Interim / Quarterly Report • Sep 23, 2022
Interim / Quarterly Report
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Sif Holding N.V.
| 8.97 LTIF | Gross CO-2 emission 2,092 ton, net CO-2 emission 0 |
Participation in projects resulting in 803 MW renewable energy capacity |
Successful deliveries for Maasvlakte 2, Dogger Bank A, Hollandse Kust Zuid |
55 kiloton contract wins for He Dreiht and undis closed project |
|---|---|---|---|---|
| (2.63 first half 2021) | (Gross 1,943 ton, net 0 first half 2021) |
(576 MW first half 2021) | For grid connection in 2022- 2023 |
For manufacturing in 2023 |
| Profit | ||||
| Contribution €63.5 million |
Adjusted EBITDA €21.1 million |
Production output 89 kiloton |
Contribution €612 per ton |
Order book for rest of 2022 85 kiloton |
| €191.3 million revenues |
EBITDA €19.1 million |
74 monopiles, 55 transition pieces |
Ex Marshalling and Other | 282 kiloton for 2023-2024 |
Switch from gas pre-heating to electrical on schedule with conversion at seven workstations. >
Project AmpHytrite: feasibility study by Sif, GE Renewable and Pondera to determine whether it is possible to produce green hydrogen at sea on a large scale, safe and economically viable. >
Final deliveries of TP-less monopiles for Hollandse Kust Zuid;
Monopiles for Dogger Bank A ready for load-out;
Production of monopiles for Hollandse Kust Noord started;
Total throughput of approximately 89 Kton steel or 74 monopiles and 55 transition pieces (88 Kton or 102 monopiles and 3 transition pieces in HY1 2021), all for offshore wind energy production.
Revenue: less subcontracted passthrough work than in first half of 2021 results in lower revenue of €191.3 million (HY 2021: €249.3 million);
Contribution of €63.5 million (HY 2021: €57.7 million)
Adjusted EBITDA of €21.1 million slightly higher than in first half year 2021 (€20.6 million);
Operating working capital stands at -/- €42.0 million (HY 2021: -/- €56.9 million);
No external debt excluding lease liabilities (HY 2021: nihil). Total cash position amounts to €57.6 million (HY 2021: €61.7 million);
Order book per 30 June 2022: 282 Kton for 2023 and beyond:
263 Kton signed contracts
19 Kton exclusive negotiations;
Outlook full year 2022 confirmed at slightly higher adjusted EBITDA compared to 2021.
installation of first foundation for Dogger Bank A
load-out of first monopile for Hollandse Kust Zuid
"It looks like the human tragedy related to the war in Ukraine will continue for a longer period. Whatever the outcome will be, it demonstrates, amongst many other things, the importance of energy independence and security, placing the urgency of energy transition at the top of national agendas across the globe. More than short term revitalizations of oil and gas fields, renewable energy sources are key in this. For the past 20 years, offshore wind as one of the sources for transition, developed from a few countries around the North Sea, the western part of the Baltic Sea and China into many new areas in Europe, the United States of America and Asia.
For the Asia region we have entered into a strategic partnership with GS Entec from Korea to initially convert and in a later stage set-up a monopile factory in Ulsan or elsewhere in that region. It is our intention to grant GS Entec a 10-year mutual exclusive license for the Asian region to use technology developed and applied by Sif, for the purpose of manufacturing monopiles foundations and transition pieces.
For the USA region, discussions with a specific potential partner are ongoing. The recently approved massive federal budget for investment in renewable energy in the USA is an important step to further boost the transition process in the USA. Offshore wind will form an important part of this transition and Sif aims to play a role in that process when a strong partnership with an experienced well established local party can be agreed.
Client demand for climate change adaption solutions is high and increasing which is driving our production increase investment plans. Sif's order book for the period until 2024 is filled with sound projects for amongst others Hollandse Kust Noord, Dogger Bank B, Dogger Bank C and He Dreiht and with some smaller diameter offshore wind projects that partly fill our production lines for pin piles and smaller tubulars. Our capacity for 2023 is fully booked and we aim for a production output of at least 200 Kton. Tendering activity for projects in 2024 remains high including projects for our planned production expansion.
With 89 Kton output in the first half of 2022, we participate in projects resulting in 803 MW renewable energy capacity (576 MW first half 2021). Production was almost equal to the same period last year (88 Kton) and total output for the full year 2022 with 174 Kton is expected to end slightly ahead of 2021's output of 170 Kton. The war in Ukraine resulted in pricing and availability uncertainties around mainly steel and energy. Where increasing energy prices put pressure on our financial results, steel is a pass-through cost. Looking at our main financial and non-financial performance indicators, we expect to generate a slightly higher EBITDA on an adjusted basis compared to 2021. This confirms our guidance at the beginning of the year.
With the replacement of gas pre-heating by electrical pre-heating project well on its way, our ambitions for reduction of our CO2 footprint are on schedule. The combination of increasing product dimensions, relatively inexperienced new employees and production facilities that are reaching the boundaries of what we can handle, we see the injury risk increasing as reflected in our safety KPI's. The lost time incidents (LTI) increased to five compared to one in the first half of 2021, resulting in a lost time incidents frequency (LTIF) of 8.97 (2.63 in first half 2021). Not only have we sharpened our safety policies and instructions, we have also further invested in an open safety culture and continue to invest in safety improving tools and systems.
Higher sickness-leave, tight labor markets and consequential replacement by temporary or less experienced workforce puts pressure on production output, reflected in the forecast production for the full year. Post-closing, we faced a gas explosion in our Roermond-factory. Luckily there were no physical personal injuries but the mental impact on our colleagues was big. Trauma support is provided and one employee was taken to hospital for a two days observation. All gas and electrical circuits and devices were checked following the incident and preventative measures like extra gas detection devices were implemented to avoid a similar situation to happen again. A thorough root cause analyses is being executed and upgraded training and instruction procedures are put in place to manage the human factor related to this event.
Ever increasing product sizes is a trend we have been discussing for the past years; products increase in diameter, length and weight. The handling of these products in our existing facilities has reached its limits. The monopiles for Dogger Bank are the largest we have ever manufactured. Their diameters and weights measure close to nine meter and between one and 1.4 Kton respectively. This reflects what is assumed to be the lower end of the standard going forward. More than 80% of the offshore wind foundations in 2025 and beyond will measure diameters between nine and 11.5 meters. This will require different manufacturing facilities and production methods, but will also require different skillsets of our production colleagues. We have been studying different manufacturing options and resulting business scenarios during the past two years and have projected a preferred set-up for which we are seeking a committed financing solution. We made substantial progress and are well aware that by the start of 2025 this set-up needs to be operational to service our clients, amongst whom our launching customers that intend to commit to 400 Kton launching production capacity subject to timely FID for the expansion plans. In the meantime, we notice that various other main offshore wind supply chain companies have challenges in realizing a decent return on the capital invested as economical depreciation periods are often too short. For our investment case we therefore set the earn back period on three to maximum four years. We have shared our plans with clients and other value chain participants and their feedback has confirmed the robustness of our strategic ambitions for 2025 and beyond. All actions are geared towards an FID as soon as possible, aiming for completion of the expansion in the second half of 2024 to be fully operational by early 2025."
The production in the first half of 2022 was mainly composed of activities for Hollandse Kust Zuid, Dogger Bank A, Hollandse Kust Noord and Dogger Bank B. Total production for the first half of 2022 ended at 89 Kton (88 Kton in HY1 2021). We manufactured 74 monopiles and 55 transition pieces in the first half of 2022, compared to 102 and 3 respectively in 2021. Realised contribution, adjusted for contribution from marshalling and other, of €612 per ton was in line with the first half of 2021 when it was €614 per ton. Results in the first half of 2022 saw lower margins on subcontracted work being offset by incremental marshalling and logistics related work.
Steel is a pass-through cost for Sif. Therefore, contribution, compared to for example revenues, is a better performance indicator for comparison year-on-year.
Gross profit per ton was affected by higher energy costs, increased sickness-leave and lower efficiency as a consequence of the tight labour market and challenge to find experienced workforce. EBITDA was reported at €19.1 million (HY 2021: €20.2 million). Adjusted with €2 million for non-recurring expenses relating to the strategic plans to expand manufacturing facilities, this resulted in adjusted EBITDA of €21.1 million (€237 per ton) compared to €20.6 million (€234 per ton) for the first half of 2021. Depreciation in the first half of 2022 was higher compared to the same period in 2021 due to depreciation of investments for marshalling activities and of leased transportation equipment. Net profit consequently was €2.5 million lower compared to the same period in 2021.
At the end of the first half of 2022 Sif employed 220 FTE temporary workers (194 FTE end of June 2021) and 368 FTE permanent staff (388 FTE end of June 2021). High absence of permanent staff due to sickness and difficulties to replace departing staff, resulted in more temporary workers in the first half of 2022.
On balance sheet date, Sif had no external debt (excluding lease liabilities). This is in line with 30 June 2021. The cash position amounted to €57.6 million (€61.7 million at the end of the first half of 2021). The leverage ratio at the end of June 2022 was 0. For covenant purposes, net debt is stated on an IFRS16 excluded basis. The leverage covenant as of end of 2021 is fixed at 2.5 until the current credit facility reaches maturity on March 31, 2024. Solvency covenant going forward is >35%. With 51% solvency at the end of June 2022, Sif complies with its covenants.
The demand for operating working capital defined as current operating assets minus current operating liabilities was -/- € 42.0 million (-/- € 56.9 million at the end of June 2021).
Current operating assets include inventories, contract assets, trade receivables and prepayments. Current operating liabilities include trade payables and contract liabilities.
Wind park Maasvlakte 2 at Rotterdam
Today's order book for the remainder of 2022 includes an estimated 2022 full year production of 174 Kton. This implies an expected production of 85 Kton for the second half of 2022 where we will mainly manufacture for the Dogger Bank B project. We have secured sourcing of steel and energy as far as we could. A new framework agreement with steel supplier Dillinger Hütte is being negotiated and certification of steel from alternative suppliers is in progress for a back-up scenario against the background of uncertain and volatile steel markets. We expect a level of adjusted EBITDA for the full year 2022 that is slightly higher compared to adjusted EBITDA of €39.4 million in 2021.
The order book for 2023 and beyond has 263 Kton contracted work and 19 Kton under exclusive negotiations. This does not yet include 400 Kton production from launching customers with whom we are in exclusive negotiations and which are subject to timely realization of the expansion plan.
The number of tenders in process for monopiles with diameters larger than 9 meters is massive which underpins the overheated market demand. The upscaled ambitions for production of sustainable energy by various European countries, the USA and Asia, imply the total offshore wind supply chain will face high growth rates for the years to come with the biggest challenge to manage the fast growth from a human resources, suppliers and investment perspective. A clear and long term transparent governmental tender pipeline and tender award process is key to assure political
ambitions are met to some reasonable extent especially for the period till 2030. Despite all investment initiatives from existing suppliers and new entrants the risk of undersupply of foundations for offshore wind farms remains realistic.
artist impression of expanded facilities
The Management Board of Sif Holding NV ("Sif") hereby declares that, to the best of its knowledge, the unaudited interim condensed financial statements for the period ending 30 June 2022, which have been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed by the EU, give a true and fair view of the assets, liabilities, financial position and profit and loss of Sif and its consolidated companies included in the consolidation as a whole, and that the report by the Management Board included in this interim report 2022 gives a fair view of the information required in accordance with Section 25d, subsections 8 and 9 of Book 5 of the Dutch Financial Supervision Act (Wet op het financieel toezicht).
Roermond, 25 August 2022 Fred van Beers (CEO) Ben Meijer (CFO)
| Contribution | Total revenue minus cost of raw materials, subcontracted work | |
|---|---|---|
| and other external charges and logistic and other project related expenses. |
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| EBITDA | Earnings before net finance costs, tax, depreciation and amortization. |
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| The company discloses EBITDA and Adjusted EBITDA as supplemental non-IFRS financial measures, as the company |
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| believes these are meaningful measures to evaluate the performance of the company's business activities over time. The company understands that these measures are used by |
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| analysts, rating agencies and investors in assessing the | ||
| company's performance. The company also believes that the presentation of EBITDA or Adjusted EBITDA provide useful |
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| information to investors on the development of the company's business. EBITDA or Adjusted EBITDA are also used by the |
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| company as key financial measures to assess the operating performance of the operations. |
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| Net earnings | Profit attributable to the shareholders | |
| Net debt | Loans and borrowings minus cash and cash equivalents. |
Net debt is presented to express the financial strength of the company. The company understands that this measure is used by analysts, rating agencies and investors in assessing the company's performance
Adjusted EBITDA EBITDA corrected for incidental expenses or income
The company discloses EBITDA or Adjusted EBITDA as supplemental non-IFRS financial measures, as the company believes these are meaningful measures to evaluate the performance of the company's business activities over time. The company understands that these measures are used by analysts, rating agencies and investors in assessing the company's performance. The company also believes that the presentation of EBITDA or Adjusted EBITDA provide useful information to investors on the development of the company's business. EBITDA or Adjusted EBITDA are also used by the company as key financial measures to assess the operating performance of the operations.
| Solvency | Equity/balance sheet total |
|---|---|
| Executive Board | Board of Executive directors responsible for the day-to-day |
| business at Sif. In 2021 comprised of CEO and CFO. | |
| Kton | Kilotons: A weight measurement used in the steel industry. One |
| Kiloton equals one million kilograms. | |
Working capital Inventories plus contract assets plus trade receivables plus current prepayments minus trade payables and contract liabilities)
The company discloses working capital as a supplemental non-IFRS financial measure, as the company believes it is a meaningful measure to evaluate the company's ability to maintain a solid balance between growth, profitability and liquidity. Working capital is broadly analyzed and reviewed by analysts and investors in assessing the company's performance. This measure serves as a metric for how efficiently a company is operating and how financially stable it is in the short term. It is an important measure of a company's ability to pay off short term expenses or debts.
| LTI | Lost Time Incidents. |
|---|---|
| LTIF | Lost Time Injury Frequency, measured over the past 12 months. |
| Order book | The total of signed contracts and contracts under exclusive negotiations. |
| ROACE | Earnings before interest and tax as a % of average equity plus |
|---|---|
| loans and borrowings excluding lease-commitments minus cash | |
| Sif Group | The group of companies that together establish the Sif Group: |
| Also referred to as 'Company' or 'Sif'. | |
| Sif Holding N.V. | The entity whose shares are listed on the stock exchange. |
Trading Update Q3 2022 4 November 2022
Following this release, the CEO and CFO of Sif will present the 2022 interim results during audio webcast of a live-analyst meeting/conference call on August 26, 2022 at 10:00 AM CET. A transcript of the meeting will be available on the Sif website shortly after the meeting. The meeting can be followed (audio and slides only) via the link on the Company's website www.sif-group.com
| AMOUNTS IN EUR '000 Notes |
2022 | 2021 |
|---|---|---|
| Unaudited | Unaudited | |
| Revenue from contracts with customers | 185,709 | 246,575 |
| Operating lease income | 5,585 | 2,698 |
| Total revenue 4 |
191,294 | 249,273 |
| Raw materials | 98,670 | 73,300 |
| Subcontracted work and other external charges | 17,717 | 101,299 |
| Logistic and other project related expenses | 11,428 | 16,998 |
| Direct personnel expenses | 17,650 | 16,723 |
| Production and general manufacturing expenses | 7,860 | 5,087 |
| Indirect personnel expenses | 11,299 | 10,430 |
| Depreciation and amortization | 11,663 | 9,822 |
| Facilities, housing and maintenance | 2,339 | 1,928 |
| Selling expenses | 279 | 262 |
| General expenses | 4,916 | 3,013 |
| Operating profit | 7,473 | 10,411 |
| Impairment (losses) / reversals on financial assets | (2) | 2 |
| Finance costs | (1,074) | (1,198) |
| Finance costs and impairment losses | (1,076) | (1,196) |
| Share of profit / (loss) of joint ventures | (21) | - |
| Profit before tax | 6,376 | 9,215 |
| Income tax expense | 1,633 | 2,015 |
| Profit after tax | 4,743 | 7,200 |
| Attributable to: | ||
| Non-controlling interests | 163 | 166 |
| Equity holders of Sif Holding N.V. | 4,580 | 7,034 |
| Profit after tax | 4,743 | 7,200 |
| Earnings per share | ||
| Number of ordinary shares outstanding | 25,501,356 | 25,501,356 |
| Basic earnings per share (EUR) | 0.18 | 0.28 |
| Diluted earnings per share (EUR) | 0.18 | 0.28 |
| AMOUNTS IN EUR '000 | Notes | 30-Jun-2022 | 31-Dec-2021 |
|---|---|---|---|
| Unaudited | Audited | ||
| Assets | |||
| Intangible fixed assets | 226 | 477 | |
| Property, plant and equipment | 5 | 104,799 | 107,612 |
| Right-of-use assets | 107,622 | 104,598 | |
| Investment property | 425 | 425 | |
| Investments in joint ventures | 94 | 115 | |
| Deferred tax assets | 791 | 748 | |
| Total non-current assets | 213,957 | 213,975 | |
| Inventories | 631 | 612 | |
| Contract assets | 6 | 15,926 | 12,944 |
| Trade receivables | 7 | 19,092 | 17,927 |
| VAT receivable | - | 50 | |
| Prepayments | 2,177 | 2,472 | |
| Cash and cash equivalents | 57,569 | 73,201 | |
| Total current assets | 95,395 | 107,206 | |
| Total assets | 309,352 | 321,181 |
| AMOUNTS IN EUR '000 Notes |
30-Jun-2022 | 31-Dec-2021 | |
|---|---|---|---|
| Unaudited | Audited | ||
| Equity | |||
| Share capital | 5,100 | 5,100 | |
| Additional paid-in capital | 1,059 | 1,059 | |
| Retained earnings | 91,271 | 84,527 | |
| Result for the year | 4,580 | 11,590 | |
| Equity attributable to | |||
| shareholder | 102,010 | 102,276 | |
| Non-controlling interests | 984 | 821 | |
| Total equity | 102,994 | 103,097 | |
| Liabilities | |||
| Lease Liabilities - non-current | 101,386 | 100,573 | |
| Employee benefits - non-current | 369 | 416 | |
| Other non-current liabilities | 1,141 | 1,407 | |
| Total non-current liabilities | 102,896 | 102,396 | |
| Lease Liabilities - current | 7,906 | 5,110 | |
| Trade payables | 59,072 | 62,082 | |
| Contract Liabilities | 6 | 20,781 | 37,713 |
| Employee benefits - current | 2,471 | 2,460 | |
| Wage tax and social security | 1,685 | 791 | |
| VAT payable | 1,172 | - | |
| CIT payable | 2,408 | 2,081 | |
| Other current liabilities | 7,967 | 5,451 | |
| Total current liabilities | 103,462 | 115,688 | |
| Total liabilities | 206,358 | 218,084 | |
| Total equity and liabilities | 309,352 | 321,181 | |
| Additional paid | Retained earn | Result for the | Non-controlling | ||||
|---|---|---|---|---|---|---|---|
| AMOUNTS IN EUR '000 | Share capital | in capital | ings | year | Total | interests | Total equity |
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Balance as at 1 January 2022 | 5,100 | 1,059 | 84,527 | 11,590 | 102,276 | 821 | 103,097 |
| Appropriation of result | - | - | 11,590 | (11,590) | - | - | - |
| Total comprehensive income | |||||||
| Profit for the year | - | - | - | 4,580 | 4,580 | 163 | 4,743 |
| Total comprehensive income | - | - | - | 4,580 | 4,580 | 163 | 4,743 |
| Transactions with owners of the Company | |||||||
| Dividend distributions | - | - | (4,846) | - | (4,846) | - | (4,846) |
| Total transactions with owners of the | |||||||
| Company | - | - | (4,846) | - | (4,846) | - | (4,846) |
| Balance as at 30 June 2022 | 5,100 | 1,059 | 91,271 | 4,580 | 102,010 | 984 | 102,994 |
| Balance as at 1 January 2021 | 5,100 | 1,059 | 80,316 | 7,271 | 93,746 | 524 | 94,270 |
| Appropriation of result | - | - | 7,271 | (7,271) | - | - | - |
| Total comprehensive income | |||||||
| Profit for the year | - | - | - | 11,590 | 11,590 | 297 | 11,887 |
| Total comprehensive income | - | - | - | 11,590 | 11,590 | 297 | 11,887 |
| Transactions with owners of the Company | |||||||
| Dividend distributions | - | - | (3,060) | - | (3,060) | - | (3,060) |
| Total transactions with owners of the | |||||||
| Company | - | - | (3,060) | - | (3,060) | - | (3,060) |
| Balance at 31 December 2021 | 5,100 | 1,059 | 84,527 | 11,590 | 102,276 | 821 | 103,097 |
| AMOUNTS IN EUR '000 | 2022 | 2021 |
|---|---|---|
| Unaudited | Unaudited | |
| Cash flows from operating activities | ||
| Profit before tax | 6,376 | 9,215 |
| Adjustments for: | ||
| Depreciation and amortization of Property, Plant and Equipment and Intangible | ||
| assets | 7,058 | 7,374 |
| Depreciation of right-of-use assets | 4,605 | 2,449 |
| Unrealised changes in joint ventures | 21 | 1 |
| Impairment (losses) / reversals on financial assets | - | 2 |
| Net finance costs | 1,074 | 1,196 |
| Changes in net working capital | ||
| o Inventories | (19) | (140) |
| o Contract assets and liabilities | (19,914) | 80,308 |
| o Trade receivables | (1,165) | 620 |
| o Prepayments | 160 | (1,934) |
| o Trade payables | (3,014) | (25,584) |
| Total changes in net working capital | (23,952) | 53,270 |
| VAT payable and receivable | 1,222 | 192 |
| Initial direct costs on operating lease contracts | (605) | - |
| Other financial assets | - | 1,186 |
| Employee benefits | (36) | (726) |
| Wage tax and social security | 894 | (1,141) |
| Other liabilities | 3,607 | (201) |
| Government grants received | 516 | 375 |
| Income taxes received / (paid) | (1,349) | (2,075) |
| Interest received / (paid) | (458) | (440) |
| Net cash from operating activities | (1,027) | 70,677 |
| AMOUNTS IN EUR '000 | 2022 | 2021 |
|---|---|---|
| Unaudited | Unaudited | |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (5,869) | (4,777) |
| Acquisition of subsidiaries | - | (578) |
| Net cash from (used in) investing activities | (5,869) | (5,355) |
| Cash flows from financing activities | ||
| Payment of lease liabilities | (3,890) | (3,197) |
| Dividends paid | (4,846) | (3,060) |
| Net cash from (used in) financing activities | (8,736) | (6,257) |
| Net increase / (decrease) in cash and cash equivalents | (15,632) | 59,065 |
| Cash and cash equivalents at 1 January | 73,201 | 2,645 |
| Cash and cash equivalents at 30 June | 57,569 | 61,710 |
Sif Holding N.V. (the 'Company') is a company domiciled in the Netherlands. The Company's registered office is at Mijnheerkensweg 33, Roermond. These interim condensed consolidated financial statements comprise the Company and its subsidiaries (collectively the 'Group' and individually 'Group companies').
The Group is primarily involved in the manufacturing of metal structures, parts of metal structures, pipes, pipe structures, components for the offshore industry and foundation piles for offshore wind farms.
These interim condensed consolidated financial statements for the period ended 30 June 2022 have been prepared in accordance with International Financial Reporting Standards IAS 34 (Interim Financial Reporting) as adopted by the European Union (EU-IFRS).
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2021.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of new standards effective as of 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The interim condensed consolidated financial statements have been prepared on a historical cost basis, except for investment property that have been measured at fair value. The Group's consolidated financial statements are presented in EUR ('000), which is also the Company's functional currency, if not stated otherwise. All values are rounded to the nearest thousands (EUR '000) on individual line items which can result in minor rounding differences in sub-totals and totals, except when otherwise indicated. The interim condensed consolidated financial statements have not been audited.
The preparation of the Group's interim condensed consolidated financial statements requires management to make estimates and assumptions. To make these estimates and assumptions, the Group uses factors such as experience and expectations about future events that are reasonably expected to occur given the information that is currently available. These estimates and assumptions are reviewed on an ongoing basis.
Revisions of accounting estimates and assumptions, or differences between accounting estimates and assumptions and the actual outcomes, may result in adjustments to the carrying amounts of assets and liabilities, which would be recognised prospectively.
Revenues from contracts with customers and direct costs are recognised in the statement of profit or loss in proportion to the satisfaction over time of each performance obligation. The satisfaction is assessed based on the actual hours incurred compared with the estimated hours needed to complete the full performance obligation. In addition, management estimates at each reporting date the total expected costs to be incurred for each individual performance obligation and adjustments are made where appropriate.
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to terminate or extend the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew or to terminate (e.g., a change in business strategy).
In previous years, the Group entered into a lease agreement with Havenbedrijf Rotterdam N.V. for the lease of three plots in the Rotterdam harbour. The leases contractually end as per 1 July 2041 and the plots are cancellable as per 1 July 2031.
The costs of the jubilee scheme are calculated according to actuarial methods. The actuarial method uses assumptions about discount rates, future salary increases, and retention rates. Such estimates are very uncertain, owing to the long-term nature of the scheme. The assumptions used are reviewed each reporting date.
The amendments prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
Companies are required to apply the amendment to annual reporting periods beginning on or after 1 January 2022. The amendment must be applied retrospectively but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments.
These amendments had no impact on the interim condensed consolidated financial statements of the Group.
The amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a "directly related cost approach". The costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and supervision) directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
These amendments had no impact on the interim condensed consolidated financial statements of the Group.
The amendments replaced the reference to an old version of the IASB's Conceptual Framework (the 1989 Framework) with a reference to the current version issued in March 2018 (the Conceptual Framework). The amendments further added an exception to the recognition principle in IFRS 3. That is, for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21, if incurred separately an acquirer would apply IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to identify the obligations it has assumed in a business combination. The amendment further added an explicit statement in the standard that an acquirer cannot recognise contingent assets acquired in a business combination.
Since the Group's practice was already in line with the amendments, the amendments had no impact on the interim condensed consolidated financial statements of the Group.
The following table presents revenue and profit information for the Group's operating segments for the six months ended 30 June 2022 and 2021, respectively.
| AMOUNTS IN EUR '000 | 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
| Wind | Marshalling | Other | Total | Wind | Marshalling | Other | Total | |
| - Revenue from contracts with | ||||||||
| customers | 181,547 | 1,136 | 3,026 | 185,709 | 243,081 | 1,343 | 2,151 | 246,575 |
| - Operational lease income | - | 4,782 | 803 | 5,585 | - | 1,915 | 783 | 2,698 |
| Total revenue | 181,547 | 5,918 | 3,829 | 191,294 | 243,081 | 3,258 | 2,934 | 249,273 |
| Segment contribution | 54,478 | 5,402 | 3,599 | 63,479 | 53,739 | 1,063 | 2,874 | 57,676 |
| Gross profit | 31,265 | 5,389 | 1,315 | 37,969 | 33,478 | 1,038 | 1,350 | 35,866 |
| Indirect personnel expenses | (11,299) | (10,430) | ||||||
| Depreciation and impairment | (11,663) | (9,822) | ||||||
| Facilities, housing & maintenance | (2,339) | (1,928) | ||||||
| Selling expenses | (279) | (262) | ||||||
| General expenses | (4,916) | (3,013) | ||||||
| Net finance costs | (1,076) | (1,196) | ||||||
| Joint ventures | (21) | - | ||||||
| Total profit before tax | 6,376 | 9,215 | ||||||
The depreciation and impairment expenses includes an amount of EUR 1.9 million (2021: EUR 0.8 million), which is related to the capitalised ground lease expenses for the logistical area (EUR 0.8 million, 2021: EUR 0.8 million) and initial direct costs for an operational lease contract (EUR 1.1 million, 2021: nihil) in the Marshalling segment (under IFRS 16).
The increase in the general expenses is mainly attributable to the expenses incurred related to the expansion plans (EUR 2.0 million, 2021: EUR 0.4 million).
For management purposes, the Group is organised into divisions based on its products and services and has three operating segments:
Other.
These divisions offer different products and services, and require different technology and target different markets.
The Group's revenues do not have a seasonal pattern. Finance income, finance costs, taxes and fair value gains and losses on certain financial assets and liabilities are not allocated to individual segments as these are managed on an overall group basis. Total assets, which are all located in the Netherlands, are not allocated to individual segments as these are managed on an overall group basis.
During the six months ended 30 June 2022, the Group acquired assets with a cost of EUR 4.0 million (the six months ended 30 June 2021 EUR 6.0 million). All acquisitions are related to assets under construction (the six months ended 30 June 2021 EUR 6.0 million).
| AMOUNTS IN EUR '000 | 30-Jun-2022 | 31-Dec-2021 |
|---|---|---|
| Contract assets | 15,926 | 12,944 |
| Contract liabilities | (20,781) | (37,713) |
| (4,855) | (24,769) | |
| Expenses incurred including realized profit to | ||
| date | 1,004,341 | 831,510 |
| Invoiced terms | (1,009,196) | (856,279) |
| (4,855) | (24,769) | |
Management periodically reviews the valuation of work in progress based on project agreements, project results till date and estimates of project expenses to be incurred. Each period end management assesses the status of the projects and
takes into consideration all aspects in order to finalize the projects in line with contractual agreement and relating contingencies, such as potential upward or downward adjustment in the projected estimates, and accounts for them accordingly. Due to changes in estimates, fluctuations in the anticipated project result can occur over the contract term.
At balance sheet date management made a reassessment of the applicable variable considerations related to liquidated damages in projects in progress. This resulted in a total increase in transaction price amounting to EUR 2.2 million.
The contract assets concern all projects in progress for which the incurred expenses, including realized profit and project losses to date (if any), exceed the terms invoiced to customers. The contract liabilities concern the balances of all projects in progress for which the invoiced terms exceed expenses incurred plus recorded profit minus project losses if any. The negative balance position is the result of regular invoiced installments. In addition, the estimated bond costs for completed contracts which are expected to be incurred within 12 months after balance sheet date are recorded as part of the contract liabilities, which amount to EUR 0.7 million at 30 June 2022 (31 December 2021: EUR 0.7 million).
Both the contract assets and contract liabilities predominantly have durations shorter than 12 months and are therefore considered to be current.
At 30 June 2022 no amount of the total open balance refers to related parties.
Included in the interim condensed consolidated financial statements are the following subsidiaries:
| Name | Location | Share in issued capital % |
|---|---|---|
| Sif Property B.V. | Roermond | 100 |
| Sif Netherlands B.V. | Roermond | 100 |
| Sif Japan K.K. | Tokyo | 95 |
| Twinpark Sif BV | Roermond | 60 |
| Zonnepanelen Maasvlakte B.V. | Rotterdam | 100 |
| KCI The Engineers B.V. | Schiedam | 100 |
At 30 June 2022, the Group's commitments for the purchase of property, plant and equipment amounts to EUR 5.2 million (per 31 December 2021: EUR 1.1 million) relating to the purchase of property, plant and equipment items. The commitments for raw materials amounts to EUR 177.9 million (per 31 December 2021: EUR 287.9 million) and commitments for subcontracting amounts to EUR 9.4 million (per 31 December 2021: EUR 16.8 million).
At 30 June 2022 guarantee facilities of the Group can be specified as follows:
| Name | Type | 30 June 2022 | 31 December 2021 | ||
|---|---|---|---|---|---|
| AMOUNTS IN EUR '000 | Total facility | Used | Total facility | Used | |
| Euler Hermes S.A. / Tokio Marine Europe S.A. | General | 130,000 | 97,209 | 130,000 | 127,929 |
| Coöperatieve Rabobank U.A. | General | 40,000 | 11,255 | 40,000 | 11,255 |
| ING Bank N.V. | General | 40,000 | 33,623 | 40,000 | 33,623 |
| ABN AMRO Bank N.V. | General | 40,000 | 18,333 | 40,000 | 27,589 |
| Coöperatieve Rabobank U.A. | Project | - | - | 3,604 | 3,604 |
| ING Bank N.V. | Project | - | - | 3,604 | 3,604 |
| Total | 250,000 | 160,420 | 257,208 | 207,604 | |
The Group is jointly and severally liable for all amounts to which Euler Hermes S.A., Tokio Marine Europe S.A., ING Bank N.V., ABN Amro Bank N.V. and Coöperatieve Rabobank U.A. have a right to claim in relation to the above mentioned guarantees. The former shareholder is also jointly and severally liable for all amounts of the pending guarantees which have been provided before 12 May 2016.
In 2022 the Group did pay out a dividend related to financial year 2021 amounting to EUR 4.8 million (in 2021 over 2020: EUR 3.1 million).
The FID for the expansion plan, which was planned in July 2022, has been suspended until further notice. Reference is made to 'Message from CEO Fred van Beers' for further information.
In addition to the above, there were no material events after 30 June 2022.
Roermond, XX August 2022 The Board of Directors:
G.G.P.M. van Beers B.J. Meijer
Corporate seat Roermond
Chamber of Commerce Roermond
Shareholder, clearing and settlement agent Euroclear Nederland
Listing and payment agent ABN AMRO Bank NV
Address Mijnheerkensweg 33 6040 AM Roermond The Netherlands
Telephone +31 475 385777
E-mail [email protected]
No. 13027369
Herengracht 459-469 1017 BS Amsterdam The Netherlands
Gustav Mahlerlaan 10 1082 PP Amsterdam The Netherlands
Mijnheerkensweg 33 6040 AM Roermond The Netherlands Telephone: +31 475 385777 E- mail: [email protected]
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