Odfjell SE Annual Report 2012

odfjell group
Note 14 Government grants
Government grants from the Norwegian Maritime Directorate related to the reimbursement system for Norwegian seafarers of USD 1.8
million in 2012 (USD 1.7 million in 2011) is entered in the accounts as a reduction of operating expenses.
Flumar Transportes de Quimicos e Gases Ltda received USD 2.1 million in 2012 (USD 5.1 million in 2011) in AFRMM (Additional Freight for the
Merchant Marine Renewal), which is a freight contribution for cargoes shipped by Brazilian flag vessels on the Brazilian coast. The AFRMM
are recognized where there is a reasonable assurance that the AFRMM will be received and all attached conditions will be fulfilled. When
the benefit refers to an expense item, it is recognized as reduction in expenses over the period of benefit, on a systematic basis in relation
to costs the benefit aims to offset.
Note 15 Transactions with related parties
The Group has carried out various transactions with related parties. All transactions have been carried out as part of the ordinary operations
and on market terms.
The Odfjell Group shares offices in Brazil with a local terminal company related to a Director of the Board, Bernt Daniel Odfjell. The Director's
family also has ownership interest in a company, which acts as Brazilian port agent for Odfjell as one among many customers. In addition to
reimbursement of actual expenses and expenditures incurred, Odfjell Tankers AS and Flumar Transportes de Quimicos e Gases Ltda paid
these companies USD 1.5 million in agency fees in 2012 (USD 1.7 million in 2011), while Flumar Transportes de Quimicos e Gases Ltda and
Odfjell Brasil – Representacoes Ltds paid USD 0.4 million for administrative services in 2012 (USD 0.5 million in 2011).
AS Rederiet Odfjell, jointly controlled by Laurence Ward Odfjell (Chairman) and Bernt Daniel Odfjell (Director), rents office premises and
buys limited administrative services from Odfjell Management AS in Bergen, for which Odfjell Management AS received USD 0.1 million in
2012 (same as in 2011).
Transactions with related parties are settled on a regular basis and the balances as per 31.12.2012 were immaterial.
Note 16 Commitments, guarantees and contingencies
Operating leases
The Group has entered into several operating leases for ships. The leases have fixed time charter commitment. The time charter rate is the
compensation to the ship owner covering his financial expenses and in some cases also the ship operating expenses. In addition the Group
has floating time charter arrangements where payments equal the earnings generated by the ships. See note 20 for the time charter/lease
expenses.
The Group also has entered into operating leases for land, buildings and certain vehicles and items of machinery. Leases for land and buildings
are generally non-cancellable and long-term. Leases for certain vehicles and items of machinery have an average period of between three
and five years with no renewal option in the contracts.
The operating leases contain no restrictions on the Company’s dividend policy or financing opportunities.
The nominal value of future rents related to the operating lease fall due as follows:
(USD 1 000) 2012 2011
Within one year 152 838 156 127
After one year but not more than five years 299 714 354 811
After five years 112 413 166 773
Total operating leases 564 965 677 711
Capital commitments
Odfjell has an agreement with Chongqing Chuandong Shipbuilding Industry Co to build a series of three 9,000 DWT stainless steel chemical
tankers. Two of these vessels were delivered in 2012 and the last vessel was delivered early 2013. These newbuildings are fully financed.
Odfjell has also entered an agreement with Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME) to build one fully IMO II 75,000 DWT
chemical tanker with 31 coated tanks for delivery first half 2013 at a total price of about USD 65 million. This ship is fully financed except for
a remaining equity payment totalling about USD 4 million.
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odfjell annual report 2012