- Provides update on Financial Situation
- Announces changes to Management
LEVIS, QC, Aug. 11 /CNW/ - Davie Yards Inc. ("Davie" or the "Company")
(TSX: DAV) today released its financial and operating results for the six
month period ended June 30, 2008.
Update on Financial Situation
Revenue for the six months ended June 30, 2008 was US$22.6 million.
EBITDA was negative US$51.0 million, and the Company recorded a net loss of
On the arrival of our new Chief Executive Officer, Steinar Kulen, at the
end of Q1 2008, a thorough review of the Corporation's processes and projects
was initiated. This review has identified weaknesses in the Corporation's
operation. Productivity is lower than previously estimated, due to higher than
expected complexities in the vessel construction processes and a more
challenging ramp-up of the yard. Lower productivity and a very tight building
program has forced the yard to increase subcontracting and thereby increasing
costs. Davie has also been affected, along with the rest of the shipbuilding
industry, by the recent significant increases in the price of materials. The
Corporation has made a loss provision of $36.1 million for the vessels under
Going Concern Uncertainty
The Corporation has incurred significant operating losses and cash
outflows from operations and has negative working capital as at June 30, 2008.
The Corporation's cash situation is not presently sufficient to fund expected
future cash requirements after 6 months. The ability of the Corporation to
continue as a going concern is dependent upon raising additional financing and
achieving future profitable operations.
The Corporation has done a thorough competitive study of the yard and
concluded with a clear cost advantage relative to the yards competitors in
European which is only expected to improve going forward. Davie is addressing
its operating processes, and with the changes that are being implemented,
management strongly believes in the competiveness of the yard in building
complex offshore vessels and rigs. Market reports conclude on a still positive
market outlook for complex offshore service vessels and rigs, which is
expected to last for the coming years, giving Davie an interesting future
Changes to Management
Gilles Gagné, the Corporation's president and chief operating officer,
has resigned to pursue other interests effective August 11, 2008. The Chief
Financial Officer, Audun Roneid, resigned in July 2008, but has agreed to
remain in his position as Chief Financial Officer for the coming months in
order to assist with the transition and to finalize major tasks he is working
The Company has started the recruitment for both vacancies.
For a complete copy of the Financial Statements and the Management's
Discussion and Analysis please visit www.sedar.com or www.davie.ca.
About Davie Yards Inc.
Davie Yards Inc. owns and operates the Davie Shipyard in Quebec/Canada.
With over 180 years of operating experience, the shipyard is the largest in
Canada and among the largest and most sophisticated in North America. The
company has a primary focus on building complex offshore service vessels. Its
shares are traded on the Toronto Stock Exchange (DAV). News and information
are available at www.davie.ca.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information within the meaning
of applicable Canadian securities legislation. These statements include those
relating to the expectations of the Company regarding additional contracts in
fiscal 2008 and other statements that are not historical facts, and reflect
the current intentions, plans, expectations and beliefs of Davie's management
("Management"). Such forward-looking statements reflect Management's current
beliefs and are based on information currently available to Management.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors outside Management's control. A number of factors could cause
actual results of Davie to differ materially from the results predicted in the
forward-looking statements, including, but not limited to, risks associated
with a downturn in economic conditions, competition and sensitivity to the oil
and gas industry and other factors.
Although the forward-looking statements contained herein are based upon
what Management believes to be reasonable assumptions, Management cannot
assure investors that actual results will be consistent with these
forward-looking statements. Certain assumptions underlying the forward-looking
statements contained in this news release include Management's assumptions
regarding market outlook for the construction of complex offshore vessels as
well as the assumptions that new vessels will be delivered on schedule and
that the Company will attract and retain key personnel in key positions. These
forward-looking statements are made as of the date of this release, and
Management assumes no obligation to update or revise them to reflect new
events or circumstances, except as required pursuant to applicable securities
laws. Readers are cautioned not to place undue reliance on these
forward-looking statements. For additional information with respect to certain
of these and other assumptions and risks, please refer to the Company's
Management's Discussion and Analysis for Q2 2008 and the year ended December
31, 2007 as well as the Annual Financial Statements for the year 2007, and the
Company's Annual Information Form dated March 25, 2008.
For further information:
For further information: Steinar Kulen, CEO, +47 67 200 300, + 47
90105698, firstname.lastname@example.org; Audun Roneid, CFO, +47 67 200 300, + 47