Eimskip

Presentation for investors and media
6. November 2006
Magnús Þorsteinsson
Chairman
Agenda
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Avion Group overview
Eimskip overview
Atlas overview
Avion Group’s Balance Sheet
Disposal of assets for USD 501 million - Profit on disposal USD 154 million
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Disposal of 100% share in XL Leisure Group for 450 million USD [30.6 billion ISK]
– Profit on disposal before tax 107 million USD [7.3 billion ISK]
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51% share in Avion Aircraft Trading sold for 51 million USD [3.5 billion ISK]
– Profit on disposal before tax 47 million USD [3.2 billion ISK]
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49% share in Avion Aircraft Trading retained by Avion Group
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Purchase price used for continued growth and paying debts
Avion Group as of today
Prospects for financial year 2007
• Avion Group
– Turnover USD 1,838 million
– EBITDA USD 170 million
• Air Atlanta Icelandic
– Turnover USD 388 million
– EBITDA USD 25 million
• Eimskip
– Turnover USD 1,450 million
– EBITDA USD 145 million
Shareholders meeting
Avion Group - Shareholders 31. October 2006
Name
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Substantial change in biggest shareholders
Due to these changes, shareholders
meeting will be announced soon
Number of shares
Ownership
Frontline Holding S.A.
653.225.097
36,42%
Fjárfestingarfélagið Grettir hf
616.456.837
34,37%
Landsbanki Luxembourg S.A.
84.119.006
4,69%
GLB Hedge
52.616.622
2,93%
Avion Group hf.
39.453.607
2,20%
Straumur-Burðarás fjárfestingabanki hf.
36.846.325
2,05%
Arion - safnreikningur
23.892.910
1,33%
Craqueville
22.215.572
1,24%
Lífeyrissjóður Verslunarmanna
21.480.916
1,20%
Sameinaði lífeyrissjóðurinn
12.452.758
0,69%
Lerkur Sp/f
11.400.000
0,64%
Bank of Cyprus
9.924.158
0,55%
Fidecs Trust Company
9.831.927
0,55%
Landsbanki Íslands hf, aðalstöðv
9.654.934
0,54%
LI-Hedge
8.609.693
0,48%
MK-44 ehf
8.453.583
0,47%
Lífeyrissjóður Norðurlands
8.039.962
0,45%
Lífeyrissjóður Austurlands
7.385.921
0,41%
Landsbankinn eignarhaldsfél ehf
6.993.599
0,39%
Den Danske Bank A/S
6.989.381
0,39%
1.650.042.808
92,00%
143.556.327
8,00%
1.793.599.135
100,0%
In total 20 biggest shareholders
Other shareholders
Total number of shares
Corrected upon information on major holdings published at ICEX
Baldur Guðnason
CEO/President Eimskip
our Vision
To consolidate our position as a transport market leader offering total services in the North Atlantic
To be the leading short sea supplier in the Baltic states and Russia
To be a key international player in temperature-controlled cargo globally
our Mission
our Strategy
To run a total transport network as cost-effectively as possible
for customers and the company
Cost leadership
Best Product
We have a strong market share in the North-Atlantic and on this foundation, Eimskip aims to build
further growth and diversification into other areas of transport services
Our activities last two years
Business Snapshot
Approximately 8,500 employees
157 operational bases in 21 countries
40-50 vessels
30,000 teus – container units
Around 100 coldstores
1,350 trucks and trailers
Complete transport services
Empty
container
Plant/warehouse
Domestic
transport to
port
Export port
International
transport
Import port
Domestic
transport
from port
Plant/warehouse
Empty
container
Service network
Coldstore facilities
Organizational chart
North-Atlantic
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The region is comprised of:
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Managing director:
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Eimskip Iceland
Faroe Ship
Eimskip-CTG
Bragi Þór Marinósson
Main emphasis:
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Eimskip North-Atlantic offers total transportation services
to its customers with specialized focus on this market area
Eimskip aims to be the leader in warehousing and
distribution services in Iceland
N-Atlantic locations
N-Atlantic sailing network
Iceland
• Terminal operations:
• Sundahöfn is the sixth largest nordic port, with an
annual throughput of 160,000 TEUs
• Warehousing and goods distribution
• The coal is to increase Eimskip’s share in goods
distribution in the Greater Reykjavík area.
• 80 points of call throughout Iceland
• 230 trucks and trailers
• Transport system's total volume is approx.
800,000 tonnes
Faroe Ship
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Eimskip decided to enter in full force into the Faroese domestic transport market in 2004, which
was based on the subsidiary Eimskip Faroes:
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Eimskip bought Faroe Ship 2004 – Shipping established 1919
Eimskip bought Heri Thomsen 2005 – Trucking and bulk shipping established 1950
Eimskip bought Farmaleidin 2006 – Distribution network – first privatization in Faroe Islands
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Through these acquisitions Eimskip took a leading position in the Faroese transport market
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Import and export demand in the Faroe Islands similar to Iceland
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Fleets of Faroe Ship, Heri Thomsen and Farmaleidin play a role in Eimskip’s sailing network in
the North Atlantic
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The total fleet is 5 vessels, 150 trucks and trailers, 1,600 m2 warehouse facility incl. cold stores
Eimskip – CTG AS and Euro Container Line
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Eimskip's operations in Norway have been merged
under the name Eimskip – CTG AS following Eimskip's
purchase of all shares in CTG
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Eimskip - CTG AS has reefer vessels in sailings in the
North Atlantic and the Baltic Sea
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Eimskip - CTG AS also operates six reefer storage
facilities in northern and western Norway
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A new reefer vessel, Svartfoss, joined the fleet of Eimskip
- CTG AS in November 2005.
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Five additional vessels are being built. The next ship will
join our fleet in November 2006 and the other four in
2007
Eimskip owns 50% share in Euro Container Line
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4 container vessels operated between west coast of
Norway and Germany
Europe
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The region is comprised of:
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Managing director:
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The Netherlands
UK
Germany
Denmark
Sweden
Spain
ERL
Björn Einarsson
Main emphasis:
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Agency services
Coldstore projects in defined markets
Shortsea network
General forwarding – worldwide
Airfreight worldwide
TVG Zimsen, OEC, Warehousing - EDL
Europe locations
Eimskip Reefer Logistic
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Eimskip Reefer Logistics BV was founded in 2004, with
headquarters in the Netherlands
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The company offers freight-forwarding services for frozen
and chilled seafood products worldwide
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Raw materials procurement and sales take part in many
parts of the world
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Seafood processing is increasingly done in China
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The estimated volume for ERL in 2006 is 50,000 teu´s
world wide
Daalimpex Coldstores
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Eimskip bought 40% of the share capital in January 2006
One of the biggest and most efficient cold store companies in Europe
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Established by Peter Blaankendaal 1976
Operating 4 cold stores in the Netherlands with total capacity of 220,000 tons
Transport solutions to Daalimpex customers
Storage solutions to Eimskip customers
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EBITDA margin of the operation is about 25-30%
ISL, FO and NO.
China, Seattle and Vigo
Eimskip’s cold stores and new projects
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China, Pusan, St. Petersburg, Poland, Klaipeda
UK
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The region is comprised of:
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Managing directors:
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Pete Osborne
Steven Dargavel
Steven Savage
Main emphasis:
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Innovate
Corby Chilled Distribution
Property and logistics
Improve efficiencies/cost control
Build market share
Other information:
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Just under 1,000 trucks and trailers
29 warehouses at 15 sites in the UK
Approx. 2,000 employees
UK locations
Innovate
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Eimskip bought 55% in May 2006
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Call option of the remaining shares after 3 years from signing in May
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Total employees: 1,400
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Distribution from 11 sites across the UK
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25 warehouses total
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Total pallet space: 307,500 pallet
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Fleet consists of:
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Main products in storage and distribution:
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640 trucks and trailers
Meat, ice, chocolate, frozen food, fizzy drinks and steel.
Innovate and Eimskip will keep on further
consolidation in UK
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The aim is to grow the business by 100%
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Internal expansion 50%
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M&A 50%
Corby Chilled Distribution
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Innovate bought 100% in September 2006
Founded in 1993
Total employees: 600
Fleet consists of:
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330 trucks and trailers
4 coldstores/chilled
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Specializes in Temperature-controlled food distribution
Corby Chilled Distribution was one of the first temperature controlled distribution
operators to introduce a 40 pallet moving floor double deck trailer into regular
operation.
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A strong strategic fit between Corby and Innovate
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Will be a part of Innovate Logistics from now on
Innovate logistics is now the largest temperature controlled storage and
distribution operator in the UK.
Baltic/Russia
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The region is comprised of:
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Managing director:
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Containerships
Kursiu Linija
Sigurjón Markússon
Main emphasis:
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Operation of the largest short sea carrier in the Baltic, offering door to door transport
solutions by using combination of vessels and haulage operations
The goal is to maintain our position as market leaders
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This alliance creates the opportunity to gain an edge in the growing Baltic market
Other information:
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The European short-sea market is growing considerably
and great potential in the Baltic market
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with an estimated annual growth of 20%
Containership undisputed market leader in Finland
and strong presence in Russia
Kursiu Linija strong presence on the fast growing Baltic markets
11 vessels
470 employees
12,500 container units
Baltic/Russia sailing network
Containerships
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Eimskip acquired 65% equity stake in Containerships in September 2006
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The first company to introduce container transportation by sea
Door-to-door movements of containerized cargoes
Established in 1966
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Kursiu Linija becomes a susbidiary of Containerships
Celebrates 40 years anniversary in December 2006
6 ice-classed modern container vessels
Container fleet – 8,000 TEU
Headquarters in Helsinki, Finland
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10 offices in eight countries
Kursiu Linija
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Eimskip acquired 100% equity stake in Kursiu Linija in 2006
Liner service from the North Atlantic into Baltic with reefer vessels
Established in 1995
Vessels – 5 x 300 - 850 TEU (T/C vessels)
Container fleet – over 4,500 TEU
Cold store projects
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Klaipeda, St. Petersburg and Poland
Offices in the Baltic and management
of cold stores
Establishment of Eimskip offices in
St. Petersburg, Klaipeda
* Teu volume
250.000
200.000
150.000
TEU
100.000
50.000
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Asia
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The region is comprised of:
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Managing director:
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Eimskip Qingdao
Eimskip Dalian
James Liu
Main emphasis:
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Reefer freight forwarder export & import in China
Cold store service in China.
Reefer container transportation worldwide from Asia.
Develop bonded cold store service in China, S.Korea
Develop reefer tramper service between Alaska and
Russia via Qingdao hub to Europe and Asia.
Develop reefer tramper service between China,
S.Korea and Japan, complete intre Asia service.
Locations
Americas
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The region is comprised of:
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Managing director:
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Atlas Cold Storage
Eimskip Canada
Eimskip Logistics
Eimskip Liner Service
Eimskip-PTI Inc.
Harbor Grace Cold Storage
Reynir Gíslason
Main emphasis:
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NVOCC/VOCC/Air and Ocean Freight Forwarding /
Domestic Transport
Project Cargo Handling
Dedicated Airfreight Forwarding and GSA Service
Global Forwarding Agency Services
Cold storage operations
Locations before
Atlas
with Atlas
Atlas Cold Storage
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Atlas is a provider of warehousing and distribution services to the refrigerated
food industry with total 53 cold stores facilities in North America:
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18 cold stores in Canada (13 owned – 5 leased)
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225,000 Pallet Positions
35 cold stores in USA (30 owned – 5 leased)
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545,000 Pallet Positions
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Combined Pallet Space is 770,000 Pallets – 110 times the capacity in Iceland
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Available Pallet Space is 77,000 Pallets
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12% is Cooler Space
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88% is Freezer Space
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4,500 employees
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The head office is in Toronto in Canada.
Business Outline
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Atlas is a Toronto-based company, with annual revenue of approximately CAD 475M
Atlas
Public Refrigerated
Warehousing (“PRW”)
LTM Revenue: $235M
LTM Contribution: $76M
ΠProvision of public refrigerated
warehousing services from its network of
53 owned and leased temperature –
controlled warehouses
ΠFacilities: 18 in Canada, 35 in U.S.
Transportation Management Services
(“TMS”)
LTM Revenue:$35M
LTM Contribution: $2M
ΠNon-asset based freight forwarding and
freight brokerage services from eight PRW
facilities
ΠAll business is in U.S.
Third Party
Logistics
LTM Revenue:$205M
LTM Contribution: $12M
ΠOperates six distribution centres in the U.S.
ΠDistributes ice cream and frozen novelties
on behalf of major ice cream producers to a
network of sub-distributors in Quebec
Financial Overview
(C$ millions)
Revenue
Operating Costs
Profit Contribution
SG&A 1
Financial Statistics
2003
2004
448.5
445.9
359.5
354.9
89.0
91.1
26.2
25.9
2005
468.3
378.9
89.4
22.2
LTM
474.5
384.9
89.6
23.2
EBITDAR 1
Rent Payments
62.8
11.1
65.2
11.1
67.2
11.7
66.4
12.3
EBITDA 1
51.7
54.1
55.4
54.1
52.0%
(0.6%)
5.0%
6.4%
14.0%
14.6%
14.3%
14.0%
11.5%
12.1%
11.8%
11.4%
670.4
207.3
367.8
599.2
184.7
342.5
521.2
110.3
320.8
518.7
106.3
320.7
Revenue Growth
EBITDAR Margin
EBITDA Margin
1
1
Total Assets
Total Debt
Shareholders' Equity
1. Figures adjusted for investigation costs
2. Balance sheet information as at March 31, 2006. Since that time, Atlas has sold its Chicago and Arizona
facilities for US$15.7M and US$2.0M, respectively
Financing of the acquisition of Atlas
• Total purchase price CAD 630 million – market value of properties CAD 500-600 million
• Purchase of equity CAD 500 million
• Repay existing debt CAD 100 million
• Acquisition cost CAD 30 million
• Financing:
• Royal Bank of Canada CAD 260 million
• Avion Group Equity CAD 230 million
• Thereof CAD 100 million convertable bond from Kingstreet
• Kingstreet CAD 130 million
21%
42%
• Cash in Atlas CAD 10 million
Royal Bank of Canada
Avion Group
Kingstreet
37%
Next steps
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Disposal of assets to be finalized within 18 months
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Estimated market value CAD 500-600 million
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Establishment of a property company – 49% owned by Eimskip
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Sales and lease-back agreements
Sales of non-profit assets to third party without lease-back agreements
Kingstreet’s expertise is property development
New CEO
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Book value CAD 450 million
Mr. Reynir Gíslason – the CEO of Eimskip Americas
Ambitious profit improvement plan
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Increased revenues
Decreased expenses
Eimskip’s world
Home market until “now”
Operating area
Revenues 2007 – Segment overview
Total revenues approximately EUR 1,150 million
1%
17%
27%
8%
31%
16%
North Atlantic
Europe
Baltic/Russia
Americas
UK
Asia
Employees
Approximately 8,500 employees
3%
14%
6%
54%
23%
North Atlantic
Baltic
Innovate
USA
Europe and Asia
EBITDA & Revenue 2003 - 2007
Proforma Balance sheet
Steingrímur Pétursson
CFO Avion Group
Balance sheet based on figures as of 31.7.2006
Avion Group hf.
Consolidated Balance sheet 31.7.2006
Debt
31.7.2006
EAG - Sold
AAT 51% - Sold
repayment
Proforma
Intangible assets
595.646
-339.362
0
256.284
Other non - current assets
708.188
-68.609
-48.306
20.968
612.242
Current assets
542.211
-208.524
-3.044
Cash
283.328
196.704
47.517
-266.730
260.819
Total assets
2.129.373
-419.791
-3.833
-245.762
1.459.988
Equity ratio
25%
Assets
330.643
45%
Equity
523.104
89.209
39.038
Non current - liabilities
761.477
-63.996
-4.118
-174.387
518.976
Current liabilities
844.792
-445.004
-38.753
-71.375
289.660
2.129.373
-419.791
-3.833
-245.762
1.459.988
Total equity and liabilities
651.352
‘000 USD
Balance sheet
Avion Group hf.
Consolidated Balance sheet 31.7.2006
Proforma
Acquisitions *
Proforma
Intangible assets
256.284
238.057
494.341
Other non - current assets
612.242
577.589
1.189.831
Current assets
330.643
86.939
417.582
Cash
260.819
9.522
270.341
1.459.988
912.107
2.372.095
Assets
Total assets
Equity ratio
45%
27%
Equity
651.352
0
651.352
Non current - liabilities
518.976
808.426
1.327.402
Current liabilities
289.660
103.682
393.342
1.459.988
912.107
2.372.095
Total equity and liabilities
‘000 USD
* Corby Chilled Distribution, Containerships, and Atlas Cold Storage
Assumptions
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Net interest bearing debt according to proforma balance sheet USD 800 million
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Proceed from sale of assets in Atlas Canada USD 500 million
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Net interest bearing debt after sale og assets USD 300 million
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Equity ratio after sale of assets around 35%
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To be finalized before end of October 2007.