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Endúr Annual Report 2009
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Annual Report
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BERGEN GROUP
BERGEN GROUP
Financial statements 2009
Board of Directors' Report for Bergen Group ASA 2009
Since its formation, Bergen Group has grown from being a supplier to the maritime sector to become an established maritime industrial group with its primary focus on the offshore sector and advanced specialised vessels. The activity level in the companies in the group was high in 2009, with record turnover and earnings. The number of new orders was lower than in previous years.
Bergen Group's turnover exceeded NOK 5.1 billion in 2009, and it recorded a record operating profit before depreciation and write-downs (EBITDA) of NOK 416 million. Market prospects in the offshore and shipbuilding industries are somewhat uncertain at the beginning of 2010. The group's goal for 2010 is to maintain satisfying profitability through increased market focus, cost control and the realisation of synergies in the group.
The market situation
Bergen Group operates in a market that is heavily influenced by the activity level in the oil and gas sector. In 2009, both shipbuilding and the supplier industry experienced a major reduction in new order intake. This has resulted in a reduced order backlog for Bergen Group, and the group is prepared for lower turnover in 2010 than in previous year.
Bergen Group strengthened its position as a maritime industrial group in several areas last year: A number of large-scale projects and deliveries were completed for both Norwegian and international customers with good results. Focus on expertise, quality and capacity has grown in an increasingly competitive market, and better cooperation between the different business areas has given the group a stronger basis for taking on demanding and complex assignments in future. Organisational changes and strategic investments carried out in 2009 will contribute to continued growth.
Uncertainty, among other things about oil price developments, led to the postponement of many offshore projects last year. The turbulence in the international finance markets also resulted in more demanding financing processes for some shipping companies and their newbuild programmes. Bergen Group had a lower order intake in the shipbuilding and offshore segments, a situation shared by large parts of the Norwegian shipbuilding and supplier industry in the past year.
The group carried out adaptations in 2009 in relation to the expected market and activity level in the short term, while at the same time working in systematically to strengthen the group's competitiveness and market position in the long term. Bergen Group's goal is to maintain satisfying profitability in 2010 even though the prevailing market situation will involve pressure on both margins and operating profits in the short term.
The business areas
The group has organised its business into four divisions: Shipbuilding, Maritime Services, Offshore and Technology.
Shipbuilding
The main activity of the Shipbuilding division consists of building specialised vessels in the offshore and RoPax segments. At year end 2009, the division consisted of the companies Bergen Group BMV, Bergen Group Fosen and Bergen Group Shipdesign. Bergen Group Halsnøy was transferred to the Maritime Services division following completion of NB 123 for Fugro Marine Services N.V. The division's turnover in 2009 amounted to NOK 2,884 million, and it had orders worth NOK 3,608 million on its books at year end. The capacity at Bergen Group BMV is virtually fully booked until the end of 2010. The new contract with Fjord Line gives Bergen Group Fosen a predictable level of activity until fall 2012, except from a limited period between the end of 2010 and to the summer of 2011.
The great demand for specialised vessels we have seen in recent years resulted in high activity in the division in 2009. Bergen Group has for many years been building internationally competitive expertise in the group's focus areas in shipbuilding. As part of the efforts to develop further in that connection, a separate ship design company was formed in 2009. This company will be important in the efforts to integrate shipowners more closely in projects for specialised vessels, and as regards strengthening the development of new, forward-looking designs for vessels of this type. The division currently has 90 experienced engineers. This figure is expected to increase in future as a result of the establishment of the design company.
The division's most important deliveries in 2009 were:
- BN 80, BOA Galatea, BOA Offshore
- BN 81, Deep Cygnus, Volstad Maritime
- BN 123, Fugro Synergy, Fugro Marine Services N.V.
Maritime Services
The Maritime Services division provides all kinds of maritime services: repairs and maintenance of merchant and naval ships, modifications, docking, classification, and repairs and maintenance of engines at the group's authorised MTU yards.
The division consists of the entities Bergen Group Laksevåg, Bergen Group Skjøndal, Bergen Group Halsnøy, Bergen Group Sijo and Bergen Group Kimek. The turnover for the year was NOK 323 million.
Main activities in 2009:
BERGEN
BOARD OF DIRECTORS' REPORT 2009
- Long-term maintenance contracts with the Norwegian Armed Forces are among the main activities of Bergen Group Laksevåg and Bergen Group Skjøndal. These entities also have long-term maintenance agreements with several shipping companies.
- Bergen Group Halsnøy and Bergen Group Sijo were transferred to Maritime Services at the end of the year. This substantially strengthens the division, both with respect to capacity and in relation to facilities.
- Bergen Group Kimek in Kirkenes had 2009 their main activity linked to hiring out expertise to Sydvaranger AS, which is preparing the start-up of mining operations. Bergen Group Kimek has in addition built up a strong market position in connection with repair maintenance work on Russian fishing vessels. This activity is now improving.
In the time ahead, Maritime Services will focus strongly on exploiting the growth potential in the segment. It will focus much more on strategic concept development, commercial management and on capitalising on existing facilities. There is also a considerable unrealised potential in relation to utilising expertise and customer relations from the shipbuilding segment. Systematic work is being done to look into the possibility of establishing international activity to enable us to a greater extent to serve customers irrespective of their geographical location.
Offshore
Bergen Group Offshore is a supplier of services to oil and gas-related industry. The division consists of the entities Bergen Group Rosenberg, Bergen Group Hanøytangen, Bergen Group Kimek Offshore and Bergen Group Engineering. Turnover in the division in 2009 was NOK 1,358 million, and at year end 2009, it had orders worth NOK 258 million on its books. In addition, a framework agreement was signed with ConocoPhilips in the fourth quarter for future modification assignments on its installations in the North Sea (Greater Ekofisk Area), and work is also continuing in relation to assignments for Gullfaks, Statfjord and Snorre, among others.
The companies in the division are assumed to have a potential well above the volume and results in 2009. Investments were made at Hanøytangen last year that strengthen the group's future position in relation to rig service and rig maintenance.
Important activities and events in 2009 included:
- In the fourth quarter, Bergen Group Rosenberg signed a framework agreement with ConocoPhilips for future modification contracts on their installations in the North Sea (Greater Ekofisk Area). The scope of the agreement has not been defined, but the framework agreement allows for a range of activities, from studies to comprehensive deliveries (EPCI). The agreement will not generate substantial turnover for Bergen Group Rosenberg until the end of the first quarter at the earliest. The agreement runs until the end of 2010, with an option for extension of two times two years.
- Bergen Group Rosenberg has earned a reputation as a major player in the market, among other things through EPCI assignments for Statoil in connection with the Sleipner A 10 bar Inlet Pressure System, and it has carried out reinforcement work on the Ekofisk field. It has also performed major contract work in connection with Snorre Redevelopment, West Epsilon and Statfjord Late Life.
- Bergen Group Hanøytangen carried out major modification and classification assignments on two rigs belonging to Transocean, and on another rig for Songa Offshore. The projects were all completed with good results for the company and the customer. Hanøytangen is now in a position to capitalise on the investments made in facilities, systems and organisation.
- Personnel from Bergen Group Kimek Offshore have carried out extensive work throughout the year for Aker Solutions at Stord in connection with the building of the mobile rigs 'Spitsbergen', 'Barents' and 'Gjøa'.
- Bergen Group Engineering increased its proportion of external customers in 2009. The company is developing and it has succeeded in establishing itself as an important partner for many companies in and outside the group.
Technology
Bergen Group Technology is building expertise and developing innovative technological solutions for the shipbuilding/offshore industry. The companies in the division deliver advanced solutions for offshore vessels and offshore installations, including pipe and electrical systems and cranes. More than 80% of the deliveries are to external customers.
Internal restructuring was carried out in the Technology division in 2009. It entailed transferring parts of the division to a new organisational entity, Business Development, which comprises companies not included in the group's long-term focus areas. The idea behind this model is to increase focus on capitalisation of the values represented by these companies. The new entity comprises companies that primarily target the aluminium and aquaculture industries. They will be further developed as part of this business unit and phased out of the group in the long term. The aim of the restructuring is to further cultivate the Technology division's main focus area.
The restructured Technology division's turnover in 2009 was NOK 690 million, and at year end it had orders worth NOK 443 million on its books. In light of the orders on the division's books, it is also expected to have a good activity level in 2010. Several of the companies in the division are important suppliers to the group's Shipbuilding division, but the bulk of its deliveries are made to external customers.
Main activities in 2009:
BERGEN
BOARD OF DIRECTORS' REPORT 2009
The companies in the division had another excellent year in 2009 and several major projects were delivered.
- Bergen Group Skarveland achieved record turnover of NOK 265 million in 2009. Complete advanced pipe systems were delivered for the drillship Fugro Synergy, which was built at Bergen Group Halsnøy. Other large projects included the delivery of pipe systems for Troms Pollux, which was built at Hellesøy Verft, and the delivery of pipe systems for the MS Eldborg, which was built at Fjellstrand AS.
- In 2009, Bergen Group Vest Elektro AS completed large assignments in connection with maritime installations of newbuilds and repair and modification projects. The company is growing steadily and it started 2010 with record orders on its books.
- Bergen Group Dreggen also recorded record turnover in 2009. The company operates in an international market, and it delivered a number of advanced offshore cranes last year to customers in both Europe and the Far East. The order situation will ensure continued high activity in 2010.
Incoming orders and order books
At year end 2009, Bergen Group had orders worth NOK 4.2 billion on its books, compared with NOK 6.8 billion at year end 2008. The orders include contracts with BOA Offshore for the building of four AHTS vessels worth a total of NOK 1.9 billion. Building is scheduled to start in 2010-2011. The shipowner has yet to secure full financing for these vessels, and the final start-up date for outfitting work, which will be carried out at Bergen Group Fosen, therefore remains to be settled.
The order books break down as follows between the divisions: Shipbuilding NOK 3.6 billion, Maritime Services NOK 45 million, Offshore NOK 258 million and Technology NOK 443 million. The Maritime Services and Offshore divisions will normally have a more short-term order perspective than the Shipbuilding segment. NOK 140 million in internal deliveries has been eliminated in the group's total order books.
Profit for the year, balance sheet and cash flow developments
The group's accounts have been prepared in accordance with IFRS. Acquisitions carried out in previous years are included from the date on which the group gained control. See also 28 in the annual accounts.
The group's revenues in 2009 amounted to NOK 5,108 million and EBITDA was NOK 416 million. The group's revenues in 2008 were NOK 3,742 million, and EBITDA was NOK 191 million. Estimated pro forma revenues in 2008 were NOK 4,667 million and the pro forma EBITDA in 2008 was NOK 208 million.
An operating profit of NOK 239 million was recorded in 2009 compared with NOK 112 million in 2008. The operating profit for 2009 includes an impairment loss of book goodwill in the amount of NOK 87 million. The pro forma operating profit in 2008 was NOK 126 million.
The pre-tax profit in 2009 was NOK 158 million. The corresponding pre-tax profit in 2008 was NOK 18 million, while the pro forma pre-tax profit in 2008 was NOK 39 million.
Profit after tax was NOK 78 million in 2009, compared with NOK 19 million in 2008 and a pro forma net profit for 2008 of NOK 31 million.
The balance sheet total at 31 December 2009 was NOK 4,438 million and book equity was NOK 1,505 million. That is an equity ratio of 33.9%.
The cash flow from operations was NOK 254 million in 2009. The cash flow from operations can deviate somewhat from EBITDA since the effect of the delivery of major contracts such as ships has a substantial impact on cash flows. The positive cash flow from operations in 2009 is connected to the positive underlying earnings and to the delivery of major projects during the year. The net cash flow from investments was minus NOK 112 million. This is mainly related to investments in operating assets. The cash flow from financing activities amounted to NOK 61 million. This largely reflects the drawdown of loans in connection with the development of Hanøytangen and some repayment of long-term debt.
The group's holding of liquid assets was NOK 454 million at 31 December 2009. Liquid assets are at a satisfactory level given that a lot of liquidity is still tied up in ongoing projects, including shipbuilding projects. There are several reasons why the group's proportion of short-term liabilities is so large. The bond loan of NOK 400 million that originally fell due in July 2009 was refinanced in 2009 and is now due in August 2010, together with a bond loan of NOK 250 million. Active efforts are being made to refinance the company's bond loans and this work is expected to be completed in good time before they reach maturity.
The company's current building loans for ongoing shipbuilding projects are classified as short-term. Financing has been secured through the company's bank connections for all ships financed by building loans, while shipowner-financed projects are financed on an ongoing basis by the shipowners.
The group's financial position is satisfactory, and the accounts have been prepared on the basis of the going concern assumption. Efforts are currently being made to find a solution for existing bond loans that fall due in August 2010. Through Bergen Group Rosenberg AS, the group has bought back NOK 38.5 million of the loan of NOK 400 million.
The parent company Bergen Group ASA a turnover in 2009 of NOK 2.3 million, compared with no turnover in 2008. The parent company's operating result was minus NOK 0.8 million in 2009 (minus NOK 12 million). Net financial items made a positive contribution of NOK 200 million (NOK 28.6 million). The net profit after tax was NOK 158.9 million (NOK 12.0 million). Distributable equity in the company accounts is NOK 346.2 million (NOK 167.6 million).
BERGEN
BOARD OF DIRECTORS' REPORT 2009
Risk exposure and risk management
Bergen Group operates in a global market and is thus exposed to a number of risk factors. The board of Bergen Group is concerned with establishing adequate risk management systems to limit and reduce the total risk exposure to an acceptable level. The main risk factors can be categorised as market risk and financial risk.
Market risk: Bergen Group's business is linked to the global market for specialised ships and offshore operations. These markets have varied greatly over time. Bergen Group endeavours to reduce its exposure to market fluctuations by controlling critical sections of the value chain, expertise development and continuous focus on cost efficiency, including exploiting opportunities in the global market.
There is also considerable project risk associated with shipbuilding projects. Bergen Group has endeavoured to reduce this risk by gaining greater control over the value chain through owning companies in the technology segment that are important suppliers to the shipbuilding business. This is a strategic choice that distinguishes Bergen Group from many of its competitors. Project management and project supervision are critical success factors, and Bergen Group has strong focus on these areas. Most of the group's shipbuilding projects are financed by customers on a running basis in accordance with contractual milestones. Some shipbuilding projects are financed by building loans, and financing for these projects is raised through established bank connections.
The group participates in several joint ventures in the offshore segment. This is in order to reduce the risk involved in the different projects and to strengthen both expertise development and implementation capacity. The group's share of projects is normally proportionate to its contribution. In 2009, the group collaborated with Global Energy Group in Aberdeen in connection with rig service activities at Hanøytangen.
Since spring 2009, the group has carried out an extensive strategy process that was concluded in mid-August. The plan sets out the strategic guidelines for the further development and growth of the group during the period 2010 to 2012. In connection with implementation of the strategy townhall meetings have been held for all 2,000 employees at which the CEO presented the group's vision, business idea and strategies.
As part of the strategy, Bergen Group has signalled that it wishes to be active in relation to structural changes that can strengthen the group's position in future, including being open to diversified ownership in parts of the group's business areas. During the autumn and winter, the group's management has worked systematically on this process with a number of major international players, and work in this area is still in progress.
Financial risk: Financial risk can be subdivided into credit risk, currency risk, interest risk, liquidity risk and transaction risk.
The company's credit risk is deemed to be low to medium. The company has a broad spectrum of customers ranging from big oil companies to shipping companies, and they have historically proved to be good payers. There are also other smaller customers who represent a somewhat higher credit risk, but endeavours are made to reduce this risk through requiring guarantees and credit assessments of the customers in question. Naturally, the special situation in the international finance markets creates a certain amount of uncertainty concerning our customers' access to capital, primarily in relation to financing newbuilds and implementing major development plans. The measures taken by the authorities in Norway and abroad have reduced the negative effects of the situation to a certain extent.
There is limited risk attached to currency since most of the company's revenues and expenses are in NOK. The company hedges its biggest currency payments/receipts by entering into hedging contracts. Forward contracts are used to reduce risk, but the company does not fully hedge currency.
The interest risk relates to interest-bearing debt totalling NOK 1,791 million, including building loans for shipbuilding contracts of NOK 849 million. The company is exposed to changes in interest rates since all the company's debts are at floating interest rates. The group does not use interest rate hedging.
The liquidity risk is limited and the group has well established liquidity management systems that shall ensure the required liquidity at all times. At year end, the situation for the group's financing is that most of its borrowing are at parent company level through the bond loans. The subsidiaries also have some borrowings. In 2010, the group will work to increase the proportion of long-term financing, preferably as much bank financing as possible. The goal is to reduce the loan burden on the parent company by financing each division individually instead.
Material risks to the company: Macroeconomic conditions that are material to the group largely relate to the development of oil and gas prices. Most of the company's business is linked to petroleum-related activities or auxiliary activities in that connection. Persistent low oil and gas prices could affect demand for a large part of the group's services.
The cost of production input factors will also have a material bearing. This applies in particular to price changes for purchased materials. The company's annual cost of sales is more than NOK 2.9 billion, and a net increase/reduction of one per cent in the cost of sales could have an EBIT effect of NOK 29 million. However, the most important material costs in shipbuilding projects are hedged on contract signature. In 2009, the group strengthened its procurement and logistics function in order to further ensure its competitiveness in this area.
BERGEN
BOARD OF DIRECTORS' REPORT 2009
Shares and shareholders
Bergen Group ASA's registered address is in Austevoll municipality, but its business address and visiting address are in Thormøhlensgate in Bergen.
Bergen Group ASA was formed in 2007. It is a holding company with four underlying divisions. The object of the company is to bring together strategically important companies under common management in order to offer internationally-leading technology solutions and products to an increasingly demanding maritime industry. Each of the four divisions is structured as far as possible as an independent group of companies.
Share price developments: Bergen Group has been listed on Oslo Børs since 30 June 2008. The company's shares were traded in 2009 at prices ranging from NOK 4.00 to NOK 8.80. The closing price on 30 December 2009 was NOK 6.11, which, based on 48,074 million outstanding shares puts the company's value at the end of the quarter at approximately NOK 294 million.
When it was listed on 30 June 2008, the company had approximately 550 shareholders. At the end of the fourth quarter 2009, the company had 960 shareholders, the 20 biggest of which, combined, owned 79.47% of the company.
In 2009, 2,480 trades in the share were made via Oslo Børs, involving a total volume of 10.1 million shares. On 18 December, Bergen Group was moved up from OB Standard to OB Match as a result of increased trading in its shares (more than 10 trades per day).
Subscription rights: In connection with the signing of new agreements with bond holders (described in detail in the interim report for Q2 2009), the general meeting on 30 June 2009 resolved to issue 4,855,352 subscription rights for shares with a redemption price of NOK 1.10. As of 31 December 2009, 2,192,902 subscription rights had been exercised. The remaining number of subscription rights at 31 December 2009 was 2,662,450 and they must be exercised by 13 August 2010.
Authorisation of the board for capital increases: On 30 June 2009, the general meeting renewed the board's authorisation to increase the share capital by up to 10,000,000 shares with a nominal value of NOK 1. The authorisation is valid until the next annual general meeting, which will be held by 30 June 2010 at the latest.
Authorisation of the board to purchase own shares: Companies in the group own a total of 36,789 shares in Bergen Group, which is 0.08%. The Board is authorised by the general meeting to purchase own shares until the annual general meeting in 2010. The shares can be purchased in the interval between NOK 1 and NOK 100. The number of shares that can be purchased under this authorisation is limited to 10% of the total number of outstanding shares at the time of the decision. As of 31 December 2009, no shares had been purchased under this authorisation.
Changes in the organisation and management
At the general meeting on 30 June 2009, Anne-Gine Hestetun and Svein Milford were elected as members of the company's board of directors together with three new board members elected from among the company's employees. Hestetun took the place on the board vacated by Torill Stangeland while Milford replaced Sigurd Geir Amland. Svein Milford was also elected Deputy Chair of the Board.
There were no significant changes in the company's executive management in 2009.
QHSE – Quality, Health, Safety and the Environment
The group has a zero injury/harm philosophy as regards QHSE. The goals are to prevent employees being injured or becoming ill as a result of their work, to ensure quality in our deliveries and to prevent harm to the natural environment.
Quality: The group systematically and purposefully develops process-based quality systems within each division and company.
Health: The group had 1,850 permanent employees at 31 December 2009. In addition, the group had a corresponding number of hired personnel through subcontractors, mainly from countries in Eastern Europe. The workforce breaks down as follows between the divisions: Shipbuilding: 720 employees and 650 hired personnel; Maritime Services: 150 employees and 100 hired personnel; Offshore: 650 employees and 500 hired personnel; Technology: 330 employees and 300 hired personnel. The lost-time injury frequency (LTIF value) in 2009 was 7.02 for the group as a whole (the number of personal injuries resulting in absence per 1,000,000 hours worked). Sickness absence was 5.46% of total working hours. That is a slight increase on 2008, when the total sickness absence was 5.07%. The company works continuously to reduce sickness absence. No work accidents took place or were reported in 2009 that resulted in serious personal injury or serious material damage. The working environment is deemed to be good.
Environment: Bergen Group focuses continuously on potential environmental improvements relating to production processes and the use of alternative products and services. However, the company's activities have little impact on the natural environment. No accidents or mishaps were registered in 2009 that resulted in significant harmful environmental discharges. The company endeavours to use as little solvents, energy and water as possible. We use approved companies that ensure that hazardous waste is handled safely and in compliance with regulations. We focus on using less environmentally harmful products by raising awareness of the total environmental load over products' life cycle.
Safety: The Company achieved good synergies already in 2009 through being a larger and more coherent group. The main emphasis is on cooperation between the companies and on exchanging knowledge, experience
BERGEN
BOARD OF DIRECTORS' REPORT 2009
and expertise in order to reduce the risk involved in all the group's activities. Further work will be done in this area in the years ahead, and QHSE will be a natural part of our overall business strategy.
Equality: Bergen Group is dependent on having talented, experienced and qualified managers and employees. All employees are treated equally, irrespective of ethnic background, gender, religion or age – and they are offered equal opportunities for development and promotion to managerial positions. The overall proportion of women employees is 12%, and the overall percentage of permanent employees of nationalities other than Norwegian is around 15%. Women are largely employed in administrative jobs and engineering services. Four of the ten ordinary members of the group's board of directors are women. The salary level for women is the same as for men in corresponding positions. The group endeavours to recruit more women at all levels, but, historically, the industry has been characterised by a high proportion of men.
Allocation of profit and dividend policy
The group's profit after tax amounted to NOK 77.8 million. This breaks down between NOK 77.8 million for the majority and NOK 0.0 million for the minority.
The parent company's profit for the year was NOK 158.9 million, which will be transferred to other equity. The main reason for the profit is group contributions received from subsidiaries. After allocations, the company's distributable equity is NOK 346.2 million.
It is the company's goal to provide shareholders with a return in the form of dividend and appreciation in value that is at least on a par with alternative investments with comparable risk. Due to conditions in the Company's loan agreements there will not be paid out dividends for the financial year 2009.
Prospects
Bergen Group operates in a market that is heavily influenced by the activity level in the oil and gas industry. Even though there is uncertainty attached to developments in the short term, prospects in the longer term are seen as fundamentally positive in the market segments within which Bergen Group operates. Bergen Group works continuously on measures that can help to improve the group's long-term growth capability, and this is expected to produce results when the market changes.
In the Offshore division, there is uncertainty relating to the level of expected new orders in the first half-year 2010, while an increase in activity is expected in the longer term. Maintenance, modifications and decommissioning represent a growing market in the offshore sector, and the development of offshore oil and gas deposits in the far north will provide new opportunities for the group in the longer term.
The turmoil in the international finance markets resulted in an unusually low number of new shipbuilding contracts at both Norwegian and foreign yards in 2009. Even though Bergen Group saw a reduction in its order books last year, this will not significantly affect the activity level in the Shipbuilding division in 2010. In shipbuilding, our challenge is mainly related to the activity level at Bergen Group Fosen in the fourth quarter 2010. Market signals indicate that both the offshore and RoPax segments show signs of improving, as indicated by the contract with Fjord Line in mid-March 2010.
For the other divisions, no material changes are expected in turnover in 2010 compared with 2009.
In light of this situation, the group maintains a strong focus on adapting to the market and activity level during the year. Bergen Group's goal is to maintain good profitability in 2010 even though the prevailing market situation will involve pressure on both margins and turnover in the short term. In the longer term, factors such as persistent strong demand for oil and gas, limited oil production capacity, more marginal fields and the increasing technological challenges involved in recovering the oil will result in expectations of an enduring high oil price. This boosts future growth expectations for Bergen Group, in both the offshore segment and the technology segment, as well as in maritime services and shipbuilding, where the group is to a large extent positioned in relation to the market for sophisticated offshore vessels.
In addition to ongoing restructuring measures, work continues on other opportunities, including diversification of ownership in the company's business areas. The group will also give greater consideration to opportunities for utilising the group's international expertise in its business areas with a view to entering new geographical markets.
Bergen, 25 March 2010
BERGEN
BOARD OF DIRECTORS' REPORT 2009
Consolidated statement of comprehensive income
| Bergen Group ASA - Group
(amount in TNOK) | | | |
| --- | --- | --- | --- |
| | Note | IFRS
2009 | IFRS
2008 |
| Sales revenues | 4 | 5 106 849 | 3 739 930 |
| Other operating revenues | 4 | 1 411 | 1 948 |
| Operating revenues | | 5 108 260 | 3 741 878 |
| Cost of sale and changes in stock | 14 | 2 906 935 | 2 286 660 |
| Payroll expenses etc | 5 | 1 353 815 | 967 174 |
| Depreciation | 8,9 | 176 758 | 79 413 |
| Other operating expenses | | 431 678 | 297 001 |
| Operating expenses | | 4 869 187 | 3 630 248 |
| Operating profit / loss (EBIT) | | 239 073 | 111 630 |
| Financial income | 6 | 32 138 | 125 418 |
| Financial expenses | 6 | 112 777 | 218 553 |
| Net financial items | | -80 639 | -93 135 |
| Profit / loss before tax | | 158 434 | 18 495 |
| Tax | 7 | 80 599 | -519 |
| Profit / loss for the year | | 77 835 | 19 014 |
| Other comprehensive income | | | |
| Foreign currency translation differences for foreign operations | | -311 | -2 479 |
| Other comprehensive income for the period, net of income tax | | -311 | -2 479 |
| Total comprehensive income for the period | | 77 524 | 16 535 |
| Profit attributable to: | | | |
| Owners of the Company | | 77 754 | 19 121 |
| Non-controlling interest | | 81 | 107 |
| Profit for the period | | 77 835 | 19 014 |
| Total comprehensive income attributable to: | | | |
| Owners of the Company | | 77 443 | 19 121 |
| Non-controlling interest | | 81 | 107 |
| Total comprehensive income for the period | | 77 524 | 19 014 |
| Average number of outstanding shares | 19 | 46 564 637 | 43 123 903 |
| Diluted, weighted average numbers of shares outstanding | | 49 138 014 | 43 123 903 |
| Earnings per share (NOK) | 19 | 1,67 | 0,44 |
| Diluted earnings per share (NOK) | | 1,58 | 0,44 |
BERGEN
Balance Sheet
Bergen Group ASA - Group
(amount in TNOK)
| IFRS | |||
|---|---|---|---|
| Note | 31.12.2009 | 31.12.2008 | |
| Assets | |||
| Intangible assets | 8 | 1 256 365 | 1 374 248 |
| Licences, patents and R&D | 8 | 4 651 | 8 591 |
| Property, plant and equipment | 9 | 881 790 | 829 193 |
| Investments in associates | 11 | 17 078 | 27 085 |
| Other investments, including derivates | 12 | 1 424 | 21 870 |
| Other non-current receivables | 12,15 | 5 544 | 2 949 |
| Total non-current assets | 2 166 953 | 2 263 956 | |
| Inventory | 14 | 36 358 | 51 277 |
| Other investments, including derivates | 12 | 81 711 | |
| Trade debtors | 15 | 336 155 | 466 198 |
| Work in progress | 17 | 1 390 217 | 692 125 |
| Other receivables | 15 | 54 624 | 108 243 |
| Cash and cash equivalents | 16 | 453 515 | 249 929 |
| Total current assets | 2 270 869 | 1 649 463 | |
| Total assets | 4 437 723 | 3 913 420 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 18 | 48 074 | 45 881 |
| Other paid-in equity | 22 854 | ||
| Treasury shares | -37 | -95 | |
| Share premium | 1 173 019 | 1 171 754 | |
| Retained earnings | 260 902 | 198 330 | |
| Equity | 1 504 812 | 1 415 870 | |
| Minority interests | 241 | 160 | |
| Total equity | 1 505 053 | 1 416 030 | |
| Bond loans | 20,22 | 250 000 | |
| Loans | 20,22 | 178 139 | 209 919 |
| Payments to employees | 10 464 | 6 934 | |
| Deferred tax liabilities | 13 | 231 053 | 148 958 |
| Other long term liabilities | 297 | 17 213 | |
| Total non-current liabilities | 419 954 | 633 024 | |
| Bond loans | 20,22 | 611 214 | 361 500 |
| Loans | 20,22 | 153 211 | 68 791 |
| Construction loans | 20,22 | 849 196 | 376 127 |
| Trade creditors and other payment obligations | 21,22 | 397 175 | 574 539 |
| Tax payable | 7 | -5 472 | 2 557 |
| Deferred revenue | 17,21 | 196 190 | 229 615 |
| Other short term liabilities | 21,22 | 311 201 | 251 236 |
| Total current liabilities | 2 512 715 | 1 864 365 | |
| Total liabilities | 2 932 669 | 2 497 389 | |
| Total equity and liabilities | 4 437 723 | 3 913 420 |
Bergen, 25 of March 2010
Magmis Stangeland
Chairman
Svein Milford
Deputy chairman
Guludv Lode
Board member
Elise Sætersmoen
Board member
Anne-Gine Hestetun
Board member
Monica Salthella
Board member
Ingunn Flyttor
Ingrunn Flyttor
Board member empl. repr.
Ove Iversen
Board member empl. repr.
Anne Vindenes
Board member empl. repr.
Pål Engebretsen
CEO
Cash Flow statement
Bergen Group ASA - Group
(amount in TNOK)
| Note | 2009 | 2008 | |
|---|---|---|---|
| Operating result | 158 434 | 18 495 | |
| Taxes paid | 2 557 | 25 671 | |
| Depreciation and impairment | 10,11 | 176 758 | 79 413 |
| Trade debtors increase (decrease) | 15 | 130 043 | -57 508 |
| Trade creditors (increase) decrease | 21 | -119 170 | 127 101 |
| Other current accruals | 21 | -94 724 | -439 601 |
| Net cash flow from operating activities | 253 898 | -246 429 | |
| Acquisition of tangible fixed assets | 8,9 | -111 731 | -191 786 |
| Disbursed long term investments | -94 354 | ||
| Net acquisition of shares and interests | 213 163 | ||
| Disbursed investments in bonds | |||
| Net cash from investing activities | -111 731 | -72 977 | |
| Sale treasury shares | 763 | 13 730 | |
| New interest bearing debt | 84 271 | 127 657 | |
| Payment of interest bearing debt | -27 280 | -110 571 | |
| Issue of new shares | 3 663 | 9 702 | |
| Purchase treasury bonds | |||
| Net cash flow from financing activities | 61 418 | 40 518 | |
| Net change in cash balances | 203 586 | -278 888 | |
| Cash and cash equivalents as per 1.1 | 249 929 | 528 817 | |
| Cash and cash equivalents as per 31.12 | 453 515 | 249 929 |
Statement of changes in equity
Bergen Group ASA - Group
(amount in TNOK)
| Share capital | Share premium | Unregistered capital increase | Treasury shares | Other paid-in equity | Total paid-in equity | Total other equity | Minority interests | Total equity | |
|---|---|---|---|---|---|---|---|---|---|
| Equity as at 01.01.2008 | 39 446 | 1 156 737 | 3 763 | -95 | 1 199 851 | 827 | 8 588 | 1 209 266 | |
| Reduction of share premium, adopted in 2007, implemented in 2008 | - | -80 000 | - | - | - | -80 000 | 80 000 | - | - |
| Sale treasury shares | - | - | - | - | - | - | - | - | - |
| Share issue | 6 435 | 95 017 | -3 763 | - | - | 97 689 | - | - | 97 689 |
| Net operating result | - | - | - | - | - | - | 16 535 | - | 16 535 |
| Effect of three-party merger with external counterparty | - | - | - | - | - | - | 77 000 | - | 77 000 |
| Other changes | - | - | - | - | - | - | 23 968 | -8 428 | 15 540 |
| Net changes 2008 | 6 435 | 15 017 | -3 763 | 17 689 | 197 503 | -8 428 | 206 764 | ||
| Equity 31.12.2008 | 45 881 | 1 171 754 | -95 | 1 217 540 | 198 330 | 160 | 1 416 030 | ||
| Equity 01.01.2009 | 45 881 | 1 171 754 | -95 | 1 217 540 | 198 330 | 160 | 1 416 030 | ||
| Equity effect of warrants | - | - | - | - | 15 045 | 15 045 | - | - | 15 045 |
| Sale treasury shares | - | - | - | 58 | 58 | 705 | - | 763 | |
| Share issue | 2 193 | 219 | - | - | - | 2 412 | - | - | 2 412 |
| Net operating result | - | - | - | - | - | - | 77 443 | 81 | 77 524 |
| Other changes | - | 1 046 | - | - | 7 809 | 8 855 | -15 576 | - | -6 721 |
| Net changes 2009 | 2 193 | 1 265 | - | 58 | 22 854 | 26 371 | 82 572 | 81 | 89 023 |
| Equity 31.12.2009 | 48 074 | 1 173 019 | - | -37 | 22 854 | 1 243 911 | 260 902 | 241 | 1 505 053 |
Notes to the Group Financial Statement Bergen Group ASA
3 Company information
Bergen Group ASA is a public limited company based in Norway, and its head office is at Lakseväg in Bergen. Bergen Group is a maritime industrial group with main focus on the offshore industry and specialized vessels. The group has specialized competence within Shipbuilding, Maritime Service, Offshore and Technology.
Bergen Group has 1,900 employees along the Norwegian coast, from Kirkenes in the north to Stavanger in the south. The group also has activities on Iceland, in Poland and Russia. Bergen Group ASA is listed on Oslo Børs with the ticker BERGEN. Bergen Group ASA was formed on 22 May 2007.
4 Accounting principles and estimates
2.1 Declaration of conformity
The consolidated accounts have been submitted in accordance with EU approved International Financial Reporting Standards (IFRS) and associated interpretations, and also the additional Norwegian information requirement pursuant to the Norwegian Accounting Act, and that are applicable as at 31 December 2009.
The proposed annual accounts were adopted by the Board of Directors on 25 March 2010. The annual accounts will be dealt with by the Ordinary General Meeting before the end of June 2010 for final approval. Up until final approval, the Board of Directors has the authority to amend the annual accounts.
2.2 Measurement basis
The consolidated accounts have been prepared on the basis of the historical cost, with the exception of the following:
- Derivates are measured at the fair value
- Financial assets at the fair value in the profit and loss account are measured at the fair value.
- Financial assets available for sale are measured at the fair value
- Obligations associated with share-based payment schemes in cash settlements are measured at the fair value
2.3 Functional and presentation currency
The consolidated accounts are presented in NOK, which is also the functional currency of the parent company. Financial information is stated in NOK thousands, unless otherwise specified.
2.4 Estimates and assessments
Preparation of the annual accounts in accordance with IFRS includes valuations, estimates and assumptions that influence both the choice of accounting principles applied and reported amounts for assets, obligations, income and expenses. During preparation of the annual accounts, the management has used estimates based on best judgement and assumptions that are considered to be realistic based on historical experience. Actual amounts may differ from estimated amounts.
Estimates and underlying assumptions are reviewed and assessed on an ongoing basis. Changes in accounting estimates are reported in the period in which the estimates are changed and in all future periods that are affected.
2.5 Consolidation principles
The consolidated accounts include the parent company Bergen Group ASA and subsidiaries and also the group's shares in associated companies and joint ventures. The parent company and the subsidiary are referred to collectively as "the group" and individually as "group companies".
Minority interests are included in the group's equity.
Transactions between group companies and inter-company balances, including internal profit and unrealized gains and losses, are eliminated. Unrealized gains that arise from transactions with associated companies are eliminated with the group's share in the associated company. The same applies to unrealized loss, but only if there are no indications of a impairment of the asset that has been sold internally. The consolidated accounts have been prepared on the assumption of uniform accounting principles for similar transactions and other events under similar circumstances.
2.5.1 Subsidiaries
A subsidiary is a company controlled by the group. There is control when the group has authority to manage the financial and operational decisions in a company for the purpose of achieving advantages from the company's activities. Control is usually achieved when the group owns, either directly or indirectly, more than 50% of the voting rights in the company, and that the group is able to exercise actual control of the company. Subsidiaries will be consolidated at the time when the control has been transferred to the group. Consolidation ends from the date the group no longer has control.
2.5.2 Associated companies
Associated companies (AC) are companies where the group has controlling interest, but not control of financial and operational decisions. Controlling interest is assumed to exist when the group has between 20 and 50% of the voting rights and in which it has controlling interest. AC is included in the group accounts using the equity method. Investment in associated companies are recognized in the accounts using the equity method and are initially reported at the purchase cost. The investments include goodwill on takeover, less accumulated loss in the event off all in value.
The group accounts include the group's share of income, costs and equity movements, following translation to the group's accounting principles, from the time controlling interest was established and up until it ends. When the share of profit exceeds the book value of the investment, the book value of the investment is reduced to zero and reporting and further loss ends. This does not apply if the group has an obligation to or has made payments on behalf of the company.
2.5.3 Joint ventures
Joint ventures are commercial operations regulated by an agreement between two or more parties giving them shared control of the operation. Participation in joint ventures is recognized according to the proportional consolidation. Under the gross method, the participants recognize their share of revenues, costs, assets and liabilities.
2.6 Classification of assets and liabilities
Assets are classified as current assets when:
- the asset is part of the entity's service cycle and is expected to be realized or used during the course of the entity's normal production period;
- the assets is held for trading;
- the assets is expected to be realized within 12 months of the balance date;
- the asset is cash or cash equivalents, but with the exception of when there are restrictions on exchanging or using to settle debt within 12 months of the balance sheet date.
All other assets are classified as fixed assets.
Liabilities are classified as current debt when:
- the debt is part of the service cycle and is expected to be settled during the normal production period;
- the debt is held for trading;
- settlement within 12 months of the balance sheet date is agreed;
- the entity does not have an unconditional right to postpone settlement of the debt until at least 12 months after the balance sheet date.
All other debt is classified as non-current.
2.7 Cash and cash equivalents
Cash includes cash in hand and bank deposits. Cash equivalents are current liquid investments that can be converted immediately to cash, for an unknown amount, and that contain an insignificant element of risk.
2.8 Trade debtors
Trade debtors are recognized in the accounts at amortized cost. The element of risk is disregarded if it is insignificant. In the event of objective proof of impairment value, the difference between the book value and the present value of future cash flows is recognized as a loss, and discounted at the receivable's original effective interest rate.
2.9 Construction contracts in progress
The book value of the construction contracts comprises uninvoiced amounts anticipated to be paid by customers for work carried out on the balance sheet date. The value is measured by taking the costs incurred plus a mark-up for reported earnings, less on-account invoiced amounts and reported loss. Incurred costs are costs directly attributable to the construction contracts, and also the share of fixed and variable joint costs in the construction business based on operational capacity.
Construction contracts in progress are presented as current receivables in the balance sheet. If payment from customers exceeds the reported income, the difference is presented in the balance sheet as deferred income.
Notes to the Group Financial Statement Bergen Group ASA
2 Accounting principles and estimates
2.10 Property, plant and machinery
Property, plant and machinery are valued at cost price less accumulated depreciation and impeachment losses. When assets are sold or disposed, the cost price and the accumulated depreciation is reversed in the accounts and any loss or gain from the disposal is recognized in the profit and loss account.
The cost price of property, plant and machinery is the purchase price, including taxes and direct acquisition costs associated with preparing the asset for use, such as repair and maintenance, will usually be expensed. If increased earnings can be demonstrated to have resulted from the repair / maintenance, the costs will be capitalized as additions.
The estimated economic life of the asset and the depreciation method are assessed annually to ensure that the method and the period used correspond to the financial reality of the fixed assets. The same applies to the scrap value.
Work in progress is classified as a fixed asset and is recognized in the profit and loss account as costs incurred in connection with the fixed assets. Work in progress is not depreciated until the asset has been put into use.
If tangible fixed assets have a higher book value than their fair value, they will be written down to their minimum fair value. This write-down may be reversed by up to an amount corresponding to the write-down, if the book value is lower than the fair value.
2.11 Intangible assets
The cost of intangible assets acquired through acquisition is capitalized at fair value in the opening balance for the group. Capitalized intangible assets are recognized in the accounts at cost, less any depreciation and write-downs.
Internally generated intangible assets, with the exception of capitalized development costs, are not capitalized, but expensed as they arise.
The economic lifetime is either defined or not defined. Intangible assets with a defined lifetime are depreciated over the economic lifetime and are tested for write-down, if there are indications that this is required. The depreciation method and period are assessed at least once a year. Changes in the depreciation method and / or depreciation period are treated as estimate differences.
Intangible assets with an indefinite are tested for impairment at least once a year, either individually or as part of a cash-generating unit. Intangible assets with a defined lifetime are not depreciated. The lifetime is assessed annually to see whether the assumption of an undefined useful life is justified. If not, the change to a defined lifetime is treated on a prospective basis.
2.12 Goodwill
Excess value resulting from acquisition of an enterprise that cannot be allocated to identifiable assets or liabilities on the date of acquisition is classified as goodwill in the balance sheet. As regards investments in associated companies, goodwill is included in the cost price of the investments.
The identifiable assets and liabilities on the transaction date are recognized in the accounts at their fair value on the transaction date. The minority share in identifiable assets and liabilities is calculated on the basis of the minority's share in the fair value of the identifiable assets and liabilities.
If further information about assets and liabilities on the transaction date comes to light after the acquisition, the assessment of fair value of assets and liabilities could be changed up to the initial accounts for a whole accounting period have been submitted.
Goodwill is not depreciated, but an annual assessment is made to evaluate whether the value can be justified in relation to future earnings. If there are any external indications of a fall in value, goodwill will be assessed at each closing of accounts. If there are indications that it is necessary to impairment losses of goodwill, an assessment will be made about whether the discounted cash flow relating to the goodwill exceeds the value of the goodwill recognized in the accounts. If the discounted cash flow is lower than the recognized value, goodwill will be written down to the fair value.
2.13 Negative goodwill
On transfer of an enterprise, negative goodwill is taken to income after re-identification and re-valuation of transferred assets and liabilities to ensure that negative goodwill is not due to an error in valuation of the assets or liabilities.
2.14 Financial leases
The group presents financial leases in the accounts as assets and liabilities, equal to the cost price of the asset or, if lower, the current value of the lease's cash flow. The implicit interest cost of the lease, if it can be determined, is used to assess the present value of the lease. If it cannot be determined, the company's marginal lending rate in the market is used. Direct costs associated with the lease are included in the cost price of the asset. Monthly lease amounts are broken down into an interest and a repayment element. The interest costs are allocated to different periods, so that the interest on the outstanding debt is the same in different periods.
The assets involved in financial leases are depreciated. The depreciation period is consistent for corresponding assets owned by the group. If there is no guarantee that the company will take over the asset on expiry of the lease, the asset is depreciated over the shorter of the period of term of the lease and the depreciation period for corresponding assets owned by the group.
2.15 Operational leases
Leases where most of the risk lies with the lessor are classified as operational leases. Lease payments are classified as operating costs, and recognized in the profit and loss account over the term of the lease.
If a "sale and re-leasing" transaction results in an operational lease and it is clear that the transaction was carried out at fair value, any gain or loss will be recognized in the profit and loss account immediately when the transaction is carried out. If the sales price is lower than the fair value, any gain or loss will be recognized immediately, except in situations where it will lead to future lease payments below market price. In such cases, the gain or loss is amortized over the lease period. If the sales price is higher than the fair value, the difference is amortized over the estimated period of use of the asset.
2.16 Currency
2.16.1 Transactions in foreign currency
Transactions in foreign currency are translated into functional currency for the respective group companies using the exchange rate at the time of the transaction. Monetary items in foreign currency are translated to functional currency using the exchange rate on the balance sheet date. Currency gains and losses on money items are the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments in the period, and amortized costs in foreign currency translated using the exchange rate on the balance sheet date.
Non-monetary items in foreign currency are valued at the fair value translated to the functional currency using the exchange rate at the time the fair value was determined.
Differences in exchange rates related to the translation are recognized in the profit and loss account, with the exception of differences that arise when translating equity instruments available for sale, financial obligations earmarked as security for a net investment in an overseas enterprise, and cash flow hedging that satisfies the criteria for hedging accounting. All these are reported directly in the equity.
2.16.2 Overseas enterprises
Assets and liabilities in overseas enterprises, including goodwill and fair value adjustments in connection with acquisition, are translated to NOK using the exchange rate on the balance sheet date. Income and costs from overseas enterprises are translated to NOK using the average exchange rate.
Translation differences are reported in other income and costs.
2.17 Inventories
Inventories are recognized in the accounts at the lower of the acquisition cost and net sales price. The net sales price is the estimated sales price in ordinary operations, less estimated costs relating to completion, marketing and distribution. The acquisition cost is assigned using the FIFO method and includes expenses incurred on acquisition of the goods and the costs of bringing the goods to their present state and location.
Notes to the Group Financial Statement Bergen Group ASA
Accounting principles and estimates (continued)
2.18 Unsecured liabilities and accounting provisions
Unsecured liabilities and accounting provisions are recognized in the accounts when, and only when, there is a valid claim (legal or expected) resulting from previous events and it is probable (more than 50%) that a settlement will take place as a result of this liability, and that the liability can be valued in a reliable manner. Unsecured liabilities and accounting provisions are assessed on each balance sheet date and the size of the recognized liability shall reflect the best estimate of the liability. When time is not important, the liability is recognized at the expected cost of redeeming the obligation. On the other hand, if time is of material importance to the amount of the liability, it is entered at the present value. Any increase in the liability due to time, is recognized in the profit and loss account as interest costs.
Contingent liabilities arising from acquisition of enterprises are recognized at fair value, even if the liability is improbable. Probability and fair value are assessed on an ongoing basis. Changes in fair value are recognized in the profit and loss account.
Provisions for loss-making contracts are recognized when the group's expected income from a contract is lower than the unavoidable costs incurred in order to meet its contractual obligations.
2.19 Guarantee liabilities
Contractual guarantees of completion and guarantees in connection with advance payment from customers are furnished as part of Bergen Group's activities. Such guarantees usually involve a bank connection that issues the guarantee in relation to the customer. In some cases, guarantees have also been furnished by other companies in the group.
2.20 Risks in projects and provision for loss in projects
Bergen Group's activities are mainly under long-term contracts, many of them fixed-price contracts with turnkey final delivery organized through agreements. Delays in connection with delivery or deviation from the agreed quality of the final delivery, in addition to increasing the direct costs of the projects, may mean that agreed contract values do not cover the costs allocated to the projects. If a project forecast indicates that a loss is possible, a provision is made for expected future loss on the project. The accounting assessment is made on the basis of previous experience, comparable projects and the best estimates of the management of Bergen Group. Such assessment may be subject to change from period to period, since the project forecast is changed. This means that the provision made may prove to be too small or too large when the time comes to settle the accounts.
2.21 Operating income
2.21.1 Construction contracts
Work in progress associated with fixed-price contracts with a long production time is assessed according to the ongoing settlement method where carrying to income is carried out in step with the progress of the project, primarily based on a comparison of incurred and estimated total contract costs. Some companies in the group also use a specific assessment of the projects, based on physical degree of completion. The degree of completion is calculated as incurred costs as a percentage of expected total cost. The total cost is regularly re-assessed.
2.21.2 Sale of goods
Income from sale of goods is valued at the fair value of the compensation received, net after deductions for VAT, returns, discounts and deductions. Sale of goods is recognized when:
- most of the risk and advantages of owning the goods have been transferred
- it is likely that the compensation will be recovered
- associated costs and possible return of the goods can be reliably measured
- there is no involvement in the goods as is usually associated with ownership
- the income can be reliably measured
2.21.3 Services
Income from supply of services is reported in the profit and loss account in accordance with the degree of completion of the transaction on the balance sheet date. The degree of completion is calculated on the basis of work completed
2.22 Income tax
The tax cost consists of tax payable and the change in deferred tax. Deferred tax liability / tax asset is calculated on the basis of all taxable temporary differences. Deferred tax asset is recognized in the accounts when it is likely that the company will have enough taxable income to be able to use the tax asset. Deferred tax and deferred tax asset are recognized regardless of when the differences will be reversed and recognized in the accounts and in principle are recognized at nominal value. Deferred tax / tax asset is valued on the basis of the expected future tax rate.
Both tax payable and deferred tax are recognized directly against equity if they are related to items recognized directly against equity.
2.23 Financial instruments
2.23.1 Financial assets that are not derivatives
The group initially reports loans, receivables and deposits on the purchase date. All other financial assets (including assets earmarked at fair value in the profit and loss account) are initially reported on the agreement date, as the group is a party in the instrument's contractual provisions.
The group deducts a financial asset when the contractual rights to the cash flows from the asset expire, or when the group transfers the contractual rights in a transaction, where practically all the risk and return as a result of ownership of the financial asset is transferred. All rights and obligations created or retained in this type of transfer are reported separately as assets or obligations.
Financial assets and obligations are set off if the group has a legal right to set off the amounts and also intends either to settle these on a net basis or realize the asset and settle the obligation in one. If the amounts are set off, they are presented net in the balance sheet.
The group has the following non-derivative financial assets: financial assets that are kept to the due date, loans and receivables and also financial assets available for sale.
Financial assets held to maturity
If the group intends and is able to hold the obligations until maturity, this type of financial asset is classified as being "held to maturity". Financial assets held to maturity are initially reported at the fair value plus directly referable transaction costs. Following initial reporting, financial assets held to maturity are measured at the amortized cost using the effective interest method, less any loss due to fall in value. Sale or reclassification before maturity, of more than an insignificant amount of the investment to be held to maturity, will result in a reclassification of the remaining investments held to maturity to available for sale. This type of sale / reclassification will also prevent the group from classifying investments as "held to maturity" in the two subsequent financial years.
Loans and receivables
Loans and receivables are financial assets with payments that are fixed or may be fixed and that are not quoted in an active market. Loans and receivables are initially reported at the fair value plus directly referable transaction costs. Following initial reporting, the loans and receivables are measured at the amortized cost using the effective interest method less any loss due to fall in value.
Loans and receivables consist of trade debtors and other receivables, including receivables.
Cash and bank deposits, including deposits on special terms with due date within three months or less, are cash and cash equivalents. Cash credit is an important part of the group's liquidity management and is included as cash and cash equivalents in the cash flow statement.
Notes to the Group Financial Statement Bergen Group ASA
2
Accounting principles and estimates (continued)
Financial assets available for sale
Financial assets available for sale are non-derivative financial assets that are earmarked as available for sale and that are not classified in any of the other categories. The group's investments in equity instruments and certain debt instruments are classified as financial assets available for sale. Following initial reporting, the assets are measured at the fair value. Changes in the fair value are recognized under other income and costs and are presented as value adjustment reserves in the equity. This does not apply to loss due to fall in value (see note 2.17), and also foreign exchange differences on equity instruments available for sale (see note 3(b)(ii)). When an investment is deducted, the accumulated gain or loss is transferred from other income and costs to the result.
2.23.2 Financial obligations that are not derivatives
The group initially reports bonded debt and non-priority liabilities on the issue date. All other financial liabilities (including liabilities earmarked at fair value in the profit and loss account) are initially recognized on the agreement date, as the group is a party in the instrument's contractual provisions.
The group deducts a financial liability when the contractual obligations have been met, cancelled or expired.
Financial assets and liabilities are set off if the group has a legal right to set off the amounts, and also intends either to settle these on a net basis or to realize the assets and settle the liability in one. In the event of set off, the amounts are presented net in the balance sheet.
The group has the following non-derivative financial liabilities: loans, cash credit, trade creditors and other liabilities.
Non-derivative financial liabilities are initially reported at fair value plus directly attributable transaction costs. Following initial reporting, the liabilities are measured at amortized cost using the effective interest method.
2.23.3 Share capital
Ordinary shares
Ordinary share are classified as equity. Costs directly attributable to issue of ordinary shares and share options are reported as a reduction of equity (share premium account) net after any tax.
Purchase of own shares
When the share capital recognized as equity is bought back, the compensation, including directly attributable costs, is recognized as a reduction in equity, net after tax. The purchased shares are classified as own shares, are presented separately and reduce the total equity. When own shares are sold, or re-issued, the amount received is recognized as an increase in equity and gain or loss resulting from the transaction is transferred to / from retained earnings.
Complex financial instruments
The group has issued convertible bonds, where the owner of the bond is entitled to require that these are converted to shares. The number of shares that can be issued is fixed, and does not vary with price fluctuation.
The debt component in the convertible bonds is measured at the fair value on initial reporting.
The fair value is assessed on the basis of an equivalent liability without the right of conversion. The equity component is the difference between the fair value of the whole instrument and the fair value of the debt component, and is recognized in equity. Directly attributable transaction costs are distributed proportionally based on the value at initial recognition.
Following initial reporting, the debt component is measured at the amortized cost using the effective interest method. The equity component is not re-measured after initial recognition.
Interest, dividend, loss and gains related to the liability are recognized in the profit and loss account. Distribution to the owners is recognized in the equity, net after tax.
2.23.4 Financial derivatives, inc. hedge accounting
The group uses financial derivatives in the form of forward exchange contracts to hedge against exposure to currency risk. Currency risk mainly arises through operational activities in connection with construction contracts. Financial derivatives that do not qualify for hedge accounting under IAS 39, are reported as instruments held for sale.
Financial derivatives are recognized at their fair value and in subsequent valuations they are valued at the fair value. Change in the fair value in the form of loss/ gain, are immediately recognized in the profit and loss account. When financial derivatives qualify for hedge accounting, treatment of loss / gain will depend on the type of hedging used. The fair value of forward exchange contracts has been defined as the forward exchange rate on the balance sheet date for currency futures that mature at the same time. The relationship between hedging instrument and hedging object is documented when the hedging relationship is established. The group's risk management strategy and goals are documented at the same time.
The effectiveness of the hedging relationship is continuously assessed, measured by the extent to which the fair value of the hedging instrument counteracts the change in fair value of the hedging object. The fair value of derivatives used in hedging is discussed in note 24.
Bergen Group earmarks currency futures to hedge changes in the fair value of off-balance sheet binding agreements in foreign currency. Changes in the fair value of hedging instruments are recognized in the profit and loss account. When an off-balance sheet binding agreement is point out as a hedging object, the subsequent accumulated change in the fair value of the binding agreement that can be attributed to currency risk, is presented in the balance sheet as assets or liabilities with associated profit or loss in the profit and loss account.
Notes to the Group Financial Statement Bergen Group ASA
Accounting principles and estimates (continued)
2.24 Impairment losses of assets
Assets that are valued at amortized costs are written down when it is likely that the company will not receive full settlement in accordance with contractual terms for loans, receivables or "hold until maturity" investments. Write-downs are recognized in the profit and loss account. Reversal of previous years' write-downs is initially reported when subsequent transactions mean that the causes of the write-down are no longer present. Reversal of write-downs is presented as income. Reversal of previous years' write-downs is only carried out until the book value equals the amount that would have existed if the previous write-down had not taken place.
Impairment losses of other assets is considered when there are indications of a fall in value. If the book value of the asset is higher than the recoverable amount, a impairment is entered in the profit and loss account. The recoverable amount is the higher of the fair value less expected sales costs and the present value on the basis of future use of the asset. The fair value less expected sales costs is the amount that can be obtained through sale to an independent third party minus sales costs. The recoverable amount is decided separately for all assets, but - if this is possible - the recoverable amount is calculated together with the entity to which the asset belongs.
Impairment entered in the profit and loss accounts for previous periods are reversed when there is information indication that the write-down was unnecessary, or that the previously entered write-down amount was too high. No reversal will be made, however, if the balance sheet value will exceed what the balance sheet value would have been had normal depreciation been used.
2.25 Segment reporting
A business segment is part of the group and conducts business that can generate income and costs, including income and costs from transactions with other segments in the group. All business segments' operating results are reviewed regularly by the group's CEO to evaluate these and also to allocate resources to them and where separate financial information is available.
The group operates in four business segments, Shipbuilding, Maritime Service (Marine service and vedlikehold), Offshore and Technology. The company also has a segment called Business Development, which includes companies outside the group's long-term core area. The activities are spread across several geographical areas: Norway and the North Sea, Russia and others.
2.26 Contingent liabilities:
Contingent liabilities are defined as:
(i) potential liabilities resulting from previous events, but whose existence depends on future events;
(ii) liabilities not recognized in the accounts because it is not likely that the liability will result in an outflow of resources;
(iii) liabilities that cannot be measured with a satisfactory degree of reliability.
Contingent liabilities are not recognized, with the exception of contingent liabilities stemming from the acquisition of enterprises. Material contingent liabilities are specified in the notes, except for contingent liabilities where the likelihood of existence is very low.
A contingent assets is not recognized in the accounts, but will be specified in the notes to the accounts if it is likely that the asset will devolve on the group.
2.27 Events after the balance sheet date
New information about the group's positions on the balance sheet date has been taken into consideration in the accounts. Events after the balance sheet date, which do not affect the group's positions on the balance sheet date, but which have a material effect on future periods, are specified in the notes.
2.28 Cash flow statement
The cash flow statement shows the overall cash flow broken down by operations, investment and financial activities. The statement shows each activity's effect on the liquid assets. The cash flow statement is prepared in accordance with the indirect model.
2.29 Earnings per share
Earnings per share are calculated by dividing the majority's share of the profit / loss for the period by a time-weighted average of the number of ordinary shares for the period.
2.30 Employee benefits
2.30.1 Pensions
The group mainly has defined contribution pension schemes that are charged against income as contributions are made to the scheme.
Some group companies also have an early retirement scheme (AFP) in the LO-NHO area. The AFP scheme is considered to be a defined contribution pension scheme, as the scheme's administrator is not able to make the necessary calculation of obligations, assets and pension earnings for each member enterprise. Consequently, the premium and contributions will be charged against income as they arise. However, an obligation is calculated for employees who have chosen to take early retirement. These are defined as active AFPs and the obligation is equivalent to the employer's contribution in the period from when they take early retirement until they reach 67 years of age. The obligation is recognized in the consolidated accounts.
2.30.2 Severance pay
Severance pay is recognized as a cost when the group is obliged to, and does not have any realistic chance to withdraw from a formal, detailed plan regarding the end of an employee's employment before the ordinary retirement age, or an offer of voluntary retirement. The latter is recognized as a cost if it is likely that the offer will be accepted and the number of acceptances can be reliably estimated. If the severance pay falls due more than 12 months after the reporting period, it is discounted to the fair value.
2.31 Share-based payment transactions
The fair value of the share-based payments assigned to the employees, is determined on the grant date and recognized in the accounts as a payroll costs, with an equivalent increase in equity. The amount is distributed over the period until the employees are given an unconditional right to the options. The expensed amount is adjusted to reflect the actual number of share options if the associated service and non-market conditions are expected to be met, so that the total expensed amount is based on the number of share options that meet the service and non-market conditions on the vesting date. Such conditions for share-based payment with non-vesting conditions are reflected through measurement of the fair value of the share-based payment on the grant date, and no adjustment of the expensed amount is made in the event of actual failure to meet such conditions. When settlement is to be made in cash (share appreciation rights), the fair value of the expected payment is recognized in the accounts as payroll costs, with an equivalent increase in equity. The cost is distributed over the vesting period up until the employee is given an unconditional right to payment. The obligation is re-assessed on each balance sheet date (reporting date) and on the settlement date. Changes in the fair value of the obligations are recognized as payroll costs in the profit and loss account. Share-based payment transactions where the company (enterprise) receives goods or services as payment for the company (enterprise's) own equity instrument is recognized in the accounts as share-based payment transactions with settlement in equity, regardless of how the company (enterprise)
Notes to the Group Financial Statement Bergen Group ASA
Accounting principles and estimates (continued)
New accounting principles
New and amended standards and interpretations that came into effect as at 1 January 2009.
The following new and amended standards and interpretations have been applied for the first time from 1 January 2009 and have been applied in the consolidated accounts:
IFRS 8 Business segments introduces "the management approach" to segment reporting. IFRS 8, requires that segment information is based on internal management reports to be followed up regularly by the group's Chief Operating Decision Maker in order to evaluate the performance of the segments and to allocate resources to them. In accordance with IFRS 8, segment information has been given to the following business segments:
- Shipbuilding
- Maritime Services
- Offshore
- Technology
- Business Development
In addition, segment information has been given based on the geographical areas in which the group has significant activity.
Amended IAS 1 Presentation of financial statements (2007) introduces the term "total comprehensive income", which is equivalent to the changes in equity in the period and above changes associated with transactions with the owners carried out in their as owner of the company. The total comprehensive income can either be presented or combined statement, which includes both the profit and loss account and all changes in equity other than those relating to transactions with the owners (cf. above), or in an as statement separate from the profit and loss account. Bergen Group has chosen to present the total comprehensive income in a combined statement.
Amended IAS 23 Borrowing costs removes the possibility of expensing borrowing costs that can be directly attributed to a qualifying asset. Borrowing costs must therefore be capitalized together with the acquisition cost on acquisition, construction or production of the qualifying asset. In accordance with the transitional regulations, an amended IAS will be applied for the qualifying assets for which enters in the balance sheet of borrowing costs begins on 1 January 2009 or later. The amendment will therefore not involve correction of accounting figures for previous accounting periods in the consolidated annual accounts for 2009.
New and amended standards and interpretations have been applied for the first time from 1 January 2009, but have not material effect on the consolidated accounts:
Amendments to IAS 32 and IAS 1 - Financial instruments with redemption rights and liabilities resulting from winding-up require instruments with redemption right and instruments involving an obligation to deliver a portion of the entity's net assets to another party on liquidation, will be classified as equity if the given conditions are met.
Amendments to IFRS 2 Share-based payment clarifies the definition of vesting conditions, introduces the term non-vesting conditions, requires that non-vesting conditions are taken into consideration when calculating the fair value on the grant date and explains the accounting treatment of non-vesting conditions and cancellations.
Amendments from the project Improvements to IFRS (2008).
Other new and amended standards and interpretations that came into effect from 1
New and changed standards and interpretations that came into effect after 1 January 2009.
The following new and changed standards and interpretations came into effect after 1 January 2009 and have not been applied in the consolidated accounts for 2009:
IFRS 3R Business combinations (2008)
The standard has the following amendments, which are expected to be relevant to the group's operations:
- The definition of business has been expanded. This will probably mean that more acquisition will be considered to be business combinations.
- Contingent compensation must be measured at the fair value. Subsequent changes to the compensation will be recognized in the profit and loss account.
- Transaction costs over and above share issue and borrowing costs will be expensed as these are arise.
- Any existing ownership interests in the acquire party on the date of acquisition will be measured at the fair value and the gain or loss will be recognized in the profit and loss account
- Any minority interests will, for each individual transaction, be measured either at fair value or the minority's proportionate share of identifiable assets and liabilities in the acquired enterprise
Amended IFRS 3, which is mandatory from and including 1 July 2009 and will be implemented in the consolidated accounts for 2010 without retroactive effect.
IAS 27R Consolidated and separate financial statements (2008)
The standard requires that changes in holdings in a subsidiary, given that control of the subsidiary is to be maintained, must be recognized in the accounts as an equity transaction. When the group loses control of a subsidiary, any remaining holding in the former subsidiary must be measured at the fair value and the gain or loss must be recognized in the profit and loss account. The amendments to IAS 27, which are mandatory from and including 1 July 2009, are not expected to have a material effect on the consolidated accounts.
IFRS 1 Initial application - amended standard
Effective from 1 July 2009
IAS 39 / IFRIC 9 Built-in derivatives - amendments
Effective from 30 June 2009
IFRIC 17 - Distribution of non-cash assets to owners
Effective from 1 July 2009
IFRIC 18 - Transfer of assets from customers
Effective from 1 July 2009
The following new and amended standards and interpretations have been issued but have not been adopted yet:
IFRS 1 Initial application - amendments 1 January 2010
IFRS 2 Share-based payment - amendments 01.01.2010
IFRS 9 Financial instruments
IAS 24 Related party disclosures
IAS 32 Financial instruments presentation
IFRIC 14 - Rule for defined benefit pension assets - amendments 1 January 2011
IFRIC 19 - Extinguishing Financial Liabilities with Equity
instruments - new interpretation 1 July 2010
Improvements to IFRS Varies, 1 January 2009 at the earliest.
Notes to the Group Financial Statement Bergen Group ASA
3 Financial risk management
Overview
The group is exposed to the following risks resulting from the use of financial instruments:
- credit risk
- liquidity risk
- market risk.
This note provides information about exposure to each of the above-mentioned risks as well as goals, principles and processes for measuring and managing risk, and the group's capital management. More quantitative information is included elsewhere in the consolidated accounts.
The board of directors has overall responsibility for establishing and monitoring the group's risk management framework.
Risk management principles have been established in order to identify and analyse the risks to which the group is exposed, to stipulate limits on risk and pertaining control procedures, and to monitor risk and compliance with the limits. Risk management principles and systems are reviewed regularly to reflect changes in activities and market conditions.
Credit risk
Credit risk is the risk of financial losses in the event that a customer or counterparty in a financial instrument is unable to meet its contractual obligations. Credit risk is usually the result of the group's receivables from customers. The group's exposure to credit risk is mainly the result of individual factors relating to each individual customer. The demographics of the customer base, including the risk of default of payment in the industry and the country in which the customers operate, have less influence on the credit risk. There is, however, no geographical concentration of credit risk.
The group's trade debtors consist of different customer groups in the different segments. The customers of the Shipbuilding and Offshore divisions are primarily large shipping companies and oil companies, while Maritime Service's customers are shipping companies of all sizes. The Technology segment has different types of customers, but mostly related to shipbuilding and offshore shipyards.
The company has established guidelines for credit rating. This means that the creditworthiness of all new customers is assessed on an individual basis before the customer is offered the group's standard terms and conditions for delivery and payment.
Historically, losses on trade debtors have been limited.
Provisions are made for losses incurred relating to trade debtors, other receivables and investments. There are two types of provisions. One type relates to individual material factors with specific provisions. The other relates to groups of assets with similar risk characteristics where losses have been incurred, but have not been identified. Provisions are made on the basis of the payment history of similar financial assets.
Investments
Credit risk exposure is limited since the company only invests in liquid securities with counterparties with satisfactory credit ratings. The strict credit rating requirements mean that the counterparty is expected to fulfil its obligations.
Guarantees
Financial guarantees are only furnished to wholly-owned subsidiaries, in addition to guarantees being furnished for sums of money received in connection with major projects.
Liquidity risk
Liquidity risk is the risk of the group not being able to meet its contractual obligations due to insufficient liquidity. Liquidity management shall as far as possible ensure that there is sufficient liquidity available to meet obligations as they fall due without incurring unacceptable losses or risk of damage to the group's reputation.
Activity-based estimates are used to calculate the costs of products and services. This helps to follow up cash flow requirements. See note 22 for more about the company's interest-bearing liabilities.
Market risk
Market risk is the risk that fluctuations in market prices, e.g. exchange rates, the price of such raw materials as steel, and interest rates, will affect revenues or the value of financial instruments. Market risk management aims to ensure that risk exposure stays within the defined limits, while optimising the risk-adjusted return. Attempts should be made to secure major purchases in connection with projects as soon as possible after the final clarification of the project.
Currency risk
Bergen Group operates international activities, and is thus exposed to currency risk. Currency risk arises through ordinary future business transactions, capitalised receivables and liabilities, and through investments in foreign subsidiaries. Most foreign currency exposure resulting from ordinary future business transactions, capitalised receivables and liabilities is in USD, EUR, GBP and NOK, in addition to minor currency exposure in several other currencies.
Each operations entity and each project is instructed to hedge all foreign currency exposure as it arises through hedging transactions. Forward exchange contracts are used to hedge foreign currency exposure relating to future revenues and costs.
Interest risk
The company does not normally hedge against changes in the interest rate. The majority of the company's borrowing is based on the three-month floating NIBOR interest rate plus a margin. The company's loan portfolio consists of bond loans, construction loans relating to ships and other loans.
After deduction of free liquid balances, the net debt excluding construction loans amounted to NOK 706 million, which represents an increase of NOK 357 million compared with 2007. The company's exposure to an increase in short, medium and long-term interest rates is primarily in NOK.
Capital management
The board of directors' goal is to maintain a strong capital base in order to preserve the confidence of investors, creditors and market, and to develop business activities. The return on capital is monitored by the board. Return on capital is defined as the operating profit/ loss divided by the total equity. The board also monitors the level of dividends on ordinary shares. The group also trades in own shares, and the shares are mainly intended for use in connection with the share option programme. The share price influences the timing of these purchases. The group has no defined plan for the purchase of own shares.
Notes to the Group Financial Statement Bergen Group ASA
4
Segment information
(amount in TNOK)
Business segment
Bergen Group ASA operates in four segments in relation to strategic business areas. These are Shipbuilding, Maritime Services (marine service and maintenance), Offshore and Technology. In addition some companies are organised whitin the organisational unit Business Development.
Geographical segment
The group divides the customers into geographical segments on the basis of the customers' nationality. The segments are Norway, Russia and Other.
| Segment | Shipbuilding | Maritime Services | Offshore | Technology | Business development | Group elim. and others | Total |
|---|---|---|---|---|---|---|---|
| Operating revenue - external | 2 872 453 | 317 135 | 1 343 505 | 458 541 | 116 626 | 5 108 260 | |
| Operating revenue - internal | 11 902 | 6 313 | 14 291 | 231 452 | 24 958 | -288 916 | 0 |
| Total Operating revenues | 2 884 355 | 323 448 | 1 357 796 | 689 993 | 141 584 | -288 916 | 5 108 260 |
| Operating profit / loss EBITDA | 233 900 | 32 706 | 102 777 | 65 880 | -19 432 | 415 831 | |
| Depreciation | -15 058 | -7 146 | -15 147 | -2 574 | -5 552 | -45 477 | |
| Depr./ write-downs of excess values and GW | -17 885 | -54 030 | -13 282 | -9 084 | -37 000 | -131 281 | |
| Operating profit / loss EBIT | 200 957 | -28 470 | 74 348 | 54 222 | -61 984 | 0 | 239 073 |
| Net financial items | -16 764 | 2 646 | -5 426 | 6 292 | -3 533 | -63 854 | -80 639 |
| Profit / loss before tax | 184 193 | -25 824 | 68 922 | 60 514 | -65 517 | -129 371 | 158 434 |
| Assets | 1 895 887 | 378 724 | 563 074 | 238 441 | 72 892 | 1 288 705 | 4 437 723 |
| Equity | 159 344 | 191 540 | -81 169 | -27 961 | -15 068 | 1 278 367 | 1 505 053 |
| Liabilities | 1 736 543 | 187 184 | 644 243 | 266 402 | 87 960 | 10 337 | 2 932 669 |
| Cash flow from operations | 141 696 | 25 707 | 46 605 | 20 922 | 6 582 | 12 386 | 253 898 |
| Cash flow from inv. activities | -17 103 | -2 156 | -88 650 | -3 821 | 0 | -111 731 | |
| Cash flow from finance | -12 618 | -8 713 | 81 613 | -2 528 | 0 | 3 664 | 61 418 |
| Net cash flow | 111 975 | 14 838 | 39 568 | 14 573 | 6 582 | 16 050 | 203 585 |
Geographical segment
| Norway and the North Sea | Russia | Other | Total | |
|---|---|---|---|---|
| Operating revenues | 3 703 678 | 40 041 | 1 364 541 | 5 108 260 |
| Assets | 4 264 152 | 2 584 | 170 987 | 4 437 723 |
Notes to the Group Financial Statement Bergen Group ASA
5
Salary, fees, number of employees etc.
(amount in TNOK)
| 2009 | 2008 | |
|---|---|---|
| Salaries and holiday pay | 942 244 | 732 498 |
| Employer's Nat. Ins. contrib. | 126 154 | 108 601 |
| Pension expenses | 31 955 | 25 000 |
| Other payroll expenses | 253 462 | 101 075 |
| Total | 1 353 815 | 967 174 |
| Average no. of employees | 1 925 | 1 400 |
The total expenses for salary, pension premiums and other remuneration of the CEO and Vice Presidents for the Business areas in 2009 amounted to:
| 2009 | |||
|---|---|---|---|
| Payments to the CEO and Vice Presidents for the Business areas | Salary | Variable pay | Options (no.) |
| Pål Engebretsen | 3 055 | 2 250 000 | |
| Kjetil Forland | 1 357 | 528 | 138 250 |
| Inge Tangerås | 1 379 | 396 | 138 250 |
| Sebjørn Madsen | 1 325 | 280 | 82 950 |
| 7 116 | 1 204 | ||
| 2008 | |||
| --- | --- | --- | --- |
| Payments to the CEO and Vice Presidents for the Business areas | Salary | Variable pay | Options (no.) |
| Pål Engebretsen 19.09.08 - 31.12.08 | 842 | - | |
| Kjetil Forland 01.06.08 - 31.12.08 | 843 | 300 | 138 250 |
| Inge Tangerås | 1 238 | 40 | 138 250 |
| Sebjørn Madsen | 980 | 150 | 82 950 |
| 3 903 | 490 |
The CEO is entitled to free use of a car and free housing in Bergen in addition to his pay. In addition to ordinary defined contribution scheme the CEO is also entitled a yearly pension contribution of NOK 600 000. If the CEO is discharged by the Board he is entitled to receive a compensation of NOK 4 000 000. The CEO has a option agreement, with the right to 2 250 000 shares - see further description below. The CEO can be given notice by the age of 62 years, subject he is offered a new position within the company offering him 80% of the original salary. In 2009, took 6 725 including employers' national insurance contributions, has been charged as expenses related to the option agreement for the CEO.
No loans have been granted or security furnished for the CEO, board members, members of the group management or any other employees or their closely-related parties.
The retirement age is 65 years for the COE and 67 for the others in the group management.
The board has resolved a separate company guidelines for pay to executive personnel. They can be summed up as follows: The main principles for Bergen Group ASA's salary policy for managers are that executive personnel shall be offered conditions that are competitive when salary, payments in kind, bonuses and pension schemes are all taken into account. As a general rule, executive personnel can be given cash remuneration in addition to their basic salary (bonus), but this must be limited to a certain percentage of the basic salary and linked to the achievement of specific goals. Guidelines for awarding bonuses shall be decided by the board. Any bonus to the CEO shall be stipulated by the board on the basis of a recommendation from the board's compensation committee.
Notes to the Group Financial Statement Bergen Group ASA
Salary, fees, number of employees etc. (continued)
(amount in TNOK)
Share-based payments to executive personnel
All options granted are settled as a physical settlement in shares. As of 31 Dec. 2009, the group has granted the following options to employees:
| Date of granting | No. of awarded options | Pay-off criteria | Exercise price | Actual value when awarded | Expected volatility | Expiration date | Duration | Assumed dividend | Risk-free interest |
|---|---|---|---|---|---|---|---|---|---|
| 1 October 2008 | 442 400 | Permanent employ | NOK 31 | 12 000 | 78 % | 1 October 2010 | 36 mth's | 0 % | 4,80 % |
| 19. august 2009 | 2 250 000 | Permanent employ | NOK 5 | 7 965 | 70 % | 11 December 201 | 36 mth's | 0 % | 2,94 % |
| Number of, and weighted average exercise price for share | Weighted average | No of options | |||||||
| --- | --- | --- | |||||||
| Exercisable as of 01.01.2009 | NOK 31 | 294 933 | |||||||
| Lapsed during the period | NOK 31 | - | |||||||
| Exercised during the period | NOK 31 | - | |||||||
| Granted during the period | NOK 9,27 | 1 794 933 | |||||||
| Outstanding as of 31.12.09 | NOK 12,34 | 2 089 866 | |||||||
| Exercisable as of 31.12.09 | NOK 12,34 | 2 089 866 |
Measurement of fair value of options granted to employees
The value of payments received from employees in return for options are measured at the fair value at the date when the option was granted using Black & Scholes.
| 2009 | 2008 | |
|---|---|---|
| Fair value on the date when the option was granted | 7 965 | 12 000 |
| Share price on the granting date | NOK 7 | NOK 31 |
| Exercise price | NOK 5 | NOK 31 |
| Expected volatility | 70,00 % | 78,00 % |
| Term of the option | 36 mth's | 36 mth's |
| Assumed dividend | 0,00 % | 0,00 % |
| Risk-free interest | 2,94 % | 4,80 % |
The estimated expected volatility is based on the historical volatility of comparable shares, since the company itself has a short history.
| Fee to the auditor in 2009 has been charged as follows | Group | Parent company |
|---|---|---|
| Auditing | 2 511 | 597 |
| Miscellaneous related to auditing | - | - |
| Miscellaneous related to tax services | 25 | 25 |
| Other services | 155 | 155 |
| Total | 2 691 | 777 |
All amounts excluding VAT
Notes to the Group Financial Statement Bergen Group ASA
Financial income and financial expenses
(amount in TNOK)
| Konsern 2009 | Konsern 2008 | |
|---|---|---|
| Interest income | 10 770 | 31 302 |
| Currency gain | 27 468 | 105 253 |
| Return on investment in associated companies | -6 100 | 4 105 |
| Currency loss | -7 339 | -108 278 |
| Interest cost on financial liabilities measured at amortized cost | -94 518 | -96 088 |
| Other financial expenses | -10 920 | -29 429 |
| Net financial items | -80 639 | -93 135 |
Notes to the Group Financial Statement Bergen Group ASA
7 Tax
(amount in TNOK)
The tax expense in the profit and loss account reflects the tax expenses in the subsidiaries, and tax expenses related to depreciation of excess values. The Groups negative payable tax in 2009 is due to expected return of previous paid tax as a part of the "financial aid" from the government in connection with the financial crisis.
| Tax payable | 2009 | 2008 |
|---|---|---|
| Tax payable for the year | -5 472 | 1 571 |
| Adjustments from previous years | - | 986 |
| Total tax payable for the period | -5 472 | 2 557 |
| Deferred tax liabilities | ||
| Changes in temporary differences | 82 095 | -2 845 |
| Effects of temporary differences not previously recognised | 3 976 | -231 |
| Total deferred tax liabilities | 86 071 | -3 076 |
| Total tax expenses for the group | 80 599 | -519 |
| Reconciliation of effective tax rate | 2009 | 2008 |
| Profit/ loss after tax for the period | 77 835 | 19 014 |
| Total tax expenses | 80 599 | -519 |
| Profit/ loss before tax | 158 434 | 18 495 |
| Tax at nominal tax rate | 28,0 % | 44 362 |
| Permanent differences | 23,4 % | 37 122 |
| Insufficient provision, previous years | -0,6 % | -885 |
| Effect of unrecognised assets on deferred tax | n/a | - |
| Effect of acquisition - control date | n/a | - |
| Gain from purchase of own bonds | n/a | - |
| Effect of elimination of holdings in associated companies | n/a | - |
| Total tax expenses for the group | 50,9 % | 80 599 |
Notes to the Group Financial Statement Bergen Group ASA
8
Intangible assets
(amount in TNOK)
| Development | Licences, patents etc. | Goodwill | Customer relations | Customer contracts | Lease agreements | Total intangible assets | |
|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. 2008 | 3 830 | 3 792 | 1 364 164 | 94 839 | 66 208 | 55 268 | 1 588 101 |
| Additions 2008 | - | 2 232 | 19 836 | - | 5 499 | - | 27 567 |
| Disposals 2008 | - | - | - | - | - | - | - |
| Additions, acquisition and reallocation of excess | - | - | -190 582 | 42 000 | 17 000 | - | -131 582 |
| Akk. acquisition cost 31 Dec. 2008 | 3 830 | 6 024 | 1 193 418 | 136 839 | 88 707 | 55 268 | 1 484 086 |
| Akk. depreciation as of 1 Jan. 2008 | - | - | - | 8 925 | 57 824 | 747 | 67 496 |
| Akk. depreciation for the year 2008 | 805 | 458 | - | 17 477 | 13 353 | 1 658 | 33 751 |
| Akk depreciation 31 Dec. 2008 | 805 | 458 | - | 26 402 | 71 177 | 2 405 | 101 247 |
| Book value 31 Dec. 2008 | 3 025 | 5 566 | 1 193 418 | 110 437 | 17 530 | 52 863 | 1 382 839 |
| Acquisition cost 1 Jan. 2009 | 3 830 | 6 024 | 1 193 418 | 136 839 | 88 707 | 55 268 | 1 484 086 |
| Additions 2009 | - | - | - | - | - | - | - |
| Disposals 2009 | - | -1 259 | - | - | - | - | -1 259 |
| Akk acquisition cost 31 Dec. 2009 | 3 830 | 4 765 | 1 193 418 | 136 839 | 88 707 | 55 268 | 1 482 827 |
| Akk. depreciation as of 1 Jan. 2009 | 805 | 458 | - | 26 402 | 71 177 | 2 405 | 101 247 |
| Depreciation for the year 2009 | 2 383 | 298 | - | 17 478 | 11 747 | 1 658 | 33 564 |
| Write-downs for 2009 | - | - | 87 000 | - | - | - | 87 000 |
| Akk. Depreciation and write-downs 31 Dec. | 3 188 | 756 | 87 000 | 43 880 | 82 924 | 4 063 | 221 811 |
| Book value 31 Dec. 2009 | 642 | 4 009 | 1 106 418 | 92 959 | 5 783 | 51 205 | 1 261 016 |
| Allocation of goodwill | 2009 | 2008 | |||||
| --- | --- | --- | |||||
| Shipbuilding | 312 000 | 324 429 | |||||
| Maritime services | 146 421 | 171 214 | |||||
| Offshore | 456 217 | 456 217 | |||||
| Technology | 184 688 | 241 557 | |||||
| Business development | 7 092 | * | |||||
| Sum | 1 106 418 | 1 193 417 |
- Excess values related to the segment Business Development for 2008 with the identical allocation as in 2009 would have been 44 667
Cash flow-generating units
Bergen Group's goodwill originates from several acquisitions in 2007 and 2008. The management will follow up recoverable amounts per identified cash-flow generating units (CGU). Shipbuilding, Maritime Services and Offshore are defined as separate CGU. In the segments Technology and Business Development each subsidiary is defined as one CGU.
Determination of recoverable amount
Value in use, is used to find the recoverable amount. The calculations are based on future cash flows where budgets and strategically goals for the period 2010-2014 are used. The periods after 2014 no growth is used. Present value is calculated by using discounted cash flows where the weighed average cost of capital (WACC) is between $9.3\%$ and $10.8\%$ after tax. WACC is based on risk free rate at $4.1\%$, marked share premium at $5\%$, cost of loans at $7.75\%$ and based on an equity/debt ratio at 1.
Sensitivity analysis
If the company changes the expected cash flows with $10\%$ or increases used WACC with $10\%$, the company does not need to perform any additional write-downs related to the Goodwill, except for the segment Maritime Services and Bergen Group Intech. For the CGU Maritime Service it would have resulted in an write-down of additional NOK 38 million and for the CGU Bergen Group Intech NOK 5 million.
Recognizing of Impairment Loss (write down)
It is recognized a total impairment loss of NOK 87 million. It relates to the segment Maritime Service with NOK 50 million. Further it is recognized an write down of Bergen Group Raines with NOK 19 million and Bergen Group Intech with NOK 18 million. Both companies are included in the segment Business Development. The write-down is done due to changed market expectations. The write-down of the goodwill related to the companies in Business Development is based on historical performance and reduced expectations which not reflected our goals.
Notes to the Group Financial Statement Bergen Group ASA
9
Tangible fixed assets
(amount in TNOK)
| Land, buildings and quays | Plant and equipment | Operating equipment, fixtures and fittings | Total | |
|---|---|---|---|---|
| Acquisition cost 1 Jan. 2008 | 109 390 | 92 605 | 77 411 | 279 406 |
| Additions 2008 | 156 660 | 15 505 | 19 621 | 191 786 |
| Additions, acquisition and reallocation of excess values 2 | 434 354 | 1 110 | 1 019 | 436 483 |
| Disposals 2008 | 8 279 | 12 347 | 778 | 21 404 |
| Translation differences | - | - | - | - |
| Acquisition cost 31 Dec. 2008 | 692 125 | 96 873 | 97 273 | 886 271 |
| Acc. depreciation as of 1 Jan. 2008 | 2 797 | 7 693 | 3 396 | 13 886 |
| Acc. depreciation for the year 2008 | 13 800 | 18 173 | 13 689 | 45 662 |
| Acc. disposal depreciations during 2008 | 1 422 | 885 | 164 | 2 471 |
| Akk depreciation 31 Dec. 2008 | 15 175 | 24 981 | 16 921 | 57 077 |
| Write-downs as of 1 Jan. 2008 | - | - | - | - |
| Write-downs in 2008 | - | - | - | - |
| Depreciation 31 Dec. 2008 | - | - | - | - |
| Book value 31 Dec. 2008 | 676 950 | 71 891 | 80 352 | 829 193 |
| Additions 2009 | 80 820 | 16 394 | 15 405 | 112 619 |
| Disposals 2009 | - | 655 | 233 | 888 |
| Translation differences | -3 518 | 578 | - | -2 940 |
| Acc. acquisition cost 31 Dec. 2009 | 769 427 | 113 190 | 112 445 | 995 062 |
| Acc. depreciation as of 1 Jan. 2009 | 15 175 | 24 981 | 16 921 | 57 077 |
| Depreciation for the year 2009 | 25 982 | 19 250 | 10 962 | 56 194 |
| Acc. disposal depreciations during 2009 | - | - | - | - |
| Acc. depreciation 31 Dec. 2009 | 41 157 | 44 231 | 27 883 | 113 271 |
| Write-downs as of 1 Jan. 2009 | - | - | - | - |
| Write-downs in 2009 | - | - | - | - |
| Acc write-downs 31 Dec. 2009 | - | - | - | - |
| Book value 31 Dec. 2009 | 728 270 | 68 958 | 84 562 | 881 790 |
| Depreciation rates | 0-5% | 10 - 33% | 10 - 33% | |
| Depreciation plan | Linear | Linear | Linear |
Notes to the Group Financial Statement Bergen Group ASA
10
Operational leases
(amount in TNOK)
Operational lease agreements:
Operational leases includes mainly operational leasing of property and offices. In addition there are some operational leasing related to cars, copiers and other smaller equipment.
Total lease liabilities operational leases that cannot be terminated
| 2009 | 2008 | |
|---|---|---|
| Leases that expire within one year | 18 445 | 19 079 |
| Leases that expire in one to five years | 35 863 | 68 018 |
| Leases that expire in more than five years | 6 171 | 3 133 |
Notes to the Group Financial Statement Bergen Group ASA
Investments in associated companies and joint ventures
(amount in TNOK)
| Associated companies | Owner | Registered office | Holding and votes | Holding and votes | Profit/loss for the year (comp. reg.) | Assets | Liabilities | Book value |
|---|---|---|---|---|---|---|---|---|
| Altech Norway* | BG Technology | Norge | 33,00 % | -18 000 | -22 200 | 7 245 | 25 245 | - |
| Altech Island* | BG Technology | Island | 33,00 % | 1 864 | -60 | 3 087 | 1 223 | 615 |
| Elpro Industrier AS * | BG Fosen Industrier AS | Norge | 20,83 % | 30 242 | 13 673 | 75 116 | 44 874 | 6 299 |
| Haneytangen AS * | BG Offshore | Norge | 50,00 % | 20 329 | 731 | 24 304 | 3 975 | 10 164 |
| Sum** | 17 078 |
- The companies has not yet completed their final financial statement.
Notes to the Group Financial Statement Bergen Group ASA
12 Other investments
(amount in TNOK)
| Fixed assets | 2009 | 2008 |
|---|---|---|
| Investments held until maturity | - | 21 870 |
| Financial assets at fair value in the profit and loss account | - | - |
| Financial assets available for sale | 6 968 | 2 949 |
| Derivatives earmarked as hedging instruments | - | - |
| Total | 6 968 | 24 819 |
| Current assets | 2009 | 2008 |
| --- | --- | --- |
| Investments held for sale | - | - |
| Derivatives | - | - |
| Financial assets held for sale | - | - |
| Derivatives earmarked as hedging instruments | - | 81 711 |
| Total | - | 81 711 |
Notes to the Group Financial Statement Bergen Group ASA
13 Assets and liabilities related to deferred tax
(amount in TNOK)
Deferred tax liabilities not included in the calculation
At the end of the year there are temporary differences relating to the subsidiary Bergen Group Kimek AS of total NOK 23 million. NOK 6 million of this was taken into account in the calculation of the deferred tax asset entered in the balance sheet. NOK 17 million has not been included in the basis. This is due to the fact that the temporary differences are related to property, plant and equipment which cannot be utilised within a reasonable periode of time. The criteria for recognising the asset in the accounts were therefore not deemed to have been met as of 31 Dec. 2009.
Net deferred tax for the group amounts to NOK 231 million.
Recognised deferred tax liabilities
Assets and liabilities relating to deferred tax are related to the following:
| 31.12.2008 | Rec. in prof/loss acc. | Rec. in equity | 31.12.2009 | |
|---|---|---|---|---|
| Avsetninger | -28 546 | 9 904 | - | -18 642 |
| Current assets | 232 620 | 217 769 | - | 450 389 |
| Long term and short term interest bearing debt | - | 4 903 | - | 4 903 |
| Provisions | - | -28 714 | - | -28 714 |
| Pension commitments | - | 3 618 | - | 3 618 |
| Guarantee liabilities | - | -43 297 | - | -43 297 |
| Other changes | -3 035 | 11 274 | 5 343 | 13 582 |
| Excess values | 588 630 | -45 837 | - | 542 793 |
| Loss carried forward | -257 676 | 158 234 | - | -99 442 |
| Total basis related to deferred tax | 531 993 | 287 854 | 5 343 | 825 190 |
| Deferred tax in the accounts | 148 958 | 80 599 | 1 496 | 231 053 |
Notes to the Group Financial Statement Bergen Group ASA
| 14 | Stocks | (amount in TNOK) | |
|---|---|---|---|
| 2009 | 2008 | ||
| Stocks on 31 Dec. | 36 358 | 51 277 | |
| Depreciation of stocks as of 31 Dec. | - | - | |
| 15 | Trade debtor and other receivables | (amount in TNOK) | |
| --- | --- | --- | --- |
| Trade debtors | 2009 | 2008 | |
| Trade debtors at nominal value | 358 394 | 472 138 | |
| Provision for bad debt | 22 239 | 5 940 | |
| Total trade debtors as of 31 Dec. | 336 155 | 466 198 | |
| Other short-term receivables | 2009 | 2008 | |
| --- | --- | --- | |
| Receivables from closely-related parties | 439 | 40 | |
| Loans to employees | 1 103 | 6 295 | |
| Indirect taxes due | - | - | |
| Costs paid in advance | 9 774 | 1 441 | |
| Lendings and receivables | 745 | - | |
| Other short-term receivables | 42 563 | 100 467 | |
| Total other short-term receivables as of 31 Dec. | 54 624 | 108 243 | |
| Other long-term receivables | 2009 | 2008 | |
| --- | --- | --- | |
| Long-term receivables from related parties | - | - | |
| Other long-term receivables | 10 635 | 2 949 | |
| Total other long-term receivables as of 31 Dec. | 10 635 | 2 949 | |
| 16 | Liquid assets | (amount in TNOK) | |
| --- | --- | --- | --- |
| Cash and cash equivalents breaks down as follows: | |||
| 2009 | 2008 | ||
| Cash and bank deposits | 453 515 | 249 929 | |
| Total cash and cash equivalents | 453 515 | 249 929 | |
| Of which restricted funds in blocked accounts as of 31 Dec. | 57 155 | 65 983 | |
| Restricted funds consist of: | |||
| Tax withholding accounts | 38 367 | 26 026 | |
| Security furnished to customers for payment in advance | 18 788 | 39 957 |
Notes to the Group Financial Statement Bergen Group ASA
17 Construction contracts
(amount in TNOK)
The activities in parts of the group's segments involve completion of contracts with customers. The order backlog represents the company's obligation to deliver goods that have not yet been delivered, as well as entitle Bergen Group to deliver at the agreed time and price. If the costs of a project exceed the income, the loss is expensed immediately. A summary of the information follows below:
| Operating revenues consists of: | Shipbuilding | Maritime Services | Offshore | Technology | Business Development | Elimination | Total |
|---|---|---|---|---|---|---|---|
| Order backlog as of 31.12.2008 | 5 718 344 | 52 698 | 461 997 | 650 140 | 91 030 | -163 367 | 6 810 842 |
| New orders in 2009* (unaudited) | 772 585 | 316 776 | 1 154 107 | 483 003 | 64 029 | -265 708 | 2 524 792 |
| Contract-related revenue recognized during the period | 2 884 355 | 323 448 | 1 357 796 | 689 993 | 141 584 | -288 916 | 5 108 260 |
| Order backlog as of 31.12.2009 (unaudited) | 3 606 574 | 46 026 | 258 308 | 443 150 | 13 475 | -140 159 | 4 227 374 |
| Contract-related revenue recognized during the period** | 2 884 355 | 323 448 | 1 357 796 | 689 993 | 141 584 | -288 916 | 5 108 260 |
| Contract costs during the period*** | 2 650 455 | 290 742 | 1 255 019 | 624 113 | 161 016 | -288 916 | 4 692 429 |
| Expected losses on projects recognised during the period | - | - | - | - | - | - | - |
| Project result (EBITDA) | 233 900 | 32 706 | 102 777 | 65 880 | -19 432 | - | 415 831 |
- New orders also include variation orders and additional on existing contracts
** Contract related income includes all income in the various segments
*** Contract Related costs include all costs related to operations, including fixed costs like rent and salaries for managing employees
| Other financial information as of 31.12.2009 | Shipbuilding | Maritime Services | Offshore | Technology | Business Development | Elimination | Total |
|---|---|---|---|---|---|---|---|
| Gross outstanding amounts from customers on projects | 1 218 922 | 8 885 | 63 429 | 92 515 | 6 464 | - | 1 390 217 |
| Gross outstanding amounts to customers on projects | 189 602 | 3 409 | - | 3 178 | - | - | 196 189 |
Notes to the Group Financial Statement Bergen Group ASA
18
Share capital and shareholder information
(amount in TNOK)
Share capital: On 31 Dec. 2009, the share capital of Bergen Group ASA was NOK 48 074 296, divided between equal number of shares each of par value of NOK 1.00. In 2009 there has been issued 2 192 902 new shares. All new shares issued are from warrants exercised.
List of shareholders: The following is a list of the 20 largest shareholders of Bergen Group and shares owned by executive personnel and board members, including shares owned by their closely-related persons and companies, as of 31 December 2008.
| Shareholders as of 31 December 2009 | No of shares | Holding | ||
|---|---|---|---|---|
| STANGELAND INVESTMENTS AS | 20 379 014 | 42,39 % | ||
| EIKESTØ AS | 2 507 348 | 5,22 % | ||
| FURENESET INVEST A/S | 2 020 686 | 4,20 % | ||
| ODIN OFFSHORE | 1 551 000 | 3,23 % | ||
| ROS HOLDING AS | 1 436 841 | 2,99 % | ||
| MAY INVEST A/S | 989 981 | 2,06 % | ||
| DET NORDENFJELDSKE DAMPSKIPSSELSKA | 989 010 | 2,06 % | ||
| RBC DEXIA INVESTOR SERVICES TRUST | 887 000 | 1,85 % | ||
| SØR-VARANGER INVEST AS | 846 774 | 1,76 % | ||
| SKANDINAVISKA ENSKILDA BANKEN | 796 000 | 1,66 % | ||
| KANABUS AS | 710 962 | 1,48 % | ||
| CITIBANK N.A. (LONDON BRANCH) | 667 696 | 1,39 % | ||
| CITIBANK N.A. NEW YORK BRANCH | 649 043 | 1,35 % | ||
| DNB NOR NAVIGATOR | 626 561 | 1,30 % | ||
| BERGER BRUKTOMSETNING AS | 600 000 | 1,25 % | ||
| KLP LK AKSJER | 570 200 | 1,19 % | ||
| OCEAN PARTNERS AS | 494 505 | 1,03 % | ||
| BERNHD. BREKKE AS | 494 505 | 1,03 % | ||
| FOSEN OFFSHORE AS | 494 505 | 1,03 % | ||
| G.H.EIENDOM AS | 494 505 | 1,03 % | ||
| Total shares owned by 20 largest shareholders | 38 206 136 | 79,47 % | ||
| Other shareholders | 9 868 160 | 20,53 % | ||
| Total shares 31.12.2009 | 48 074 296 | 100,00 % | ||
| Board of directors: | ||||
| Magnus Stangeland | Chairman | Shares on 31 Dec. 2009 owned by Stangeland Investment | 20 379 014 | 42,39 % |
| Shares on 31 Dec. 2009 owned by Flyfisk AS | 281 250 | 0,59 % | ||
| Warrants on 31 Dec. 2009 owned by Flyfisk AS | 197 138 | NA | ||
| Svein Milford | Deputy chairman | Shares on 31 Dec 2009 | - | - |
| Geirulv Lode | Board member | Shares on 31 Dec 2009 | - | - |
| Rune Skarveland | Board member | Shares on 31 Dec 2009 owned by Eikestø AS | 2 507 348 | 5,22 % |
| Warrants on 31 Dec. 2009 owned by Eikestø AS | 131 281 | NA | ||
| Eli Sætersmoen | Board member | Shares on 31 Dec 2009 | 500 | 0,00 % |
| Anne Gine Hestetun | Board member | Shares on 31 Dec 2009 | - | - |
| Monica Siv Salthella | Board member | Shares on 31 Dec 2009 | - | - |
| Oddvar Stangeland | Deputy board member | Shares on 31 Dec 2009 owned by Kanabus AS | 710 962 | 1,48 % |
| Pål Øyvind Engebretsen | CEO | Shares on 31 Dec 2009 owned by Compleo AS | 80 000 | 0,17 % |
| Ingunn Flytør | Board member* | Shares on 31 Dec 2009 | - | - |
| Ove Iversen | Board member* | Shares on 31 Dec 2009 | 700 | 0,00 % |
| Arne Vindenes | Board member* | Shares on 31 Dec 2009 | - | - |
| *elected by the employees | ||||
| Total shares owned by board member and their closely-related parties and executive personnel | 24 288 193 | 50,52 % |
Stangeland investment AS is owned by parties closely related to Magnus Stangeland. Magnus Stangeland is chair of the boards of both Bergen Group ASA and Stangeland Investment AS.
Notes to the Group Financial Statement Bergen Group ASA
19 Earnings per share (NOK)
(amount in TNOK)
| Basis for calculation of earnings per share | 2009 | 2008 |
|---|---|---|
| Profit/ loss for the year after minority interests | 77 835 | 19 014 |
| Average outstanding shares | 46 564 637 | 43 123 903 |
| Diluted, weighted average number of shares* | 49 138 014 | 43 123 903 |
| Earnings per share for shareholders in the parent company based on avg no. of shares outstanding (NOK) | 1,67 | 0,44 |
| Earnings per share for shareholders in the parent company based on diluted, weighted avg no. of shares outstanding (NOK) | 1,58 | 0,44 |
- Diluted, weighted average number of shares includes, in addition to ordinary shares, warrants, and options issued to senior management, and are expected to be settled by the issue of new shares.
Notes to the Group Financial Statement Bergen Group ASA
20
Interest bearing debt
(amount in TNOK)
Bond loans
Bergen Group ASA has four bond loans that fall due on 12 August 2010. The trustee for the bond owners is Norsk Tillitsmann ASA and DnB NOR ASA is the registrar. The bond loans are not listed.
| ISIN no. | Nominal value | Interest | Call price | Booked value |
|---|---|---|---|---|
| NO 001 039550.2 | 230 500 | 3 mnd NIBOR + 800 bps | 108 % | 198 015 |
| NO 001 052189.1 | 169 500 | 3 mnd NIBOR + 800 bps | 100 % | 162 489 |
| NO 00 1037936.5 | 144 500 | 3 mnd NIBOR + 500 bps | 104 % | 147 214 |
| NO 00 1052190.9 | 105 500 | 3 mnd NIBOR + 500 bps | 100 % | 103 496 |
| Total | 611 214 |
Bergen Group ASA owns 38,5 million
(3 645 267 subscription rights were issued at subscription rate NOK kr.1.10 pr share)
(3 610 085 subscription rights were issued at subscription rate NOK kr.1.10 pr share)
All bond loans' interest rates are adjusted quarterly. The security furnished for two of the loans (ISIN NO 001 039550.2 and NO 001 052189.1) consists of the shares in Bergen Group Rosenberg. Bergen Group owns 38,5 million in the loan with nominal value 230 million. The security furnished for the loans (ISIN NO 001 037936.5 and NO 001052190.9) consists of the shares in the companies Bergen Group Shipbuilding, Bergen Group Maritime Services, Bergen Group Offshore, Bergen Group Technology, Bergen Group Sujo, Bergen Group Vest Elektro and Bergen Group BSM.
Covenants relating to the bond loans require that the group's book equity shall not be less than 30% of the total capital.
Construction loans
The group has taken up construction loans in connection with newbuilds. For these loans, the bank's security is the ship, and the bank makes disbursements within a given framework as the projects progress. The group has secured financing for all ships built with financing from a bank in the group's two main shipbuilding banks, Sparebanken Vest and Sparebank1 Midt-Norge. GIEK furnishes a 50 per cent guarantee for all loans granted for construction loan financing. Interest costs relating to these loans are presented under costs of sale. Construction loans are defined as short-term debt, since they are part of the production cycle.
See note 22 for information about interest, currency and liquidity risk.
Other loans
In addition to the bond loans, the group has several small long-term loans in different subsidiaries. There are various mortgage loans for which the local companies have furnished security in the form of receivables, stock etc. The terms of the loans vary, but are normally in the interval NIBOR + 100-300 bp
Financial leasing agreements:
The group's assets covered by financial leases include the foundations for buildings, accommodation rigs, quays and machinery and operating equipment. In addition to lease payments, the group also has liabilities relating to maintenance and insurance of the assets.
| Overview of interest-bearing debt | Long-term | Short-term |
|---|---|---|
| Bond loans | 611 214 | |
| Debt to credit institutions, including leasing debt | 142 854 | 143 030 |
| Other long-term debt | 35 286 | 10 181 |
| Construction loans | 849 196 | |
| Total interest bearing debt | 178 139 | 1 613 622 |
| Installment profile, long-term debt | 2011 | 2012 |
| --- | --- | --- |
| Debt to credit institutions, including leasing debt | 29 569 | 28 571 |
| Other long-term debt | 13 239 | 6 996 |
| Total instalments* | 42 808 | 35 567 |
- Installments on long-term debt that falls due in 2010 are classified under short-term liabilities in the balance sheet, and are therefore not included in the sum above.
| Liabilities secured by mortgages | 2009 | 2008 |
|---|---|---|
| Bond loans with shares as security | 611 214 | 611 500 |
| Debt with assets as security | 319 612 | 254 308 |
| Debt with ships under construction as security | 849 196 | 376 127 |
| Unsecured debt | 11 739 | 24 402 |
| Total debt | 1 791 761 | 1 266 337 |
| Average interest rate | 10,03 % | 10,79 % |
Notes to the Group Financial Statement Bergen Group ASA
21
Other short-term liabilities
(amount in TNOK)
See note 15 for an overview of short-term interest-bearing liabilities.
| Specification of other short term liabilities | 2009 | 2008 |
|---|---|---|
| Trade creditors | 348 415 | 467 585 |
| Tax payable | -5 472 | 2 557 |
| Indirect taxes due | 48 760 | 106 954 |
| Invoiced, un-earned and advance payments from customers | 196 190 | 229 615 |
| Other short-term liabilities | 311 201 | 266 949 |
| Total other short term liabilities | 899 094 | 1 073 660 |
Notes to the Group Financial Statement Bergen Group ASA
Financial instruments
(amount in TNOK)
| Note | 2009 | 2008 | |||
|---|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | ||
| Cash and cash equivalents | 16 | 453 515 | - | 249 929 | - |
| Other investments, including derivatives | - | - | - | - | |
| Short-term financial assets at fair value recognised in the profit and loss account | - | - | - | - | |
| Other investments | - | - | - | - | |
| Long-term financial assets available for sale: | |||||
| Other long-term receivables | 12 | 6 968 | - | 2 949 | - |
| Other short-term receivables | 15 | 54 624 | - | 108 243 | - |
| Trade debtors | 15 | 336 155 | - | 466 198 | - |
| Long-term interest-bearing loans | 20 | - | 178 139 | - | 209 919 |
| Bond loans, of which 361,500 short-term | 20 | - | 611 214 | - | 611 500 |
| Other long-term liabilities | - | 297 | - | 17 213 | |
| Trade creditors and other payment obligations | 21 | - | 397 175 | - | 574 539 |
| Short-term interest-bearing loans | 21 | - | 153 211 | - | 68 791 |
| Total Lendings and receivables, and liabilities at amortised cost | 851 262 | 1 340 037 | 827 319 | 1 481 962 |
Stipulation of fair value and comparison of fair value and book value
Cash and cash equivalents:
Book values have been estimated to be equivalent to fair value for cash and cash equivalents.
Short-term financial assets at fair value recognised in the profit and loss account:
Short-term financial instruments at fair value in the profit and loss account are recognised at fair value.
Long-term financial assets available for sale:
Long-term financial assets available for sale are recognised at historical cost.
Lendings and receivables, and liabilities at amortised cost:
Lendings and receivables and liabilities are recognised at amortised cost on the basis of an effective interest method. Book values are assumed to be a good estimate of the fair value of financial instruments short-term receivables and liabilities. The exception from this rule is bond loans classified as short-term liabilities. Short-term bond loans and long-term loans are listed in the table below, with specific sums given for the estimated fair value:
| Fair value of interest bearing debt | Book value | Fair value |
|---|---|---|
| Bond loans 1) | 611 214 | 518 525 |
| Construction loans | 849 196 | 849 196 |
| Other interest-bearing loans | 153 211 | 153 211 |
| Total short-term interest bearing debt | 1 613 622 | 1 520 932 |
| Bond loans 1) | - | - |
| Interest-bearing loans | 178 139 | 178 139 |
| Total long-term interest bearing debt | 178 139 | 178 139 |
1) The fair value of the bond loans is based on tax assessment rates from www.stamdata.no as of 1. January 2010.
Notes to the Group Financial Statement Bergen Group ASA
22
Financial instruments (continued)
(amount in TNOK)
Credit risk
Credit risk exposure
The value of financial assets recognised in the balance sheet represents the maximum credit exposure. The maximum credit risk exposure as of 31. Dec 2009 was:
| Note | 2009 | 2008 | |
|---|---|---|---|
| Financial assets at fair value in the profit and loss account | 14 | - | - |
| Financial assets available for sale | 14 | - | - |
| Investments held until maturity | |||
| Lendings and receivables | 17 | 397 747 | 577 390 |
| Cash and cash equivalents | 18 | 453 515 | 249 929 |
| Total amount exposed for credit risk | 851 262 | 827 319 | |
| Loss from reduction in value | |||
| The maturity profile of trade debtors as of 31 Dec | Gross | ||
| 2009 | Provisions | ||
| for loss | |||
| 2009 | Gross | ||
| 2008 | Provisions for | ||
| loss | |||
| 2008 | |||
| --- | --- | --- | --- |
| Not fallen due | 188 120 | - | 246 375 |
| Due in 0-30 days | 67 837 | - | 136 380 |
| Due in 31-120 days | 48 623 | -2 310 | 49 730 |
| Due in 121-360 days | 35 338 | -6 689 | 33 713 |
| Due in > 1 year | 11 796 | -6 560 | - |
| Total | 351 714 | -15 559 | 466 198 |
| Changes in provisions for loss related to trade debtors | 2009 | 2008 | |
| --- | --- | --- | |
| Provisions for loss 01.01. | -5 940 | -6 800 | |
| Increased provisions for loss | -9 619 | 860 | |
| Provisions for loss 31.12 | -15 559 | -5 940 |
Notes to the Group Financial Statement Bergen Group ASA
Financial instruments (continued)
(amount in TNOK)
Liquidity risk
Maturity pursuant to contracts for financial liabilities, including payment of interest and without the effect of settlement arrangements:
| 31. December 2009 | Book amount | Contractual cash flows | 6 months or less | 6-12 mth. | 1 - 2 years | 2 - 5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Non-derivative financial liabilities | |||||||
| Mortgage loans | 237 779 | 237 779 | 71 515 | 71 515 | 37 849 | 47 449 | 9 451 |
| Secured bonds | 611 124 | 632 640 | - | 632 640 | - | - | - |
| Financial leases | 48 105 | 48 105 | 5 073 | 5 073 | 20 291 | 17 669 | - |
| Other debt | 45 467 | 45 467 | 5 090 | 5 090 | 20 235 | 12 288 | 2 763 |
| Trade creditors and other debt | 904 566 | 904 566 | 650 871 | 253 696 | - | - | - |
| Derivative financial liabilities | |||||||
| Forward exchange contracts used as hedging | |||||||
| Outgoing flow | - | 122 996 | 39 817 | 45 472 | 37 707 | - | - |
| Incoming flow | - | -121 377 | -121 377 | - | - | - | - |
| Other exchanges contracts | |||||||
| Outgoing flow | - | 7 713 | 7 713 | - | - | - | - |
| Incoming flow | - | - | - | - | - | - | - |
| Total non-derivative financial liabilities | 1 847 041 | 1 859 225 | 806 396 | 922 542 | 40 668 | 77 405 | 12 214 |
| 31. desember 2008 | Book amount | Contractual cash flows | 6 months or less | 6-12 mth. | 1 - 2 years | 2 - 5 years | More than 5 years |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Non-derivative financial liabilities | |||||||
| Mortgage loans | - | - | - | - | - | - | - |
| Secured bonds | 611 500 | 611 500 | 361 500 | - | 250 000 | - | - |
| Financial leases | 73 290 | 73 290 | 10 819 | 10 819 | 13 262 | 30 014 | 8 376 |
| Trade creditors and other liabilities | 676 917 | 676 917 | - | - | - | - | - |
| Bank overdraft facility | 14 680 | 14 680 | - | - | - | - | - |
| Derivative financial liabilities | |||||||
| Forward exchange contracts used as hedging | |||||||
| Outgoing flow | - | 113 042 | 34 965 | 59 335 | 18 742 | - | - |
| Incoming flow | - | - | - | - | - | - | - |
| Total | 1 376 387 | 1 263 345 | 337 354 | -48 516 | 244 520 | 30 014 | 8 376 |
Notes to the Group Financial Statement Bergen Group ASA
22
Financial instruments (continued)
(amount in TNOK)
Currency risk exposure
The group's currency risk exposure was as follows, based on nominal amounts.
| 31. December 2009 | 31. December 2008 | |||||
|---|---|---|---|---|---|---|
| Euro | USD | Other | Euro | USD | Other | |
| Bank | 394 | -2 396 | 50 | -1 792 | -5 044 | 1 846 |
| Trade debtors | 1 326 | 778 | - | 7 886 | 1 967 | 1 340 |
| Mortgage loans | - | - | - | - | - | - |
| Trade creditors | -2 631 | -212 | 42 | -11 056 | -1 192 | -159 |
| Balance sheet exposure | -911 | -1 830 | 8 | -4 962 | -4 269 | 3 027 |
| Estimated need for future sales (NOK) | 129 877 | 20 888 | - | 56 755 | 74 278 | - |
| Estimated need for future purchases (NOK) | -121 377 | - | - | -542 585 | - | - |
| Gross exposure | 8 500 | 20 888 | - | -485 830 | 74 278 | - |
| Forward exchange contracts | 19 269 | -28 601 | - | 493 158 | -59 185 | - |
| Net exposure | 26 858 | -9 543 | 92 | 2 366 | 10 824 | 3 027 |
| Material exchange rates throughout the year: | 2009 | 2008 | ||||
| --- | --- | --- | --- | --- | ||
| Euro | USD | Euro | USD | |||
| Average exchange rate for the year | 8,73 | 6,28 | 8,22 | 5,64 | ||
| Spot exchange rate on 31 December | 8,32 | 5,78 | 8,95 | 6,99 |
Sensitivity analysis
A 10 per cent strengthening of NOK in relation to the following currencies at the end of the year would have increased (reduced) the equity and profit by the amounts shown below. This analysis assumes that the other factors remain unchanged.
| 31. December 2009 | Equity | Profit/loss |
|---|---|---|
| Euro | - | 2 686 |
| USD | - | -954 |
| GBP | - | - |
| - | 1 732 | |
| 31. December 2008 | Equity | Profit/loss |
| --- | --- | --- |
| Euro | - | 237 |
| USD | - | 1 082 |
| GBP | - | - |
| - | 1 319 |
A ten per cent weakening of NOK in relation to the above-listed currencies would have had the opposite effect in the same amounts. This analysis assumes that the other factors remain unchanged.
Notes to the Group Financial Statement Bergen Group ASA
22
Financial instruments (continued)
(amount in TNOK)
Interest risk exposure
Long-term loans at floating interest rates expose the group to cash flow fluctuations resulting from changes in the interest rate level.
Sensitivity analysis
A change in the interest rate of 100 base points on the reporting date would have increased (reduced) equity and yearly profit by the following amounts. This analysis assumes that all other variables, particularly the exchange rates, remain unchanged.
| Profit/ loss | Equity | |||
|---|---|---|---|---|
| 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease | |
| Cash and cash equivalents | 3 517 | -3 517 | - | - |
| Long-term interest-bearing loans | -3 190 | 3 190 | - | - |
| Short-term interest-bearing loans | -12 100 | 12 100 | - | - |
| Cash flow sensitivity (net) | -11 773 | 11 773 | - | - |
Notes to the Group Financial Statement Bergen Group ASA
23 Related parties
Stangeland Investment AS furnished a guarantee of NOK 72 000 000 in connection with financing relating to the acquisition of Begren Group Fosen Holding AS. A guarantee commission of 4 per cent per year is charged.
In 2006 Flyfisk AS provided Bergen Group Maritime Services AS with a subordinated loan. Per 31. Dec 2009 the amount is TNOK 4 000 000.
The Chairman, through his 100% owned company Flyfisk AS, receives an compensation of T NOK 82.5 per. month. This will cover his work beyond his function as Chairman, and expenses related to office rent.
All agreements with related parties have been entered into on market terms.
Remuneration to top management is shown in note 5
The Board of Directors receives a compensation determine by the general meeting. In 2009 the following compensation was paid:
| Board of directors | ||
|---|---|---|
| Name | Position | Remuneration |
| Magnus Stangeland | Chairman | TNOK 350 |
| Sigurd Geir Arnland | Board member | TNOK 150 |
| Rune Skarveland | Board member | TNOK 150 |
| Eli Sætersmoen | Board member | TNOK 150 |
| Monica Salthella | Board member | TNOK 125 |
| Torunn Stangeland | Board member | TNOK 100 |
| Oddvar Stangeland | Board member | TNOK 50 |
| Geirulv Lode | Board member | TNOK 0 |
| Arne Vindenes | Staff representative | TNOK 45 |
| Helga Skeie | Staff representative | TNOK 50 |
| Ove Iversen | Staff representative | TNOK 5 |
Election and remuneration committee
Pål W. Lorentzen Leader TNOK 20
Tore Dalseide Member TNOK 20
Magnus Stangeland Member TNOK 20
24 Material estimates
The company has several major projects for which the degree of completion must be estimated. The estimates are based on professional judgement seen in relation to costs incurred and hours spent. The proportion of expected total profit to be included will therefore depend on these judgements.
The depreciation of fixed assets is also influenced by discretionary judgement. The useful life of each fixed asset is normally assessed on acquisition. In the event of material changes, the useful life estimate is modified.
Provisions for guarantees are based on estimates of expected costs that can arise in connection with delivery of our products.
Provisions for potential losses on trade debtors are based on individual assessments of each item and a general provision based on the maturity profile of the receivables.
25 Contingent outcomes and contractual obligations
Project risk and uncertainty
Bergen Group's projects are based on contracts with different production periods, most of which are total contracts at a fixed price. Failure to meet delivery times or performance guarantees, as well as increases in project costs, can result in costs that cannot be recouped, and which may exceed the revenues from the project in question. If a project has identified expected losses, provisions are made to cover incurred and future losses. The accounting treatment is based on experience, available information and the judgement of the management. Such conditions and information can change in subsequent periods, and the final outcome may therefore be better or worse than concluded in the assessments made when the accounts were prepared.
Legal disputes
Bergen Group's activities may involve the group in various disputes. Provisions have been made to cover expected losses resulting from these disputes to the extent to which negative outcomes are probable and reliable estimates can be made. However, the final decision in such cases will always be uncertain and may result in liabilities exceeding the provisions made.
Guarantee liabilities
In addition, guarantees for completion and advance payments from customers are furnished as an ordinary part of the group's activities. Such guarantees usually involves a bank furnishing the guarantee to the customer.
Notes to the Group Financial Statement Bergen Group ASA
Group Companies
(amount in TNOK)
Subsidiaries included in the consolidation of the Bergen Group are listed in the table below.
| Directly owned by Bergen Group ASA | Owner | Registered office | Company's share capital | Holding and votes | Profit/loss for the year (comp. reg.) | Equity as of 31 Dec. | Book value |
|---|---|---|---|---|---|---|---|
| Bergen Group Shipbuilding AS | Bergen Group ASA | 5815 Bergen | 180 777 | 100 % | -16 944 | 166 793 | 259 771 |
| Bergen Group Maritime Services AS | Bergen Group ASA | 5160 Laksevåg | 95 770 | 100 % | 2 204 | 251 464 | 773 290 |
| Bergen Group Offshore AS | Bergen Group ASA | 5160 Laksevåg | 646 800 | 100 % | -3 122 | 633 072 | 721 084 |
| Bergen Group Technology AS | Bergen Group ASA | 5160 Laksevåg | 1 842 | 100 % | -7 791 | 147 521 | 338 499 |
| Bergen Group Management AS | Bergen Group ASA | 5160 Laksevåg | 606 | 100 % | -416 | 4 026 | 14 661 |
| Indirectly owned group companies | Owner | Registered office | Company's share capital | Holding and votes | Profit/loss for the year (comp. reg.) | Equity as of 31 Dec. | Book value |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Bergen Group Risnes AS | BG Shipbuilding AS | 5450 Sunde i Sunnhordaland | 300 | 100 % | -4 771 | -9 038 | 1 |
| Bergen Group Halsnøy AS | BG Shipbuilding AS | 5457 Høylandsbygd | 10 000 | 100 % | 59 072 | 21 593 | 75 000 |
| Bergen Group Shipdesign | BG Shipbuilding AS | 7462 Trondheim | 200 | 100 % | 217 945 | 422 | 210 |
| Bergen Group Kimek AS | BG Maritime Services AS | 9900 Kirkenes | 19 779 | 100 % | 7 325 | 60 066 | 45 800 |
| Bergen Group Skjendal AS | BG Maritime Services AS | 5160 Laksevåg | 2 752 | 100 % | 2 374 | 20 918 | 30 000 |
| Bergen Group BMV AS | BG Maritime Services AS | 5160 Laksevåg | 20 067 | 100 % | 50 013 | 96 489 | 43 920 |
| Bergen Group Laksevåg AS | BG Maritime Services AS | 5160 Laksevåg | 12 378 | 100 % | -2 116 | 14 162 | 14 055 |
| Bergen Group Rosenberg AS | BG Offshore AS | 4085 Hundvåg | 40 782 | 100 % | 52 294 | 119 583 | 673 068 |
| Bergen Group Kimek Offshore AS | BG Offshore AS | 9917 Kirkenes | 100 | 100 % | 1 942 | 5 198 | 35 000 |
| Bergen Group Haresytangen AS | BG Offshore AS | 5160 Laksevåg | 850 | 100 % | 2 692 | 7 625 | 174 |
| Bergen Group Engineering AS | BG Offshore AS | 5160 Laksevåg | 100 | 100 % | -3 007 | -2 735 | 106 |
| Bergen Group BSM AS | BG Technology AS | 5160 Averey | 108 | 100 % | -17 031 | -16 178 | - |
| Bergen Group Dreggen AS | BG Technology AS | 5815 Bergen | 5 410 | 100 % | 30 305 | 57 665 | 62 603 |
| Bergen Group SiJo AS | BG Technology AS | 5160 Laksevåg | 100 | 100 % | 3 856 | 4 998 | 35 743 |
| Bergen Group Vest Elektro AS | BG Technology AS | 5418 Filjar | 372 | 100 % | 3 361 | 6 707 | 57 282 |
| SPL Norway AS | BG Technology AS | 5450 Sunde | 1 000 | 100 % | -646 | -685 | 2 505 |
| Bergen Group Skarveland AS | BG Technology AS | 5450 Sunde | 2 000 | 100 % | 20 037 | 25 258 | 6 020 |
| Bergen Group Intech AS | BG Technology AS | 5450 Sunde | 1 000 | 100 % | 1 890 | 5 372 | 1 020 |
| Arnia SP Zoo | BG Technology AS | Polen | 158 | 100 % | 3 568 | 2 219 | 157 |
| Bergen Group Shared Services | BG Management AS | 5160 Laksevåg | 100 | 100 % | 450 | 3 084 | 106 |
| Kontor og lagerdrift | BG Technology AS | 5450 Sunde | 100 | 100 % | -198 713 | 689 | 812 |
| Rosenberg Services AS | BG Rosenberg AS | 4085 Hundvåg | 100 | 100 % | 480 | 778 873 | 8 072 |
| Bergen Group Fosen Holding AS | BG Shipbuilding AS | 7100 Rissa | 94 617 | 100 % | -10 980 | 104 435 | 180 677 |
| Bergen Group Fosen Industrier AS | BG Fosen Holding AS | 7100 Rissa | 7 974 | 100 % | 20 902 | 27 853 | 15 600 |
| Bergen Group Fosen Mek. Verksted AS | BG Fosen Holding AS | 7100 Rissa | 5 000 | 100 % | 33 599 | -26 632 | 1 |
| Bergen Group Fosen Yards AS | BG Fosen Holding AS | 7100 Rissa | 40 500 | 100 % | 69 601 | 177 241 | 81 363 |
| Bergen Group Bruces Holding AB | BG Fosen Holding AS | Sverige | 2 000 | 100 % | -3 400 | 14 090 | 28 000 |
| Bergen Group Landskronavarvet AB | BG Bruces Holding AB | Sverige | 1 000 | 100 % | -4 282 | -2 435 | 14 000 |
Notes to the Group Financial Statement Bergen Group ASA
27 Events after Balance Sheet day
Bergen Group to build two new cruise ferries for Fjord Line
Fjord Line has signed a contract with Bergen Group to build two new cruise ferries. The ships will be delivered in the spring and autumn 2012, and the contract has a total value of EURO 206 million. The two sister ships have a length of 170 meters. The hull of the two cruise ferries will be built at the Polish shipyard Stocznia Gdansk.. The contract between Fjord Line Danmark AS and Bergen Group Fosen AS is signed subject to final funding and approval of the companies' respective boards within 30 days from contract signing.
Bergen Group awarded LOI on completion of the YME-platform
Bergen Group, through its subsidiary Bergen Group Rosenberg AS, has received a letter of intent (LOI) from SBM (Single Buoy Moorings Offshore Contractors) that SBM will be awarding Bergen Group Rosenberg a contract for assistance during the completion of the YME Mobile Offshore Production Unit with Storage (MOPU Stor) jack up platform. The platform will then arrive at Bergen Group Rosenberg where the jack up legs and other equipment will be installed. The platform will then be towed to the offshore location for offshore hook up and completion which is scheduled to be completed in July 2010.
Completion of yard facility sale in Landskrona in Sweden
The final agreement is signed and yard area, fixed assets and inventories are now sold from Landskronavarvet AB to Øresundvarvet AB.
Other stock exchange notices for Bergen Group ASA can be read at www.bergengroup.no or at www.newsweb.no
Notes to the Group Financial Statement Bergen Group ASA
28
Pro forma financial information
(amount in TNOK)
Bergen Group ASA dd not perfor any acquisitions in 2009. Actual figures for 2009 are compared with proforma figures for 2008.
The pro forma information has been prepared on the basis of the composition of the group as of 31 December 2009. The basis for the presentation is each enterprise's operations in 2008 and 2009, respectively. The new companies incorporated into the group, Fosen Holding including subsidiaries and HKS Electroservice, both submitted their accounts in accordance with generally accepted accounting principles in Norway. Bergen Group prepared its accounts for 2008 and 2009 in accordance with IFRS.
| Profit and loss account | 2009 | 2008 |
|---|---|---|
| Sales revenues | 5 106 849 | 4 667 452 |
| Other income | 1 411 | 17 696 |
| Cost of sales | 2 906 935 | 3 051 729 |
| Payroll expenses etc. | 1 353 815 | 1 065 295 |
| Depreciation | 45 477 | 37 659 |
| Depreciation of excess values | 131 281 | 44 503 |
| Other operating expenses | 431 678 | 359 497 |
| Operating profit/ loss | 239 073 | 126 463 |
| Net financial items | -80 639 | -87 205 |
| Profit/ loss before tax | 158 434 | 39 258 |
| Tax expense | -80 599 | 7 778 |
| Profit/ loss for the year | 77 835 | 31 481 |
BERGEN
Profit and loss account
(amount in TNOK)
Bergen Group ASA - parent company
| Note | N-Gaap 2009 | N-Gaap 2008 | |
|---|---|---|---|
| Other operating revenues | 2 300 | ||
| Operating revenues | 2 300 | - | |
| Payroll expenses etc. | 2 | 1 704 | 2 114 |
| Other operating expenses | 2 | 1 377 | 9 880 |
| Operating expenses | 3 081 | 11 994 | |
| Operating profit/loss (EBIT) | -781 | -11 994 | |
| Financial income | 291 511 | 124 946 | |
| Financial expenses | 91 461 | 96 350 | |
| Net financial items | 200 050 | 28 596 | |
| Profit/loss before tax | 199 269 | 16 602 | |
| Tax | 7 | 40 408 | 4 578 |
| Profit/loss after tax | 158 861 | 12 024 |
BERGEN
Balance sheet
Bergen Group ASA - Parent Company
(amount in TNOK)
| N-Gaap | ||
|---|---|---|
| Note | 31.12.2009 | |
| Assets | ||
| Deferred tax asset | 7 | 1 079 |
| Investments in subsidiaries | 3 | 2 107 307 |
| Loan to group companies | 240 362 | |
| Total fixed assets | 2 347 669 | |
| Other receivables | 797 | |
| Receivables from group companies | 398 786 | |
| Cash and cash equivalents | 16 204 | |
| Total current assets | 415 787 | |
| Total assets | 2 763 457 | |
| Equity and liabilities | ||
| Equity | ||
| Share capital 48 074 296 shares at NOK 1 | 5,6 | 48 074 |
| Share premium | 6 | 1 173 019 |
| Other paid-in equity | 18 641 | |
| Other equity | 327 547 | |
| Total equity | 1 567 281 | |
| Bond loans | 4 | |
| Other long-term liabilities | 139 366 | |
| Deferred tax liabilities | 2 049 | |
| Total long-term liabilities | 141 415 | |
| Bond loans | 4 | 722 920 |
| Debt to group companies | 2 524 | |
| Trade creditors and other payment obligations | 581 | |
| Tax payable | ||
| Other short-term liabilities | 328 735 | |
| Total short-term liabilities | 1 054 760 | |
| Total liabilities | 1 196 175 | |
| Total equity and liabilities | 2 763 457 |
Bergen, 25 of March 2010
Magnus Stangeland
Chairman
Svein Milford
Deputy chairman
Gurulv Lode
Board member
Rune Skarveland
Board member
Eli Sætersmoen
Board member
Anne-Gine Hestetun
Board member
Monica Saltella
Board member
Pål Engebretsen
CEO
BERGEN GROUP ASA
Notes to the parent company accounts 2009
Note 1 Accounting principles
The annual report have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway.
Subsidiaries
In the parent company, subsidiaries are valued using the cost method. The investment is valued at acquisition cost, unless a write-down is required. Dividends and other distributions are taken to income when a dividend has been declared by a competent body in the subsidiary. If the dividend received and other payments exceed the retained profit share in the ownership period, the excess amount is recognised as a repayment of invested capital and entered in the balance sheet as a reduction of the investment.
Income tax
The tax consists of tax payable and the change in deferred tax. Deferred tax/ tax asset is calculated on the basis of all taxable temporary differences. A deferred tax asset is recognised in the profit and loss account when it is probable that the company will have sufficient taxable income to utilise the tax asset. Deferred tax and deferred tax assets are recognised regardless of when the differences are reversed, and are in principle recognised at nominal value. Deferred tax/ tax asset is valued on the basis of the expected future tax rate.
Both tax payable and deferred tax are recognised directly against equity to the extent to which they relate to items recognised directly against equity.
Classification of assets and liabilities
Assets are classified as current assets when:
- the asset is part of the entity's service cycle and is expected to be realised or consumed during the entity's normal production period;
- the asset is held for trading;
- the asset is expected to be realised within 12 months of the balance sheet date;
- the asset is cash or cash equivalents, but with an exception for when there are restrictions on exchanging or using it to settle debt within 12 months of the balance sheet date.
All other assets are classified as fixed assets.
Liabilities are classified as short-term liabilities when:
- the liability is part of the service cycle and is expected to be settled during the normal production period;
- the liability is held for trading;
- settlement within 12 months of the balance sheet date has been agreed;
- the entity has no unconditional right to postpone settlement of the liability to minimum 12 months after the balance sheet date.
All other liabilities are classified as long-term.
Estimates and valuations
Preparing the annual accounts includes judgements, estimates and assumptions that influence both the choice of accounting principles applied and the reported amounts for assets, liabilities, revenues and expenses. The management has used estimates based on its best judgement and assumptions that are considered realistic on the basis of historical experience during preparation of the annual accounts. Actual amounts may deviate from estimated amounts. Estimates and underlying assumptions are reviewed and assessed on an ongoing basis. Changes in accounting estimates are recognised in the period in which the estimates are changed and in all future periods affected.
Loans
All loans are recognised at cost price. That means that they are recognised at the current rate of value of amounts received. Costs relating to raising new loans are expensed over the term of the loan.
Equity
Transaction costs relating to equity transactions, including the tax effect of the transaction costs, are entered directly against the equity. Only transaction costs directly related to the equity transactions are entered against equity.
On the repurchase of own shares, the purchase price, including directly attributable costs such as changes in equity, is entered as a change in equity. Own shares are presented as a reduction of equity. Losses or gains from transactions with own shares are not recognised in the profit and loss account.
Events after the balance sheet date
New information about the group's positions on the balance sheet date is taken into consideration in the accounts. Events after the balance sheet date that do not influence the group's positions on the balance sheet date, but which will have a material effect on future periods, are specified in the notes.
BERGEN GROUP ASA
Notes to the parent company accounts 2009 (amount in TNOK)
Note 2 Operating expenses
The company was formed in 2007 and has not had any employees since its formation.
Director's fee were paid in the amount of NOK 1 704 in 2009.
Auditor's fees were expensed in the amount of NOK 777, excluding VAT.
Note 3 Shares and holdings in other companies
| The name of the company | No of shares | Cost price | Book value |
|---|---|---|---|
| Fixed assets | |||
| Investments in subsidiaries | |||
| Bergen Group Management AS | 6 060 | 14 661 | 14 661 |
| Bergen Group Shipbuilding AS | 100 | 259 771 | 259 771 |
| Bergen Group Maritime Services AS | 5 000 | 773 290 | 773 290 |
| Bergen Group Offshore AS | 646 800 | 721 084 | 721 084 |
| Bergen Group Technology AS | 133 949 968 | 338 499 | 338 499 |
| Total shares in subsidiaries | 2 107 307 | 2 107 307 |
Note 4 Bond loans
Bond loans
Bergen Group ASA has four bond loans that fall due on 12 August 2010. The trustee for the bond owners is Norsk Tillitsmann ASA and DnB NOR ASA is the registrar. The bond loans are not listed.
| ISIN no. | Nominal value | Interest | Call price | Booked value |
|---|---|---|---|---|
| NO 001 039550.2 | 230 500 | ¥nd NIBOR + 800 I | 108 % | 198 015 (Bergen Group ASA owns 38,5 million) |
| NO 001 052189.1 | 169 500 | ¥nd NIBOR + 800 I | 100 % | 162 489 (3 645 067 subscription rights were issued at subscription rate NOK kr.1.10 pr share) |
| NO 00 1037936.5 | 144 500 | ¥nd NIBOR + 500 I | 104 % | 147 214 |
| NO 00 1052190.9 | 105 500 | ¥nd NIBOR + 500 I | 100 % | 103 496 (1 210 085 subscription rights were issued at subscription rate NOK kr.1.10 pr share) |
| Total | 611 214 |
All bond loans' interest rates are adjusted quarterly. The security furnished for two of the loans (ISIN NO 001 039550.2 and NO 001 052189.1) consists of the shares in Bergen Group Rosenberg. Bergen Group owns 38.5 million in the loan with nominal value 230 million. The security furnished for the loans (ISIN NO 001 037936.5 and NO 001052190.9) consists of the shares in the companies Bergen Group Shipbuilding, Bergen Group Maritime Services, Bergen Group Offshore, Bergen Group Technology, Bergen Group Sulo, Bergen Group Vest Elektro and Bergen Group BSM.
Covenants relating to the bond loans require that the group's book equity shall not be less than 30% of the total capital.
| Liabilities secured by mortgages | 2009 | 2008 |
|---|---|---|
| Bond loans with shares as security | 2 107 307 | 1 983 046 |
| Sum | 2 107 307 | 1 983 046 |
| Debt pr. 31.12.2009 | 722 920 | 722 000 |
Interest-bearing debt excl. group liabilities relates to the financing of the business.
BERGEN GROUP ASA
Notes to the parent company accounts 2009 (amount in TNOK)
Note 5 Share capital and shareholder information
| Sharecapital | Numbers | Value |
|---|---|---|
| 48 074 296 | 48 074 296 | 1 |
Share capital: On 31 Dec. 2009, the share capital of Bergen Group ASA was NOK 48 074 296, divided between equal number of shares each of par value of NOK 1.00. In 2009 there has been issued 2 192 902 new shares. All new shares issued are from warrants exercised.
List of shareholders: The following is a list of the 20 largest shareholders of Bergen Group and shares owned by executive personnel and board members, including shares owned by their closely-related persons and companies, as of 31 December 2008.
| Shareholders as of 31 December 2009 | No of shares | Holding | |
|---|---|---|---|
| STANGELAND INVESTMENTS AS | 20 379 014 | 42,39 % | |
| EIKESTØ AS | 2 507 348 | 5,22 % | |
| FURENESET INVEST A/S | 2 020 686 | 4,20 % | |
| ODIN OFFSHORE | 1 551 000 | 3,23 % | |
| ROS HOLDING AS | 1 436 841 | 2,99 % | |
| MAY INVEST A/S | 989 981 | 2,06 % | |
| DET NORDENFJELDSKE DAMPSKIPSSELSKA | 989 010 | 2,06 % | |
| RBC DEXIA INVESTOR SERVICES TRUST | 887 000 | 1,85 % | |
| SØR-VARANGER INVEST AS | 846 774 | 1,76 % | |
| SKANDINAVISKA ENSKILDA BANKEN | 796 000 | 1,66 % | |
| KANABUS AS | 710 962 | 1,48 % | |
| OTIBANK N.A. (LONDON BRANCH) | 667 696 | 1,39 % | |
| OTIBANK N.A. NEW YORK BRANCH | 649 043 | 1,35 % | |
| DNB NOR NAVIGATOR | 626 561 | 1,30 % | |
| BERGER BRUKTOMSETNING AS | 600 000 | 1,25 % | |
| KLP LK AKSJER | 570 200 | 1,19 % | |
| OCEAN PARTNERS AS | 494 505 | 1,03 % | |
| BERNHD. BREKKE AS | 494 505 | 1,03 % | |
| FOSSEN OFFSHORE AS | 494 505 | 1,03 % | |
| G.H.EIENDOM AS | 494 505 | 1,03 % | |
| Total shares owned by 20 largest shareholders | 38 206 136 | 79,47 % | |
| Other shareholders | 9 868 160 | 20,53 % | |
| Total shares 31.12.2009 | 48 074 296 | 100,00 % | |
| Board of directors: | |||
| Magnus Stangeland | Chairman | Shares on 31 Dec. 2009 owned by Stangeland Investment | 20 379 014 |
| Shares on 31 Dec. 2009 owned by Flyfisk AS | 281 250 | ||
| Warrants on 31 Dec. 2009 owned by Flyfisk AS | 197 138 | ||
| Svein Milford | Deputy chairman | Shares on 31 Dec 2009 | - |
| Geirulv Lode | Board member | Shares on 31 Dec 2009 | - |
| Rune Skarveland | Board member | Shares on 31 Dec 2009 owned by Eikestø AS | 2 507 348 |
| Warrants on 31 Dec. 2009 owned by Eikestø AS | 131 281 | ||
| Eli Sætersmoen | Board member | Shares on 31 Dec 2009 | 500 |
| Anne Gine Hestetun | Board member | Shares on 31 Dec 2009 | - |
| Monica Siv Sathella | Board member | Shares on 31 Dec 2009 | - |
| Oddvar Stangeland | Deputy board me | Shares on 31 Dec 2009 owned by Kanabus AS | 710 962 |
| Pål Øyvind Engebretsen | CEO | Shares on 31 Dec 2009 owned by Compleo AS | 80 000 |
| Ingunn Flyter | Board member* | Shares on 31 Dec 2009 | - |
| Ove Iversen | Board member* | Shares on 31 Dec 2009 | 700 |
| Arne Vindenes | Board member* | Shares on 31 Dec 2009 | - |
| *elected by the employees | |||
| Total shares owned by board member and their closely-related parties and executive personnel | 24 288 193 | 50,52 % |
Stangeland investment AS is owned by parties closely related to Magnus Stangeland. Magnus Stangeland is chair of the boards of both Bergen Group ASA and Stangeland Investment AS.
| BERGEN GROUP ASA | ||||||
|---|---|---|---|---|---|---|
| Notes to the parent company accounts 2009 (amount in TNOK) | ||||||
| Note 6 Equity | ||||||
| 2009 | Share capital | Approved, not reg. capital increase | Share premium reserve | Other equity | Other paid-in equity | Total |
| Equity on 1 Jan. 2008 | 39 446 | 5 199 | 1 075 299 | 150 674 | - | 1 270 618 |
| Registered capital increase | 2 580 | -5 199 | 2 619 | - | - | - |
| Correction, tax payable 31 Dec. 2007 | - | - | - | 757 | - | 757 |
| Correction, deferred tax asset, 1 Jan. 2008 | - | - | - | 5 656 | - | 5 656 |
| Capital increase | 3 461 | - | 86 538 | - | - | 89 999 |
| Correction for previous years (VAT) | - | - | - | -427 | - | -427 |
| Subscription, new shares | 51 | - | 1 548 | - | - | 1 599 |
| Stock-exchange listing | 343 | - | 6 794 | - | - | 7 137 |
| Profit/ loss for the year | - | - | - | 12 024 | - | 12 024 |
| Equity as of 31 Dec 2008 | 45 881 | - | 1 172 798 | 168 684 | - | 1 387 363 |
| 2009 | Share capital | Approved not reg. capital increase | Share premium reserve | Other equity | Other paid-in equity | Total |
| Equity on 1 Jan. 2008 | 45 881 | - | 1 172 798 | 168 684 | - | 1 387 363 |
| Issue new shares | 2 193 | - | 220 | - | - | 2 413 |
| Correction for previous years | - | - | - | - | - | - |
| Equity effect of warrants | - | - | - | - | 18 641 | 18 641 |
| In total this year | - | - | - | 158 861 | - | 158 861 |
| Equity as of 1 Jan. 2009 | 48 074 | - | 1 173 019 | 327 547 | 18 641 | 1 567 281 |
| Note 7 Taxes | ||||||
| 2009 | 2008 | |||||
| Ordinary profit/ loss before tax | 199 269 | 16 602 | ||||
| Permanent differences | 15 447 | 107 | ||||
| Accounting loss on the realisation of shares | - | 6 997 | ||||
| Dividend received | - | -225 | ||||
| Group contributions received | - | -116 766 | ||||
| changes in temporary differences | 7 726 | - | ||||
| Issue costs | - | -7 134 | ||||
| The tax profit/ loss for the year | 222 442 | -100 419 | ||||
| Group contributions paid | -133 140 | - | ||||
| Group contributions received | - | 116 766 | ||||
| Unutilised loss carryforward | -89 302 | -20 203 | ||||
| Basis for tax payable | - | -3 856 | ||||
| 28% tax payable | - | - | ||||
| The tax expense for the year is calculated as follows: | ||||||
| 28% of the tax profit/ loss | 62 284 | - | ||||
| Net change in deferred tax/ tax asset | -21 876 | 4 578 | ||||
| Tax expense for the year | 40 408 | 4 578 |
| BERGEN GROUP ASA | ||
|---|---|---|
| Cashflow statement parent company 2009 (amount in TNOK) | ||
| 2009 | 2008 | |
| Profit/ loss before tax | 199 269 | 16 602 |
| Gain on sale of shares | ||
| Tax paid during the period | -757 | |
| Depreciation of fixed assets | ||
| Changes in trade debtors | 2 006 | |
| Changes in trade creditors | -3 350 | 2 218 |
| Difference between expensed pension and payments received and disbursed | - | |
| Effect of exchange rate changes | - | |
| Change in other accrual items (working capital) * | 16 916 | 68 667 |
| Group contributions received | -116 766 | |
| Income using the gross method/ equity method | ||
| Net cash flow from operations | 212 835 | -28 030 |
| Disbursements on the acquisition of intangible assets | ||
| Payments received on the sale of tangible fixed assets | ||
| Disbursements on the acquisition of tangible fixed assets* | ||
| Payments received on the sale of shares and units | ||
| Disbursements on the acquisition of shares and units | -91 236 | |
| Disbursed equity in subsidiaries | -201 540 | |
| Advance payment, newbuilds | ||
| Net change in long-term outstanding group balances | - | - |
| Net cash flow from investment activities | -201 540 | -91 236 |
| Payment received on sale of own shares | ||
| Payment received on taking up new long-term debt* | 72 000 | |
| Disbursement, repayment of long-term debt | ||
| Equity contributions | 2 413 | 8 734 |
| Dividend | ||
| Net cash flow from financing activities | 2 413 | 80 734 |
| Net change in liquid assets | 13 708 | -38 532 |
| Liquid assets at the beginning of the period | 2 496 | 41 028 |
| Liquid assets at the end of the period | 16 204 | 2 496 |
BERGEN
Responsibility Statement regarding the Financial Statements Bergen Group 2009
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 31 December 2009 has been prepared in accordance with IFRS, and gives a true and fair view of the Group's assets, liabilities, financial position and the financial result as a whole. We also confirm, to the best of our knowledge that the Board of directors' report gives a correct description of the result and position of the company, together with a description of the most important risks and uncertainties the company is facing.
Bergen, 25 of March 2010
The Board of Directors and CEO of Bergen Group ASA
Magnus Stangeland
Chairman
Svein Milford
Deputy Chairman
Gelrulv Lode
Board member
Rune Skarveland
Board member
Eli Sætersmoen
Board member
Anne-Gine Hestetun
Board member
Monica Salthella
Board member
Ingunn Flytør
Board member empl. repr.
Ove Iversen
Board member empl. repr.
Arne Vindenes
Board member empl. repr.
BDO
Tel: +47 23 11 91 00
Fax: +47 23 11 91 01
www.bdo.no
BDO
Munkedamsveien 45
P.O. Box 1704 Vika
0121 Oslo
Norway
To the Annual Shareholders’ Meeting of Bergen Group ASA
AUDITOR’S REPORT FOR 2009
We have audited the annual financial statements of the Bergen Group ASA as of 31 December 2009, showing a profit of KNOK 158.861 for the parent company and a profit of KNOK 77.835 for the group. We have also audited the information in the Board of Directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The annual financial statements comprise the parent company’s financial statements and the group accounts. The parent company’s financial statements comprise the balance sheet, the statements of income and cash flows and the accompanying notes. The group accounts comprise the balance sheet, the statements of income and cash flows, the statement of changes in equity and the accompanying notes. The financial statements of the parent company have been prepared in accordance with the rules of the Norwegian accounting act and good accounting practice in Norway. International Financial Reporting Standards as adopted by the EU have been applied on the financial statements of the group. These financial statements are the responsibility of the Company’s Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other information according to the requirements of the Norwegian Act on Auditing and Auditors.
We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice in Norway, including standards on auditing adopted by Den Norske Revisorforening. These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company’s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
- the financial statements of the mother company are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Company as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in accordance with good accounting practice in Norway
- the financial statements of the group are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Group as of December 31, 2009, and the results of its operations and its cash flows and the changes in equity for the year then ended, in accordance with The International Financial Reporting Standards
- the company’s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information in accordance with the law and good bookkeeping practice in Norway
- the information in the Board of Directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit are consistent with the financial statements and comply with the law and regulations.
Oslo, 25th of March 2010
BDO AS (Org.no., 994 855 573)
This translation from Norwegian has been prepared for information purposes only.
BDO AS, a Norwegian limited partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the International BDO network of independent member firms.