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Endúr Interim / Quarterly Report 2010
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Interim / Quarterly Report
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BERGEN GROUP
Interim report, second quarter and
1st half year 2010
Improved order situation and a good profit margin
In the second quarter 2010, Bergen Group recorded an increase in the orders on the company's books and an improved profit margin compared with both the last quarter and the corresponding quarter in 2009. The process of strengthening the group's market position through cooperating with international players has taken a big step forward. We have secured new long-term financing through the issue of a new three-year bond loan.
Turnover in the quarter was down compared with the corresponding period last year. The overall profit margin is deemed to be satisfactory. Market prospects are deemed have improved in all of the group's business areas.
Key figures for the second quarter and the first six months of 2010:
- Turnover of NOK 790 million (NOK 1,761 million in the first six months)
- EBITDA of NOK 71 million (NOK 152 million in the first six months)
- EBITDA margin of 9.0% (8.6% in the first six months)
- Orders worth NOK 4.7 billion on the books as of 30 June 2010 – a net increase of NOK 500 million since 31 December 2009.
The increase in orders on the group's books mainly applies to the Shipbuilding Division.
Condensed consolidated interim statement of income (unaudited)
| Figures in NOK MILLION | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
|---|---|---|---|---|---|
| Operating revenues | 790 | 1 305 | 1 761 | 2 452 | 5 108 |
| Other operating costs | (719) | (1 218) | (1 609) | (2 287) | (4 692) |
| Operating profit before depreciation | 71 | 87 | 152 | 165 | 416 |
| Ordinary depreciation | (13) | (12) | (25) | (23) | (45) |
| Excess depreciation and write down of goodwill 1) | (11) | (11) | (22) | (23) | (131) |
| Operating profit | 47 | 64 | 104 | 120 | 239 |
| Net interest costs | (33) | (11) | (58) | (18) | (81) |
| Profit before taxes | 14 | 53 | 47 | 101 | 158 |
| Net profit 2) | 10 | 38 | 34 | 73 | 78 |
| Earnings pr share (NOK) | 0,20 | 0,83 | 0,70 | 1,59 | 1,67 |
| Diluted earnings per share (NOK) | 0,19 | 0,83 | 0,64 | 1,59 | 1,58 |
| Weighted avg. no. of shares outstanding (mill) | 48,42 | 45,88 | 48,25 | 45,88 | 46,56 |
| Diluted Weighted avg. no. of shares outstanding (mill) | 52,99 | 45,88 | 52,99 | 45,88 | 49,13 |
| 1) Depreciation of identified excess values related to acquisitions | |||||
| 2) Tax in 2009 calculated based on a nominal tax rate of 28% |
Bergen Group ASA / Report Q2 and 1st half year 2010
Report, second quarter and first six months of 2010
Bergen Group recorded operating revenues of NOK 790 million in the second quarter, compared with NOK 1,305 million in the corresponding quarter in 2009. Operating profit before depreciation and write-downs (EBITDA) amounted to NOK 71 million for the quarter, compared with NOK 87 million in the second quarter 2009. The operating margin (EBITDA) for the quarter was 9.0%, up on the corresponding quarter last year (6.7%) and the first quarter this year (8.3%).
For the first six months of 2010, the group recorded a turnover of NOK 1,761 million, compared with NOK 2,452 million in the first six months of 2010. Operating profit before depreciation and write-downs (EBITDA) in the first six months was NOK 152 million, compared with NOK 165 million in the corresponding period last year. That means an EBITDA margin of 8.6% for the first six months of 2010, compared with 6.7% for the first six months of last year and 4.2% for the first six months of 2008. The EBITDA margin for 2009 as a whole was 8.1%.
Few new orders in the last six months of 2009 has resulted in an expected reduction in turnover in both the first and second quarters this year. At the same time, however, the EBITDA margin has increased in both quarters compared with the corresponding periods last year. In the past year, Bergen Group has made active efforts to develop an operating organisation and a cost structure that focus on satisfactory profitability despite marked-related fluctuations in turnover.
The Offshore Division's activity level and the number of orders on its books are lower than expected for the quarter. For strategic reasons, we have chosen to retain expertise and capacity pending expected market growth and an increase in activity in the time ahead.
Growth in all of Bergen Group's four business areas is still a clear goal for the group. The increase in the number of orders on the group's books for the second quarter is positive, but, in the short term, it is not enough to ensure optimal utilisation of all the production facilities.
Market prospects are deemed to have improved in all four segments, and the group is focusing strongly on this being reflected in an increase in the number of orders on its books.
On 29 June, the annual general meeting elected Hans Olav Lindal as the new Chair of the Board of Bergen Group.
Financial review
This interim report has been prepared in accordance with IAS 34 'Interim Financial Reporting', and it uses the same accounting principles as in the annual accounts for 2009.
Order books
The group had orders worth NOK 4.7 billion on its books at 30 June 2010, compared with NOK 3.4 billion at 31 March 2010 and NOK 4.2 billion at 31 December 2009. The increase in orders in the second quarter mainly involves assignments in 2011 and 2012, and will not significantly affect the group's turnover in the last six months of 2010.
The Shipbuilding Division has orders on its books that ensure activity at Bergen Group BMV until well into the first half-year of 2011. Bergen Group Fosen is ensured sufficient activity until the middle of the third quarter 2010, and high fitting-out activity from summer 2011 until the last cruise ferry for Fjord Line is delivered in autumn 2012. Both these yards are working on several potential projects and assignments that are expected to be decided during the third and forth quarter. This concerns assignments that can generate activity in both the short and long term. Bergen Group Fosen's orders include a contract with BOA Offshore for the building of four AHTS vessels worth a total of NOK 1.9 billion. The shipowner has yet to secure full financing for these vessels, and it is still unclear when this contract will generate activity at the yard.
The orders on the Offshore Division's books remain unchanged in the quarter. However, the division has potential opportunities in the form of framework contracts and letters of intent that are expected to result in both orders and activity in the last six months of 2010. The market prospects for this division are still deemed to be good, and a marked increase in the number of orders is expected in the next few quarters.
Our order situation is such that we can expect satisfactory activity in 2010 in both the Technology Division and Maritime Service Division.
Bergen Group ASA / Report Q2 and 1st half year 2010
Income statement
Bergen Group had recorded operating revenues of NOK 790 million in the second quarter 2010, compared with NOK 1,305 million in the corresponding quarter in 2009.
The operating profit before depreciation (EBITDA) for the quarter amounted to NOK 71 million, compared with NOK 87 million in the corresponding quarter in 2009. This means an EBITDA margin for the quarter of 9.0%, compared with 6.7% in the corresponding quarter in 2009.
Accumulated operating revenues amounted to NOK 1,761 for the first six months of 2010, compared with NOK 2,452 for the corresponding period last year. EBITA in the first six months amounted to NOK 152 million, compared with NOK 165 million for the corresponding period last year. This means an EBITDA margin of 8.6% for the first six months of 2010, compared with 6.7% last year.
After total depreciation of NOK 24 million during the quarter, NOK 11 million of which was depreciation of excess values, the operating profit after depreciation/write-downs (EBIT) for the second quarter amounted to NOK 47 million, compared with NOK 64 million the year before. EBIT for the first six months of 2010 was NOK 104 million, compared with NOK 120 million in 2009.
Net financial expenses in the second quarter 2010 amounted to NOK 33 million, compared with NOK 11 million in the corresponding quarter in 2009. The increase in financial expenses in the second quarter 2010 compared with the second quarter 2009 is mainly due to higher margins in connection with the extension of the bond loans in June 2009. These bond loans were redeemed on 13 August this year. NOK 6.5 million relating to the write-down of receivables are also included in the financial expenses for the quarter.
The pre-tax profit in the second quarter amounted to NOK 14 million, compared with NOK 53 million in the corresponding quarter in 2009. The accumulated pre-tax profit in the first six months of the year amounted to NOK 47 million, compared with NOK 101 million in 2009.
At group level, the operating profits for the second quarter are largely satisfactory. Both the Shipbuilding Division and the Maritime Service Division recorded strong profits. The Technology Division and the Offshore Division have both
seen a reduction in turnover, and therefore also weak profits. This applies in particular to the Offshore Division, which has capacity for a considerably higher level of activity. The market situation is still challenging, but is seen as good in the somewhat longer term.
Balance sheet and cash flow
The group's balance sheet total at 30 June 2010 amounted to NOK 3,880 million, compared with NOK 4,662 million on the same date in 2009. Goodwill and excess values amounted to NOK 1,245 million.
The group's receivables amounted to NOK 307 million, while it had bank deposits of NOK 274 million, compared with NOK 445 million at 31 March 2010. The fluctuations are mainly due to changes in liquidity in big ongoing projects.
The company's equity at 30 June 2010 amounted to NOK 1,542 million, which means an equity ratio of 39.7%. The company had short-term interest-bearing liabilities of NOK 684 million, including bond loans, and long-term interest-bearing liabilities of NOK 156 million. Long-term liabilities and commitments amounted to NOK 407 million. At 30 June, the group had net interest-bearing liabilities of NOK 609 million.
At the end of June, Bergen Group took up a new bond loan of NOK 330 million which will be disbursed on 9 July 2010 and matures on 9 July 2013. The purpose of the new bond loan was to refinance an outstanding bond loan that matured on 13 August 2010. The new loan has a margin of 9% over three-month NIBOR and secures long-term financing for the company.
On 12 August, Bergen Group signed an agreement with Spring Capital Resources Inc to take up a convertible bond loan of NOK 120 million – to be paid in three tranches up until 20 September 2010. This convertible bond loan has a term of ten months and has an interest rate of three-month NIBOR + 3%. The loan will contribute to strengthening the group's working capital. The agreement also entitles Bergen Group to repurchase the loan on specific dates. The conversion price is set at NOK 12 per share in the agreement. See also the stock exchange announcement submitted on 12 August, and the section on 'Prospects' later in this report.
The company had a net cash flow in the second quarter of minus NOK 170 million. The cash flow from operations amounted to minus NOK 82
Bergen Group ASA / Report Q2 and 1st half year 2010
million, while the cash flow from investment activities amounted to minus NOK 16 million. The cash flow from financing activities amounted to minus NOK 72 million. The negative cash flow from operations in the second quarter is due to the fact that several large shipbuilding contracts are in the process of being finalised, but have not yet been delivered. Final delivery of large projects will result in the release of profits and equity from the projects. During the quarter, bond loan instalments of NOK 44.3 million have been paid.
Segment information
The group reports on the following four segments: Shipbuilding, Maritime Service, Offshore and Technology. Each of these segments is organised as a separate business area.
Shipbuilding
| Shipbuilding
Figures in NOK mill. | Q2 2010 | Q2 2009 | Pr. 30.06 2010 | Pr. 30.06 2009 | 31.12 2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating revenues | 438 | 688 | 1019 | 1 360 | 2 884 |
| EBITDA | 59 | 32 | 137 | 71 | 234 |
| Ordinary depreciation | (3) | (6) | (5) | (11) | (15) |
| Excess depreciation | (5) | (4) | (9) | (8) | (18) |
| Operating profit | 51 | 21 | 123 | 51 | 201 |
| Order backlog | 4 307 | 4 856 | 4 307 | 4 856 | 3 608 |
The Shipbuilding Division's turnover in the second quarter amounted to NOK 438 million, compared with NOK 688 million in the corresponding quarter in 2009. In the first six months, the division's turnover amounted to NOK 1,019 million, compared with NOK 1,360 million in the first six months of 2009.
In the second quarter, the division reported a satisfactory operating profit before depreciation and write-downs (EBITDA) of NOK 59 million, resulting in a strong EBITDA margin of 13.5%. For the first six months, the division's total EBITDA amounted to NOK 137 million. The activity level at the division's two shipyards has been satisfactory throughout the quarter, both with respect to progress and utilisation of capacity, and, at times, the division has had four newbuild projects under construction. One newbuild was delivered during the quarter: Mermaid Endurer (BN 163 from Bergen Group BMV), which is one of the world's most advanced diving ships in its class. The ship was delivered to Mermaid Offshore Services Ltd in May.
Bergen Group BMV's activity level has been high throughout the quarter with the completion of one newbuild in May and two newbuilds being fitted out for delivery in August. The yard has orders on its books that ensure activity at Bergen Group BMV until well into the first half-year of 2011. Activity in the market is high with respect to clarifying new assignments both in the short and long term, and the yard is working on concrete projects that are expected to produce positive results this autumn.
In the second quarter, Bergen Group Fosen concluded a contract for the building of two new cruise ferries for Fjord Line. The design and engineering work under the contract is already well under way, and the contract ensures fitting-out activity at the yard from summer 2011 until autumn 2012. The work on BN 167, for which Bergen Group Fosen is carrying out a great deal of the fitting out on behalf of Bergen Group BMV, will be completed in September 2010. After this, the activity level at the yard will be uncertain until summer 2011. The yard will carry out necessary capacity adjustments to adapt the organisation to this low-activity period. As of 15 August, a progress schedule has not been finalised for the contract with BOA Offshore for the building of four advanced offshore vessels (BN83-BN86).
The market for offshore/specialised vessels and RoPax vessels involves stringent requirements with respect to quality, ability to deliver and innovation. In recent years, Bergen Group's Shipbuilding Division has shown that it has the ability to meet all these requirements and operate at a reasonable profit. The market segments in which the yards operate have seen some improvement, and Bergen Group deems the prospects for newbuild contracts to be relatively good, despite strong international competition.
Offshore
| Offshore
Figures in NOK mill. | Q2 2010 | Q2 2009 | Pr. 30.06 2010 | Pr. 30.06 2009 | 31.12 2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating revenues | 178 | 362 | 368 | 601 | 1 358 |
| EBITDA | 2 | 32 | (12) | 41 | 103 |
| Ordinary depreciation | (5) | (4) | (10) | (8) | (16) |
| Excess depreciation | (4) | (3) | (6) | (6) | (13) |
| Operating profit | (6) | 25 | (28) | 28 | 74 |
| Order backlog | 156 | 464 | 156 | 464 | 258 |
The Offshore Division's turnover in the second quarter amounted to NOK 178 million, compared with NOK 362 million in the corresponding quarter in 2009. In the first six months, the
Bergen Group ASA / Report Q2 and 1st half year 2010
division's turnover was NOK 368 million, compared with NOK 601 million in the first six months of 2009.
The reduction in turnover affects EBITDA, which was down from NOK 32 million in the second quarter 2009 to NOK 2 million in the second quarter 2010. Turnover in the second quarter is virtually unchanged from the first quarter this year, while EBITDA is up from minus NOK 14 million to NOK 2 million during the period. A previous provision for a receivable of NOK 10 million in connection with a specific project has been reversed in the period.
The quarter's turnover figures are affected by a reduction in new orders at the end of last year and in the first six months of this year. In addition, some awarded assignments and framework contracts have been postponed, so that the division's activity level in the quarter has been lower than expected. The number of orders on the division's books for the quarter is not deemed to be satisfactory. The level of marketing activity is very high, and the division expects that this will produce results that will boost activity during the year.
Bergen Group Offshore has an established and strong platform for increasing activity both in the short and the long term. The division's key expertise has been further developed and strengthened during the quarter, and the different companies in the division are well prepared for the growth expected in the time ahead.
Bergen Group Hanøytangen entered into a contract with Odfjell Drilling in the second quarter for modification and adaptation work relating to the replacement of the Blow Out Preventer (BOP) on Deepsea Atlantic. Work on this very advanced drilling rig started in June and will mainly affect turnover in the third quarter. The value of the contract has previously been estimated at NOK 30-40 million.
A strong market for modifications and maintenance in the rig market is expected in the years ahead, and Bergen Group Hanøytangen is well prepared for this growth. The company is also succeeding in increasing its share of offshore and maritime operations in addition to ordinary rig assignments.
Bergen Group Rosenberg's turnover in the quarter was somewhat lower than expected, mainly due to postponements in activity relating to framework agreements and letters of intent. The framework contract that Bergen Group
Rosenberg entered into with ConocoPhilips in November 2009 is not included in the orders reported in the quarter, and at 30 June 2010, it has only resulted in limited activity. This contract runs until 31 December 2010, with an option for an extension of two times two years. Nor is the value of the letter of intent with SBM (Single Buoy Moorings Offshore Contractors) for work in connection with the completion of a mobile offshore production and offshore storage platform for the Yme field included in the order books at the end of the quarter. This letter of intent will involve activity at Bergen Group Rosenberg from the middle of September 2010.
Kristin Færøvik took up the position of new CEO of Bergen Group Rosenberg in the middle of May. Ms Færøvik has extensive experience from leading positions in the offshore sector, most recently as CEO of Marathon Petroleum Norge.
Maritime Service
| Maritime service
Figures in NOK mill. | Q2
2010 | Q2
2009 | Pr.
30.06
2010 | Pr.
30.06
2009 | 31.12
2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating
revenues | 92 | 77 | 178 | 160 | 323 |
| EBITDA | 7 | 6 | 10 | 12 | 33 |
| Ordinary depreciation | (2) | (1) | (5) | (2) | (7) |
| Excess depreciation | (2) | (1) | (4) | (2) | (54) |
| Operating profit | 3 | 4 | 1 | 6 | (28) |
| Order backlog | 31 | 54 | 31 | 54 | 45 |
In the second quarter, the Maritime Service division's turnover amounted to NOK 92 million, compared with NOK 77 million in the corresponding quarter last year. The division's turnover was NOK 178 million for the first six months of 2010, which is an increase of NOK 18 million on the first six months of 2009.
EBITDA amounted to NOK 7 million in the second quarter, on a par with the corresponding quarter in 2009, which means an EBITDA margin of 7.6%. Total EBITDA in the first six months of the year amounted to NOK 10 million, on level with the same period last year.
In the second quarter, the division improved both its turnover and financial performance in a market that is still seen as very competitive due to the high level of spare capacity along the whole coast. The division has initiated various processes that are expected to further optimise resource use, and steps are also being taken to further develop the division's market position and area of activity.
The companies in this division have the required organisation and facilities to enable them to
Bergen Group ASA / Report Q2 and
1^{\text{st}}
half year 2010
increase their turnover significantly in step with the volume of orders. In addition to the orders on its books, the division has valuable maintenance framework contracts with the Royal Norwegian Navy.
Terje Arnesen took up the position of new Vice President of the Maritime Service Division on 1 August. Mr Arnesen has extensive international experience from the maritime industry, and comes from the post of managing director of the Bennex group.
Technology
| Technology
Figures in NOK mill. | Q2 2010 | Q2 2009 | Pr. 30.06 2010 | Pr. 30.06 2009 | 31.12 2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating revenues | 176 | 184 | 319 | 367 | 690 |
| EBITDA | 9 | 11 | 19 | 36 | 66 |
| Ordinary depreciation | (1) | (1) | (2) | (2) | (3) |
| Excess depreciation | (1) | (3) | (3) | (6) | (9) |
| Operating profit | 7 | 7 | 15 | 34 | 54 |
| Order backlog | 303 | 640 | 303 | 640 | 443 |
Technology's turnover in the second quarter amounted to NOK 176 million, compared with NOK 184 million in the corresponding quarter in 2009. The division's turnover in the first six months of 2010 was NOK 319 million, compared with NOK 367 million in the corresponding period in 2009.
Operating profit before depreciation and write-downs (EBITDA) amounted to NOK 9 million in the second quarter, compared with NOK 11 million in the first quarter 2009. In total, EBITDA amounted to NOK 19 million in the first six months of 2010.
The decrease in operating revenues was mainly due to certain contracts being postponed by customers. Some of the companies in the division have also seen limited periods of low activity this quarter. The number of orders on the division's books has been lower than expected this quarter, but this will have little impact on turnover in the last six months of 2010. The number of orders on the division's books is expected to see a positive development in the next few quarters.
The companies in the division are working strategically to expand both the geographical markets and the market segments in which they operate. This is part of a long-term growth strategy that is expected to produce results from 2011.
Business Development
| Business Dev.
Figures in NOK mill. | Q2 2010 | Q2 2009 | Pr. 30.06 2010 | Pr. 30.06 2009 | 31.12 2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating revenues | 9 | 50 | 38 | 88 | 142 |
| EBITDA | (6) | 6 | (2) | 7 | (19) |
| Ordinary depreciation | (0) | (1) | (1) | (2) | (6) |
| Excess depreciation | (0) | - | (0) | - | (37) |
| Operating profit | (6) | 5 | 4 | 5 | (62) |
| Order backlog | 19 | 54 | 19 | 54 | 13 |
The companies in this new organisational entity, which was established in 2009, had a turnover of NOK 9 million in the second quarter 2010. The operating loss before depreciation and write-downs was NOK 6 million. This quarter's loss is mainly due to winding down expenses and losses on receivables.
The companies in Business Development have both a long history and, in part, established positions in markets that fall outside the group's strategic priority areas. The process of assessing these companies' future is under way.
Elimination, group
| Group elimination
Figures in NOK mill. | Q2 2010 | Q2 2009 | Pr. 30.06 2010 | Pr. 30.06 2009 | 31.12 2009 |
| --- | --- | --- | --- | --- | --- |
| Elimination operating revenues | (102) | (55) | (162) | (124) | (290) |
| Cost related to listing/restructuring | - | -) | - | - | - |
| Eliminationn order backlog | (106) | (243) | (106) | (243) | (140) |
Shareholder information
Bergen Group has been listed on Oslo Børs since 30 June 2008. In the second quarter, the company's shares were traded at prices ranging from NOK 8.40 to NOK 11.90. The closing price on 30 June 2010 was NOK 8.50, which, based on 48,805 million outstanding shares on 30 June 2010, puts the company's value at the end of the quarter at approximately NOK 415 million.
At the end of the second quarter 2010, the company had 873 shareholders, the 20 biggest of which, combined, owned 84.2% of the company.
In the second quarter 2010, there were 1,100 trades in the share via Oslo Børs, involving a total volume of 2.06 million shares.
Bergen Group ASA / Report Q2 and 1st half year 2010
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 30 June 2010, 3,484,736 subscription rights had been exercised. The remaining number of subscription rights at 30 June 2010 was 1,370,616, which had to be exercised by 13 August 2010. A total of 4,740,653 subscription rights were exercised by this deadline, which means the company will have 50,622,009 outstanding shares once they are finally converted.
Other matters at the end of the quarter
On 12 August, Bergen Group entered into an agreement with Spring Capital Resources Inc. for the issue of a convertible bond loan of NOK 120 million with a term to maturity of 10 months. The loan can be converted into shares in Bergen Group ASA in accordance with the authorisation granted to the Board of Directors by the general meeting. After nine months, or less if agreed between the parties, the bond loan can be converted into 10 million shares at a price of NOK 12 per share. The agreement includes an option for Bergen Group to repurchase bonds either on 1 December 2010 or 1 March 2011, or earlier if this is agreed with the bond owners.
Since 26 March 2010, Spring Capital Resources Inc has had a reported stake of 10.55% of the share capital in Bergen Group ASA. A conversion of the bond loan agreed on 12 August will, in such case, increase the company's shareholding in Bergen Group from 5.1 million to 15.1 million shares.
Prospects
Bergen Group operates in a market characterised by keen international competition. Parts of the market have also been hesitant to implement new projects following the global financial crisis. This affected the number of orders the company had on its books for much of last year and the start of 2010. The order situation improved in the second quarter, and it is expected to further improve in the last six months of 2010.
An expected increase in orders in the last six months of the year will not affect the group's total turnover in the short term, and turnover in the last six months of 2010 is expected to be on a par with turnover in the first six months of the year. Bergen Group's goal is still to maintain good profitability this year.
In the past year, Bergen Group has made active efforts to develop an operating organisation and a cost structure that focus on satisfactory profitability despite marked-related fluctuations in turnover. This work will continue to be a major priority throughout the organisation. Over the last few months, the number of permanent employees has been reduced from 2,000 to 1,800 persons, mainly in areas in which production volume is most vulnerable to market fluctuations. Project management and key expertise have been strengthened.
The Offshore Division's activity has been weaker and the number of orders on its books is lower than expected for the quarter. Key expertise and capacity have been retained pending expected market growth and a healthy increase in activity in the time ahead, and the order situation is expected to improve in the last six months of 2010. There are great expectations of further growth in this division. Bergen Group Offshore has a good strategic starting point, with strong expertise, sound reference projects and unique facilities that will become more attractive if the market develops as expected in the time ahead.
The Shipbuilding Division has seen high activity and good margins several quarters in a row. Bergen Group Shipbuilding's two newbuild shipyards have established very strong positions in the market for advanced offshore vessels and RoPax. The unusually low number of newbuild contracts that affected the whole shipyard industry last year has shown clear signs of improvement this quarter. Bergen Group expects to see a continued high level of activity in shipbuilding, but recognises that the organisation will see limited periods of low activity as a result of the time it takes from contracts are signed until vessels are fitted out. The division's most recent shipbuilding contract for two modern cruise ferries for Fjord Line is progressing according to the contract.
Industrial cooperation: For some time, Bergen Group has been making structured and determined efforts to map various alternatives for industrial partners that meet the group's growth ambitions. In this context, the board has also opened for an evaluation of diversified ownership as a possible option.
Bergen Group ASA / Report Q2 and 1st half year 2010
This process has been very useful and the group is now entering an exciting mapping phase linked to a possible future cooperation with Spring Capital Resources, and the opportunities opened by the company's shareholding in the Chinese offshore and marine shipyard group Yantai CIMIC Raffles. The cooperation with Spring Capital Resources, which currently holds 10.5% of the shares in Bergen Group, materialised through the group taking up a convertible bond loan of NOK 120 million on 12 August this year.
Bergen Group has developed international expertise in a number of areas that is attractive to both customers and potential partners. Combined with the company's strategic geographical location and unique facilities, this makes for exciting opportunities in the time ahead.
Further growth: Growth in all of Bergen Group's four business areas is still a clear goal for the group. Market prospects are regarded as having improved in all four segments, and the group is focusing strongly on this being reflected in an increase in the number of orders on its books.
Risk and uncertainty
As described in Bergen Group's annual report for 2009, the company is exposed to a number of risk factors as a result of operating in a global market. Bergen Group's Board of Directors therefore focuses on risk management, and makes active efforts to improve procedures in order to strengthen the procedures for managing the group's total risk exposure.
The main risk factors can be categorised as market risk, liquidity risk and financial risk, and they are described in more detail in the directors' report for 2009.
Closely-related parties
Note 23 in Bergen Group's annual report for 2009 concerns transactions with closely-related parties. There have been no changes in this connection or transactions with closely-related parties during the first six months of 2010 that materially influence the group's financial position or performance in the period.
Declaration by the Board and CEO
We confirm that, to the best of our knowledge, the condensed half-year accounts for the period 1 January 2010 to 30 June 2010, have been prepared in accordance with IAS 34 Interim Financial Reporting/applicable accounting standards and that the information in the half-year report provides a correct picture of the company and group's assets, liabilities, financial position and performance as a whole, and that it correctly describes important events in the accounting period and their impact on the half-year accounts, the key risk and uncertainty factors to which the company will be exposed in the next accounting period and material transactions with closely-related parties.
Bergen, 25 August 2010
Board of Directors and CEO of Bergen Group ASA
Hans Olav Lindal, chair of the board
Anne Gine Hestetun, board member
Eli Sætersmoen, board member
Rune Skarveland, board member
Monica Salthella, board member
Magnus Stangeland, board member
Oddvar Skjegstad, board member
Ove Iversen, board member, employee repr.
Arne Vindenes, board member, employee repr.
Ingunn Flytør, board member, employee repr.
Pål Engebretsen, CEO
Bergen Group ASA / Report Q2 and 1st half year 2010
QUARTERLY DEVELOPMENT BERGEN GROUP
QUARTERLY DEVELOPMENT – BY BUSINESS AREA
Bergen Group ASA / Report Q2 and 1st half year 2010
Group consolidated accounts Bergen Group ASA - Q2 and 1st Half 2010
| Condensed consolidated interim statement of income | |||||
|---|---|---|---|---|---|
| Figures in TNOK | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Operating revenues | 789 957 | 1 305 478 | 1 760 565 | 2 451 863 | 5 108 260 |
| Cost of Goods Sold | 325 781 | 730 759 | 842 358 | 1 382 023 | 2 906 935 |
| Salaries and personnel costs | 317 749 | 373 956 | 619 511 | 701 638 | 1 353 815 |
| Other operating costs | 75 280 | 113 734 | 146 676 | 203 061 | 431 678 |
| Operating profit before depreciation | 71 147 | 87 029 | 152 020 | 165 141 | 415 831 |
| Ordinary depreciation | 12 789 | 11 570 | 25 467 | 22 577 | 45 288 |
| Excess depreciation and write down of goodwill 1) | 11 266 | 11 358 | 22 194 | 22 737 | 131 473 |
| Operating profit | 47 092 | 64 101 | 104 359 | 119 830 | 239 073 |
| Net interest costs | (24 227) | (12 231) | (47 432) | (31 160) | (94 518) |
| Other finance costs | (9 219) | 1 001 | (10 138) | 12 715 | 13 879 |
| Profit before taxes | 13 646 | 52 871 | 46 789 | 101 385 | 158 434 |
| Taxes | 3 821 | 14 804 | 13 101 | 28 387 | 80 599 |
| Net profit 2) | 9 825 | 38 067 | 33 688 | 72 998 | 77 835 |
| 1) Depreciation of identified excess values related to acquisitions | |||||
| 2) Tax in 2009 calculated based on a nominal tax rate of 28% | |||||
| Statement of comprehensive income | Q2 2010 | 30.06.2010 | 30.06.2009 | ||
| Figures i TNOK | |||||
| Profit for the period | 9 825 | 33 688 | 77 835 | ||
| Other comprehensive income | |||||
| Foreign currency translation subsidiaries | |||||
| Available for sale financial hedges | - | - | - | ||
| Cash flow hedges | - | - | - | ||
| Gains on property revaluation | - | - | - | ||
| Actuarial gain (loss) on defined benefit pension plans | - | - | - | ||
| Share of other comprehensive income of associates | - | - | - | ||
| Income tax relating to components of other comprehensive income | - | - | - | ||
| Other comprehensive income for the period, net of tax | 9 825 | 33 688 | 77 835 | ||
| Total comprehensive income for the period | 9 825 | 33 688 | 77 835 | ||
| Total comprehensive income attributable to: | - | - | - | ||
| Owners of the parent | 9 825 | 33 688 | 77 835 | ||
| Minority interests | - | - | - | ||
| Condensed consolidated interim balance sheet | |||||
| Figures in TNOK | 31.03.2010 | 31.12.2009 | 31.12.2008 | ||
| Intangible assets | 1 244 848 | 1 367 481 | 1 256 365 | ||
| Tangible assets | 866 271 | 845 689 | 886 441 | ||
| Financial assets | 21 404 | 30 005 | 24 047 | ||
| Total non-current assets | 2 132 523 | 2 243 175 | 2 166 853 | ||
| Inventory | 30 729 | 39 197 | 36 358 | ||
| Projects in progress | 1 135 950 | 1 341 170 | 1 390 217 | ||
| Receivables | 306 763 | 702 787 | 390 779 | ||
| Bank deposits | 274 212 | 335 684 | 453 515 | ||
| Total current assets | 1 747 654 | 2 418 838 | 2 270 869 | ||
| Total assets | 3 880 177 | 4 662 013 | 4 437 723 | ||
| Paid-in equity | 48 806 | 45 881 | 48 074 | ||
| Share premium fund | 1 173 019 | 1 171 754 | 1 173 019 | ||
| Own shares | - | (95) | |||
| Non-registered increase in share capital | - | 10 832 | 10 834 | ||
| Other equity | 296 011 | 270 936 | 260 865 | ||
| Minority interests | - | 160 | 241 | ||
| Total equity | 1 541 759 | 1 499 469 | 1 505 053 | ||
| Provision for liabilities | 251 207 | 164 629 | 241 815 | ||
| Long term liabilities | 156 111 | 835 273 | 178 139 | ||
| Total long term liabilities | 407 318 | 999 902 | 419 954 | ||
| Short term bond loan | 551 645 | - | 611 214 | ||
| Short term liabilities | 752 662 | 1 228 468 | 1 052 305 | ||
| Construction loans | 626 793 | 934 174 | 849 196 | ||
| Total short term liabilities | 1 931 100 | 2 162 642 | 2 512 715 | ||
| Total liabilities | 2 338 418 | 3 162 544 | 2 932 670 | ||
| Total equity and liabilities | 3 880 177 | 4 662 013 | 4 437 723 | ||
| Condensed consolidated interim statement of cash flow | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in TNOK | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| From operational activities | (62 404) | 82 235 | (56 046) | 141 740 | 253 900 |
| From investment activities | (15 617) | (17 189) | (1 286) | (46 435) | (111 731) |
| From financing activities | (72 391) | (6 750) | (121 971) | (9 550) | 61 417 |
| Change in the period | (170 412) | 58 296 | (179 303) | 85 755 | 203 586 |
| Cash & cash equiv. at start of period | 444 624 | 277 388 | 453 515 | 249 929 | 249 929 |
| Cash & cash equiv. at end of period | 274 212 | 335 684 | 274 212 | 335 684 | 453 515 |
Bergen Group ASA / Report Q2 and
1^{\text{st}}
half year 2010
Bergen Group ASA
Notes to Second quarter 2010
Group consolidated accounts (unaudited)
1: General
Bergen Group ASA is listed at Oslo Stock Exchange and is a Norwegian company. The consolidated figures include subsidiaries and parts in associated companies.
2: Interim report
This interim report is in accordance with IAS 34 "Interim Financial Reporting" and follows the same accounting principles as the financial statements for 2009. An interim report does not include all the information required in a complete financial statement, and it should be read in conjunction with the consolidated financial statement for 2009. The financial statement is available at the group's web pages: www.bergengroup.no
3: Estimates and judgments in the accounts
Preparation of both interim accounts and financial statement according to IFRS includes judgments, estimates and assumption that will influence of the reported values for both assets, liabilities, income and costs. During the preparation of the accounts the management used estimates based on best estimates, and assumptions considered to be fair and true based on historical knowledge
4: Changes in equity
In the period warrants has been converted to equity, witched caused a small share issue. Expect this other changes in equity sins 31.12.2009 is primarily related to equity effects of share options.
| Reconciliation of equity | |||
|---|---|---|---|
| Figures in TNOK | 30.06.2010 | 30.06.2009 | 31.12.2009 |
| Equity at the end of previous period | 1 505 053 | 1 416 030 | 1 416 030 |
| Effect of triangle merger with ext. Party | - | - | - |
| Share issue | - | - | 2 412 |
| Net profit for the period | 33 688 | 72 995 | 77 524 |
| Other changes | 3 018 | 10 444 | 9 087 |
| Changes in equity through the year | 36 706 | 83 439 | 89 023 |
| - | - | - | |
| Equity per end of period | 1 541 759 | 1 499 469 | 1 505 053 |
4: Largest shareholders
| Largest shareholders per. 30.06.2010 | # of shares | % ownership |
|---|---|---|
| STANGELAND INVESTMENTS AS | 20 379 014 | 41,76 % |
| GOLDMAN SACHS INT. - EQUITY - | 4 629 800 | 9,49 % |
| EIKESTØ AS | 2 507 348 | 5,14 % |
| ODIN OFFSHORE | 2 480 000 | 5,08 % |
| FURENESET INVEST A/S | 2 020 686 | 4,14 % |
| ROS HOLDING AS | 1 436 841 | 2,94 % |
| MAY INVEST A/S | 989 981 | 2,03 % |
| SØR-VARANGER INVEST AS | 846 774 | 1,73 % |
| RBC DEXIA INVESTOR SERVICES TRUST | 752 000 | 1,54 % |
| KANABUS AS | 710 962 | 1,46 % |
| CITIBANK N.A. NEW YORK BRANCH | 649 043 | 1,33 % |
| DNB NOR NAVIGATOR | 593 340 | 1,22 % |
| BERGER BRUKTOMSETNING AS | 500 000 | 1,02 % |
| BERNHD. BREKKE AS | 494 505 | 1,01 % |
| FOSEN OFFSHORE AS | 494 505 | 1,01 % |
| AKER ASA | 444 923 | 0,91 % |
| MORGAN STANLEY & CO INTERNAT. PLC | 373 018 | 0,76 % |
| BANK JULIUS BAER & CO. AG | 297 030 | 0,61 % |
| FLYFISK AS | 281 250 | 0,58 % |
| HASLETT | 232 428 | 0,48 % |
| Sum | 41 113 448 | 84,24 % |
| Other shareholders | 7 692 052 | 15,76 % |
| Total shareholders | 48 805 500 | 100,00 % |
Bergen Group ASA / Report Q2 and 1st half year 2010
Bergen Group ASA
Notes to Second quarter 2010
Group consolidated accounts (unaudited)
- Segment information
| Shipbuilding | |||||
|---|---|---|---|---|---|
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Gross operating revenues | 438 | 688 | 1 019 | 1 360 | 2 884 |
| EBITDA | 59 | 32 | 137 | 71 | 234 |
| Ordinary depreciation | (3) | (6) | (5) | (11) | (15) |
| Excess depreciation | (5) | (4) | (9) | (8) | (18) |
| Operating profit | 51 | 21 | 123 | 51 | 201 |
| Order backlog | 4 307 | 4 856 | 4 307 | 4 856 | 3 608 |
1) Bergen Group Fosen included from 16 July 2008
| Offshore | |||||
|---|---|---|---|---|---|
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Gross operating revenues | 178 | 362 | 368 | 601 | 1 358 |
| EBITDA | 2 | 32 | (12) | 41 | 103 |
| Ordinary depreciation | (5) | (4) | (10) | (8) | (16) |
| Excess depreciation | (4) | (3) | (6) | (6) | (13) |
| Operating profit | (6) | 25 | (28) | 28 | 74 |
| Order backlog | 156 | 464 | 156 | 464 | 258 |
| Maritime Service | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Gross operating revenues | 92 | 77 | 178 | 160 | 323 |
| EBITDA | 7 | 6 | 10 | 12 | 33 |
| Ordinary depreciation | (2) | (1) | (5) | (2) | (7) |
| Excess depreciation | (2) | (1) | (4) | (2) | (54) |
| Operating profit | 3 | 4 | 1 | 6 | (28) |
| Order backlog | 31 | 54 | 31 | 54 | 45 |
| Technology | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Gross operating revenues | 176 | 184 | 319 | 367 | 690 |
| EBITDA | 9 | 11 | 19 | 36 | 66 |
| Ordinary depreciation | (1) | (1) | (2) | (2) | (3) |
| Excess depreciation | (1) | (3) | (3) | (6) | (9) |
| Operating profit | 7 | 7 | 15 | 34 | 54 |
| Order backlog | 303 | 640 | 303 | 640 | 443 |
| Business development | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Gross operating revenues | 9 | 50 | 38 | 88 | 142 |
| EBITDA | (6) | 6 | (2) | 7 | (19) |
| Ordinary depreciation | (0) | (1) | (1) | (2) | (6) |
| Excess depreciation | (0) | - | (0) | - | (37) |
| Operating profit | (6) | 5 | (4) | 5 | (62) |
| Order backlog | 19 | 54 | 19 | 54 | 13 |
| Group elimination | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q2 2010 | Q2 2009 | 30.06.2010 | 30.06.2009 | YTD 2009 |
| Elimination operating revenues | (102) | (56) | (162) | (124) | (290) |
| Costs related to listing/restructuring | - | - | - | - | - |
| Elimination order backlog | (106) | (243) | (106) | (243) | (140) |
Bergen Group ASA / Report Q2 and 1st half year 2010