1st quarter 2008 report

 

 

Wilson ASA - Business idea

Wilson`s main activity is the chartering and operation of small dry bulk vessels between 1,500 and 10,000 dwt in the European short sea trade. Wilson is a premier player in this market. Per 14.05.2008 the Wilson system is operating 108 ships, whereof 77 are owning-wise controlled by the company.
Wilson`s strategy is to offer Norwegian and European industry competitive, reliable, flexible and long-term transportation services. By controlling large contract volumes and long-term contract portfolios Wilson may optimize vessel operations and secure stable and long term income levels.

Result 1st quarter 2008

In the 1st quarter 2008 the company achieved freight income on TC basis of MNOK 269 compared to MNOK 225 in the 1st quarter 2007. The increase is in due to generally higher freight rates market compared to the same period last year and that the company has had more ships in operation in the 1st quarter 2008 than in the 1st quarter 2007.

The company`s operating cost (excl. depreciations) is MNOK 193 in the quarter compared to MNOK 170 in
the 1st quarter 2007. Other operating cost ships and crew cost show a total increase of MNOK 25 which is related to a higher activity level and general cost increases. Cost to TC and BB hires are declining due to fewer hired ships.

The operating result before depreciations (EBITDA) is MNOK 86 in the quarter compared to MNOK 60 in the 1st quarter 2007.

The net finance cost is totalling MNOK 44 in the 1st quarter 2008 compared to MNOK 14 for the 1st quarter 2007. Value changes in financial instruments are charging the accounts with MNOK 20 which in main is due to unrealized loss on USD forward exchange rate agreements. Net interest cost is charging the accounts with MNOK 17, an increase of MNOK 7 compared to 1st quarter 2007. Currency loss is charging the quarterly accounts with MNOK
14, an increase of MNOK 12 compared to the 1st quarter 2007. The increase is in main related to loss on realized forward currency contracts due to the weak USD compared to NOK in the quarter, as well as value changes on EUR loans.

The company`s result before minority share and estimated tax is MNOK 2 in the 1st quarter 2008
compared to MNOK 14 for the 1st quarter 2007.


Market

In the quarter the company have had good earnings from the contracts and the COA-share is 71 % compared to 69 % in the 4th quarter 2007 and 72 % in the 1.st quarter 2007. At the same time the spot market has been generally good, although somewhat down compared to the 4th quarter 2007.

The activity level in the 1st quarter measured as the number of sailing days shows a reduction of 2 % compared to the 4th quarter 2007. The reduction is in main attributed to increased docking activity in the period.


Financing and capital structure

Interest bearing mortgage- and leasing obligations per 31.03.2008 are MNOK 1,064 in the balance compared to MNOK 1,009 per 31.12.2007. The increase is due to drawdown on borrowing facilities for tonnage delivered in the period.

Booked equity in the company per 31.03.2008 is MNOK 620 compared to MNOK 626 per 31.12.2007. Booked
equity is thereby 28.4 % compared to 29.5 % per 31.12.2007. Compared to the covenants as referred to in the company`s annual financial statement, the covenants have been adjusted by the lending bank so that the required equity ratio now is 27.5 %.

Planned investments which have been carried through have reduced the company`s liquidity, and bank
deposit per 31.03.2007 is MNOK 38. Additionally the company has an unused credit facility of MNOK 50.


Investments

In the 1st quarter the company has not entered into any new purchase agreements for additional tonnage.
Of previously published ship purchases 4 ships were delivered in the 1st quarter for a total purchase price of MEUR 17.

The company is doing the final negotiations with a Chinese building yard regarding the last conditions before the previously published contract of 8 ships à 4.500 dwt becomes effective. Somewhat more time has expired than expected to get the last conditions sorted out, however these conditions are now assumed clarified shortly. The new buildings will be delivered during 2010-2012 and have a total cost price to the building yard of around MUSD 83.


Order reserves

Wilson`s contract coverage is satisfactory and the order reserve per 31.03.2008 is ca NOK 1.6 billions. The order reserve is defined as the expected future shipment commitments under the current Contracts of Affreightment (COA) during the agreed contract period. The company has long lasting and good relations to the customers with
close to 100 % success rate in contract renewals.


Prospects

Based on ship investments carried through and positive developments in the contracts portfolio, the Board of Directors expects that the company will maintain a continued high activity level during 2008. The freight level for already agreed contracts is good and provided that a stable level of shipped volumes under the contracts is maintained, the Board of Directors expects that the positive earnings trend in the 1st quarter 2008 shall continue.

A continued weak USD will be operationally favourable for the company, but will be negative for the financial result.


Financial principles for the quarterly report

The quarterly report has been established on the basis of international accounting standards (IAS 34).



The Board of Directors of Wilson ASA

Bergen, 14th May 2008