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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Nimrod Sea Asst | LSE:NSA | London | Ordinary Share | GG00BK0SC854 | RED ORD SHS NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.05 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMNSA
RNS Number : 8886R
Nimrod Sea Assets Limited
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
Half-yearly Financial Report
In accordance with the FCA's Disclosure Guidance and Transparency Rules, the Board of directors of the Company announces the Company's results for the period from 1 April to 30 September, 2016. The full text of the half-yearly financial report is included below.
The Company will make a further announcement once the half-yearly financial report has been uploaded to the Company's website and submitted to the FCA's National Storage Mechanism.
For further information, please contact:
For administrative and company information:
JTC (Guernsey) Limited
+44 (0) 1481 702 400
For shareholder information:
Nimrod Capital LLP
Richard Bolchover
Marc Gordon
+44 (0) 20 7382 4565
14 December, 2016
OF ANNOUNCEMENTE&OE -- in transmission
Nimrod Sea Assets Limited
Half-yearly
Financial Report
From 1 April to
30 September 2016 (Unaudited)
NIMROD SEA ASSETS LIMITED (the "Company")
CONTENTS
Page
1 Summary Information 2 Company Overview 4 Chairman's Statement 5 Executive Directors' Investment Report 9 Directors' Information 11 Interim Management Report 12 Unaudited Financial Statements 16 Notes to the Financial Statements 35 Key Advisers and Contact Information
Defined terms used in this Half-yearly Financial Report shall have the same meaning as ascribed to them in the Company's Prospectus dated 12 March 2014.
NIMROD SEA ASSETS LIMITED (the "Company")
SUMMARY INFORMATION
Listing Specialist Fund Segment (formerly Specialist Fund Market) of the London Stock Exchange's Main Market ----------------------------- --------------------------------------------- Ticker NSA ----------------------------- --------------------------------------------- Market Capitalisation USD 6.52 million (as at 30 September, 2016) ----------------------------- --------------------------------------------- Currency USD ----------------------------- --------------------------------------------- Launch Date/Price 24 March, 2014 / USD 1.00 per Share ----------------------------- --------------------------------------------- Incorporation Guernsey ----------------------------- --------------------------------------------- Consultancy Service Provider Auld Partners Ltd (appointed 3 October, 2016) Stamford Maritime Limited (resigned 30 September, 2016) ----------------------------- --------------------------------------------- Corporate and Shareholder Nimrod Capital LLP Adviser ----------------------------- --------------------------------------------- Administrator and Secretary JTC (Guernsey) Limited ----------------------------- --------------------------------------------- Auditor Deloitte LLP ----------------------------- --------------------------------------------- Market Makers Winterflood Securities Limited Jefferies International Limited ----------------------------- --------------------------------------------- SEDOL, ISIN BK0SC85, GG00BK0SC854 ----------------------------- --------------------------------------------- Year End 31 March ----------------------------- --------------------------------------------- Stocks and Shares ISA Eligible ----------------------------- --------------------------------------------- Website www.nimrodseaassets.com ----------------------------- ---------------------------------------------
NIMROD SEA ASSETS LIMITED (the "Company")
COMPANY OVERVIEW
Nimrod Sea Assets Limited
Nimrod Sea Assets Limited (LSE: NSA) ("NSA" or the "Company") is a non-cellular Guernsey company limited by shares and incorporated on 8 October 2012. The ordinary shares of the Company were admitted to trading on the Specialist Fund Segment ("SFS") (formerly the Specialist Fund Market) of the London Stock Exchange's Main Market ("LSE") on 24 March 2014.
The Company's total issued share capital currently consists of 130,000,000 ordinary shares of no par value (the "Shares") which were admitted to trading at an issue price of USD 1.00 per Share.
Investment Objective and Policy
The Company's investment objective was to obtain income return and capital appreciation for its shareholders by participating in vehicles which acquire, charter and sell Marine Assets associated with the offshore oil and gas industry.
To pursue its investment objective, the Company obtained exposure to Marine Assets by acquiring interests in special purpose holding companies ("Marine Asset Companies").
The majority of the Marine Assets to which the Company has exposure at any time are those that are needed for the inspection, repair, maintenance and operation of installed infrastructure and production equipment for use in the offshore oil and gas industry.
The Board has conducted extensive reviews of the existing portfolio, investment policy and the investment process and future opportunities. Market conditions have remained uncertain and the Board considers that, unless market conditions improve significantly, it is unlikely to make any further new investments.
Distribution Policy
Following the significant deterioration of the oil market during 2015 and 2016, the Company has previously made announcements regarding the payment of distributions (RNS numbers: 7405Q, 5576R, 9410A, 4760K and 4223T), as well as the strategy to be adopted regarding uninvested capital (RNS number: 9410A). The Board had previously announced that it anticipated declaring a quarterly dividend of 2 cents per Share from the end of June 2015 until March 2016. This was funded by income received net of expenditure and added to from the Company's capital resources. The dividends of 30 June, 2015, 30 September, 2015, 31 December, 2015 and 31 March, 2016 have been distributed to shareholders.
As a result of the poor market conditions and on the basis the Company is unlikely to make any further new investments; on 13 April, 2016 the Company announced its intention to return uninvested capital at 20 cents per Share which was paid to shareholders on 29 April, 2016 (RNS number: 1297V).
Investments to date
As at 30 September, 2016 the Company held investments in the following Marine Asset Companies: Bukit Timah Offshore DIS, Norseman Offshore IS, Volstad Maritime II DIS, Altus Subsea IS, Aberdeen DIS and Jane Offshore Limited. However, only three have been given any value in this Half-yearly Financial Report.
Realisation Resolution
Although the Company does not have a fixed life, the Company's Articles of Incorporation (the "Articles") require that, at the first annual general meeting held following 24 March 2019, being the fifth anniversary of admission to trading on the SFS, the directors propose an ordinary resolution that the Company proceed to an orderly wind-up (the "Realisation Resolution").
If the Realisation Resolution is passed, the Directors will, as soon as reasonably practicable thereafter, bring forward specific proposals for the orderly winding up of the Company. The intention of the directors is that the proposals will seek to return capital to investors within two years, and in any event no later than three years, of the Realisation Resolution being passed (subject to shareholders' approval by ordinary resolution of an alternative period for return at the time of the Realisation Resolution being passed).
In the event that the Realisation Resolution is not passed, the directors will consider alternatives for the Company and shall propose such alternatives at a general meeting of the Company, which may include re-investment of capital with new Marine Asset Companies or, if preferable, seeking to petition existing Marine Asset Companies to renew the Charter Party Agreements on their underlying Marine Assets or seek a subsequent Charter Counterparty.
NIMROD SEA ASSETS LIMITED (the "Company")
CHAIRMAN'S STATEMENT
I would like to present the Half-yearly Financial Report of the Company for the financial period from 1 April to 30 September, 2016 (the "Period"). On behalf of the Board of directors, I take this opportunity to thank all shareholders for their support during this very challenging time.
As shareholders will be aware, the environment in which the Company has operated has continued to be difficult and our assets have been written down further, as you will see below.
The Company, however, faced other challenges during the Period, which led to the Board concluding that the Company needed to be advised by new executive directors.
Following support from shareholders for this change, the executive directors resigned at the end of September and the services of Stamford Maritime Limited were terminated with immediate effect. The Company has appointed Auld Partners Ltd ("Auld") as the new consultant to the Company and its partners, Robin Das and Frank Pedder, have been appointed to the Board as executive directors. Auld has significant experience in the maritime field.
The new executive directors, together with the non-executive directors and the Company's Shareholder Advisor, Nimrod Capital LLP, are assessing the portfolio and reviewing the options open to the Company.
As you will be aware, the Company only invested 54% of the Company's investable funds available and the vast majority of these funds were invested in the first full year of the Company's listing from March 2014 to April 2015.
As a result of the problems facing the sector, the Company reacted early on and made various announcements in the early part of the year. These included the decision to effectively halt any further deals and new transactions, to pay four quarterly dividends of 2 cents per share from June 2015 to March 2016, most of which came out of capital, and to return unrequired, uninvested cash of some 20 cents per share. Taking these dividend payments and the return of capital, the latter of which shareholders received via a B share redemption in April 2016, investors have received back nearly 30% of their original investment.
As at 30 September, 2016 the net asset value per share was 20.24 cents. The Company still has six investments in Marine Asset Companies comprising in total eight vessels. However, only three have been given any value in this Half-yearly Financial Report. Full details of all of these investments held by the Company can be found in the Executive Directors' Investment Report on pages 5 to 8.
As we have stated before, the Company remains focused on maximising the return to shareholders from its existing assets and continuing to ensure it has the necessary expertise to do this, as well as reviewing the strategic options available. This constitutes the main focus of our activities.
Jeffrey Vidamour
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
EXECUTIVE DIRECTORS' INVESTMENT REPORT
Market and Investment Portfolio Update
The offshore industry remains extremely challenging. With supply of offshore vessels significantly in excess of demand, many vessels are laid up and short term market rates are low - often at, or below, operating costs.
Supply of offshore vessels is expected to peak during 2017, as most of the order book will then have been delivered.
PSV supply/demand balance (# PSVs) AHTS supply/demand balance (# AHTSs)
On the demand side, analysts expect E&P spending to decline by 25-30% in 2016 and to be flat-to-down 12% in 2017 (Source: Pareto, DNB Markets and Fearnleys), driven by the oil price. Analysts believe that E&P companies require oil to trade at USD 50-55 per barrel to balance operating cash flow with capital expenditure and dividends in 2017.
NIMROD SEA ASSETS LIMITED (the "Company")
As a result of the supply-demand situation, no improvement in the offshore market is expected in the near term and there is a clear differentiation between projects with fixed, longer term employment (to a creditworthy party) and those which are exposed to the current market.
Many offshore companies and projects are highly leveraged and are in restructuring discussions with their lenders and charter vessel providers. Lender and charter vessel owner behaviour has been supportive in cases where balance sheets are stronger and where there is greater contracted/visible cashflow with credible counterparties. As may be expected, lenders are generally blocking dividends to shareholders and requesting shareholder contributions where they can.
Since being appointed in October 2016, the new executive directors have undertaken an assessment of, and continue to review, the Company's investment portfolio, with the main focus being on the three investments to which we still attribute material positive equity value. This involves: 1) assessing the situation of the one asset which is effectively exposed to the short term market (Altus Subsea AS), and 2) seeking to create as much certainty as possible regarding the cash flows of the two remaining assets where the charterers continue to perform (Jane Offshore Ltd and Volstad Maritime DIS II).
Prior to the appointment of the new executive directors, the value of the Company's holding in Bukit Timah DIS was written down to zero (per press release dated 28 July, 2016). The current value of the Company's holding in Jane Offshore Ltd has improved, based on a stronger financial position than expected of charterer EDT. The value of the holdings in Altus Subsea IS and Volstad Maritime DIS II have been revised lower, mainly to reflect lower broker valuations of the vessels given the current market situation.
Over the past few months, the Company has received indicative proposals from third parties suggesting various strategic and restructuring options. The executive directors intend to continue considering these options for the future of the Company, and any others that may be put forth, including an orderly managed wind-down, while recognising that exiting existing investments in the near term is challenging, with a dearth of potential buyers/investors given the short-term outlook for the offshore industry.
Project Investment Summary
Marine Asset Percentage Purchase Percentage Value as Percentage of of at 30 of ------------------- ----------- ----------- --------------- ---------- ----------- Company ownership Cost investable Sep 2016 investable funds funds ------------------- ----------- ----------- --------------- ---------- ----------- (USD) as at Purchase (USD) as at 30 Sep ------------------- ----------- ----------- --------------- ---------- ----------- 2016 ------------------- ----------- ----------- --------------- ---------- ----------- Bukit Timah Offshore DIS 26.0% 8,585,125 7.1% nil 0.0% ------------------- ----------- ----------- --------------- ---------- ----------- Norseman Offshore IS 43.0% 11,046,500 9.1% nil 0.0% ------------------- ----------- ----------- --------------- ---------- ----------- Volstad Maritime DIS II 20.5% 7,261,000 6.0% 3,197,061 2.6% ------------------- ----------- ----------- --------------- ---------- ----------- Altus Subsea IS 51.0% 9,639,000 8.0% 4,075,249 3.4% ------------------- ----------- ----------- --------------- ---------- ----------- DSV Alliance DIS 99.5% 12,750,000 10.6% nil 0.0% ------------------- ----------- ----------- --------------- ---------- ----------- Aberdeen Offshore DIS 75.0% 12,750,000 10.6% nil 0.0% ------------------- ----------- ----------- --------------- ---------- ----------- Jane Offshore Ltd 50.0% 8,022,500 6.6% 4,629,832 3.8% ------------------- ----------- ----------- --------------- ---------- -----------
Investment Performance
Aberdeen Offshore AS
The FS Cygnus is currently on charter to Enquest UK Ltd, until January, 2017 at a rate which covers operating expenses, however is insufficient to fully cover debt service. Negotiations are currently ongoing for an extension of the charter, but at a lower rate. Aberdeen Offshore AS has reached agreement with the senior debt provider to delay debt service until January, 2017. Given the cashflow situation, the defaults under the loan (temporarily waived by the lender) and the high debt level versus the estimated market value of the vessel, the equity should be considered lost and it may not be possible to safeguard any possible future recovery for the Company.
Norseman AS
Viking Supply AS (charterer of the Odin Viking) stopped paying charter hire in February, 2016 and negotiations between the parties since then have not been successful. DVB as lender to Norseman AS has made calls for the uncalled capital to be paid in, something the majority of the shareholders have resisted. As a result, DVB have successfully petitioned the Norwegian courts for the bankruptcy of Norseman AS. DVB has also won the court's approval of a forced sale of the vessel and other rights such as payment of the uncalled capital. We are currently evaluating our options with respect to the uncalled capital.
Altus Subsea AS
This project has encountered significant payment issues, largely because Marine Engineering and Diving Services FZE ("MEDS"), the charterer, has had insufficient work for the Altus Invictus. Since the contract in April, 2016 in Qatar, Altus Invictus has been unemployed apart from a few weeks recently when the vessel has been on a contract in Iran. MEDS remains in financial difficulties with an uncertain forward order book for its fleet of 3 vessels. The Altus Subsea board is currently working with the business manager in order to assess the Company's options.
Bukit Timah DIS
As reported by NSA on 28 July, 2016, a winding-up application was filed in Singapore in respect of Swiber Holdings Limited on 27 July, 2016, which has subsequently changed to the company being put into judicial management. As a result, Swiber is no longer performing under the charters, which have been terminated. The Bukit Timah Offshore board is co-operating with the financing banks who intend to take control of the vessels and auction them. The estimated values that can be achieved from a forced sale of the vessels are unlikely to cover the outstanding debt, so there is no equity value remaining.
Jane Offshore Ltd
In common with the overall OSV fleet the EDT Jane has had poor, but improving, utilisation rates since June, 2015. However, EDT Offshore Ltd ("EDT") continues to make payment in full under the charter. Jane Offshore Ltd is not in compliance with all its loan covenants, but the lender has provided a waiver until year-end 2016 and discussions are taking place regarding an extension. The lender has required Jane Offshore Limited to suspend dividends for the time being. The Company is of the opinion that distributions may resume in 2018. EDT has successfully taken steps to restructure its obligations and raise cash through asset sales, as well as actively winning new contracts.
Volstad Maritime DIS II
The seismic market continues to be extremely weak, but the charterer of this investment continues to perform as planned. The Oceanic Endeavour remains on charter to CGG Eidesvik and has worked consistently throughout the year. CGG, the parent company of the charterer, is one of the larger players in the segment and is proactively restructuring its business to cope with the difficult market. However, CGG is rated CCC+. The vessel's value has recently been revised downwards, but the company remains in compliance with the loan to value covenant on its debt. The vessel is one of the most capable in its class with up to date technology installed and we believe it is highly regarded by the charterer. However, given the current market conditions we believe it is unlikely the charter extension options will be exercised at the agreed rates and it is likely that a different arrangement will need to be negotiated with CGG. We understand that, in light of this uncertainty, the lender to this project will not permit the payment of dividends in the short to medium term.
Robin Das Frank Pedder Executive Director Executive Director
14 December 2016
NIMROD SEA ASSETS LIMITED (the "Company")
DIRECTORS' INFORMATION
Jeffrey (Jeff) Vidamour (Age 67)
Chairman of the Board and the Investment Committee
Jeff is the Chairman and a non-executive director of MEIF II Channel Islands Transport Limited which owns the Condor Group. He retired as an executive director of the Condor Group on 31 December, 2007 after 40 years' service in the marine industry. Whilst at the Condor Group he was responsible for vessel chartering requirements and as Project Director oversaw the acquisition, building and commissioning of three purpose built Ro-Ro/Ro-Pax (roll-on/roll-off freight and passenger) vessels for the Condor Group's own Channel Islands service.
He is Guernsey resident and is chairman of James 750 Limited, a subsidiary of the States of Guernsey, which owns and operates two 3000 tonne coastal oil tankers. Jeff is a non-executive director of Guernsey Stevedores Limited.
Peter Atkinson (Age 62)
Non-executive Director and Chairman of the Audit Committee
Peter is a non-executive director and an Advocate of the Royal Court of Guernsey and an English Solicitor. Admitted to the Bar in 1980, he was senior partner of Collas Day Advocates (now Collas Crill) for 14 years. He is presently a Consultant with AFR Advocates. He specialises in corporate and fiduciary work and has been and continues to act as a non-executive director of private companies and companies within the financial services sector. Past and current directorships include companies listed on the London Stock Exchange and Channel Islands Securities Exchange. He is a former chairman of the Guernsey Bar and resides in Guernsey.
Norbert Bannon (Age 67)
Non-executive Director and Chairman of the Remuneration Committee
Norbert Bannon is chairman of a large UK DB pension fund, a major Irish DC pension scheme and is a Director of and advisor to a number of other financial companies. He is Chairman of Doric Nimrod Air Two Limited and Chairman of the Audit Committee of Doric Nimrod Air Three Limited. He has extensive experience in international finance having been CEO of banks in Singapore and New York. He was CEO of Ireland's largest venture capital company and was Finance Director and Chief Risk Officer at the leading investment bank in Ireland. He has worked as a consultant on risk issues internationally.
He earned a degree in economics from Queen's University, studied at Stanford Graduate School of Business and is a Chartered Accountant.
Robin Das (Age 44)
Executive Director (appointment effective from 6 October 2016)
Robin is an executive director of the Company. Robin founded Auld Partners Ltd in 2013. From 2011 to 2012 Robin was Managing Director (partner) of Navigos Capital Management, an asset management firm established to focus on the shipping sector. Until October 2011, Robin was Global Head of Shipping at HSH Nordbank - the world's largest shipping lender at the time. Before joining HSH in 2005, he was Head of Shipping at WestLB and prior to this Robin was joint Head of European Shipping at J.P. Morgan. Robin has worked in shipping finance and shipping investment banking since 1995.
Frank Pedder (Age 53)
Executive Director (appointment effective from 6 October 2016)
Frank is an executive director of the Company. Frank joined Auld Partners Ltd in 2014. From 2006 to 2013 Frank was with DNB as Head of Corporate Finance and Senior Advisor, London, and prior to this spent 4 years with DVB Bank as Partner and senior member of the M&A/Advisory team. Frank started his career with Manufacturers Hanover (J.P. Morgan) in 1988 as a credit analyst and spent 13 years with J.P. Morgan in Oslo, London and New York, most recently as Head of Shipping Americas in New York.
Jeremy Punnett (Age 43)
Executive Director (resigned effective from 30 September 2016)
Cyril Green (Age 67)
Executive Director (resigned effective from 30 September 2016)
NIMROD SEA ASSETS LIMITED (the "Company")
INTERIM MANAGEMENT REPORT
from 1 April to 30 September, 2016 (the "Period")
A description of the important events that have occurred during the Period and their impact on the condensed set of financial statements is included in the Executive Directors' Investment Report on pages 5 to 8. A description of the principal risks and uncertainties facing the Company is given in the Executive Directors' Investment Report and notes 7, 12 and 14. Details of all related party transactions and changes in the related parties are given in the Chairman's Statement and note 15 to the financial statements. Other than the information set out in the Chairman's Statement, the Executive Directors' Investment Report and notes 7 and 15, the Board is not aware of any events or changes in the related parties transactions during Period, which had or could have had a material impact on the financial position of the Company.
The directors jointly and severally confirm that, to the best of their knowledge:
(a) The financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
(b) This Interim Management Report includes or incorporates by reference:
(i) an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;
(ii) a description of the principal risks and uncertainties for the remaining six months of the financial year;
(iii) confirmation that there were no related party transactions in the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period; and
(iv) changes in the related party transactions described in the last annual financial report that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year.
Signed on behalf of the Board of directors on 14 December 2016
Peter Atkinson
Chairman Audit Committee
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 September 2016
Period Ended Period Ended Notes 30 Sep 2016 30 Sep 2015 USD USD Operating income Net movement in unrealised losses on financial assets at fair value through profit or loss 7 (6,608,081) (17,337,082) Distributions received from investments 507,400 1,103,474 Bank interest received 18,685 53,930 ------------- ------------- (6,081,996) (16,179,678) Operating expenses 4 (1,663,444) (2,990,871) ------------- ------------- Net loss for the period before finance costs and foreign exchange gain / (loss) (7,745,440) (19,170,549) ------------- ------------- Unrealised foreign exchange gain / (loss) 15,548 (3,067) ------------- ------------- Net loss for the period attributable to shareholders (7,760,988) (19,173,616) ------------- ------------- Other comprehensive income - - ------------- ------------- Total comprehensive loss for the period (7,760,988) (19,173,616)
============= ============= Cents Cents Loss per share for the period - basic and diluted 6 (5.97) (14.75) ------------- -------------
In arriving at the results for the financial period, all amounts above relate to continuing operations.
There are no recognised gains or losses for the period other than those disclosed above.
The notes on pages 16 to 34 form an integral part of these financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF FINANCIAL POSITION
as at 30 September 2016
30 Sep 2016 31 Mar 2016 Notes USD USD Non-current assets Financial assets designated at fair value through profit and loss 7 11,902,142 18,510,222 Current assets Receivables 8 50,105 69,954 Cash and cash equivalents 16,899,816 46,248,403 ------------- ------------- 16,949,921 46,318,357 Total assets 28,852,063 64,828,579 ============= ============= Current liabilities Payables - due within one year 9 2,718,687 4,934,215 ------------- ------------- 2,718,687 4,934,215 Total liabilities 2,718,687 4,934,215 ============= ============= Total net assets 26,133,376 59,894,364 ============= ============= Equity Share capital 10 - - Share premium 11 122,895,175 122,895,175 Revenue reserve (96,761,799) (63,000,811) ------------- ------------- 26,133,376 59,894,364 ============= ============= Cents Cents Net asset value per share 20.10 46.07 ------------- -------------
The financial statements were approved by the Board on 14 December 2016 and were signed on its behalf by:
Peter Atkinson
Director
The notes on pages 16 to 34 form an integral part of these financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF CASH FLOWS
for the period ended 30 September 2016
Period Ended Period Ended Notes 30 Sep 2016 30 Sep 2015 USD USD Operating activities Net loss for the period attributable to shareholders (7,760,988) (19,173,616) Net movement in unrealised losses on financial assets at fair value through profit or loss 6,608,081 17,337,082 Interest received (18,685) (53,930) (Decrease) / Increase in payables 384,472 704,078 Decrease / (Increase) in receivables 19,849 (8,285) Foreign exchange movement 15,548 3,067 ------------- ------------- Net cash flow used in operating activities (751,723) (1,191,604) ------------- ------------- Investing activities Purchase of investments 7 - (8,808,500) Payment of uncalled share capital 7 - (344,000) Interest received 18,685 53,930 ------------- ------------- Net cash flow used in investing activities 18,685 (9,098,570) ------------- ------------- Financing activities Redemptions paid (26,000,000) (3,243,463) Dividends paid (2,600,000) - ------------- ------------- Net cash flow used in financing activities (28,600,000) (3,243,463) ------------- ------------- Cash and cash equivalents at beginning of period 46,284,403 66,730,471 Decrease in cash and cash equivalents (29,333,039) (13,533,637) Foreign exchange movement (15,548) (3,067) ------------- ------------- Cash and cash equivalents at end of period 16,899,816 53,193,767 ============= =============
The notes on pages 16 to 34 form an integral part of these financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 September 2016
Ordinary Shares Share Revenue Total Capital Reserve USD USD USD Balance as at 1 April 2016 122,895,175 (63,000,811) 59,894,364 Total comprehensive loss for the - (7,760,988) (7,760,988) period Redemption - (26,000,000) (26,000,000) ------------ ------------- ------------- Balance as at 30 September 122,895,175 (96,761,799) 26,133,376 2016 ------------ ------------- -------------
for the period ended 31 March 2016
Ordinary Shares Share Revenue Total Capital Reserve USD USD USD Balance as at 1 April 2015 122,895,175 (10,835,954) 112,059,221 Total comprehensive loss for the year - (41,129,169) (41,129,169) Dividends paid - (8,435,688) (8,435,688) Dividend declared - (2,600,000) (2,600,000) ------------ ------------- ------------- Balance as at 31 March 2016 122,895,175 (63,000,811) 59,894,364 ------------ ------------- -------------
The notes on pages 16 to 34 form an integral part of these financial statements.
NIMROD SEA ASSETS LIMITED (the "Company")
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 September 2016
1 GENERAL INFORMATION
The financial statements incorporate the results of Nimrod Sea Assets Limited (the "Company").
The Company was incorporated in Guernsey on 8 October 2012 with registered number 55718. Its share capital consists of one class of Ordinary Shares "Shares") of no par value. The Shares were admitted to trading on the Specialist Fund Segment ("SFS") of the London Stock Exchange's Main Market ("LSE") on 24 March 2014.
The Company's investment objective was to obtain income returns and a capital appreciation for its Shareholders by participating in vehicles which acquire, charter and sell Marine Assets associated with the offshore oil and gas industry.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are as follows:
(a) Basis of preparation
The financial statements have been prepared in conformity with the International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union, and applicable Guernsey law. The financial statements have been prepared on a historical cost basis modified by the revaluation of investments at fair value through profit and loss.
The same accounting policies and methods of computation are followed in the interim financial report as compared with the most recent annual financial statements (31 March 2016). This report should be read in conjunction with the latest Annual Financial Report (31 March 2016). For a detailed discussion about the group's performance and financial position please refer to the Chairman's Report on pages 4 and Executive Directors' Investment Report on pages 5 to 8.
The Company is an investment entity and as such does not consolidate the entities it controls. Instead interests in subsidiaries are classified as fair value through profit and loss and measured at fair value. Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries, other than those that provide investment services to the Company, at fair value through profit or loss rather than consolidate them. The criteria which define an investment entity are, as follows:
-- An entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;
-- An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and
-- An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Company meets the criteria as follows:
The Company provides investment management services and has a number of investors who pool their funds to gain access to these services and investment opportunities that they might not have had access to individually. The Company, being listed on the London Stock Exchange, obtains funding from a diverse group of external shareholders.
The Company's objective is consistent with that of an investment entity. The Company has the intention to realise the constituents of each of its investment classes.
The Company measures and evaluates the performance of substantially all of its investments on a fair value basis. The fair value method is used to represent the Company's performance in its communication to the market, including investor presentations. In addition, the Company reports fair value information internally to Directors, who use fair value as a significant measurement attribute to evaluate the performance of its investments and to make investment decisions for mature investments.
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in the current year. Their adoption has not had any impact on the amounts reported in these Financial Statements.
IAS 1 Presentation of Financial Statements - amendments resulting from the disclosure initiative effective for annual periods beginning on or after 1 January 2016.
IFRS 7 Financial Instruments: Amendments resulting from September 2014 Annual improvements to IFRSs, effective for annual periods beginning on or after 1 January 2016.
IAS 34 Interim Financial Reporting - Amendments resulting from September 2014 Annual Improvements to IFRSs, effective for annual periods beginning on or after 1 January 2016.
IFRS 10 Consolidated Financial Statements - amendments regarding the application of the consolidation exception effective for annual periods beginning on or after 1 January 2016.
The following Standards or Interpretations that are expected to affect the Company have been issued but not yet adopted by the Company as shown below. Other Standards or Interpretations issued by the IASB and IFRIC are not expected to affect the Company.
IFRS 7 Financial Instruments: Disclosures - Deferral of mandatory effective date of IFRS 9 and amendments relating to additional hedge accounting disclosure (and consequential amendments). Applied only when IFRS 9 is adopted, which is effective for annual periods beginning on or after 1 January 2018.
IFRS 9 Financial Instruments - classification and measurement of financial assets effective for annual period beginning on or after 1 January 2018. The standard contains revised guidance including new general hedge accounting requirements that align hedge accounting more closely with an entity's risk management approach and a new expected credit loss model for calculating impairment on financial assets.
Other requirements of IFRS 9 relating to accounting for liabilities and derecognition of financial instruments are effective for annual periods beginning on or after 1 January 2018.
IFRS 15 Revenue from Contracts with Customers - effective for annual periods beginning on or after 1 January 2018.
IAS 7 Statement of Cash Flows - amendments resulting from the disclosure initiative effective for annual periods beginning on or after 1 January 2017 (EU endorsement is outstanding).
The Directors have considered the above and are of the opinion that these Standards and Interpretations are not expected to have an impact on the Company's financial statements except for the presentation of additional disclosures and changes to the presentation of items of the financial statements. These items will be applied in the first financial period for which they are required.
(b) Taxation
The Company has been assessed for tax at the Guernsey standard rate of 0%. Dividends receivable from investments held in Marine Asset vehicles are recognised at an amount that excludes any withholding taxes payable to the relevant tax authorities.
(c) Share capital
Shares are classified as equity. Incremental costs directly attributable to the issue of Shares are recognised as a deduction from equity.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest income
Interest income is accounted for on an accruals basis.
(f) Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity are carried at cost. Cash and cash equivalents are defined as call deposits, short term deposits with a term of no more than three months from the start of the deposit and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. The Company invests its cash and cash equivalents with Royal Bank of Scotland International Limited and Diversified Enhanced Yield Account ("DEYA").
(g) Distributions
Distributions from investments are accounted for on an accruals basis.
(h) Going concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and has significant liquid funds to do so. Accordingly, the Directors have adopted the going concern basis in preparing the financial statements.
(i) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being participating in vehicles that acquire, charter and sell Marine Assets associated with the offshore oil and gas industry.
(j) Foreign currencies
The financial statements of the Company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the financial statements, the results and financial position of the Company are expressed in US Dollars, which is the functional currency of the Company, and the presentation currency for the financial statements.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise. Transactions denominated in foreign currencies are translated into USD at the rate of exchange ruling at the date of the transaction.
(k) Financial instruments
Financial assets and financial liabilities are recognised in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' ("FVTPL") and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial assets at fair value through profit and loss ("FVTPL")
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. Fair value is determined in the manner described in Note 7.
The Company's investments in Marine Asset vehicles have been designated as at FVTPL on the basis that they are managed and their performance is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the investments is provided internally on that basis.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
Derecognition of financial assets
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised and accumulated in equity is recognised in profit or loss.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the application of the Company's accounting policies, which are described in Note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical judgements and estimates that the Directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in financial statements.
Fair value measurement
The Company's financial assets are measured at fair value for financial reporting purposes. In estimating the fair value of an asset the Board have approved a discounted cash flow methodology for assets with long term charter and the adjusted asset valuation methodology for assets with short term or no charter using inputs from the Marine Asset Companies underlying the investments and market wide data e.g. depreciation rates. Independent valuations were obtained and these were used to benchmark the valuations prepared by Auld Partners Ltd and any significant differences are investigated. The Board resolved to use the valuation values provided by Auld Partners Ltd. The valuation techniques and inputs to the fair value models are reviewed bi-annually by the directors to ensure the assumptions are still appropriate. Detailed information about the valuation techniques and inputs used in determining the fair value of the financial assets is disclosed in Note 7.
4 OPERATING EXPENSES Period Ended Period Ended 30 Sep 2016 30 Sep 2015 USD USD Corporate and Shareholder advisory fee 96,499 154,756 Consultancy Services fee 569,439 555,550 Administration fees 39,250 43,707 Investment acquisition costs - 24,000 Bank interest and charges 957 1,556 Accountancy fees 18,667 16,000 Registrar's fee 5,079 7,370 Audit fee 32,548 44,504 Directors' remuneration 129,308 139,788 Directors' and officers' insurance 21,559 21,499 **DSV Alliance expenses - 1,784,104 *Legal and professional expenses 724,502 165,927 Other operating expenses 25,636 32,110 ------------- ------------- 1,663,444 2,990,871 ============= =============
*Included in legal and professional expenses are non-audit services provided by Deloitte LLP in the sum of USD 28,500 (30 September 2015 : USD 30,676).
**DSV Alliance expenses related to the cost of the Company's provision financial support for the maintenance of the relevant vessel whilst it sought to realise its investment. The support was withdrawn in February 2016 and DSV Alliance AS was voted into liquidation.
5 DIRECTORS' REMUNERATION
Under their terms of appointment, the two previous executive directors were each paid a fee of USD 75,000 per annum by the Company. With the new arrangement with Auld Partners Ltd, the current executive directors are each paid a fee of USD 54,000 per annum. The three remaining Directors are each paid a each fee of GBP 25,000, with the exception of the Chairman, who receives GBP 30,000 per annum, and the Chairman of the Audit Committee, who also receives an additional GBP 4,000 per annum.
6 LOSS PER SHARE
Loss per Share is calculated by dividing the net loss for the year attributable to shareholders of USD 7,760,989 (30 September 2015: USD 19,173,616) by the weighted average number of Shares in issue during the period since the placing in March 2014 of 130,000,000 Shares (30 September 2015: 130,000,000 ).
7 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS
The Company holds interests in Marine Asset Companies that enter into medium to long term contractual relationships with counterparties that charter the Marine Asset held by the Marine Asset Company. The investments in Marine Asset Companies are stated at fair value. Any changes to their fair value are recognised through the profit or loss.
Percentage of Percentage Investable Percentage Fair value Fair value of of ownership Funds 30 Investable as at 30 as at 31 Sep Mar September Funds 31 2016 2016 2016 March 2016 % % % USD USD *Bukit Timah Offshore DIS 26.0 0.0 4.8 - 5,796,425 Norseman Offshore IS 43.0 0.0 0 - - Volstad Marine DIS II 20.5 2.8 3 3,197,061 3,670,899 Altus Subsea IS 51.0 3.4 5.2 4,075,249 6,321,625 **DSV Alliance DIS 99.5 0.0 0 - - Aberdeen Offshore DIS 75.0 0.0 0 - - Jane Offshore Ltd 50.0 3.8 2.3 4,629,832 2,721,273 ----------- ----------- 11,902,142 18,510,222 =========== ===========
All Marine Asset Companies are incorporated in Norway and operations are worldwide.
All Marine Asset Companies' principal activities are associated with offshore oil and gas industry and deep sea exploration.
*Bukit Timah Offshore DIS is held through an intermediate holding company Nimrod Sea AS which is 100% owned by the Company and incorporated in Norway.
**DSV Alliance AS was written down to nil and the investee is in liquidation.
The valuations stated above are based on the latest information available to the Board as at 14 December 2016, being the latest practicable date prior to publication of these financial statements.
In arriving at the above fair values, the Board considered the following:
Bukit Timah Offshore DIS
As reported by the Company on 28 July 2016, a winding-up application was filed in Singapore in respect of Swiber Holdings Limited on 27 July 2016, which subsequently changed to the company being put into judicial management. Swiber is no longer performing under the charters, which have been terminated. The Board is co-operating with the financing banks, who intend to take control of the vessels and auction them. The estimated values that can be achieved from a forced sale of the vessels are unlikely to cover the outstanding debt, so there is no equity value remaining.
Jane Offshore Limited
In common with the overall OSV fleet, the EDT Jane has had poor but improving utilisation rates. However, EDT Offshore Ltd ("EDT") continues to make payment in full under the charter. Jane Offshore Ltd is not in compliance with all its loan covenants, but the lender has provided a waiver until year-end 2016 and discussions are taking place regarding an extension. EDT has successfully taken steps to restructure its obligations and raise cash through asset sales, as well as actively winning new contracts. Distributions payable by Jane Offshore Limited have been suspended. The Company is of the opinion that distributions may resume in 2018 and this has been reflected in the valuation.
Volstad Maritime DIS II
The seismic market continues to be extremely weak, but the charterer of this investment continues to perform as planned. The Oceanic Endeavour remains on charter to CGG Eidesvik and has worked consistently throughout the year. CGG, the parent company of the charterer, is one of the larger players in the segment and is proactively restructuring its business to cope with the difficult market. However, CGG is rated CCC+. The vessel's value has recently been revised downwards, but the company remains in compliance with the minimum loan to value covenant on its debt. The vessel is one of the most capable in its class with up to date technology installed and we believe it is highly regarded by the charterer. However, given the current market conditions we believe it is unlikely the charter extension options will be exercised at the agreed rates and it is likely that a different arrangement will need to be negotiated with CGG. We understand that, in light of this uncertainty, the lender to this project will not permit the payment of dividends in the short to medium term.
Altus Subsea IS
This project has encountered significant payment issues, largely because Marine Engineering and Diving Services FZE ("MEDS"), the charterer, has had insufficient work for the Altus Invictus. Since the contract in April 2016 in Qatar, Altus Invictus has been unemployed apart from a few weeks recently when the vessel has been on a contract in Iran. MEDS remains in financial difficulties with an uncertain forward order book for its fleet of 3 vessels. The Board is currently working with the business manager in order to assess the Company's options.
The valuation assumes sale of the vessel after a period of lay-up with the vessel value based on recent broker valuations.
Norseman Offshore IS
Viking Supply AS (charterer of the Odin Viking) stopped paying charter hire in February 2016 and negotiations between the parties since then have not been successful. DVB as lender to Norseman AS has made calls for the uncalled capital to be paid in, something the majority of the shareholders have resisted. As a result, DVB have successfully petitioned the Norwegian courts for the bankruptcy of Norseman AS. DVB has also won the court's approval of a forced sale of the vessel and other rights such as payment of the uncalled capital. The Board is currently evaluating its options with respect to the uncalled capital (the Company's share is USD 1,978,000). In addition, debt exceeds the current asset value of the vessel. The investment has therefore been valued at nil.
DSV Alliance AS
DSV Alliance has been written off entirely and DSV Alliance AS is in liquidation.
Aberdeen Offshore DIS
The FS Cygnus is currently on charter to Enquest UK Ltd until January, 2017 at a rate which covers operating expenses, but which is insufficient to fully cover debt service. Fletcher is currently in negotiations for an extension of the charter, but at a lower rate. Aberdeen Offshore AS has reached agreement with the senior debt provider to delay debt service until January 2017. Given the cashflow situation, the defaults under the loan (temporarily waived by the lender) and the high debt level versus the estimated market value of the vessel, the equity should be considered lost and it may not be possible to safeguard any possible future recovery for the Company.
IFRS 13 requires disclosure of fair value of measurements of financial assets and liabilities, using a three-level hierarchy as detailed below:
-- Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities,
-- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (that is, as prices) or indirectly (that is, derived from prices),
-- Level 3: Inputs for the assets or liability that are not based on observable market data (that is unobservable inputs).
Under IFRS 13, all of the investments have been classified as Level 3 under the fair value hierarchy as their valuations are derived from techniques that include inputs that are not based on observable market data.
There have been no transfers between levels during the period. The level 3 reconciliation is provided below:
Level 3 reconciliation
30 Sep 2016 31 Mar 2016 USD USD Balance at beginning of period 18,510,222 45,591,678 Additions - purchase of investments - 8,808,500 Additions - payment of uncalled share - 344,000 capital Additions - Uncalled Capital now due - 1,978,000 Disposal - DSV Alliance - (10,061,689) Movement in unrealised depreciation on (6,608,001) (28,150,267) investments ------------- --------------- Balance at end of year 11,902,141 18,510,222 ============= ============= Closing Marine Assets cost 57,304,125 57,304,125 ------------- ------------- Unrealised depreciation on valuation carried (45,401,984) (38,793,903) forward ============= =============
Valuation process for Level 3 valuations
The valuation of the investments as at 30 September 2016 has been derived using the Discounted Cash Flow (DCF) method for assets with a long term charter and Adjusted Valuation for assets with a short term or no charter.
Marine Assets 1
Under the DCF method the fair value of investments is estimated using assumptions regarding the forecast distributions from the underlying partnerships and the residual value of the return of capital at the end of the project. The present value of the projected cash flows from the distributions and residual value at the end of the project is derived using a discount rate that is considered to be appropriate. The discount rate is based on market conditions, investment performance and other relevant information. The discount rate is reviewed bi-annually. Page 26 sets out the range of rates and sensitivity analysis.
Marine Assets 2
Under the Adjusted Asset Valuation method the fair value of investments is based on the latest available independent valuation of the vessel held by the Marine Asset Company, carried out by an independent valuer on a "willing seller and willing buyer" basis. The independent valuation has then been adjusted for the available cash in the Marine Asset Company, repayment of the mortgage and associated interest, subject to any agreements relating to the allocation of the proceeds on sale of the vessel between the Company and the mortgage provider, ongoing operating expenses to reflect the estimated sale date or long term charter and prevailing market conditions.
The valuations are the responsibility of the Board of Directors of the Company. The valuation method and its inputs were considered and approved by the Board. On a bi-annual basis the valuation results and underlying assumptions will be reviewed to ensure that they remain appropriate.
Information about fair value measurement using significant unobservable inputs (Level 3)
Significant Fair Value Fair Value Valuation unobservable Range* (weighted average) at at Asset class 31 Mar 2016 30 Sep 2016 technique Input USD USD --------------- ------------ ------------ ---------- ------------- -------------------------- Marine Assets Discount 1 12,188,597 7,826,892 DCF Rate 21.9% - 27.6% (24.75%) Residual value of vessels USD 4,790,882 - USD net of 5,815,358 loans in (USD 5,303,120) SPV --------------- ------------ ------------ ---------- ------------- -------------------------- Marine Assets 2 Aberdeen - - Adjusted Charter free N/A Offshore valuation Valuation DIS Norseman - - Adjusted Charter free N/A Offshore valuation Valuation IS Altus Subsea IS 6,321,625 4,075,249 Adjusted Charter free N/A valuation Valuation Estimated N/A
operating costs
Sensitivity analysis to significant changes in unobservable inputs
The significant unobservable inputs used in the fair value measurements categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 30 September 2016 are shown below:
Favourable Unfavourable Significant Sensitivity Change in Change in fair fair Asset class unobservable used* value value input USD USD --------------- ----------------- ------------ ----------- ------------- Marine Assets 1 Discount Rate 5% 1,315,082 (1,008,971) Residual value of assets 20% 650,492 (650,492) Marine Assets 2 Altus Subsea Charter free IS valuation 20% 824,222 (824,222) Estimated Costs 20% 130,703 (130,703)
* The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value. An increase in discount rate will result in a decrease in fair value and vice versa. An increase in residual value will result in an increase in fair value and vice versa. When performing sensitivity analysis on discount rates, the rates have been increased or decreased by five whole percentage points. In the event of uncertainty around charter restructuring and the potential impact on the timing of dividend payments a discount of up to 50% may be applied to the valuation.
In carrying out the sensitivity analysis it was assumed that all other variables remained constant. The sensitivity rates used represent the Board's assessment of what changes may feasibly occur to the residual value of the vessels and also the possible changes in the market and risk profile of the investments.
There has been significant disruption in the Company's principal markets where the continued depressed oil price has resulted in failure and stress amongst the charter holders to whom the underlying vessels are leased. This disruption has also led to significant illiquidity and uncertain pricing both for the underlying vessels and Company's investments. These reasons give rise to material uncertainty in valuation.
8 RECEIVABLES 30 Sep 2016 31 Mar 2016 USD USD Prepayments 22,956 43,573 Sundry debtors 27,149 26,381 ------------ ------------ 50,105 69,954 ============ ============ 9 PAYABLES (amounts falling due within one year) 30 Sep 2016 31 Mar 2016 USD USD Accrued administration fees 9,227 8,116 Accrued audit fee 32,430 79,423 Accrued shareholder advisor fee 17,188 79,313 Accrued management fee 94,906 94,906 Accrued legal & professional fees 559,072 75,000 Accrued printing expenses - 1,648 Other accrued expenses 27,864 17,809 * Capital Commitment 1,978,000 1,978,000 ** Dividend Payable - 2,600,000 ------------ ------------ 2,718,687 4,934,215 ============ ============
* Payable raised for Norseman uncalled capital that will become due. This has been accrued for as the Company does not believe it will recover this additional investment. Refer to note 7 and the Executive Directors Investment report for more information.
** A dividend of USD 2,600,000 was declared on 29 March 2016.
The above carrying value of payables is equivalent to the fair value.
10 SHARE CAPITAL
The authorised share capital of the Company is an unlimited number of shares of no par value which may be issued as Ordinary Shares or reclassified as any other class of shares.
30 Sep 2016 31 Mar 2016 Shares Shares Issued share capital 130,000,000 130,000,000 ------------ ------------ 130,000,000 130,000,000 ============ ============
Shareholders holding Shares are entitled to receive and participate in any dividends out of income attributable to the Shares, other distributions of the Company available for such purposes and resolved to be distributed in respect of any accounting period or other income or right to participate therein.
On a winding up, shareholders are entitled to the surplus assets attributable to the Shares remaining after payment of all the creditors of the Company. Shareholders have the right to receive notice of and to attend, speak and vote at general meetings of the Company.
Shareholders shall have the right to receive notice of and to attend, speak and vote at general meetings of the Company and each holder of Shares being present in person or by attorney at a meeting shall upon a show of hands have one vote and upon a poll each such holder present in person or by proxy or by attorney shall have one vote in respect of each Share held by him/her.
Provisions in the Company's Articles of Incorporation enable the Directors to repay their invested capital to shareholders via the issue and redemption of B Shares. Each time the Board wishes to return capital to shareholders, the Company is able to issue B Shares to all registered shareholders, pro rata to their existing holdings of Redeemable Ordinary Shares. Any such B Shares may be issued fully paid, then redeemed at the option of the Directors for the amount deemed paid up, with the capital cash proceeds paid to holders of such B Shares as soon as reasonably practicable thereafter.
At a Board meeting held on 12 April, 2016 and as announced on 13 April, 2016 (RNS number 1977V), the Board resolved to return to shareholders 20 US$ cents per Redeemable Ordinary Share (US$26 million in aggregate) by way of an issue of 130 million B Shares to shareholders on the Company's register on the record date of 22 April, 2016. Each shareholder was issued one B Share for every Redeemable Ordinary Share held by them and the B Shares were all redeemed on 21 April, 2016 at a value of US$ 20 cents per B share, with the redemption proceeds being paid to shareholders on 29 April, 2016.
The cash proceeds payable on the redemption of the B Shares represented a capital distribution of 20 US$ cents per share and the aggregate redemption proceeds were US$26 million. No further B Shares were issued in the period under review nor up to the date of this half-yearly financial report.
11 SHARE PREMIUM 30 Sep 2016 31 Mar 2016 Shares Shares Issued share premium 122,895,175 122,895,175 Share issue costs - - ------------ ------------ 122,895,175 122,895,175 ------------ ------------ 12 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's objective is to obtain income returns and a capital return for its shareholders by participating in vehicles which acquire, charter and sell Marine Assets associated with the offshore oil and gas industry. Risk is inherent in the Company's activities, but is managed through a regular process of identification, measurement and monitoring by the Board of directors. The financial risks which the Company are exposed to include: market risk, interest rate risk, credit risk (including counterparty risk), liquidity risk and capital management risk. The Board regularly review and agrees policies for managing each of these risks and these are summarised below and overleaf:
(a) Market Risk
Market risk is the risk that the future cash flows or fair value of the investments will fluctuate due to general economic and market conditions, such as currencies, interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, currency exchange controls and national and international political circumstances. All of these may affect the price level, volatility and liquidity of securities prices and result in losses in the value of the Company's assets.
The Company invests in Marine Asset Companies holding highly specialised Marine Assets for use within the offshore oil and gas industry and which have few alternative uses. The Company's performance will therefore depend largely on the overall condition of the offshore oil and gas industry.
The effects of the changing market place are considered in deriving an appropriate discount rate for determining the fair value of the assets. The sensitivity on the fair value of the Company's investment portfolio as a result of a 5% increase/ decrease in discount rates is shown in Note 7.
The residual value of a vessel at the end of a charter term may also be impacted if there is not an active market due to market conditions prevailing at the time. The residual value of the vessels is monitored through independent valuations and broker reports. The sensitivity on the fair value of the Company's investment portfolio as a result of a 20% increase/ decrease in residual value is shown in Note 7.
(b) Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company.
The Company is exposed to credit risk in respect of its cash and cash equivalents, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets.
The credit risk on liquid funds is limited as the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The Company monitors the placement of cash balances on an ongoing basis. The Company invests its cash and cash equivalents with Royal Bank of Scotland International Limited and Diversified Enhanced Yield Account ("DEYA") facility which at 30 September 2016 deposited cash in Royal Bank of Scotland International, ABN Amro, Lloyds, BNP and Santander. DEYA facility is maintained by JTC Cash Management service where the Company's "on call" cash is amalgamated with other participating parties in order to diversify and thus reduce the level of depositor risk and enhance yield. The credit risk is mitigated through the spread of the Company's cash across various counterparties each with a Standard and Poor's ratings ranging between BBB+ to A+ at 14 December 2016.
The Company is exposed to credit risk in respect of its financial assets designated at fair value, arising from possible default of the counterparties that will charter the marine asset from the Marine Asset vehicles in which the Company holds an interest. There is no guarantee that all of the counterparties will honour their contractual obligations and default may adversely effect the dividends received if they do not meet their financial obligations and the residual value if the vessel is poorly maintained by the counterparty.
The Marine Assets companies into which the Company invests frequently utilise a substantial amount of leverage to finance the purchase of the marine assets. These Marine Assets companies will therefore likely be required to comply with loan covenants and undertakings. There is therefore a credit risk to the Company that the underlying Marine Asset company holding one or more investments may fail to comply with any covenants and the relevant lenders will recall the loans. In such circumstances the Marine Asset company may be required to sell the asset to repay the outstanding loan. If the asset is sold, in relation to that Marine Asset the Company will receive only the proceeds left after the deduction of the outstanding loan repayments.
The Board receives quarterly reports and regular market updates from the executive directors. The Board continues to monitor the financial stability of each of its investments and this is considered when establishing the appropriate valuation method. If the income receivable from a counterparty ceases, or the Board concludes that the income will not be paid in the longer term, the Board will refer to broker reports and valuations and comparable sales (if any) to ascertain the value of the underlying Marine Asset.
The overall credit exposure on a DCF basis is $7,826,892 (31 March 2016 : $12,188,597). If any of the charterers had a credit event which meant they were no longer able to adhere to the charter contract with the SPV, the value recovered may be on an asset sale basis, which was not practical to quantify at the end of the reporting period. The value receivable on an asset sale basis would be expected to be significantly lower, as evidenced by the asset sale valuations of the Altus Invictus (see Note 7 for further details).
Sellers' credits have been entered into for some of the investments as a way of mitigating the risk of default by the charterer. The sellers' credit acts as a performance related obligation which, subject to the charterer performing all of its obligations, becomes repayable at the end of the charter. In the event of default by the charterer of its obligations the seller's credit would not be paid.
In Jane Offshore Ltd, there is a seller's credit for USD23.98 million (Company's share - USD11.99 million), but will be reduced by USD7.7 million at the end of the 10 year charter period, reducing the Company's share at this point to USD8.14 million.
All charter arrangements allow the charterer to conduct worldwide operations. The Board does not consider that credit risk is concentrated in one geographic location.
The Investment Committee considered the counterparty risk prior to making an investment decision. The Board does not quantify the counterparty risk for all the investments on an ongoing basis due to the limited information available on a number of the charterers. The executive directors obtain regular updates from the appointed commercial manager on whether the charterer and debt is in compliance and reports to the Board should issues arise.
Further information is given in Note 7 on pages 22 to 27.
(c) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows, it is also the risk that fluctuations in market interest rates will result in a reduction in deposit interest earned on bank deposits held by the Company.
Other than cash and cash equivalents, none of the assets or liabilities of the Company attract or incur interest. The following table details the Company's exposure to interest rate risks:
As at 30 September 2016:
Non-interest Total 0-3 3-6 Bearing Months months USD USD USD USD Financial assets Assets held at fair value through profit and - - 11,902,142 11,902,142 loss Receivables - - 50,105 50,105 Cash and cash 16,899,816 - - 16,899,816 equivalents Total financial 16,899,816 - 11,952,247 28,852,063 assets ----------- ------- ------------- ----------- Financial liabilities Accrued expenses - - 2,718,687 2,718,687 ------------ --- ---------- ---------- Total financial liabilities - - 2,718,687 2,718,687 ------------ --- ---------- ---------- Total interest bearing 16,899,816 - assets ------------ ---
As at 31 March 2016:
Non-interest Total 0-3 months 3-6 months Bearing USD USD USD USD Financial assets Assets held at fair value through profit and loss - - 18,510,222 18,510,222 Receivables - - 69,954 69,954 Cash and cash equivalents 46,248,403 - - 46,248,403 ----------- ----------- ------------- ----------- Total financial assets 46,248,403 - 18,580,176 64,828,579 ----------- ----------- ------------- ----------- Financial liabilities Accrued expenses - - 2,334,215 2,334,215 Dividend Payable - - 2,600,000 2,600,000 ------------ --- ---------- ---------- Total financial liabilities - - 4,934,215 4,934,215 ------------ --- ---------- ---------- Total interest bearing 46,248,403 - assets ------------ ---
If interest rates had been 25 basis points higher throughout the period and all other variables were held constant, the Company's net assets attributable to shareholders as at 30 September 2016 would have been USD 42,250 (31 March 2016: USD 115,621) greater due to an increase in the amount of interest receivable on the bank balances.
If interest rates had been 25 basis points lower throughout the period and all other variables were held constant, the Company's net assets attributable to shareholders as at 30 September 2016 would have been USD 42,250 (31 March 2016: USD 115,621) lower due to a decrease in the amount of interest receivable on the bank balances.
(d) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments. The Company's main financial commitment is its ongoing operating expenses.
The Board regularly monitors the cash flow of the Company to ensure that the Company has sufficient liquid resources available to fulfil its operational plans and to meet its financial obligations as they fall due.
The table below details the residual contractual maturities of financial liabilities:
As at 30 September 2016:
Less than 1 to 3 months Greater 3 to than 1 month Months 1 year 1 year Total USD USD USD USD USD Accrued expenses 671,166 2,047,521 - - 2,718,687 ---------- ---------- --------- -------- ---------- 671,166 2,047,521 - - 2,718,687 ========== ========== ========= ======== ==========
As at 31 March 2016:
Less than 1 to 3 months Greater 3 to than 1 month Months 1 year 1 year Total USD USD USD USD USD Accrued expenses 176,766 2,157,449 - - 2,334,215 Dividend payable 2,600,000 - - - 2,600,000 ---------- ---------- --------- -------- ---------- 2,776,766 2,157,449 - - 4,934,215 ========== ========== ========= ======== ========== (e) Capital management
The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to shareholders.
The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders, comprising issued capital and retained earnings and losses.
The Board reviews the capital structure on a bi-annual basis.
Equity includes all capital and reserves of the Company that are managed as capital.
13 ULTIMATE CONTROLLING PARTY
In the opinion of the Board, the Company has no ultimate controlling party.
14 COMMITMENTS AND CONTINGENT LIABILITIES
There are uncalled capital commitments in place in respect of certain Marine Asset Companies. It is unknown if the commitment will be called upon, as this is dependent on several conditions and circumstances. The uncalled capital commitments are summarised as follows:
30 Sep 2016 31 March 2016 Volstad Marine DIS II NOK 6,150,000 6,150,000 Jane Offshore Ltd USD 5,000,000 5,000,000 * Norseman Offshore IS USD 1,978,000 1,978,000
* Accrued for see Note 9. The amount has been accrued for as the Company does not believe it will recover this additional investment.
15 RELATED PARTY TRANSACTIONS
Nimrod Capital LLP ("Nimrod") is the Company's Corporate and Shareholder Adviser. In consideration for Nimrod acting as placing agent in the initial Ordinary Share Placing, the Company agreed to pay to Nimrod at Admission a placing commission equal to 2.5 per cent of the initial gross proceeds of the initial Ordinary Share Placing. The amount was deducted from Share premium.
The Company previously paid Nimrod for its services as Corporate and Shareholder Adviser a fee of USD 301,964 per annum (adjusted annually for inflation from 2015 onwards, at 2.5 per cent per annum) payable quarterly in arrears. With effect from 1 April 2016, this fee was reduced to USD 193,000 per annum.
During the period, the Company incurred USD 96,499 (30 September 2015: USD 154,756) of fees due to Nimrod, of which USD 17,188 (31 March 2016: USD 79,313) was outstanding to this related party as at 30 September, 2016.
Stamford Maritime Limited ("Stamford") was the Company's Consultancy Service Provider. The Company was to pay to Stamford in consideration for the services of the Executive Directors, together with certain investment support services to the Directors and the Company, a fee of USD1,083,999 per annum (adjusted annually for inflation from 2015 onwards, at 2.5 per cent per annum) payable monthly in arrears. However, the agreement with Stamford was terminated and the Executive Directors from Stamford resigned with effect from 30 September, 2016.
During the Period, the Company incurred USD 569,439 (30 September 2015: USD 555,550) of fees due to Stamford, of which USD 94,906 (31 March, 2016: USD 94,906) was outstanding to this related party as at 30 September, 2016.
A new agreement was entered into with Auld Partners Ltd ("Auld") as the Company's Consultancy Service Provider. The current executive directors of the Company are also directors of Auld. The Company is to pay to Auld in consideration for the services of the current executive directors, together with certain investment support services to the Directors and the Company, a fee of USD 23,500 per month, payable monthly in arrears.
Directors' fees are disclosed in Note 5.
16 EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
There were no events that occurred between the Period end and the date of signing of these financial statements which required disclosure within the financial statements or these notes.
NIMROD SEA ASSETS LIMITED (the "Company")
KEY ADVISERS AND CONTACT INFORMATION
Exchange Specialist Fund Segment of the London Stock Exchange's Main Market ----------------------------------- ------------------------------------ Ticker NSA ----------------------------------- ------------------------------------ Listing Date 24 March 2014 ----------------------------------- ------------------------------------ Financial Year end 31 March ----------------------------------- ------------------------------------ Base Currency USD ----------------------------------- ------------------------------------ ISIN GG00BK0SC854 ----------------------------------- ------------------------------------ SEDOL BK0SC85 ----------------------------------- ------------------------------------ Country of Incorporation Guernsey - Registration number 55718 ----------------------------------- ------------------------------------ Registration Number 55718 ----------------------------------- ------------------------------------ Registered Office Auditor ----------------------------------- ------------------------------------ Ground Floor Deloitte LLP ----------------------------------- ------------------------------------ Dorey Court PO Box 137, Regency Court ----------------------------------- ------------------------------------ Admiral Park Glategny Esplanade ----------------------------------- ------------------------------------ St Peter Port St Peter Port ----------------------------------- ------------------------------------ Guernsey GY1 2HT Guernsey GY1 3HW ----------------------------------- ------------------------------------ Corporate and Shareholder Adviser Administrator and Company Secretary ----------------------------------- ------------------------------------ Nimrod Capital LLP JTC (Guernsey) Limited ----------------------------------- ------------------------------------ St Helen's Place Ground Floor, Dorey Court ----------------------------------- ------------------------------------ London Admiral Park ----------------------------------- ------------------------------------ EC3A 6AB St Peter Port ----------------------------------- ------------------------------------ Guernsey GY1 2HT ----------------------------------- ------------------------------------ Consultancy Service Provider Registrar ----------------------------------- ------------------------------------ Stamford Maritime Anson Registrars Limited ----------------------------------- ------------------------------------ Southgate Chambers PO Box 426, Anson House ----------------------------------- ------------------------------------ 37/39 Southgate Street Havilland Street ----------------------------------- ------------------------------------ Winchester St Peter Port ----------------------------------- ------------------------------------ Hampshire SO23 9EH Guernsey GY1 2QE ----------------------------------- ------------------------------------ (resigned 30 September 2016) UK Transfer Agent ----------------------------------- ------------------------------------ Anson Registrars (UK) Limited ----------------------------------- ------------------------------------ Auld Partners Ltd 3500 Parkway ----------------------------------- ------------------------------------ 26-27 Bedford Square Whiteley ----------------------------------- ------------------------------------ London Fareham ----------------------------------- ------------------------------------ WC1B 3HP Hampshire PO15 7AL ----------------------------------- ------------------------------------ (appointed 3 October 2016) Solicitors to the Company (as to ----------------------------------- ------------------------------------ English law) ----------------------------------- ------------------------------------ Advocates to the Company (as Herbert Smith Freehills LLP to ----------------------------------- ------------------------------------ Guernsey law) Exchange House ----------------------------------- ------------------------------------ Carey Olsen Primrose Street ----------------------------------- ------------------------------------ PO Box 98 London ----------------------------------- ------------------------------------ Carey House EC2A 2EG ----------------------------------- ------------------------------------ Les Banques ----------------------------------- ------------------------------------ St Peter Port ----------------------------------- ------------------------------------ Guernsey GY1 4BZ
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This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMMMZNDNGVZM
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December 14, 2016 12:47 ET (17:47 GMT)
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