Quarterly Report • May 14, 2018
Quarterly Report
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2017 2017 2017 2018 Q1 Q2 Q3 Q4 Q1
Highlights for Beerenberg (Beerenberg Holdco II AS consolidated) in the 1st quarter was
Revenue in 1st quarter was MNOK 322 compared to MNOK 513 in 1st quarter 2017. Activity level in the group was down in the 1st quarter of 2018 compared to previous periods. The reason for the falling activity relates to low activity in new build projects. The activity on new build projects is expected to recover in 2nd half this year.
1st quarter EBITDA was MNOK 28 compared to MNOK 59 in 1st quarter 2017. The EBITDA margin in 1st quarter was 8.5% compared to 11.6 % in 1st quarter 2017. Beerenberg and its owners have been evaluating strategic options including a possible listing of the company and has incurred approx. MNOK 7 in related costs in the
quarter. Adjusted for these one-off costs the margin is 10.7%
Financial cost in the 1st quarter 2018 was MNOK 24. down from MNOK 49 in the 1st quarter of 2017. In 2017 Beerenberg issued a new bond loan and repaid its previous loan, resulting in higher financial cost in the period.
Net loss for 1st quarter 2018 was MNOK 7 compared to a loss of MNOK 1 in 1st quarter 2017.
Total assets were MNOK 1 623 at the end of the quarter with an equity ratio of 25.8%,
Total non-current assets increased by MNOK 9 compared to 1st quarter 2017. The increase is mainly due to the acquisition of Bouvet Industries. Current assets were reduced to MNOK 595, down from MNOK 782 at the end 1st quarter 2017. Total current liabilities were MNOK 318 compared to MNOK 572 at the end of 1st quarter 2017. The reduction in current assets and liabilities are mainly related to lower activity. Total non-current liabilities were MNOK 885 compared to 888 at the end of 1st quarter 2017.
Net interest-bearing debt was MNOK 631 compared to MNOK 671 in 1st quarter 2017.
Total cash flow for the 1st quarter 2018 was MNOK 58 compared to MNOK 63 in 1st quarter of 2017. Net cash flow from investment activities was MNOK -5.6, in line with 1st quarter last year. Net cash flow from financing activities was MNOK-18,4, mainly payment of interest.
Within maintenance and modifications, market activity level is expected to keep increasing in 2018. The outlook for new build related projects remains reasonable; however, most of the prospects are likely to affect activity level in 2019 and onwards.
The tender activity was relatively stable during 1st quarter of 2018 relating both to maintenance and new build projects.
Total order intake of new contracts was MNOK 250 for the period. The major award was the Subcontract Frame Agreement with Kværner currently estimated to be worth approximately MNOK 210.
The current estimated order backlog (including frame agreements and options) is BNOK 10,5.
At the end of Q1 2018 Beerenberg had 1130 employees, down from 1150 last quarter.
Total recorded Serious Incident Frequency (SIF) in the period and in the last 12 months was 0.
The lower activity within the service segment is mainly caused by lower activity on new-build projects. The activity level within maintenance and modification has generally been increasing. It is expected that the activity in new build projects will increase in the 2nd half of the year. The margin in 1st quarter is somewhat lower than in 1st quarter 2017 due to lower activity and additional costs related to IPO preparation process.
The activity in Benarx was down significantly in the period due to lower activity on new-build projects. The margin was influenced by the lower activity within new build. The tender activity for Benarx remains high.
| Group Summary | Q1 | Q1 | YTD | YTD | FY. |
|---|---|---|---|---|---|
| Amounts in NOK million Note |
2018 | 2017 | 2018 | 2017 | 2017 |
| 6 Operating revenue |
322,3 | 512,7 | 322,3 | 512,7 | 1851,9 |
| Operating expenses | 294,8 | 453,2 | 294,8 | 453,2 | 1599,0 |
| 7 EBITDA |
27,5 | 59,4 | 27,5 | 59,4 | 252,8 |
| Depreciation | 7,4 | 7,6 | 7,4 | 7,6 | 30,4 |
| EBITA | 20,0 | 51,8 | 20,0 | 51,8 | 222,5 |
| Amortisation | 4,7 | 4,3 | 4,7 | 4,3 | 15,5 |
| Operating profit (EBIT) | 15,3 | 47.6 | 15,3 | 47.6 | 207,0 |
| $\overline{4}$ Finance costs - net |
24,6 | 49,2 | 24,6 | 49,2 | 102,4 |
| Profit before tax (EBT) | $-9,3$ | $-1,6$ | $-9,3$ | $-1,6$ | 104,6 |
| Income Tax expense | $-2,1$ | $-0,4$ | $-2,1$ | $-0.4$ | 27,0 |
| Net profit | $-7,1$ | $-1,2$ | $-7,1$ | $-1,2$ | 77,6 |
| Profit for the period is attributable to: | |||||
| Shareholders of the parent company | $-7,1$ | $-1,2$ | $-7,1$ | $-1,2$ | 77,6 |
| Basic earnings per share (NOK) | $-0,03$ | 0,00 | $-0,03$ | 0,00 | 0,29 |
| Diluted earnings per share are identical as there are no dilutive effect |
|||||
| EBITDA margin | 8,5% | 11,6% | 8,5% | 11,6% | 13,7% |
| EBITA margin | 6,2% | 10,1% | 6,2% | 10,1% | 12,0% |
| Q1 | Q1 | YTD | YTD | FY | ||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2018 | 2017 | 2018 | 2017 | 2017 |
| Net profit for the period | $-7,1$ | $-1,2$ | $-7,1$ | $-1,2$ | 77.6 | |
| Other comprehensive income: | ||||||
| Conversion differences | $-0,3$ | 2,2 | $-0.3$ | 2,2 | 5,8 | |
| Change in value of derivatives | 5.2 | $-4,8$ | 5,2 | $-4.8$ | $-5,6$ | |
| Total comprehensive income | $-2,2$ | $-3,8$ | $-2,2$ | $-3,8$ | 77,8 |
| Group Summary Amounts in NOK million Note |
Q1 31.03.2018 |
Q1 31.03.2017 31.12.2017 |
FY |
|---|---|---|---|
| Goodwill | 786,2 | 778,7 | 786,2 |
| Intangible assets | 71,1 | 72,3 | 73,0 |
| Property, plant and equipment | 170,1 | 166,9 | 175,2 |
| Financial Fixed Assets | 0,0 | 0,6 | 0,0 |
| Total non-current assets | 1027,5 | 1018,5 | 1034,4 |
| Goods | 46,2 | 44,0 | 33,8 |
| Accounts receivables from customers | 223,2 | 417,2 | 337,8 |
| Earned Not Invoiced Revenue (WIP) | 77,5 | 117,2 | 102,3 |
| Other Short Term Receivables | 21,5 | 29,6 | 15,5 |
| Prepayments | 3,2 | 4,6 | 1,0 |
| Cash and cash equivalents | 223,5 | 169,3 | 189,4 |
| Total Current Assets | 595,1 | 781,9 | 679,8 |
| TOTAL ASSETS | 1622,6 | 1800,4 | 1714,2 |
| Share Capital | 26,7 | 26,7 | 26,7 |
| Share premium | 240,3 | 240,3 | 240,3 |
| Retained Earnings | 160,0 | 75,4 | 155,1 |
| Current year result after est. Tax | -7.1 | $-1.2$ | |
| Total equity | 420,0 | 341,2 | 422,2 |
| Deferred tax liabilities | 2,3 | 11,5 | 3,4 |
| Pension obligations | 9,5 | 7,7 | 10,1 |
| Warranty provision | 14,0 | 13,8 | 14.0 |
| Financial Lease Ioan | 10,6 | 0,5 | 11,4 |
| Bond 4 |
837,3 | 832,9 | 836,2 |
| Derivatives | 11,1 | 21,2 | 18,9 |
| Total non-current liabilities | 884,7 | 887,5 | 894,1 |
| Overdraft & accrued interests | 6,8 | 6,5 | 7,2 |
| Supplier liabilities | 69,3 | 140,1 | 94,6 |
| Tax payable | 23,0 | 34,1 | 40,1 |
| Social Security, VAT and other taxes | 52,8 | 106,4 | 72,9 |
| Accruals | 73,3 | 163,2 | 81,5 |
| Deferred Revenue | 0,2 | 29,1 | 22,7 |
| Other Current Liabilities | 92,6 | 92,4 | 79,0 |
| Total Current Liabilities | 318,0 | 571,7 | 398,0 |
| TOTAL EQUITY & LIABILITY | 1622,6 | 1800,4 | 1 7 1 4, 2 |
| Amounts in NOK million | Conversion | Hedging | Retained | Total | ||
|---|---|---|---|---|---|---|
| Share capital | Share premium | reserve | reserve | earnings | ||
| 01. January 2018 | 26,7 | 240,3 | -5,5 | $-6.9$ | 156,5 | 422,2 |
| Net profit Other Comprehensive Income |
$-0,3$ | 5,18 | $-7.1$ | $-7.1$ 4,9 |
||
| Equity as per 31.03.2018 | 26,7 | 240,3 | 5,2 | $-1,7$ | 149.4 | 420,0 |
| Amounts in NOK million | Conversion | Hedaina | Retained | |||
|---|---|---|---|---|---|---|
| Share capital | Share premium | reserve | reserve | earnings | Total | |
| 01. January 2017 | 26.7 | 240.3 | $-0.3$ | -1,3 | 79.6 | 345,0 |
| Net profit | $-1.2$ | $-1,2$ | ||||
| Other Comprehensive Income | -4 R | $-2,6$ | ||||
| Equity as per 31.3.2017 | 26,7 | 240.3 | 1.8 | $-6,0$ | 78.3 | 341,2 |
| Q1 | Q1 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| Amounts in NOK million Note |
2018 | 2017 | 2018 | 2017 | 2017 |
| EBITDA | 27,5 | 59,4 | 27,5 | 59,4 | 252,8 |
| Taxes paid | $-17,0$ | $-1,7$ | $-17,0$ | $-1,7$ | $-36,1$ |
| Change in net working capital | 56,3 | 4,2 | 56,3 | 4,2 | $-50,0$ |
| Changes to other time restricted items | $-8,7$ | 1,3 | $-8,7$ | 1,3 | 4,3 |
| Net Cash flow from operating activites | 58,1 | 63,2 | 58,1 | 63,2 | 171,0 |
| Net cash effect acquisition of subsidiary | 0,0 | 0,0 | 0,0 | 0,0 | $-28,8$ |
| Capex | $-5,6$ | $-5,4$ | $-5,6$ | $-5,4$ | $-13,3$ |
| Net cash flow from investing activities | $-5,6$ | $-5,4$ | $-5,6$ | $-5,4$ | $-42,2$ |
| Net repayment of interest bearing debt $\overline{4}$ |
$-0,8$ | $-80,5$ | $-0,8$ | $-80,5$ | $-80,3$ |
| Payment of Group contribution | 0,0 | 0,0 | 0,0 | 0,0 | $-0,8$ |
| Net interest paid 4 |
$-17,6$ | $-34.0$ | $-17,6$ | $-34,0$ | $-84,3$ |
| Net cash flow from financing activities | $-18,4$ | $-114,5$ | $-18,4$ | $-114,5$ | $-165,4$ |
| Total cash flow | 34,1 | $-56,7$ | 34,1 | $-56,7$ | $-36,6$ |
| Opening balance net bank deposits | 189,4 | 225,9 | 189,4 | 225,9 | 225,9 |
| Closing balance net bank deposits | 223,5 | 169,3 | 223,5 | 169,3 | 189,4 |
Beerenberg Holdco II AS is a company domiciled in Norway. The consolidated financial statements of Beerenberg Holdco II comprise the company and its subsidiaries, together referred to as the Group. The Beerenberg Holdco II Group was established 01. March 2013, as a result of the Beerenberg Holdco II AS acquisition of all shares in Beerenberg Holding AS.
Beerenberg is delivering products and services to its customer in complex environments implying operational risk with regards to quality, cost, time and injuries and accidents (HSE). Beerenberg works systematically to mitigate and manage risk on all levels. The annual report for 2017 provides further information on risks and uncertainties applicable to Beerenberg.
In order to simplify the Group structure, the parent companies Beerenberg Holdco I AS and Beerenberg Invest AS, was merged with Beerenberg Holdco II AS in February 2018 with tax effect from 01.01.2018. This was conducted as a reversed merger with Beerenberg Holdco II AS as the acquiring company. Beerenberg Holdco I AS, and Beerenberg Invest AS have been holding companies where only assets of significance were shares in subsidiary. Furthermore, there were no liabilities in these two holding companies. Therefore, this merger does not materially impact the Consolidated Statement of Financial Position for the Group.
At the Annual General Meeting at the 14th May it was proposed and resolved to change the name of the Company from Beerenberg Holdco II AS to Beerenberg AS.
Shareholders in Beerenberg Holdco II are specified in table below.
| Shareholders Beerenberg Holdco II AS | A-Shares | % | B-Shares | % | Total Shares | % |
|---|---|---|---|---|---|---|
| Segulah IV L.P. | 818462 | 81.8% | 219445603 | 82.5% | 220 264 065 | 82,5% |
| AlpInvest Partners Co-Investments 2012 I C.V. | 92121 | $9.2\%$ | 24 931 110 | 9.4% | 25 023 231 | 9,4% |
| AlpInvest Partners Co-Investments 2011 II C.V. | 23319 | 23% | 6310883 | 2.4% | 6334202 | 2.4% |
| Management | 66098 | 66% | 15312404 | 5.8% | 15378502 | 5,8% |
| Total | 1000000 | 100.0% | 266 000 000 | 100.0% | 267000000 | 100,0% |
The interim financial statements for the Group are prepared in accordance with International Financial Reporting Standards (IFRS) as approved by the European Union and their interpretations adopted by the International Accounting Standards Board (IASB).
The interim report does not include all the information required for full annual consolidated financial statements in an Annual Report, and should be read in conjunction with the Annual Report of the Group for 2017. The accounting policies applied in the interim financial statements is the same as those described in the Annual Report for 2017, with the exceptions of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. These two standards are new, and implemented as of 01.01.2018. Refer to note 3, section New standards and interpretations not yet adopted, in the Annual Report for 2017 for further description of these two standards.
The condensed consolidated interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements are unaudited.
The Annual Report for 2017 is available at www.Beerenberg.com
In applying the accounting policies, management makes judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In preparing these interim financial statement, the significant judgments made by management in applying the Group's accounting policies and the key sources of uncertainty in the estimates were consistent with those applied to the consolidated financial statements as at and for the period ended 31. December 2017. Please refer to Note 3 in the Annual Report for 2017.
A new 4-year Senior Secured Bond of MNOK 850 was issued in Q1 2017, and the previous bond of MNOK 1 100 was repaid. In connection with the bond issue Beerenberg extended its MNOK 300 credit facility agreement with Danske Bank.
The Facility agreement includes covenants related to quarterly Net Total Leverage ratio test (below 9.0) and to Incurrence testing (if applicable). The Group is in compliance with covenants as of 31.03.2018.
Refer to note 1 regarding merger of parent companies. Other than this, no related party transactions were conducted in Q1 2018.
Beerenberg is organized in two operating segments in order to optimize and focus its business. The Services segment includes business related to the traditional ISS-activity in the Group which is mainly related to major framework agreements, and the Benarx segment which consists of advanced insulation topside and subsea.
| Q1 | Q1 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| Amounts in NOK million | 2018 | 2017 | 2018 | 2017 | 2017 |
| Services | 285.4 | 467.4 | 285,4 | 467,4 | 1568,3 |
| Benarx | 59,4 | 93.7 | 59,4 | 93,7 | 367,1 |
| Eliminations | $-22,5$ | $-48.4$ | $-22.5$ | $-48.4$ | $-83,6$ |
| Total | 322,3 | 512,7 | 322,3 | 512,7 | 1851,9 |
| Q1 | Q1 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| Amounts in NOK million | 2018 | 2017 | 2018 | 2017 | 2017 |
| Services | 24,8 | 42.9 | 24,8 | 42.9 | 190,6 |
| Benarx | 2,7 | 16,5 | 2,7 | 16,5 | 62,3 |
| Other | 0,0 | 0,0 | 0.0 | 0,0 | |
| Total | 27,5 | 59,4 | 27,5 | 59,4 | 252,8 |
No events have occurred after the reporting date that are of significant impact when considering the financial position or result in the Group as of 31.03.2018.
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