Beerenberg

Quarterly Report • Jan 31, 2017

Unaudited $4^{\text{th}}$ Quarter and preliminary Annual results 2016

«High activity in Q4 related to greenfield projects»

2016 2016 2016 2016 Q4 Q1 Q2 Q3 Q4

Group Overview

Highlights for Beerenberg (Beerenberg Holdco II AS consolidated) in the $4^th$ quarter of 2016 was

• Revenue was MNOK 584, an increase of 4% compared to 4^th quarter 2015.
• EBITDA of MNOK 67, up MNOK 11 compared to Q4 2015
• EBITDA margin was 11,4 % compared to 10% in Q4 2015
• Estimated order backlog at the end of the quarter was BNOK 10.2
• Beerenberg has recorded a loss provision related to restructuring of MNOK 5 in the quarter.

Income Statement

In the $4^th$ quarter the activity has been high on new build projects with a 4 % increase compared to $4^th$ quarter last year. For the full year the revenue is down 13% mainly due to low activity on offshore contracts.

EBITDA in the 4^th quarter was MNOK 67, and increase of MNOK 11 from last year. Included in the quarterly result was a provision for restructuring of MNOK 5.

For the year the EBITDA was MNOK 219, down from MNOK 275 in 2015. In addition to lower activity, restructuring provisions and cost related to relocating production facilities to Poland are the main reason for the lower EBITDA.

The profit before tax in the $4^th$ quarter was MNOK 35, up from MNOK 10.6 in 4^th quarter 2015. In 2015 the result was affected by a provision for relocating the production facilities to Poland. In full year 2016 the loss before tax is MNOK 62. The loss reflects an impairment of intangible assets of MNOK 150 in 3rd quarter 2016.

Balance Sheet

Total assets was MNOK 1 875 at the end of the quarter with an equity ratio of 18,4 %. The reduction in total asset is mainly due to impairment of intangible assets in 3rd quarter 2016.

Working capital was reduced by MNOK 140 in the quarter mainly related to payments on new build projects.

Net interest bearing debt was MNOK 679 compared to MNOK 770 in 4^th quarter 2015, mainly related to earnings.

In June 2014 Beerenberg issued a 4 year bond loan of MNOK 1100. In Q4 2016 Beerenberg acquired additional bond with a nominal value of MNOK 92 and held at year end MNOK 187 of own bonds. In January 2017 it acquired an additional MNOK 20 in own bonds and current balance is MNOK 207. The company continues the process of evaluating its options to secure longer term funding beyond the maturity of the bond loan in June 2018.

Cash Flow

Cash flow from operations was MNOK 177 in 4^th quarter and MNOK 175 in 2016. Minor investments offset by minor sale of assets and a tax related refund arrangement (Skattefunn) resulted in a positive cash flow from investment in the quarter of MNOK 1.2.

Order Backlog & Market

The market outlook for Beerenberg remains mixed. The drop in oil-price has re-enforced a number of cut backs related to running Maintenance & Modification contracts which has impacted the activity level. We expect the M&M market to recover and return to growth during 2017. However, the down turn could have a growing impact on the activity level within Greenfield operations in the next 2-3 years.

The tender activity has been on a somewhat lowerlevel in 4^th quarter; however there are still significant tenders outstanding. In addition the company has an increasing amount of tenders towards clients in Asia.

There were no major awards during $4^th$ quarter 2016. Total order intake of new contracts was MNOK 21 mainly related to product (Benarx) orders, included associated consultancy/engineering services.

The current estimated order backlog (including frameagreements and options) is BNOK 10.2. The estimate reflects current and near term expected activity level including latest new wins and losses.

HSEO

At the end of Q4 2016 Beerenberg had 1344 employees, down 48 from last quarter.

During the 4^th quarter of 2016 Beerenberg recorded 2 incidents compared to 0 same period last year.

Total recordable incident frequency (TRIF) was 2,9 measured on last twelve months basis (LTM), compared to 2,97 YTD at the end of 4^th quarter 2015

"Greenfield projects behind growing revenue in Services"

Business Segments

Services

The service segment reports an increase in revenue of 13% from 4^th quarter 2015, but a drop of 13% compared to full year 2015. The EBITDA was MNOK 53 in 4^th quarter compared to MNOK 44 in 4^th quarter 2015. The EBITDA margin in 2016 was in line with the margin in 2015. Included in the EBITDA for Q4 16 was a provision for restructuring of MNOK 5.

Benarx

The Benarx division (Prefabricated insulation topside and subsea) reports 32% lower income in 2016 compared to 2015. In the 4^th quarter the revenue was 45% down from 4^th quarter 2015. The EBITDA margin in 4^th quarter was 15,5% compared to 7,8% in Q4 2015. The margin in Q4 2015 was impacted by relocating the production to Poland.

FIGURES & NOTES

Figures for Beerenberg Holdco II

Condensed Consolidated Income Statement

Group Summary		Q4	Q4	YTD	YTD	FY
Amounts in NOK million	Note	2016	2015	2016	2015	2015
Operating revenues and other income	6	584,2	558,4	2081,5	2 3 6 3, 2	2 3 6 3, 2
Operating Expenses		517,5	502,4	1862,3	2087,5	2087,5
EBITDA	7	66,7	56,0	219,2	275,7	275,7
Depreciation		7,7	18,6	31,9	45,3	45,3
EBITA		58,9	37,4	187,3	230,4	230,4
Amortisation	8	8,5	8,4	181,5	36,5	36,5
Operating profit (EBIT)		50,5	29,0	5,7	194,0	194,0
Financial expenses	$\overline{4}$	15,7	18,5	67,2	75,1	75,1
Profit before tax (EBT)		34,8	10,6	$-61,5$	118,9	118,9
Estimated tax		9,5	1,2	11,9	30,5	30,5
Net profit		25,3	9,3	$-73,3$	88,4	88,4
Profit for the period is attributable to:
Shareholders of the parent company		25,3	9,3	$-73,3$	88,4	88,4
Basic earnings per share (NOK) Diluted earnings per share are identical as there are no dilutive effect		0,09	0,03	$-0,27$	0,33	0,33
EBITDA margin		11,4%	10,0%	10,5%	11,7%	11,7%
EBITA margin		10,1%	6,7%	9,0%	9,8%	9,8%

Condensed Consolidated Statement of Comprehensive Income

		Q4	Q4	YTD	YTD	FY
Amounts in NOK million	Note	2016	2015	2016	2015	2015
Net profit for the period		25,3	9,3	$-73.3$	88,4	88,4
Other comprehensive income:
Conversion differences		0,1	0,4	$-0,7$	0,4	0,4
Change in value of derivatives		1,1	$-0,5$	4.7	$-4,4$	$-4.4$
Total comprehensive income		26,5	9,3	$-69,4$	84.4	84,4

$\sim$

Condensed Consolidated Balance Sheet

Group Summary
	Q4	Q4	FY.
Amounts in NOK million Note	31.12.2016	31.12.2015	31.12.2015
8 Goodwill	778,7	883,9	883,9
8 Intangible assets	76,0	153,6	153,6
Property, plant and equipment	169,0	183,1	183,1
Financial Fixed Assets	0.6	0.6	0,6
Total non-current assets	1024,3	1221.2	1221,2
Inventories	35,0	53.4	53.4
Trade Debitors	416,2	386,6	386,6
Earned Not Invoiced Revenue (WIP)	151,8	112,4	112,4
Other Short Term Receivables	21,0	17,9	17,9
Prepayments	1,1	0,7	0,7
Bank Deposit	225,9	264,8	264,8
Total Current Assets	851,0	835,8	835,8
TOTAL ASSETS	1875,3	2057,0	2057,0
Share Capital	26,7	26,7	26,7
Share premium	240,3	240,3	240,3
Retained Earnings	151,6	147,6	147,6
Current year result after est. Tax	$-73,3$	0,0	0,0
Total equity	345,3	414,7	414,7
Deferred tax	22,2	35,4	35,4
Pension Liability	8,6	6,5	6,5
Warranty	13,0	9,4	9,4
Financial Lease Ioan	0,8	1,8	1,8
Bond $\overline{4}$	904,0	1030,0	1030,0
Derivatives	14,9	30,0	30,0
Total non-current liabilities	963,5	1113,1	1113,1
Overdraft & Accrued interests	0,5	3,1	3,1
Trade Creditors	182,0	123,0	123,0
Current Tax Payable	26,7	33,9	33,9
Social Security, VAT and other taxes	82,5	108,8	108,8
Accruals	147,8	117,8	117,8
Deferred Revenue	47,5	47,7	47,7
Other Current Liabilities	79,5	94,9	94,9
Total Current Liabilities	566,5	529,2	529,2
TOTAL EQUITY & LIABILITY	1875,3	2057,0	2057,0

Condensed Consolidated Statement of Change in Equity

			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
Profit for the year					$-73.3$	-73,3
Other Comprehensive Income			-0.7	4.676		4.0 l
Equity as per 31.12.2016	26.7	240.3	$-0.3$	$-1.285$	79.9	345,3

			Conversion	Hedging	Retained
	Share capital	Share premium	reserve	reserve	earnings	Total
01. January 2015	26.7	240.3	0.C	$-1.6$	64.8	330,2
Profit for the year					88,4	88,4
Other Comprehensive Income			O 4	-44		$-4.0$
Equity as per 31.12.2015	26,7	240.3	0.4	$-6,0$	153,2	414.7

Condensed Consolidated Statement of Cash Flow

	Q4	Q4	YTD	YTD	FY
Note	2016	2015	2016	2015	2015
EBITDA	66,7	56,0	219,2	275,7	275,7
Taxes paid	$-30.5$	$-25.5$	$-33.9$	$-38,5$	$-38.5$
Change in net working capital	140,6	138,5	$-6,8$	39,6	39,6
Changes to other time restricted items	0,5	$-0,6$	$-3,5$	$-4,5$	$-4,5$
Net Cash flow from operating activites	177,3	168,4	175,0	272,3	272,3
Capex	1,2	$-11,1$	$-17,1$	$-27,8$	-27,8
Net cash flow from investing activities	1,2	$-11,1$	$-17,1$	$-27,8$	$-27,8$
Repayment of interest bearing debt 4	$-90,7$	$-0,3$	$-127,0$	$-3,9$	$-3,9$
4 Interest paid	$-15.9$	$-14.2$	$-69.8$	$-66.3$	$-66,3$
Net cash flow from financing activities	$-106,6$	$-14,6$	$-196,7$	$-70.3$	$-70,3$
Total cash flow	71,9	142,7	$-38,9$	174,2	174,2
Opening balance net bank deposits	154,0	122,0	264,8	90,6	90,6
Closing balance net bank deposits	225,9	264,8	225,9	264,8	264,8

Notes

Note 1 - General

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 2015 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 % 219 445 603	82.5 %	220 264 065	82.5 %
AlpInvest Partners Co-Investments 2012 C.V.	92 1 2 1	92%	24 931 110	9.4%	25 023 231	9.4%
AlpInvest Partners Co-Investments 2011 II C.V.	23319	23%	6310883	2.4%	6 334 202	2.4%
Management	66098	6.6 %	15 312 404	5.8%	15 378 502	5.8%
Total	1 000 000	100.0 %	266 000 000		100.0 % 267 000 000	100.0%

Note 2 - Basis for preparation

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 2015. The accounting policies applied in the interim financial statements is the same as those described in the Annual Report for 2015. 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 2015 is available at www.Beerenberg.com

Note 3 - Judgments, estimates and assumptions

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 2015.

Note 4 - Bond and covenants

A bond of MNOK 1100 was issued in Q2 2014. In the same quarter long term loans to financial institutions and long term Ioan from the parent company Beerenberg Holdco I AS was fully repaid. In Q4 2014 the Group repurchased own Bonds with face value totaling MNOK 55. In Q3 2016 the Group purchased own Bonds with face value totaling MNOK 40, and in Q4 2016 the Group purchased further own Bonds with face value totaling MNOK 92.

The Bond agreement includes covenants related quarterly Net Total Leverage ratio test (below 9.0) and to Incurrence testing (if applicable). The Group is in compliance with covenants as of 31.12.2016.

Note 5 - Related party transactions

No related party transactions were conducted in Q4 2016.

Note 6 - Revenue by Segment

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.

	Q4	Ο4	YTD	YTD	FY.
Amounts in NOK million	2016	2015	2016	2015	2015
Services	555,3	491,7	1900,6	2184,8	2 1 8 4, 8
Benarx	86,6	157,9	361,7	535,7	535,7
Eliminations	$-57.7$	$-91.2$	$-180,8$	$-357,3$	$-357,3$
Total	584,2	558,4	2081,5	2 3 6 3, 2	2 3 6 3 , 2

Note 7 - EBITDA by Segment

	Q4	Q 4	YTD	YTD	FY
Amounts in NOK million	2016	2015	2016	2015	2015
Services	53,3	43,8	167,8	194,5	194,5
Benarx	13,4	12,3	51,4	81,2	81,2
Other	0,0	0.0	0,0	0.0	0,0
Total	66,7	56,0	219,2	275,7	275,7

Note 8 - Impairment of Goodwill and Intangible Assets

In Q3 2016, following the non-renewal of a larger contract an indication of impairment situation of intangible assets was identified, and in accordance with IAS 36 a test for impairment of intangible assets and Goodwill was performed. According to this standard the company shall estimate recoverable amount, and compare this to book values including Goodwill. The group has two cash-generating units (CGU), "Benarx" and "Services". The cash generating units are coinciding with the segments described in Note 6.

Intangible assets and Goodwill was tested for impairment by comparing capital employed in the two CGUs against the present value of expected future cash flows of the CGUs (Value in use). Value in use is valued according to level 3 of the valuation hierarchy (IFRS 13).

The result of the test for impairment was a write down in the segment (CGU) Services of MNOK 45 of intangible assets related to customer relations and a further write down of MNOK 105 MNOK of Goodwill, also in Services.

The basis for the impairment test set out certain requirements. The rate of return is set to 10.7 %.

Forecasts approved by the Board of Directors for the next 5 years forms the basis for the test of impairment. The forecasted activity level for the Group and the Segments are expected to return, over the next years, to approximately the same level as 2016. Margins are assumed to remain at similar level as today in the segment Services, while margins are assumed to increase somewhat in the segment Benarx.

Key assumptions for estimated future cash flows are:

• An increase and stabilization of oil-price on a level higher level than current, with a gradually higher activity level on the Norwegian Continental Shelf.

• The Group maintaining a reasonable market share of expected new developments through amongst other deliveries to new build projects initiated on Norwegian Continental Shelf.

The sensitivities for the impairment test for CGU Services are:

Figures in MNOK	Change in assumtion
Required rate of return	$-1\%$ point	$+1\%$ point
Effect on impairment	+ 92 MNOK	$-77$ MNOK
Operating result	$+10%$	$-10%$
Effect on impairment	+ 83 MNOK	$-83$ MNOK
Revenue*	$+10%$	$-10%$
Effect on impairment	+106 MNOK	$-106$ MNOK

* EBITDA margin unchanged

The Group believes that balanced assumptions have been used for testing impairment.

Note 9 - Subsequent events

The group acquired own bonds with a nominal value of MNOK 20 in January 2017.