Quarterly Report • Aug 16, 2017
Quarterly Report
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Unaudited First half year and 2nd Quarter results 2017
2016 2016 2017 2017 Q2 Q3 Q4 Q1 Q2
Highlights for Beerenberg (Beerenberg Holdco II AS consolidated) in the 2nd quarter of 2017 was
Revenue of MNOK 511 in Q2 2017 is in line with the activity level in Q2 2016. The activity level within Services is overall down due to the loss of Ekofisk frame agreement, but this is offset by a general increase in activity on other frame agreements and higher product sales. The newbuild activity remains relatively stable in the quarter.
EBITDA in the 2nd quarter was MNOK 60. This is up MNOK 3 from 2nd quarter 2016. Overall the margins remain relatively stable.
Financial cost in the 2nd quarter was MNOK 19, a slight increase from 2nd quarter last year. The increase relates to the refinancing of the company
The profit before tax increased with MNOK 7 in the 2nd quarter compared to 2nd quarter last year.
For the first half of 2017 the revenue has increased by 8% compared to first half in 2016. The increase in activity is mainly related to new build activities and increased activity on existing frame agreements offset by the loss of the Ekofisk contract.
EBITDA margin increased from 10.3% in first half of 2016 to 11.7% in first half of 2017. The increase is mainly relating to lower operating costs in services.
Total assets were MNOK 1791 at the end of the quarter with an equity ratio of 20.4%.
Working capital increased by MNOK 32 in 2nd quarter, mainly due to higher activity towards the end of the quarter.
Net interest bearing debt was MNOK 665 compared to MNOK 882 in 2nd quarter 2016.
The new senior secured bond of MNOK 850 placed in February secures the financing for the company until 2021. In March Beerenberg also repaid the previous bond. In connection with the bond issue, Beerenberg has extended its 300 MNOK facility with Danske Bank. The new bond was listed on Oslo Boers on the 20th of June 2017.
Cash flow from operations was MNOK 28 in Q2 2017.
Investments in the 2nd quarter was MNOK 2, mainly replacement investments.
Net cash flow from financing activities was negative by MNOK 19 where the majority is interest payment.
There are some indications that the activity level within maintenance and modification are picking up. The outlook for new build market remains reasonable; however, the majority of the prospects will impact Beerenberg's activity level in 2018 and 2019.
The tender activity has been relatively high also in 2nd quarter of 2017, especially related to Benarx products and services outside Norway.
Total order intake of new contracts was approximately MNOK 600. The major award was the Johan Sverdrup Hook-up contract with Aker Solutions estimated to be worth approximately MNOK 550 (including options).
The current estimated order backlog (including frame agreements and options) is BNOK 10.
At the end of Q2 2017 Beerenberg had 1136 employees, down 82 from last quarter.
During the 2nd guarter of 2017 Beerenberg recorded 3 incidents compared to 3 same period last year.
Total recordable incident frequency (TRIF) was 3,3 measured on last twelve months' basis (LTM), compared to 3,1 YTD at the end of 2nd quarter 2016.
"Benarx international growth strategy is starting to be reflected in the activity level"
The service segment reports a reduction in revenue of 7% from Q2 2016. High activity within newbuild and existing frame agreements are offset by the loss of Ekofisk frame agreement. The EBITDA margin increased from 9,8% in Q2 2016 to 10,6% in Q2 2017.
The Benarx segment reports an increase in revenue in Q2 2017 of 7% compared to Q2 2016. The increase is mainly related to international sales. EBITDA was MNOK 15, this is up from 12,5 MNOK in Q2 2016.
The Board confirm that to the best of our knowledge, the condensed set of financial statement for the period 1. January 2017 to 30. June 2017, has been prepared in accordance with all applicable accounting standards, and gives a true and fair view of the group's assets, liabilities, financial position and result for the period. The Board also confirm that the interim first half report includes, to the best of our knowledge, a fair review of any significant events that arose during the six-month period and their effect on the half-yearly financial report, and a description of the principal risks and uncertainties facing the Beerenberg Holdco II AS group.
Bergen 16. August 2017 The Beerenberg Holdco II AS Board of Directors and CEO
$KerL$
Ketil Lenning
Chairman
Vantache
Lars Marusson
Director
Pelos tia Elma to
Sebastian Ehrnrooth Director
| Group Summary | Q 2 | Q 2 | YTD | YTD | FY. | |
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2017 | 2016 | 2017 | 2016 | 2016 |
| Operating revenue | 6 | 511,3 | 518,6 | 1024,0 | 949,0 | 2081,5 |
| Operating expenses | 450,9 | 461,6 | 904,2 | 851,2 | 1862,3 | |
| EBITDA | $\overline{7}$ | 60,4 | 57,1 | 119,8 | 97,8 | 219,2 |
| Depreciation | 7,6 | 7,8 | 15,2 | 15.9 | 31,9 | |
| EBITA | 52,7 | 49,2 | 104,6 | 81,9 | 187,3 | |
| Amortisation | 8 | 3,7 | 7,5 | 8,0 | 15,7 | 181,5 |
| Operating profit (EBIT) | 49,0 | 41.8 | 96,5 | 66.1 | 5,7 | |
| Finance costs - net | 4 | 19,2 | 18,7 | 68,4 | 38,2 | 67,2 |
| Profit before tax (EBT) | 29,8 | 23,0 | 28,2 | 27,9 | $-61,5$ | |
| Estimated tax | 7.1 | 5,8 | 6,8 | 7,0 | 12,2 | |
| Net profit | 22,6 | 17,3 | 21,4 | 21,0 | $-73,6$ | |
| Profit for the period is attributable to: | ||||||
| Shareholders of the parent company | 22,6 | 17,3 | 21,4 | 21,0 | $-73,6$ | |
| Basic earnings per share (NOK) | 0,08 | 0,06 | 0,08 | 0,08 | $-0,28$ | |
| Diluted earnings per share are identical as there are no dilutive effect |
||||||
| EBITDA margin | 11,8% | 11,0% | 11,7% | 10,3% | 10,5% | |
| EBITA margin | 10,3% | 9,5% | 10,2% | 8,6% | 9,0% |
| Q 2 | Q 2 | YTD | YTD | FY | ||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2017 | 2016 | 2017 | 2016 | 2016 |
| Net profit for the period | 22,6 | 17.3 | 21,4 | 21,0 | $-73.6$ | |
| Other comprehensive income: | ||||||
| Conversion differences | 1,8 | $-0.4$ | 4,0 | $-0,8$ | $-0.7$ | |
| Change in value of derivatives | $-0,6$ | 1,6 | $-5.3$ | $-0.2$ | -4,7 | |
| Total comprehensive income | 23,9 | 18,4 | 20,1 | 20,0 | $-69.7$ |
| Group Summary | |||
|---|---|---|---|
| Q 2 | Q2 | FY. | |
| Amounts in NOK million Note |
30.06.2017 | 30.06.2016 | 31.12.2016 |
| Goodwill 8 |
778,7 | 883,9 | 778,7 |
| 8 Intangible assets |
69,6 | 137,9 | 76,0 |
| Property, plant and equipment | 160,8 | 182,1 | 169,0 |
| Financial Fixed Assets | 0,6 | 0.6 | 0,6 |
| Total non-current assets | 1 0 0 9 7 | 1 204,5 | 1024,3 |
| Goods | 51,8 | 45,2 | 35,0 |
| Accounts receivables from customers | 464,5 | 552,3 | 416,2 |
| Earned Not Invoiced Revenue (WIP) | 66,0 | 56,6 | 151,8 |
| Other Short Term Receivables | 18,9 | 21,3 | 21,0 |
| Prepayments | 3,9 | 1,0 | 1,1 |
| Cash and cash equivalents | 176,0 | 152,4 | 225,9 |
| Total Current Assets | 781,2 | 829,0 | 851,0 |
| TOTAL ASSETS | 1790,9 | 2033,4 | 1875,3 |
| Share Capital | 26,7 | 26,7 | 26,7 |
| Share premium | 240,3 | 240,3 | 240,3 |
| Retained Earnings | 76,0 | 146,6 | 151,6 |
| Current year result after est. Tax | 21,4 | 21,0 | $-73,6$ |
| Total equity | 364,5 | 434,6 | 345,0 |
| Deferred tax liabilities | 18,2 | 42,3 | 13.4 |
| Pension obligations | 9,1 | 6,9 | 8,6 |
| Warranty provision | 14,3 | 10,9 | 13,0 |
| Financial Lease Ioan | 0,3 | 1,3 | 0,8 |
| Bond $\overline{A}$ |
834,0 | 1033,0 | 904,0 |
| Derivatives | 20.8 | 25.9 | 14,9 |
| Total non-current liabilities | 896,7 | 1 1 2 0 4 | 954,7 |
| Overdraft & accrued interests | 6,5 | 0,5 | 0,5 |
| 127,4 | 121,6 | 182,0 | |
| Supplier liabilities | 32,3 | 30,5 | 35,8 |
| Tax payable | |||
| Social Security, VAT and other taxes | 88,1 | 87,3 | 82,5 |
| Accruals | 220,1 | 163,4 | 147,8 |
| Deferred Revenue | 22,5 | 34,1 | 47,5 |
| Other Current Liabilities | 32,9 | 41,1 | 79,5 |
| Total Current Liabilities | 529,8 | 478,5 | 575,7 |
| TOTAL EQUITY & LIABILITY | 1790,9 | 2033,4 | 1875,3 |
Contract Contract Contract Contract
| Amounts in NOK million | Conversion | Hedging | 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 | 21,4 | 21,4 | ||||
| Other Comprehensive Income | 4,0 | $-5.3$ | $-1,3$ | |||
| Group contribution | $-0.6$ | $-0.6$ | ||||
| Equity as per 30.06.2017 | 26.7 | 240,3 | 3,6 | $-6,6$ | 100,4 | 364,5 |
| Amounts in NOK million | Conversion | Hedging | Retained | |||
|---|---|---|---|---|---|---|
| Share capital | Share premium | reserve | reserve | earnings | Total | |
| 01. January 2016 | 26,7 | 240.3 | 0.4 | $-6,0$ | 153,2 | 414,7 |
| Net profit | 21.0 | 21,0 | ||||
| Other Comprehensive Income | $-0.8$ | - 1 | $-1.0$ | |||
| Equity as per 30.6.2016 | 26.7 | 240.3 | $-0.4$ | $-6.2$ | 174,2 | 434.6 |
| Q 2 | Q 2 | YTD | YTD | FY | ||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2017 | 2016 | 2017 | 2016 | 2016 |
| EBITDA | 60,4 | 57,1 | 119,8 | 97,8 | 219,2 | |
| Taxes paid | $-1,8$ | 15,9 | $-3,6$ | $-3.4$ | $-33,9$ | |
| Change in net working capital | $-32,8$ | $-114,4$ | $-28,6$ | $-150,3$ | $-6,8$ | |
| Changes to other time restricted items | 2,2 | 0,3 | 3,5 | $-2.8$ | $-3,5$ | |
| Net Cash flow from operating activites | 27,9 | $-41,2$ | 91,2 | $-58,7$ | 175,0 | |
| Capex | $-2,0$ | $-4,7$ | $-7,4$ | $-15,3$ | $-17.1$ | |
| Net cash flow from investing activities | $-2,0$ | $-4,7$ | $-7,4$ | $-15,3$ | $-17,1$ | |
| Repayment of interest bearing debt | $\overline{4}$ | $-0,2$ | $-0,3$ | $-80,7$ | $-0,5$ | $-127,0$ |
| Payment of Group contribution | 5 | $-0,8$ | 0,0 | $-0.8$ | 0,0 | 0,0 |
| Interest paid | 4 | $-18,1$ | $-17,2$ | $-52,1$ | $-37,8$ | $-69,8$ |
| Net cash flow from financing activities | $-19,2$ | $-17,5$ | $-133,7$ | $-38,3$ | $-196,7$ | |
| Total cash flow | 6,8 | $-63,4$ | $-49,9$ | $-112,4$ | $-38,9$ | |
| Opening balance net bank deposits | 169,3 | 215,8 | 225,9 | 264,8 | 264,8 | |
| Closing balance net bank deposits | 176,0 | 152,4 | 176,0 | 152,4 | 225,9 |
L.
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 2016 provides further information on risks and uncertainties applicable to Beerenberg.
Beerenberg Holdco II AS is wholly owned by Beerenberg Holdco I AS which is wholly owned by Beerenberg Invest AS. Shareholders in Beerenberg Invest are specified in table below.
| Shareholders Beerenberg Invest | 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. | 92 1 21 | $9.2\%$ | 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 | 6.6 % | 15312404 | 5.8% | 15378502 | 5,8% |
| Total | 1 000 000 | 100.0 % | 266 000 000 | 100.0% | 267 000 000 | 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 2016. The accounting policies applied in the interim financial statements is the same as those described in the Annual Report for 2016. 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 2016 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 2016.
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 30.06.2017.
Group contribution of MNOK 0,5 was paid to Beerenberg Invest AS, and Group contribution of MNOK 0,3 was paid to Beerenberg Holdco I AS, other than that no related party transactions were conducted in Q2 2017.
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.
| Q2 | Q2 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| Amounts in NOK million | 2017 | 2016 | 2017 | 2016 | 2016 |
| Services | 423,5 | 456,0 | 891,0 | 823,4 | 1900,6 |
| Benarx | 105,4 | 98.7 | 199,0 | 204,7 | 361,7 |
| Eliminations | $-17,6$ | $-36.0$ | $-66.0$ | $-79.2$ | $-180,8$ |
| Total | 511,3 | 518,6 | 1024,0 | 949.0 | 2081,5 |
| Q 2 | Q2 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| Amounts in NOK million | 2017 | 2016 | 2017 | 2016 | 2016 |
| Services | 45,0 | 44,6 | 88,0 | 68.7 | 168,0 |
| Benarx | 15,3 | 12,5 | 31,8 | 29,1 | 51,2 |
| Other | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| Total | 60,4 | 57,1 | 119,8 | 97,8 | 219,2 |
Beerenberg signed an agreement with regards to delivery of the Nyhamna project on the 12th of August. The agreement concludes the major construction activities at Nyhamna, although some activities relating to start up and commissioning continues at the site. The agreement will give a limited positive financial impact for Beerenberg in Q3 2017.
On Tuesday 15th of August Beerenberg signed a frame agreement with Wintershall for delivery of ISS services on the Brage installation. The 4-year frame agreement includes 3 options of 2 years' extension and is expected to have a value of MNOK 20-40 per year. The contract will commence in Q4 2017.
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