Taxes related to paid group contributions which is booked as an increase of the cost price of the related shares, and taxes related to received group contributions which is booked as a reduction of the cost price of the related shares, are both booked directly against tax in the balance sheet (taxes payable if the Group contri bution affects taxes payable and deferred tax if the Group contribution affects deferred tax).
Cash flow statement
The cash flow statement has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits, and other short term investments with maturity less than 3 months from the date of acquisition and which immediately and with minimal exchange risk can be converted into known cash amounts.
NOTES
NOTE 1 SUBSIDIARIES
Net profit
Subsidiary (all figures in NOK 1 000) Registered office Ownership Equity (100%) (100%) Book value
Airlift AS Førde 100% 28 305 -4 355 115 079
Blueway Helicopter AS Bærum 100% 20 909 12 867 449
Blueway Offshore Norge AS Bærum 100% 12 744 5 649 12 610
Airlift Sweden Holding AB Sweden 100% 37 195 175 47 964
Airlift Sweden Helicopter AB (tier-subsidiary) Sweden 100% 12 774 -2 025 2 703
Airlift Services AS (tier-subsidiary) Førde 100% 1 155 -4 -
DanCopter AS 100 Denmark 100% 78 104 4 965 398 032
Vertech Holding AS Lillesand 60% 8 200 -262 58 274
Vertech Offshore AS (tier-subsidiary) Lillesand 60% 9 904 7 028 -
Closing net book amount 635 111
Voting rights in the subsidiaries equals the ownership of each company.
In 2010, the company invested NOK 12.6 million in Blueway Offshore Norge AS through a capital increase.
NOTE 2 RECEIVABLES
NOK 1 000 2010 2009
Receivables
Other short-term receivables 18 908 14 798
Prepayments relating to helicopters 33 063 -
Dividends - 1 800
Accounts receivables 51 971 16 598
Receivables due later than one year
Inter company loans 412 564 495 457
Total 412 564 495 457
NOTE 3 BORROWINGS
NOK 1 000 2010 2009
Non-current Liabilities
Bank borrowings 579 209 670 531
Loan from Shareholders 56 846 -
Convertible bonds 86 952 -
Total 723 006 670 531
Current liabilities
Bank borrowings (next 12 months amortsations) 47 243 57 720
Bank overdraft - 2 571
Current debt to shareholders - 52 855
Current debt to non-controlling interests in subsidiaries - 5 840
Trade and other payables 1 315 -13 094
Other current liabilities 12 335 6 328
Total 60 893 112 220
Current debt to minority shareholdes of NOK 5.8 million is related to an Earn Out agreement between Blueway AS and the minority shareholdes in Vertech Holding AS. The Earn Out agreement was established in connection with the acquisition of Vertech Holding AS in 2007. The final payment related to this agreement was made in 2010.
Convertible bonds
The Company issued convertible bonds at value of NOK 82.25 million on 5 July 2010. The bonds mature 18 months from the issue date at their nominal value of NOK 82.25 million or can be converted into shares at the holder`s option at the maturity date.
Bank loans
The SEB engagement is divided into two facilities. Facility A is a combined NOK and EUR facility, while facility B is denominated in EUR only. Facility B is related to financing of the Group’s helicopters.
The bank borrowings mature in 2014 and average interest (exclusive interest rate swaps) were 4,88 percent annually (2009: 4,92 percent annually).
Loan facility Face value 31.12.2010 NOK Face value 31.12.2010 EUR Nominal interest rate Yearly payment Book value NOK NOK EUR
Facility A (SEB) 20 065 20 958 EURIBOR + 2,5%NIBOR/ 5 760 5 320 183 795
Facility B (SEB) - 56 658 EURIBOR + 1,75% Irredeemable until repayment 2014 442 765
Total bank borrowings 626 561
Average interest rate on facility A was 5,37% in 2010. Average interest rate on facility B was 4,65% in 2010.
The carrying amounts of the Company’s borrowings are denominated in the following currencies (amount in NOK).
NOK 1 000 2010 2009
NOK 163 862 82 406
Euro 606 387 701 270
Total 770 249 783 676
Interest rate swaps
Loan facility
Hedged
amount Payment structure Maturity
Estimated market value at 31 December 2010
Facility A NOK 20 065 quarterly payments 31 December 2014 NOK - 258
Facility A EUR 20 958 quarterly payments 31 December 2014 EUR - 561
Facility B EUR 56 660 quarterly payments 30 June 2014 EUR - 1 996
Total estimated marked value at 31 December 2010 NOK - 20 232
The interest rate swaps are not recognised in the balance sheet.
Covenants
The covenants on the Company’s bank loans are linked to the financial performances of the Blueway Group and not directly to the company. Three out of five financial covenants have been operative during 2010. The Group is per 31.12.2010 in breach with one covenant concerning the relationship between the last 12 months EBITDA (Operating profit before depreciations, amortisations and impairments) and total senior debt. The company received a waiver for this covenant breach. The two last covenants will be operative from 2011. The financial covenants are related to requirements such as debt/EBITDA-ratio, minimum liquidity level, cash flow, minimum market value of the helicopter fleet and investment levels.
Bank borrowings are secured by shares in subsidiaries, helicopters, trade receivables and buildings owned by subsidiaries.
NOK 1 000 2010 2009
Secured debt 626 452 730 822
Book value of assets pledged as security
Shares in subsidiaries 635 111 622 501
Trade receivables 431 472 512 055
Total 1 066 583 1 134 555
NOTE 4 RELATED PARTY TRANSACTIONS
Receivables Payables NOK 1 000 2010 2009 2010 2009 Blueway Helicopter AS 316 468 349 799 - - DanCopter AS 101 902 139 911 - - Airlift AS 2 718 5 747 - - Vertech Holding AS - 5 400 - -
Blueway Offshore Norge AS 9 306 - 10 524 -
Airlift Helicopter AB 1 020 - - -
Miscellaneous short-term inter company debt 0 9 995 - -
Total 431 414 510 852 10 524 0
The Company’s operating revenue is made up of intercompany fees related to the performance of management services. In addition, the Company has provided loans to some of its subsidiaries and subsequent interest income from these loans. Debt to Shareholders
In March and June 2009, the owners granted two loans to Blueway AS amounting to NOK 30 million and NOK 20 million, respectively. The owners have made pro rata contributions according to ownership percentage as of the time the loans were granted, i.e. 60 percent granted from Reiten & Co Capital Partners VI LP, 38 percent from Helicopter Transportation Group AS and 2 percent from Skogstad Corporate AS. Both loans were included in one agreement in 2010 and the duration was extended until the latest event of February 2012 or the final repayment of the Company’s current loan facilities in SEB. As such, the loan was reclassified to non-current liabilities. The loan carries an interest rate of 8 percent which is accumulated on the loan until final repayment.
NOTE 5 EQUITY
Changes in equity during the year (NOK 1 000) Share capital Share premium Retained earnings Total Equity
Equity at 1 January 2010 2 555 337 522 28 808 368 886
Profit for the year - - -1 706 -1 706
Equity at 31 December 2009 2 555 337 522 27 103 367 180
NOTE 6 SHARE CAPITAL AND SHAREHOLDER INFORMATION
The share capital of NOK 2 555 100 consists of 25 551 authorised ordinary shares with a par value of NOK 100. All issued shares have equal rights.
Shareholders at 31 December 2010 (NOK 1 000) Number of shares Ownership
Reiten & Co Capital Partners VI LP 15 428 60.4%
Helicopter Transportation Group AS 9 772 38.2%
Skogstad Corporate AS 351 1.4%
Total number of shares 25 551 100%
The Chairman of the Board in Blueway AS, Aage Krog, controls 40 percent of the shares in Helicopter Transportation Group AS through his company La Mani AS. Member of the Board in Blueway AS, Jan Bragnes, controls 28 percent of the shares in Helicopter Transportation Group AS through his company Lave AS.
NOTE 7 TAXES
Calculation of deferred tax/deferred tax benefit
Temporary differences (NOK 1 000) 2010 2009
Net temporary differences -12 1
Tax losses carried forward -63 264 -60 943
Basis for deferred tax -63 276 -60 942
28% deferred tax -17 717 -17 064
Deferred tax benefit not shown in the balance sheet - -
Deferred tax in the balance sheet -17 717 -17 064
Basis for income tax expense, changes in deferred tax and tax payable
Result before taxes -2 359 39 964
Permanent differences 25 -1 695
Basis for the tax expense for the year -2 334 38 269
Change in temporary differences and tax losses carried forward 2 334 -38 269
Basis for payable taxes in the income statement -
-+/- Group contributions received/given - -
-Components of the income tax expense
NOK 1 000 2010 2009
Payable tax on this year's result -
-Adjustment in respect of priors -
-Total payable tax - -
Change in deferred tax -654 10 715
Tax expense -654 10 715
NOTE 8 REVENUE
Segment allocation (NOK 1 000) 2010 2009
Management services 10 648 7 102 Total 10 648 7 102 Geographic allocation Norway 4 805 2 274 Denmark 4 823 3 724 Sweden 1 020 1 104 Total 10 648 7 102
NOTE 9 SALARIES, RETIREMENT BENEFIT PLAN, AUDITORS FEE ETC.
Wages and salaries (NOK 1 000) 2010 2009
Wages and salaries 1 181 8 770
Social security tax 167 733
Pension costs 101 533
Other benefits 69 289
Total 1 518 10 325
The Company is obliged to provide an employment pension plan and the company has established a defined contribution plan for its employees. Under a defined contribution plan the Company is only obliged to pay a fixed premium and will have no obligation to pay further contributions. For the defined contribution plans the premiums are expensed. Average number of people employed in 2010 was 1.7.
2010 2009
Management remuneration (NOK 1 000) CEO Board of Directors CEO Board of Directors
Wages and salaries 0 188 1 518 250
Invoiced fee CEO 3 411 0 791 0
Pension costs 0 0 161 0
Other benefits 0 0 10 0
Total 3 411 188 2 480 250
The CEO during 2010 was hired in October 2009. The CEO has been paid according to monthly invoices and has not received salaries from the Company. As such, he has not been part of the Company’s pension scheme and all expenses related to the CEO are classified as other operating expenses.The CEO has had a contractual performance- based successive bonus plan related to the development in the Group’s EBITDA. This is based on a defined basis level of EBITDA. The agreement has no upper limit, but is adjusted for changes in EBITDA caused from sale and purchase of enterprises. The engagement is regulated by a contract with duration of 18 months, which can be unilate-rally extended by the company. By the time of the finalization of the Financial Statements, the CEO has informed the Board of Directors that he will resign from his positon with effect from June 20th 2011.
Auditors’ fee
Auditor’s fee is allocated as follows:
NOK 1 000 2010 2009
Audit services (incl. technical assistance with financial statements) 421 296
Other assurance services 97 89
Tax advisory (incl. technical assistance with tax returns) 369 59
Other assistance (specified below) 783 -
Total 1 670 444
IFRS conversion 280
Accounting compliance advice 433
Other 70
Total other assistance 783
All fees in the tables are excl. VAT.
NOTE 10 OTHER OPERATING EXPENSES
Other operating expenses (NOK 1 000) 2010 2009
Consultants, legal and finance 14 261 3 389
Travel expenditures 1 041 1 204
Premises 677 314
IT/communication 159 126
Misc. other operating expenses 350 920
Total other operating expenses 16 487 5 952
NOTE 11 FINANCIAL ITEMS
NOK 1 000 2010 2009
Inter company interest income on long term loans 24 179 22 880
Other interest income 791 275
Unrealized agio/disagio long term monetary items 6 473 74 654
Realized agio/disagio 10 400 (7 090)
Group contributions 7 000 -
Dividend received - 1 800
Financial income 48 843 92 519
Interest expenses on inter company non-current liabilities (679) (174)
Interest expenses on non-current liabilities (42 770) (42 062)
Other financial expenses (378) (1 135)
Financial expenses -43 827 -43 371
NOTE 12 RESTRICTED FUNDS, BANK OVERDRAFTS
Restricted funds (NOK 1 000) 2010 2009
Tax deduction employees 179 321
Granted bank overdrafts
Bank overdraft 50 000 5 000
Of this not used 50 000 2 429
NOTE 13 RISK MANAGEMENT
The Company’s operations is exposed to several financial risk elements such as currency risk and interest rate risk. Currency risk
The Company’s exposure to currency risk is mainly due to the fact that a significant part of the borrowings is denominated in Euro. In 2010 the Company had recognised approx. MNOK 6.5 of net unrealised currency gain arising from the loan portfolio as a result of currency fluctuations between EUR and NOK.
The Company’s income is solely denominated in NOK. Most of its daily expenses is also in NOK but interest expenses on the majority of the Company’s external bank financing is made in EURO.
During 2010, the Company did not use any hedging strategies to reduce the company’s currency exposure, but this is evaluated continuously by the Company’s Board and Management.
Interest rate risk
The Company’s interest rate risk exposure is mainly related to interest expenses relating to the long-term loan portfolio. During 2009 the Company entered interest rate swap agreements towards the loan portfolios’ payment structure in order to ensure predictability for future interest rate payments. The bank is acting as counterparty in the interest rate swap agreements, where the Company swaps fixed to floating interest rates. The agreements ensures both parties a mutual option on pre-maturity settlements against settlement of excess/diminished values at maturity date.
In 2010, the Company has made interest payments of approximately MNOK 42.8 million in relation to its long-term borrowings. Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group and aggregated by group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements with aim to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements – for example, currency restrictions. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the group treasury. Group treasury primarily deposit surplus cash in interest bearing bank accounts.
NOTE 14 EVENTS AFTER THE REPORTING PERIOD
In April 2011, DanCopter AS, a subsidiary of the Company won a significant five year contract with Mærsk Oil & Gas. The contract includes a defined period of options for extension. The contract is an offshore contract consisting of crew changes on offshore installations in the North Sea. Mærsk Oil & Gas has the options for extension of the contract. The operations will start in July 2012 and the Group will be using three new EC225 helicopters for these operations in addition to one equal back-up helicopter. The three first helicopters were ordered during Q1 2011 with deliveries during Q2 2012. The Group paid approx EURO 3 mill as a first down payment for these three helicopters during Q1 2011 and is currently working towards the remaining financing of the helicopters. The order of the helicopters and other necessary investments will in total amount to approx MNOK 600 - 650. These investments trigger at financing need over the next 12-15 months of approx MNOK 600–650. The Group is currently analyzing various options in order to arrange for the best possible financing solution. At this stage, the options include a range of different loan structures as well as a financial lease structure.
Mr. Leif Salomonsen has decided to resign from the position as CEO in Blueway with effect from June 20th 2011. Mr. Salomonsen has held this position since he joined the Group in October 2009. EVP Offshore, Mr. Jakob Bae took on the position as CEO from the same date.
Johnny Skoglund, former deputy CEO of SAS Norway, has accepted the position as new Managing Director in Blueway AS’ subsidiary Airlift AS. Mr Skoglund will also be responsible for the Onshore Business Area in the Group. Mr. Skoglund joined the Group in May 2011.
