Beerenberg

Quarterly Report • May 15, 2019

Headlines

"High activity in all business areas, important new contracts awarded and steadily improving market"

REVENUE

* includes frame agreements and exercise of options

** Employees end of quarter

Group Overview

The highlights for Beerenberg (Beerenberg AS consolidated) in the 1^st quarter were:

• Revenue was MNOK 444, up 38% compared to 1^st quarter 2018.
• EBITDA of MNOK 34, up from MNOK 28 compared to Q1 2018. Higher activity within new build is the main reason for the increase in FRITDA
• ISS contract for Johan Sverdrup P2 topside of MNOK 250 awarded
• Total order intake in the period was MNOK 370 vs MNOK 250 1st quarter 2018.
• Estimated order backlog at the end of the quarter was BNOK 9.5.

Income Statement

Revenue in 1^st quarter was MNOK 444 compared to MNOK 322 in 1^st quarter 2018. The increase from the corresponding quarter last year relates to work at Johan Sverdrup and high demand for maintenance offshore. The revenue is also somewhat up from previous quarter due to general high activity in the ISS market.

With an EBITDA of MNOK 34, the EBITDA margin ended at 7.7%, up from 4.9% compared to previous quarter. Improved margin in Benarx explains most of the improvement.

Financial cost in the 1^st quarter 2019 was MNOK 21, somewhat lower than 1^st quarter of 2018.

Net loss in 1^st quarter 2019 was MNOK 3 compared to a loss of MNOK 7 in 1^st quarter 2018.

Balance Sheet

Total assets were MNOK 1 706 at the end of the quarter with an equity ratio of 23%,

Total non-current assets increased by MNOK 55 compared to reported 1^st quarter 2018. The increase is mainly due to implementation of the new leasing standard IFRS 16. Please see note 7 for further information. Current assets ended at MNOK 624, up from MNOK 595 at the end 1^st quarter 2018. Total current liabilities were MNOK 366 compared to MNOK 318 at the end of 1st quarter 2018. The balance sheet reflects current activities.

Total non-current liabilities were MNOK 949 compared to 885 at the end of 1^st quarter 2018. The increase is also affected by implementation of IFRS 16. The Senior Secured Bond of MNOK 850 was issued in 01 2017 and mature in 2021.

Net interest-bearing debt was MNOK 740 compared to MNOK 631 in 1^st quarter 2018. Approximately MNOK 70 of this increase relates to the implementation of IFRS 16.

Cash Flow

Total cash flow for the 1st quarter 2019 was MNOK-18 compared to MNOK 34 in 1st quarter of 2018. The decrease is mainly explained by increase in working capital due to growth in activity.

Cash flow from operating activities was MNOK 15 in Q1 2019 versus 58 MNOK the corresponding quarter in 2018. Net cash flow from investment activities was MNOK -9 versus MNOK -6 the 1^st quarter last year. Net cash flow from financing activities was MNOK -24, mainly payment of interest. Note that payments of leasing, related to IFRS 16, are reported as cash flow from financing activities.

Order Backlog & Market

The tender activity has been high during the 1st quarter of 2019 relating both to maintenance and new build projects.

Total order intake of new contracts was approximately MNOK 370 for the period. The major award was the Subcontract for Johan Sverdrup P2 Topside for Aibel in Haugesund. This is the latest among several contracts that have been won for the Johan Sverdrup development. This includes, among others, Johan Sverdrup hook-up contract for Aker Solutions awarded in 2017, frame agreement with Kværner for jackets and Benarx insulation products for a number of other contracts. The current estimated order backlog (including frame agreements and options) is BNOK 9,5.

HSEQ

At the end of Q1 2019 Beerenberg had 1235 employees, up from 1131 last quarter.

No serious incidents this quarter, results in a total Serious Incident Frequency (SIF) in the period of 0 and 0,9 during the last 12 months.

"Margin in Benarx has improved due to reduced cost and improved efficiency in production"

Business Segments

Services

The service segment reports this quarter an increase in revenue of 41% compared to 1^st quarter 2018. The revenue ended at MNOK 402 with EBITDA margin of 7.6%. The main reasons for the higher revenue are increased activity within new build projects and generally higher activity in the maintenance portfolio.

Benarx

Sales in Benarx this quarter ended at MNOK 66, up from MNOK 59 the 1^st quarter 2018. The margin has improved, both compared to corresponding quarter last year and previous quarters. Benarx reports an EBITDA margin in 1^st guarter 2019 of 5.6% versus 4.5% the 1^st quarter 2018. The EBITDA ended at MNOK 3.7. Reduced costs and improved efficiency in the production in Poland are the main reasons for the improvements.

FIGURES & NOTES

Figures for Beerenberg

Condensed Consolidated Income Statement

Group Summary		Q1	Q1	YTD	YTD	FY
Amounts in NOK million	Note	2019	2018	2019	2018	2018
Operating revenue	$\epsilon$	443,5	322,3	443,5	322,3	1519,6
Operating expenses		409,2	294.8	409,2	294,8	1422,5
EBITDA	6	34,3	27,5	34,3	27,5	97,0
Depreciation		12,9	7,4	12,9	7,4	32,1
EBITA		21,4	20,0	21,4	20,0	65,0
Amortisation		4,6	4,7	4,6	4,7	17,3
Operating profit (EBIT)		16,8	15,3	16,8	15,3	47,7
Finance costs - net	$\overline{4}$	20,5	24,6	20,5	24,6	77,9
Profit before tax (EBT)		$-3,7$	$-9,3$	$-3,7$	$-9,3$	$-30,2$
Income Tax expense		$-0,8$	$-2,1$	$-0,8$	$-2,1$	1,2
Net profit		$-2,9$	$-7,1$	$-2,9$	$-7,1$	$-31,4$
Profit for the period is attributable to:
Shareholders of the parent company		$-2,9$	$-7,1$	$-2,9$	$-7,1$	$-31,4$
Basic earnings per share (NOK) Diluted earnings per share are identical as there are no dilutive effect		$-0,01$	$-0.03$	$-0,01$	$-0.03$	$-0,12$
EBITDA margin		7,7%	8,5%	7,7%	8,5%	6,4 %
EBITA margin		4,8%	6,2%	4,8%	6,2%	4,3%

Condensed Consolidated Statement of Comprehensive Income

		Q1	Q1	YTD	YTD	FY
Amounts in NOK million	Note	2019	2018	2019	2018	2018
Net profit for the period		$-2,9$	$-7,1$	$-2.9$	$-7,1$	$-31.4$
Other comprehensive income:
Conversion differences		$-1,1$	$-0,3$	$-1,1$	$-0.3$	$-0.6$
Change in value of derivatives		1.0	5.2	1,0	5.2	3,8
Total comprehensive income		$-3,0$	$-2,2$	$-3,0$	$-2,2$	$-28.2$

Condensed Consolidated Balance Sheet

Group Summary		Q1	Q1	FY.
Amounts in NOK million			Note 31.03.2019 31.03.2018 31.12.2018
Goodwill		782,8	786,2	782,8
Intangible assets		61,4	71,1	65,9
Property, plant and equipment	7	238,2	170,1	171,8
Total non-current assets		1082,3	1027,5	1020,5
Goods		49,8	46,2	44,8
Accounts receivables from customers		165,5	223,2	186,4
Earned Not Invoiced Revenue (WIP)		206,3	77,5	163,7
Other Short Term Receivables		20,2	24,7	13,7
Cash and cash equivalents		181,8	223,5	199,3
Total Current Assets		623,5	595,1	607,8
TOTAL ASSETS		1705,8	1622,6	1628,3
Share Capital		26,7	26,7	26,7
Share premium		240,3	240,3	240,3
Retained Earnings		126,8	152,9	127,0
Current year result after est. Tax		$-2,9$	0,0	0,0
Total equity		391,0	420,0	394,0
Deferred tax liabilities		2,5	2,3	2,7
Pension obligations		7,3	9,5	7,2
Warranty provision		16,5	14.0	16,5
Financial Lease Ioan	7	74,1	10,6	8,2
Bond	$\overline{4}$	841,7	837,3	840,6
Derivatives		7.1	11,1	9,5
Total non-current liabilities		949,2	884,7	884,6
Overdraft & accrued interests		6,4	6,8	6,8
Supplier liabilities		144,6	69,3	147,6
Tax payable		0,0	23,0	0,0
Social Security, VAT and other taxes		56,9	52,8	57,2
Accruals		65,9	73,3	71,7
Deferred Revenue		5,1	0,2	0,0
Other Current Liabilities		86,7	92,6	66,4
Total Current Liabilities		365,6	318,0	349,7
TOTAL EQUITY & LIABILITY		1705,8	1622,6	1628,3

Condensed Consolidated Statement of Change in Equity

Amounts in NOK million	Share capital	Share premium	Conversion reserve	Hedging reserve	Retained earnings	Total
01. January 2019	26,7	240,3	4.9	$-3,1$	125,1	394,0
Net profit Other Comprehensive Income			$-1,1$	1,0	$-2.9$	$-2.9$ $-0.1$
Equity as per 31.03.2019	26,7	240.3	3,8	$-2.0$	122.2	391,0

Amounts in NOK million	Share capital	Share premium	Conversion reserve	Hedging reserve	Retained earnings	Total
01. January 2018	26,7	240.3	5,5	-6,9	156.5	422,2
Net profit Other Comprehensive Income			$-0.3$	5,2	$-7.1$	$-7.1$ 4,9
Equity as per 31.03.2018	26,7	240.3	5,2	$-1,7$	149.4	420,0

		Q1	Q1	YTD	YTD	FY.
Amounts in NOK million	Note	2019	2018	2019	2018	2018
EBITDA		34,3	27,5	34,3	27,5	97,0
Taxes paid		0,0	$-17,0$	0,0	$-17,0$	$-41,5$
Change in net working capital		$-18,1$	56,3	$-18,1$	56,3	75,3
Changes to other time restricted items		$-0,9$	$-8,7$	$-0,9$	$-8,7$	$-10,1$
Net Cash flow from operating activities		15,3	58,1	15,3	58,1	120,8
Net cash effect acquisition of subsidiary		0,0	0,0	0,0	0,0	0,0
Capex		$-9,2$	$-5,6$	$-9,2$	$-5,6$	$-38,9$
Net cash flow from investing activities		$-9,2$	$-5,6$	$-9,2$	$-5,6$	$-38,9$
Net repayment of interest bearing debt		$-3,9$	$-0,8$	$-3,9$	$-0,8$	$-3,2$
Payment of Group contribution		0,0	0,0	0,0	0,0	0,0
Net interest paid	4	$-19,7$	$-17,6$	$-19,7$	$-17,6$	$-68,8$
Net cash flow from financing activities		$-23,6$	$-18,4$	$-23,6$	$-18,4$	$-72,0$
Total cash flow		$-17,5$	34,1	$-17,5$	34,1	9,9
Opening balance net bank deposits		199,3	189,4	199,3	189,4	189,4
Closing balance net bank deposits		181,8	223,5	181,8	223,5	199,3

Notes

Note 1 - General

Beerenberg AS is a company domiciled in Norway. The consolidated financial statements of Beerenberg AS comprise the company and its subsidiaries, together referred to as the group. The Beerenberg Group was established 01. March 2013, as a result of the Beerenberg 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 2018 provides further information on risks and uncertainties applicable to Beerenberg.

Shareholders in Beerenberg AS are specified in table below.

Shareholders	A-Shares	%	B-Shares	%	Total Shares	$\%$
Segulah IV L.P.	828407	82.8%	221 980 303	83.5%	222 808 710	83,4 %
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	$2.3\%$	6310883	2.4%	6334202	2,4%
Management	56 153	5.6 %	12 777 704	4.8%	12833857	4,8 %
Total	- 000 000	100 %	266,000,000	100%	267 000 000	$100\%$

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 2018. The accounting policies applied in the interim financial statements is the same as those described in the Annual Report for 2018, with the exceptions of IFRS 16 Leasing. This standard is new and implemented as of 01.01.2019. Refer to note 7 for implication effects of this standard and refer to note 3, section New standards and interpretations not yet adopted, in the Annual Report for 2018 for further description of this standard.

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 2018 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 this 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 2018. Please refer to Note 3 in the Annual Report for 2018.

Note 4 - Bond and covenants

A 4-year Senior Secured Bond of MNOK 850 was issued in Q1 2017, and the previous bond of MNOK 1100 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 31.03.2019.

Note 5 - Related party transactions

No related party transactions were conducted in 1^st Quarter of 2019.

Note 6 Operating segments

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.

Revenue by Segment

	Q1	Q1	YTD	YTD	FY
Amounts in NOK million	2019	2018	2019	2018	2018
Services	401,6	285,4	401,6	285,4	1373,8
Benarx	66,2	59,4	66,2	59,4	219,6
Eliminations	$-24.3$	$-22.5$	$-24,3$	$-22.5$	$-73,8$
Total	443,5	322,3	443,5	322,3	1519,6

EBITDA by Segment

	Q1	Q1	YTD	YTD	FY
Amounts in NOK million	2019	2018	2019	2018	2018
Services	30,7	24,8	30,7	24,8	119,1
Benarx	3,7	2,7	3,7	2,7	$-22,1$
Other	0,0	0.0	0,0		0,0
Total	34,3	27,5	34,3	27,5	97,0

Note 7 IFRS 16 Leases

Implementation of IFRS 16 results in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change.

The impact of IFRS 16 is that implementation of the standard results in significant leases that previously were treated as operating leases, wherein costs were recorded as operating cost, are now treated as financial leases. Therefore, a lease obligation, and an equivalent asset (right to use) is recognized on the balance sheet. Lease expenses according to IFRS 16 is in the form of depreciation and interest expense instead of as operating expenses as under the previous standard. The effect of implementation of the standard is increased assets and increased liabilities, and operating profit before depreciation, financial items and tax (EBITDA) will be improved.

The group has adopted the standard from 01.01.2019 using the Simplified approach. The group has implemented the standard by applying the exceptions in the standard to exclude short-term and low-value leases. When considering the relevant rental period in the lease contracts, options to extend the contracts are included to the extent that they are very likely to be exercised. When calculating the present value of the lease contracts alternative borrowing rates for similar assets in similar economic environments are applied as discount rate.

The implementation effect of IFRS 16 as at 1^st of January 2019 was increased assets "right of use" of the amount MNOK 70, corresponding to an increased liability, lease obligation, of the amount MNOK 70. The effect on Profit and Loss for 2019 compared to what would have been the case using the previous standard, is estimated to the following; operating cost decreases by MNOK 17, Depreciation increases by MNOK 16, Financial cost increases by MNOK 3, and thus EBT decreases by MNOK 2.

The difference between irrevocable operating leasing liabilities in note 22 of the annual accounts for 2018 of MNOK 81 and the implementation effect of IFRS 16 as at 1^st January 2019 of MNOK 70 is related to the discounting effect when calculating the lease obligation.

The implementation of IFRS 16 has no cashflow impact.

Note 8 - Subsequent events

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 31.03.2019.