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Endúr Interim / Quarterly Report 2010
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Interim / Quarterly Report
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BERGEN
INTERIM REPORT
Interim report, third quarter 2010
Bergen Group's turnover in the third quarter 2010 was stable compared with the previous quarter. The companies' individual projects are largely progressing satisfactorily, but low capacity utilisation in parts of the business reduces the group's total operating profit. The profit margin after the first nine months of the year is on a par with last year, although the margins in the quarter are not satisfactory seen in isolation.
The order situation will not generate growth in turnover in the short term. The group is therefore focusing strongly on cost-cutting measures that can ensure better earnings and improve competitiveness. The market prospects are fundamentally positive in the group's business areas.
The frequent postponement of decisions among several of our most important customers has resulted in low capacity utilisation in the Offshore Division in particular during the quarter and fewer new orders than expected. The division has been very active in the market, and it is currently in position in relation to various assignments that will be clarified during this quarter and in the time ahead. The Shipbuilding Division, which was responsible for almost 60% of the group's profit in the third quarter, had a profit margin (operating profit before depreciation and write downs) of 7.3%.
Throughout the year, the group has maintained a strong focus on strengthening the group's balance sheet. The group's net interest-bearing liabilities have been reduced by NOK 121 million since the beginning of the year. In August this year, a convertible bond loan of NOK 120 million was taken up with a right to convert in June 2011. Spring Capital, the issuer, and the group have agreed on early conversion, cf. the rights stipulated in the loan agreement. The entire loan will be converted into equity in Bergen Group ASA through the issuing of 10 million new shares at a price of NOK 12.
Key figures for the third quarter and accumulated at 30 September 2010:
- Turnover of NOK 767 million
(accumulated: NOK 2,528 million at 30 September 2010) - EBITDA of NOK 8 million
(accumulated: NOK 160 million at 30 September 2010) - EBITDA margin of 1.0%
(6.3% at 30 September 2010) - Net interest-bearing liabilities of NOK 428 million
- Orders worth NOK 4.2 billion as of 30 September 2010
| Condensed consolidated interim statement of income (unaudited) | |||||
|---|---|---|---|---|---|
| Figures in NOK MILLION | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Operating revenues | 767 | 1 388 | 2 528 | 3 839 | 5 108 |
| Other operating costs | (759) | (1 282) | (2 367) | (3 569) | (4 692) |
| Operating profit before depreciation (EBITDA) | 8 | 106 | 160 | 271 | 416 |
| Ordinary depreciation | (15) | (12) | (41) | (35) | (45) |
| Excess depreciation and write down of goodwill^{1)} | (12) | (11) | (34) | (34) | (131) |
| Operating profit (EBIT) | (18) | 82 | 86 | 202 | 239 |
| Net interest costs | (21) | (37) | (79) | (56) | (81) |
| Profit before taxes | (39) | 45 | 7 | 146 | 158 |
| Net profit^{2)} | (28) | 32 | 5 | 105 | 78 |
| Earnings pr share (NOK) | (0.57) | 0.69 | 0.11 | 2.28 | 1.67 |
| Diluted earnings per share (NOK) | (0.54) | 0.61 | 0.10 | 2.18 | 1.58 |
| Weighted avg. no. of shares outstanding (mill) | 49.47 | 46.41 | 48.66 | 46.06 | 46.56 |
| Diluted Weighted avg. no. of shares outstanding (mill) | 52.88 | 52.99 | 52.88 | 48.23 | 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 / Interim Report Q3 2010
Financial review
This interim report has been prepared in accordance with IAS 34 'Interim Financial Reporting', and it uses the same accounting principles as the annual accounts for 2009.
Order books
The group had orders worth NOK 4.2 billion on its books as of 30 September 2010, compared with NOK 4.7 billion as of 30 June 2010, NOK 3.4 billion as of 31 March 2010 and NOK 4.2 billion as of 31 December 2009.
The Shipbuilding Division has not entered any new newbuild contracts during the quarter. At the end of the third quarter, the division had orders on its books that ensure activity at Bergen Group BMV until into May 2011. With the orders currently on the books, Bergen Group Fosen is ensured a high level of fitting-out activity from summer 2011 until the last cruise ferry for Fjord Line is delivered in autumn 2012.
Both yards are working actively on potential projects and various assignments that may be clarified in the relatively near future.
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 Offshore Division won new orders worth NOK 175 million during the quarter. This is on a par with the previous quarter and represents a good increase in relation to the first quarter. However, the number of new orders has been lower than expected. The division has a strong focus on the market and is in position in relation to important competitive tender procedures that are expected to be decided in the fourth quarter and the first quarter. The division also has a potential in connection with framework contracts and letters of intent, but they are only expected to generate limited activity in the last quarter of 2010.
In the Technology Division, the order situation at 30 September 2010 varies somewhat between the different companies, and the overall level indicates somewhat reduced activity in the first six months of 2011. The order situation in Bergen Group Dreggen, which is the biggest company in the division, is such that we can expect relatively stable activity in 2011 compared with 2010.
The Maritime Service Division has traditionally had a short-term order perspective, but stable and increasing activity is expected in the time ahead. After the end of the quarter, the division has signed an LOI valued NOK 165 million for a project to be carried out at Bergen Group Halsnøy in 1st half 2011.
Income statement
Bergen Group recorded operating revenues of NOK 767 million in the third quarter 2010, compared with NOK 1,388 million in the corresponding quarter in 2009.
The operating profit before depreciation and write-downs (EBITDA) for the quarter amounted to NOK 8 million, compared with NOK 106 million in the same quarter in 2009. This means an EBITDA margin for the quarter of 1.0%, compared with 7.6% in the corresponding quarter in 2009.
Accumulated at 30 September 2010, operating revenues were NOK 2,528 million, compared with NOK 3,839 in the corresponding period last year. After the three first quarters of the year, EBITDA is NOK 160 million, compared with NOK 271 million in the same period last year. This means an EBITDA margin of 6.3% as of 30 September 2010, compared with 7.1% in the same period last year.
Bergen Group ASA / Interim Report Q3 2010
After total depreciation of NOK 27 million during the quarter, NOK 12 million of which was depreciation of excess values, the operating profit/loss after depreciation/write-downs (EBIT) for the third quarter amounted to minus NOK 18 million, compared with a profit of NOK 82 million last year. At 30 September 2010, EBIT amounted to NOK 86 million, compared with NOK 202 million in the corresponding period in 2009.
Net financial expenses in the third quarter 2010 amounted to NOK 21 million, compared with NOK 37 million in the third quarter 2009.
The pre-tax profit/loss for the third quarter amounted to minus NOK 39 million, compared with a profit of NOK 45 million in the third quarter 2009. The accumulated pre-tax profit as of 30 September 2010 was NOK 7 million, compared with NOK 146 million in the first three quarters in 2009.
Balance sheet and cash flow
The group's balance sheet total at 30 September 2010 was NOK 3,369 million, compared with NOK 4,339 million on the same date in 2009. Goodwill and excess values amounted to NOK 1,238 million. The group's receivables amounted to NOK 267 million, while it had bank deposits of NOK 221 million, compared with NOK 274 million at 30 June 2010.
The company's equity as of 30 September 2010 was NOK 1,517 million, which means an equity ratio of 45%. The company had short-term interest-bearing liabilities (excluding building loans) of NOK 116 million and long-term interest-bearing liabilities of NOK 498 million. Long-term liabilities and commitments amounted to NOK 739 million. At 30 September, the group had net interest-bearing liabilities of NOK 428 million, down from NOK 609 million at 30 June 2010.
In August this year, an agreement was signed for a convertible bond loan of NOK 120 million with a right to convert in June 2011. Spring Capital, the issuer, and the group have agreed on early conversion, cf. the rights stipulated in the loan agreement. The entire loan will be converted into equity through the issuing of 10 million new shares at a price of NOK 12.
The loan, the issuing of which was formally decided by the board of Bergen Group ASA on 27 October 2010 based on authorisation from the extraordinary annual meeting on 20 October 2010, was drawn in the amount of NOK 40 million as of 30 September 2010.
The company had a net cash flow in the third quarter of minus NOK 54 million. The cash flow from operations amounted to NOK 210 million, while the cash flow from investment activities amounted to minus NOK 2 million. The cash flow from financing activities was minus NOK 262 million. The positive cash flow from operations in the third quarter is due to the completion and delivery of several large projects in the quarter.
Segment information
The group reports on the following four segments: Shipbuilding, Maritime Service, Offshore and Technology. Each of these segments, as well as Business Development, is organised as a separate business area.
Bergen Group ASA / Interim Report Q3 2010
Shipbuilding
| Shipbuilding
Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| --- | --- | --- | --- | --- | --- |
| Gross operating revenues | 440 | 773 | 1 450 | 2 133 | 2 884 |
| EBITDA | 32 | 66 | 169 | 137 | 234 |
| Ordinary depreciation | (9) | (6) | (12) | (15) | (15) |
| Excess depreciation | (4) | (4) | (13) | (12) | (18) |
| Operating profit | 19 | 57 | 144 | 111 | 201 |
| Order backlog | 3 787 | 4 122 | 3 787 | 4 122 | 3 608 |
The Shipbuilding Division's turnover in the third quarter amounted to NOK 440 million, compared with NOK 773 million in the corresponding quarter last year. Variation must be expected in the division's turnover from one quarter to the next. This is because the value-added in each individual ship project varies during the production process. Accumulated at 30 September, the division had a turnover of NOK 1,459 million, compared with NOK 2,133 million in the same period last year.
In the third quarter, the division reported a satisfactory operating profit before depreciation and write-downs (EBITDA) of NOK 32 million, resulting in an EBITDA margin of 7.3%. In the first nine months of the year, the division had an accumulated EBITDA of NOK 169 million, and an EBITDA margin of 11.6%.
Bergen Group recognises that the two yards will experience a limited period of low newbuild activity until next year, as a result of the time that elapses from new contracts are signed until the start-up of fitting-out work. The contract for two modern cruise ferries for Fjord Line is progressing satisfactorily, and the steel work started at the yard in Gdansk in the final week of October.
The market for advanced offshore vessels/specialised vessels and RoPax vessels involves stringent requirements with respect to quality, ability to deliver and the ability to innovate. In recent years, Bergen Group's Shipbuilding Division has shown that it is fully capable of meeting all these requirements while operating at a good profit. The division is making targeted efforts to coordinate and increase the efficiency of the activities in the division.
Bergen Group BMV has had high activity at the yard in the quarter, including the completion and delivery of two newbuilds (BN 164 Island Enforcer - and BN 165 Geo Coral), as well as the start-up of fitting-out work on yet another newbuild, BN 166, which will be delivered in May 2011. At the turn of the third and fourth quarters, the yard also completed work on BN 167 Normand Pacific, which has been fitted out at Bergen Group Fosen. The ship was christened and delivered to Solstad Offshore in early November.
Activity in relation to the market is high with a view to clarifying new assignments that will generate work both in the short and long term. Bergen Group BMV is implementing measures intended to reduce costs in a period of reduced capacity utilisation if the order situation does not improve by the end of the first quarter 2011.
Bergen Group Fosen completed fitting-out work on BN 167 at the end of the third quarter. Pending new contracts and the start-up of fitting-out work on the two new cruise ferries for Fjord Line, activity and staff at parts of the yard has been significantly reduced through temporary lay offs. However, activity in the company's engineering departments is very high due to preparations for fitting out the cruise ferries for Fjord Line.
Progress on the two new cruise ferries is according to plan. The contract has primarily generated activity in connection with design and engineering work in the quarter. The contract ensures fitting-out activity at the yard from summer 2011 until the fourth quarter 2012. A progress schedule has yet to be finalised for the contract with BOA Offshore for the building of four advanced offshore vessels (large AHTSs).
Bergen Group ShipDesign increased its turnover and staff in the third quarter. The company has built up experienced design expertise that is also used for development projects. This will strengthen the division's competitiveness in connection with newbuild assignments.
Bergen Group ASA / Interim Report Q3 2010
Offshore
| Offshore | Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
|---|---|---|---|---|---|---|
| Gross operating revenues | 189 | 419 | 857 | 1 020 | 1 358 | |
| EBITDA | (15) | 23 | (27) | 64 | 103 | |
| Ordinary depreciation | (4) | (3) | (16) | (11) | (16) | |
| Excess depreciation | (5) | (4) | (11) | (10) | (13) | |
| Operating profit | (26) | 15 | (54) | 43 | 74 | |
| Order backlog | 142 | 434 | 142 | 434 | 258 |
The Offshore Division's turnover in the third quarter amounted to NOK 189 million, compared with NOK 419 million in the corresponding quarter last year. Accumulated at 30 September 2010, the division had a turnover of NOK 557 million, compared with NOK 1,020 million in the same period last year.
Low capacity utilisation also affects EBITDA in the third quarter, and, at 30 September 2010, the division has an accumulated operating loss before depreciation and write-downs of NOK 27 million. The main reason for the low turnover is few new orders over a long period, among other things because of postponement of the implementation of new projects by the division's customers. The number of new orders is too low to ensure satisfactory capacity utilisation, and Bergen Group Offshore is focusing strongly on measures to boost competitiveness. Tender activity has been very high, and we are currently in a strong position in relation to various tender procedures that are expected to be decided in the current quarter and in the first quarter 2011.
The Offshore Division has a good strategic foundation with strong expertise, sound reference projects and unique facilities that will become more attractive if the market develops as expected in the time ahead. A major international collaboration will strengthen this further.
Signs of increasing investment activity have strengthened during the quarter, and the market prospects are regarded as positive in the segments in which Bergen Group operates.
Bergen Group Rosenberg signed a contract with SBM (Single Buoy Moorings Offshore Contractors) during the quarter for the completion of a mobile offshore production and storage platform for the Yme field. The platform arrived in Stavanger in the middle of September. The scope of this work, which was estimated to be around NOK 55 million on contract signature, has increased significantly in value due to additional work. The project will mainly generate turnover during the fourth quarter 2010. It is currently uncertain when the platform will be taken offshore for completion – that is up to the client.
The framework contract that Bergen Group Rosenberg entered into with ConocoPhilips in November 2009 is not included in the orders reported this quarter, and, at 30 September 2010, it has only resulted in limited activity. This contract runs until 31 December 2010, with an option for an extension of one year at a time. The company regards the chances of the option being exercised as good. Bergen Group Rosenberg expects to be awarded a sub-project under the existing framework agreement in the fourth quarter.
Bergen Group Hanøytangen's main activity in the third quarter was related to the drilling rig Deepsea Atlantic. As of today, the company will have activities in connection with two different rig projects in the fourth quarter, Deepsea Atlantic and Safe Scandinavia. So far, an option for a small rig assignment in the first quarter 2011 has been exercised. There will be stronger focus on the work of developing Hanøytangen into a forward-looking base for maritime and offshore industry. It was decided in the third quarter that Frydenbø Industrier will move important parts of its operations from Bergen to Hanøytangen during 2012. There are also other processes under way that are expected to contribute to the development of this unique industrial site north of Bergen.
The overview of planned classifications and upcoming changes of assignments/fields indicates an increasing number of assignments in the next years. A tight rig market on the Norwegian continental shelf may also result in units being brought in from outside that will require modifications.
Bergen Group ASA / Interim Report Q3 2010
Strengthening the division: Strategic and operational measures have been implemented during the quarter to strengthen the professional development of and coordination between the different companies in the division, thereby improving the division's competitiveness. Kristin Færøvik took up the position of new Executive Vice President of Bergen Group Offshore on 1 September 2010. Mrs Færøvik, who has extensive experience from leading positions in the offshore sector, became new CEO of Bergen Group Rosenberg in the middle of May this year, and will continue in this function.
Bergen Group has made a strategic decision that the development of its engineering expertise shall to a greater extent take place in the operating companies. In that connection, it has been decided to wind up Bergen Group Engineering by the turn of the year. Liquidation costs of NOK 7 million have been recognised in the accounts for the quarter.
The work of building a new engineering and office building at Bergen Group Rosenberg started during the quarter, and it is expected to be ready for occupation no later than the first quarter 2012. The building will have room for more than 400 new, modern and functional office spaces, which will form a sound basis for the planned focus on increasing activities that are demanding in terms of expertise.
Maritime Service
| Maritime Service | |||||
|---|---|---|---|---|---|
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 63 | 81 | 241 | 241 | 323 |
| EBITDA | (1) | 13 | 9 | 24 | 33 |
| Ordinary depreciation | (1) | (2) | (8) | (5) | (7) |
| Excess depreciation | (1) | (1) | (5) | (3) | (54) |
| Operating profit | (3) | 10 | (4) | 16 | (28) |
| Order backlog | 16 | 50 | 16 | 50 | 45 |
The Maritime Service division's turnover was NOK 63 million in the third quarter, compared with NOK 81 million in the corresponding quarter last year. Accumulated at 30 September 2010, the division had a turnover of NOK 241 million, on a par with the corresponding period last year.
EBITDA in the third quarter amounted to minus NOK 1 million, compared with plus NOK 13 million in the corresponding quarter last year. The low capacity utilisation at Bergen Group Halsnøy in particular is responsible for the reduction in profit performance this quarter as well. Accumulated at 30 September 2010, the division has an EBITA of NOK 9 million and an EBITDA margin of 3.7%. The extensive spare yard capacity along the whole coast continues to intensify competition and put pressure on prices.
After the end of the quarter, the division has signed an LOI valued NOK 165 million linked to a larger modification job to be carried out at Bergen Group Halsnøy in the period from the end of November until the second quarter 2011.
During the quarter, Bergen Group Maritime Service started the process of improving the coordination of activities and resources in the division's three companies in the Bergen area (G SIJO, BG Skjøndal and BG Laksevåg) by merging the companies. These three enterprises complement each other to a great extent and have extensive expertise that is in great demand. The coordination will be concluded by the turn of the year and is expected to result in greater flexibility and efficiency.
Terje Arnesen took up the position of Executive Vice President of the Maritime Service division on 1 August. Mr Arnesen has extensive international experience of the maritime industry with the Ulstein Group and Rolls-Royce Marine, and comes from the post of managing director of the Bennex group.
Bergen Group ASA / Interim Report Q3 2010
Technology
| Technology | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
|---|---|---|---|---|---|
| Figures in NOK million | |||||
| Gross operating revenues | 132 | 167 | 451 | 534 | 690 |
| EBITDA | (2) | 15 | 17 | 50 | 66 |
| Ordinary depreciation | (1) | (1) | (3) | (2) | (3) |
| Excess depreciation | (1) | - | (4) | (9) | (9) |
| Operating profit | (5) | 14 | 10 | 39 | 54 |
| Order backlog | 234 | 519 | 234 | 519 | 443 |
Technology's turnover in the third quarter was NOK 132 million, compared with NOK 167 million in the corresponding quarter in 2009. Accumulated turnover at 30 September 2010 is NOK 451 million, compared with NOK 534 million in the corresponding period last year.
The operating profit/loss before depreciation and write-downs (EBITDA) was minus NOK 2 million in the quarter, compared with a profit of NOK 15 million in the third quarter 2009. The total EBITDA for the first nine months of the year amounted to NOK 17 million, which means an EBITDA margin of 3.8%. The figures for the corresponding period last year were NOK 50 million and an EBITDA margin of 9.4%.
Several of the companies in the division saw periods with lower activity than expected during the quarter. The number of new orders, which was somewhat weak during the quarter, is showing a positive trend which is expected to continue in the time ahead as a result of increased activity in the market and in connection with tenders. Since the end of the third quarter, several orders have been signed for 2011, the largest of which went to Bergen Group Skarveland and is worth NOK 24 million.
Business Development
| Business development | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
|---|---|---|---|---|---|
| Figures in NOK million | 16 | 31 | 54 | 118 | 142 |
| Gross operating revenues | (6) | (11) | (8) | (4) | (19) |
| EBITDA | (1) | (1) | (2) | (3) | (6) |
| Ordinary depreciation | 0 | - | 0 | - | (37) |
| Excess depreciation | (5) | (12) | (9) | (7) | (62) |
| Operating profit | 9 | 32 | 9 | 32 | 13 |
The companies in this new organisational entity, which was established in 2009, had a turnover of NOK 16 million in the third quarter 2010. The operating profit/loss before depreciation and write-downs (EBITDA) was minus NOK 6 million. This loss for the quarter is mainly due to a concluded project in one of the companies.
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 and is expected to be completed during the winter of 2010/2011.
Elimination, group
| Group elimination | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
|---|---|---|---|---|---|
| Figures in NOK million | (75) | (85) | (237) | (207) | (290) |
| Elimination operating revenues | - | - | - | - | - |
| Costs related to listing/restructuring | (30) | (183) | (30) | (183) | (140) |
| Elimination order backlog | (30) | (183) | (30) | (183) | (140) |
Bergen Group ASA / Interim Report Q3 2010
Shareholder information
Bergen Group has been listed on Oslo Børs since 30 June 2008. During the third quarter, the company's shares were traded at prices between NOK 7.25 and NOK 9.48. The final price on 30 June 2010 was NOK 8.00, which, based on 50,622 million outstanding shares at 30 September 2010, values the company's equity at about NOK 405 million at the end of the quarter.
At the end of the third quarter 2010, the company had 871 shareholders, the 20 biggest of which, combined, owned 84.1% of the company.
In the third quarter 2010, there were almost 400 trades in the share via Oslo Børs, involving a total volume of 597,000 shares.
In connection with the signing of new agreements with the 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. The deadline for exercising the subscription rights expired on 13 August 2010. A total of 4,740,653 subscription rights were exercised by this deadline, which means the company has 50,622,009 outstanding shares as of today.
On 8 November, Spring Capital Resources Inc. purchased 5 million shares in Bergen Group ASA. According to Spring Capital Resources Inc.'s flagging announcement, this means that the company's ownership interest in Bergen Group ASA is 19.9%.
On 12 August, Bergen Group entered into an agreement with Spring Capital Resources Inc. for the issuing of a convertible bond loan of NOK 120 million with a term to maturity of 10 months. It has been agreed with Spring Capital Resources Inc. that this loan will now be converted into shares. The conversion means that the loan of NOK 120 million will be converted into equity through the issuing of 10 million shares at a price of NOK 12 per share.
The conversion increases the number of issued shares in Bergen Group to 60,622,009 shares. According to Spring Capital's last flagging announcement on 8 November, the company's ownership interest in Bergen Group will be 33.1% after the conversion.
Other matters since the end of the quarter
See also the discussion of changes in the shareholder situation and the share capital in the previous section. No other developments have taken place since the end of the quarter that are considered relevant to the market's assessment of Bergen Group ASA.
Prospects
Bergen Group operates in a market that has been hesitant to initiate new projects of any significant scope since 2008. This situation has improved in most areas in the last six months. There has been a noticeable increase in the number of contracts for new ships, and in the offshore sector, the Norwegian supply industry has seen a long-hoped-for growth in new orders on its books.
For Bergen Group, this improvement in the market has resulted in several smaller contracts for the group, as well as a contract worth NOK 1,7 billion in a demanding cruise ferry market characterised by major international competition.
Though the number of new orders has increased somewhat compared with the third quarter and tender activity is still at a high level, Bergen Group recognises that the economic downturn that lasted from the end of 2008 up until the start of 2010 will also affect the activity level in parts of the group in the first six months of 2011. Bergen Group is confident that the group's market position and available capacity form the basis for healthy growth in the years ahead. There is strong focus on ensuring acceptable earnings for the group regardless of the market position, and the group has implemented processes intended to contribute to increased competitiveness and a more flexible cost structure:
Bergen Group ASA / Interim Report Q3 2010
- Engineering expertise is being strengthened and further developed in the operating environments in the largest companies in the group
- Activity in Maritime Service is being coordinated through an ongoing process of merging the companies in the Bergen area.
- The whole group is being reviewed with a view to increasing expertise-based capacity while at the same time securing more flexible production capacity in relation to the work operations that are most exposed to competition.
- The work of developing international cooperation is well under way and is expected to produce visible results within a reasonable period of time.
Industrial cooperation: Bergen Group is in a constructive mapping phase relating to a possible future collaboration with Spring Capital Resources, and the opportunities represented by the company's ownership interests in the Chinese offshore and marine shipyard group CIMIC Raffles. This possible collaboration is expected to open up for industrial synergies and a strengthening of both parties' competitiveness.
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 highly strategic location and unique facilities, this makes for exciting opportunities in the time ahead.
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 handling and management, and active efforts are being made to improve procedures in order to strengthen the group's overall risk exposure.
The main risk factors can be categorised as market risk, liquidity risk and financial risk. 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 third quarter 2010 that materially influence the group's financial position or performance in this period.
Bergen, 12 November 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 / Interim Report Q3 2010
Bergen Group ASA / Interim Report Q3 2010
Quarterly development Bergen Group – consolidated figures
Quarterly development Bergen Group – business areas
10
Group consolidated accounts Bergen Group ASA – Q3 2010
| Condensed consolidated interim statement of income | |||||
|---|---|---|---|---|---|
| Figures in TNOK | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Operating revenues | 767 073 | 1 387 610 | 2 527 638 | 3 839 473 | 5 108 260 |
| Cost of Goods Sold | 379 808 | 791 918 | 1 222 166 | 2 173 941 | 2 906 935 |
| Salaries and personnel costs | 304 308 | 365 395 | 923 819 | 1 067 033 | 1 353 815 |
| Other operating costs | 74 503 | 124 728 | 221 179 | 327 789 | 431 678 |
| Operating profit before depreciation | 8 455 | 105 569 | 160 474 | 270 710 | 415 831 |
| Ordinary depreciation | 15 263 | 12 184 | 40 730 | 34 761 | 45 288 |
| Excess depreciation and write down of goodwill 1) | 11 518 | 11 370 | 33 712 | 34 107 | 131 473 |
| Operating profit | (18 327) | 82 015 | 86 033 | 201 842 | 239 073 |
| Net interest costs | (19 519) | (8 661) | (66 951) | (39 821) | (94 518) |
| Other finance costs | (1 458) | (28 689) | (11 596) | (15 974) | 13 879 |
| Profit before taxes | (39 303) | 44 665 | 7 486 | 146 047 | 158 434 |
| Taxes | (11 005) | 12 506 | 2 096 | 40 893 | 80 599 |
| Net profit 2) | (38 298) | 32 159 | 5 390 | 105 154 | 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 | Q3 2010 | 30.09.2010 | YTD 2009 | ||
| Figures i TNOK | |||||
| Profit for the period | (20 290) | 5 390 | 77 835 | ||
| Other comprehensive income | - | ||||
| Foreign currency translation subsidiaries | 1 601 | 1601 | - | ||
| 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 | - | - | - | ||
| Total comprehensive income for the period | 1 601 | 1 601 | 77 835 | ||
| Total comprehensive income attributable to: | (26 697) | 6 991 | 77 835 | ||
| Owners of the parent | - | - | - | ||
| Minority interests | (26 697) | 6 991 | 77 835 | ||
| Condensed consolidated interim balance sheet | |||||
| Figures in TNOK | 30.09.2010 | 30.09.2009 | YTD 2009 | ||
| Intangible assets | 1 237 990 | 1 359 012 | 1 256 365 | ||
| Tangible assets | 849 770 | 862 378 | 886 441 | ||
| Financial assets | 21 929 | 26 453 | 24 047 | ||
| Total non-current assets | 2 109 689 | 2 247 843 | 2 166 853 | ||
| Inventory | 34 803 | 37 098 | 36 358 | ||
| Projects in progress | 736 445 | 1 100 853 | 1 390 217 | ||
| Receivables | 267 457 | 660 764 | 390 779 | ||
| Bank deposits | 220 652 | 292 655 | 453 515 | ||
| Total current assets | 1 259 267 | 2 001 370 | 2 270 869 | ||
| Total assets | 3 369 046 | 4 339 213 | 4 437 723 | ||
| Paid-in equity | 50 622 | 48 053 | 48 074 | ||
| Share premium fund | 1 173 273 | 1 173 016 | 1 173 019 | ||
| Own shares | - | - | - | ||
| Non-registered increase in share capital | 16 032 | 10 833 | 22 854 | ||
| Other equity | 276 683 | 300 236 | 260 865 | ||
| Minority interests | - | 243 | 241 | ||
| Total equity | 1 516 611 | 1 532 381 | 1 505 053 | ||
| Provision for liabilities | 240 012 | 166 082 | 241 815 | ||
| Long term liabilities | 205 807 | 162 886 | 178 139 | ||
| Total long term liabilities | 738 643 | 328 968 | 419 954 | ||
| Short term bond loan | 39 040 | 602 620 | 611 214 | ||
| Short term liabilities | 695 237 | 1 147 936 | 1 052 305 | ||
| Construction loans | 379 514 | 727 308 | 849 196 | ||
| Total short term liabilities | 1 113 792 | 2 477 864 | 2 512 715 | ||
| Total liabilities | 1 852 435 | 2 806 832 | 2 932 670 | ||
| Total equity and liabilities | 3 369 046 | 4 339 213 | 4 437 723 | - | |
| Condensed consolidated interim statement of cash flow | |||||
| Figures in TNOK | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| From operational activities | 210 401 | (39 352) | 154 355 | 102 388 | 253 900 |
| From investment activities | (1 968) | (31 774) | (3 254) | (78 209) | (111 731) |
| From financing activities | (261 993) | 28 097 | (383 964) | 18 547 | 61 417 |
| Change in the period | (53 560) | (43 029) | (232 863) | 42 726 | 203 586 |
| Cash & cash equiv. at start of period | 274 212 | 335 684 | 453 515 | 249 929 | 249 929 |
| Cash & cash equiv. at end of period | 220 652 | 292 655 | 220 652 | 292 655 | 453 515 |
Bergen Group ASA / Interim Report Q3 2010
Bergen Group ASA
Notes to Third 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, which caused a small share issue. Except for this, other changes in equity since 1.12.2009 is primarily related to equity effects of share options.
| Reconciliation of equity | |||
|---|---|---|---|
| Figures in TNOK | 30.09.2010 | 30.09.2009 | 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 | - | 2 389 | 2 412 |
| Net profit for the period | 5 390 | 105 154 | 77 524 |
| Other changes | 6 169 | 8 808 | 9 087 |
| Changes in equity through the year | 11 559 | 116 351 | 89 023 |
| - | - | - | |
| Equity per end of period | 1 516 611 | 1 532 381 | 1 505 053 |
4: Largest shareholders
| Largest shareholders per 30.09.2010 | # of shares | % ownership |
|---|---|---|
| STANGELAND INVESTMENTS AS | 20 379 014 | 40.26 % |
| GOLDMAN SACHS INT. - EQUITY - | 5 068 500 | 10.01 % |
| EKESTØ AS | 2 638 773 | 5.21 % |
| ODIN OFFSHORE | 2 480 000 | 4.90 % |
| FURENESET INVEST A/S | 2 152 113 | 4.25 % |
| ROS HOLDING AS | 1 568 266 | 3.10 % |
| MAY INVEST A/S | 989 981 | 1.96 % |
| SØR-VARANGER INVEST AS | 846 774 | 1.67 % |
| RBC DEXIA INVESTOR SERVICES TRUST | 752 000 | 1.49 % |
| KANABUS AS | 710 962 | 1.40 % |
| BERGER BRUKTOMBETNING AS | 649 500 | 1.28 % |
| CITIBANK N.A. NEW YORK BRANCH | 649 043 | 1.28 % |
| DNB NOR NAVIGATOR | 593 340 | 1.17 % |
| MP PENSJON | 555 573 | 1.10 % |
| BERNHD BREKKE AS | 494 505 | 0.98 % |
| FOSEN OFFSHORE AS | 494 505 | 0.98 % |
| FLYFISK AS | 478 388 | 0.95 % |
Bergen Group ASA / Interim Report Q3 2010
Bergen Group ASA
Notes to Third quarter 2010
Group consolidated accounts (unaudited)
- Segment information
| Shipbuilding | |||||
|---|---|---|---|---|---|
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 440 | 773 | 1 459 | 2 133 | 2 884 |
| EBITDA | 32 | 66 | 169 | 137 | 234 |
| Ordinary depreciation | (9) | (6) | (12) | (15) | (15) |
| Excess depreciation | (4) | (4) | (13) | (12) | (18) |
| Operating profit | 19 | 57 | 144 | 111 | 201 |
| Order backlog | 3 787 | 4 122 | 3 787 | 4 122 | 3 608 |
1) Bergen Group Fosen included from 16 July 2008
| Offshore | |||||
|---|---|---|---|---|---|
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 189 | 419 | 557 | 1 020 | 1 358 |
| EBITDA | (15) | 23 | (27) | 64 | 103 |
| Ordinary depreciation | (4) | (3) | (16) | (11) | (16) |
| Excess depreciation | (5) | (4) | (11) | (10) | (13) |
| Operating profit | (26) | 15 | (54) | 43 | 74 |
| Order backlog | 142 | 434 | 142 | 434 | 258 |
| Maritime Service | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 63 | 81 | 241 | 241 | 323 |
| EBITDA | (1) | 13 | 9 | 24 | 33 |
| Ordinary depreciation | (1) | (2) | (8) | (5) | (7) |
| Excess depreciation | (1) | (1) | (5) | (3) | (54) |
| Operating profit | (3) | 10 | (4) | 16 | (28) |
| Order backlog | 16 | 50 | 16 | 50 | 45 |
| Technology | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 132 | 167 | 451 | 534 | 690 |
| EBITDA | (2) | 15 | 17 | 50 | 66 |
| Ordinary depreciation | (1) | (1) | (3) | (2) | (3) |
| Excess depreciation | (1) | - | (4) | (9) | (9) |
| Operating profit | (5) | 14 | 10 | 39 | 54 |
| Order backlog | 234 | 519 | 234 | 519 | 443 |
| Business development | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Gross operating revenues | 16 | 31 | 54 | 118 | 142 |
| EBITDA | (6) | (11) | (8) | (4) | (19) |
| Ordinary depreciation | (1) | (1) | (2) | (3) | (6) |
| Excess depreciation | 0 | - | 0 | - | (37) |
| Operating profit | (5) | (12) | (9) | (7) | (62) |
| Order backlog | 9 | 32 | 9 | 32 | 13 |
| Group elimination | |||||
| --- | --- | --- | --- | --- | --- |
| Figures in NOK million | Q3 2010 | Q3 2009 | 30.09.2010 | 30.09.2009 | YTD 2009 |
| Elimination operating revenues | (75) | (85) | (237) | (207) | (290) |
| Costs related to listing/restructuring | - | - | - | - | - |
| Elimination order backlog | (30) | (183) | (30) | (183) | (140) |
Bergen Group ASA / Interim Report Q3 2010