Download - Interim Financial Statements - KCA DEUTAG 2017 Interim Financial... · These condensed quarterly consolidated financial statements have been prepared in accordance with IAS 34, Interim

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Interim Financial

Statements

KCA Deutag Alpha Limited

For the nine months ended 30 September 2017

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UNAUDITED

Table of contents

Consolidated income statement 3

Consolidated statement of changes in shareholder's equity 3

Consolidated balance sheet 4

Consolidated cash flow statement 5

Notes to the quarterly financial statements 6

1. Significant accounting policies 6

1.1 Compliance with IAS 34 6

1.2 Basis of preparation 6

2. Segment reporting 7

3. Net finance costs 7

4. Exceptional items 8

5. Reconciliation of net debt 8

6. Tangible fixed assets 9

7. Intangible assets 10

8. Trade and other receivables 10

9. Trade and other payables 10

10. Cash generated from operating activities 11

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Consolidated income statement

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016Note $m $m $m $m

Sales 2 866.0 964.6 309.4 283.6

Operating costs (710.3) (761.8) (254.6) (227.2)

EBITDA 2 155.7 202.8 54.8 56.4

Depreciation/Amortisation (110.8) (121.7) (38.3) (39.0)

Operating profit (pre-exceptional) 44.9 81.1 16.5 17.4

Exceptional items (including impairment) 4 (7.7) (9.4) (2.2) (0.9)

Operating profit (post-exceptional) 37.2 71.7 14.3 16.5

Net finance costs 3 (155.9) (114.7) (39.0) (35.5)

Loss before tax (118.7) (43.0) (24.7) (19.0)

Taxation (21.6) (33.1) (8.0) (9.9)

Loss after tax (140.3) (76.1) (32.7) (28.9)

Consolidated statement of changes in shareholder’s equity

Sharecapital

Sharepremium

Retainedearnings

Otherreserves Total

$m $m $m $m $m

At 1 January 2017 - 14.2 (2,101.4) 2,169.3 82.1

Comprehensive income

Loss for the period - - (140.3) - (140.3)

Other comprehensive income

Exchange differences on foreign operations - - - 1.8 1.8

Actuarial gains on defined benefit plans - - - - -

Total other comprehensive (expense) income - - - 1.8 1.8

Total comprehensive (expense) income - - (140.3) 1.8 (138.5)

Transactions with owners

Dividend to minority shareholder - - (0.3) - (0.3)

At 30 September 2017 - 14.2 (2,242.0) 2,171.1 (56.7)

At 30 September 2016 - 14.2 (2,069.2) 2,169.5 114.5

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Consolidated balance sheet

AuditedQ3 2017 Q3 2016 Q4 2016

Note $m $m $mASSETS

Non-current assets

Property, plant and equipment 6 776.9 846.9 822.4

Goodwill 550.9 550.9 550.9

Intangible assets 7 92.8 105.0 101.6

Investments 2.5 2.6 2.1

Deferred tax assets 28.3 27.9 27.6

Financial assets - derivative financial instruments - - 0.8

1,451.4 1,533.3 1,505.4

Current assets

Inventories and work-in-progress 113.8 107.7 106.3

Trade and other receivables 8 263.3 274.4 236.8

Amounts owed by parent company - - 4.5

Financial assets - derivative financial instruments 1.4 2.4 1.3

Cash at bank 80.6 146.2 181.4

459.1 530.7 530.3

Total assets 1,910.5 2,064.0 2,035.7

Liabilities

Current liabilities

Bank overdraft - (7.7) (19.5)

Trade and other payables 9 (231.3) (250.8) (242.8)

Tax liabilities (32.4) (32.8) (35.1)

Financial liabilities - derivative financial instruments (0.1) - (0.1)

Financial liabilities - borrowings (21.6) (20.8) (22.1)

Provisions and other payables (1.3) (1.2) (1.7)

(286.7) (313.3) (321.3)

Non-current liabilities

Deferred income (20.3) (38.0) (32.5)

Financial liabilities - borrowings (1,267.7) (1,262.6) (1,257.0)

Amounts owed to parent company (206.2) (156.8) (167.1)

Deferred tax liabilities (39.8) (45.3) (45.1)

Retirement benefit obligations (141.7) (129.3) (127.1)

Provisions and other non-current liabilities (4.8) (4.2) (3.5)

(1,680.5) (1,636.2) (1,632.3)

Total liabilities (1,967.2) (1,949.5) (1,953.6)

Net (liabilities) assets (56.7) 114.5 82.1

Capital and reserves

Share capital - - -

Share premium reserve 14.2 14.2 14.2

Other reserves 2,171.1 2,169.5 2,169.3

Retained earnings (deficit) (2,242.0) (2,069.2) (2,101.4)

Total shareholders' (deficit) surplus (56.7) 114.5 82.1

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Consolidated cash flow statement

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016Note $m $m $m $m

Cash flows from operating activitiesCash generated from operations 10 82.8 193.9 45.4 54.0Tax paid (24.7) (32.2) (5.0) (9.3)Net cash inflow from operating activities 58.1 161.7 40.4 44.7

Cash flows from investing activitiesCapital expenditure (50.5) (89.0) (9.5) (15.0)

Proceeds from sale of property, plant andequipment

0.7 60.6 0.4 0.8

Purchase of intangible assets (1.5) (1.6) (0.7) (0.3)

Other investments - 0.6 - 0.2Interest received 16.9 15.7 5.3 5.1Net cash in (out) flow from investingactivities

(34.4) (13.7) (4.5) (9.2)

Cash flows from financing activitiesIncrease in loan to parent 25.0 - - -Drawdowns/(repayments) from borrowings (500.0) - - -Bank loan drawdowns/(repayments) (16.1) 63.3 (5.3) (7.4)

New senior secured notes (net of originalissue discount)

527.3 - - -

Arrangement fees paid (15.6) (1.6) - 0.2

Interest paid, including capitalised interest (79.2) (76.8) (14.3) (13.2)Costs incurred on early redemption of 2018Senior Secured Notes

(27.8) - - -

Finance lease payments (2.8) (2.2) (0.9) (0.8)Dividend paid to minority shareholders (0.3) (0.5) - (0.5)Net cash in (out) flow from financingactivities

(89.5) (17.8) (20.5) (21.7)

Effect of foreign exchange rate changeson cash and bank overdrafts

(15.5) 10.4 (8.3) (0.7)

Net cash in (out) flow (81.3) 140.6 7.1 13.1Cash and cash equivalents at start of period 161.9 (2.1) 73.5 125.4Cash and cash equivalents at end ofperiod

80.6 138.5 80.6 138.5

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1.

UNAUDITED

Notes to the Quarterly Financial Statements

Significant Accounting Policies

1.1 COMPLIANCE WITH IAS 34

These condensed quarterly consolidated financial statements have been prepared in accordance with IAS 34, Interim

Financial Reporting. They do not contain all the disclosures required for annual financial statements and shouldtherefore be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2016,prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

1.2 BASIS OF PREPARATION

1.2.1 General principle

The preparation of these condensed quarterly financial statements requires the use of certain critical accounting

estimates. It also requires management to exercise its judgement in the process of applying the Group’s accountingpolicies. The areas involving a higher degree of judgement, complexity or areas where assumptions and estimates aresignificant to the condensed quarterly consolidated financial statements are disclosed in Note 1.2.2.

1.2.2 Accounting estimates and judgements

Accounting estimates and underlying assumptions are based on past experience and other factors considered

reasonable under the circumstances.

They serve as the basis for any judgement required for determining the carrying amounts of assets and liabilities whensuch amounts cannot be obtained directly from other sources.

Actual amounts may differ from these estimates.

The main sources of uncertainty relating to estimates used to prepare the interim consolidated financial statements werethe same as those described in the full year 2016 consolidated financial statements.

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2. Segment reporting

In 2017 KCA Deutag had 4 Business Units. Following the gradual reduction in significance of our mobile offshore drilling units to ouroverall business, and the transition of day to day management of the residual activities to Platform Services, the results of the mobileoffshore drilling units are now combined with the Platform Services business and now reported as Offshore Services.

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016$m $m $m $m

RevenuesLand Drilling 373.0 436.1 122.8 135.3Bentec 54.2 58.9 22.1 12.4

Offshore Services 404.1 422.6 153.1 122.0RDS 42.3 60.8 13.8 16.9Corporate costs/other 0.3 0.4 0.1 (0.1)

Elimination on consolidation (7.9) (14.2) (2.5) (2.9)GROUP TOTAL 866.0 964.6 309.4 283.6

EBITDA (pre-exceptional)Land Drilling 122.0 139.8 35.5 43.8

Bentec 0.5 1.2 - (2.2)Offshore Services 46.7 72.4 22.6 18.6RDS 0.5 5.4 - 1.8

Corporate costs/other (14.0) (15.7) (3.3) (5.5)1Elimination on consolidation - (0.3) - (0.1)

GROUP TOTAL 155.7 202.8 54.8 56.4

1 Eliminations on consolidation principally relate to profits generated by Bentec on sales to Land Drilling and to support the Group’scapital expenditure programme.

3. Net finance costs

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016$m $m $m $m

Interest payable to immediate parent company (18.3) (15.7) (6.7) (5.5)Interest payable on bank borrowings (18.6) (17.5) (6.5) (5.9)

Interest payable on Senior Secured Notes (59.0) (56.5) (20.0) (18.9)Finance costs on finance leases (0.6) (0.7) (0.2) (0.3)Less amounts included in the cost of property, plant

and equipment- - - -

Amortisation of arrangement fees (9.9) (6.4) (1.5) (2.1)Amortisation of discount assets (7.5) (3.6) (0.5) (1.2)

Costs incurred on early redemption of 2018 SeniorSecured Notes

(27.8) - - -

Other finance costs (10.4) (5.8) (2.1) (1.1)

Finance costs (152.1) (106.2) (37.5) (35.0)Finance income 2.8 2.7 0.7 2.2Exchange (losses) gains (6.6) (11.2) (2.2) (2.7)

Finance costs – net (155.9) (114.7) (39.0) (35.5)

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4. Exceptional items

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016$m $m $m $m

1Reorganisation costs (7.7) (6.3) (2.2) (0.8)2Ben Loyal disposal - (0.2) - -

3Ben Rinnes disposal - (2.8) - -4Libya operations - 0.8 - 0.8

5Others - (0.9) - (0.9)

GROUP TOTAL (7.7) (9.4) (2.2) (0.9)

1 Reorganisation costs primarily relate to the Group’s cost reduction, restructuring, redundancy and other project

expenditure.

2 The MODU business unit completed the sale of the Ben Loyal Jack-Up rig in December 2015 resulting in a loss ondisposal.

3 Loss on disposal of the Ben Rinnes and costs related to the sale which was completed in June 2016.

4 Proceeds from disposal of assets in Libya which were written down in earlier periods as a result of ongoing politicalunrest and a decision to cease our operations in Libya.

5 Other exceptional items in the prior year includes a provision against cash in a severely distressed bank in Iraq wherewe have been unable to access funds.

5. Reconciliation of net debt

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016$m $m $m $m

Opening net debt (1,117.2) (1,215.7) (1,220.0) (1,162.6)

Net cash in (out) flow (81.3) 140.6 7.1 13.1(Drawdown) / Repayment of debt (8.4) (61.1) 6.2 8.2Other non-cash movements (1.8) (8.7) (2.0) (3.6)

Closing net debt per balance sheet (1,208.7) (1,144.9) (1,208.7) (1,144.9)Capitalised arrangement fees (35.8) (32.5) (35.8) (32.5)Closing net debt (1,244.5) (1,177.4) (1,244.5) (1,177.4)

KCA Deutag Alpha Limited, their affiliates or other related parties may or may not opportunistically purchase debt in oneor more series of open-market transactions from time to time.

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6. Tangible fixed assets

Land and buildings– long

leaseholdand freehold

Drilling rigs andequipment

Plant,machinery

andvehicles Total

$m $m $m $mCostAt 1 January 2017 29.8 1,472.6 104.4 1,606.8Additions at cost 0.2 49.4 0.9 50.5Disposals - (14.4) (0.1) (14.5)

Exchange adjustments 0.9 9.3 5.9 16.1At 30 September 2017 30.9 1,516.9 111.1 1,658.9

Accumulated depreciationAt 1 January 2017 4.8 764.1 15.5 784.4Charge for the period 1.3 95.7 2.9 99.9

Disposals - (14.1) (0.1) (14.2)Exchange adjustments 0.1 6.7 5.1 11.9At 30 September 2017 6.2 852.4 23.4 882.0

Net carrying amountAt 30 September 2017 24.7 664.5 87.7 776.9

Net carrying amountAt 31 December 2016 25.0 708.5 88.9 822.4

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7. Intangible assets

Customerrelationships and

contractsTradename Technology Total

$m $m $m $mCostAt 1 January 2017 196.0 176.3 36.3 408.6

Additions at cost - - 1.5 1.5Disposals at cost - - - -Exchange - - 1.9 1.9

At 30 September 2017 196.0 176.3 39.7 412.0

Accumulated amortisationAt 1 January 2017 194.1 87.7 25.2 307.0Charge for the period 1.4 6.1 3.4 10.9Disposals - - - -

Exchange - - 1.3 1.3At 30 September 2017 195.5 93.8 29.9 319.2

Net carrying amountAt 30 September 2017 0.5 82.5 9.8 92.8

Net carrying amountAt 31 December 2016 1.9 88.6 11.1 101.6

8. Trade and other receivables

Q3 2017 Q3 2016

$m $m

Trade receivables 239.9 252.0Other receivables 16.3 11.0

Prepayments and accrued income 7.1 11.4Total 263.3 274.4

9. Trade and other payables

Q3 2017 Q3 2016

$m $m

Trade payables 40.3 36.8

Other tax and social security 12.8 13.6Other payables 62.3 53.4Accruals 99.4 121.4

Payments received on account 0.1 7.0Deferred income 16.4 18.6Total 231.3 250.8

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10. Cash generated from operating activities

Q3 2017 YTD Q3 2016 YTD Q3 2017 Q3 2016$m $m $m $m

Loss for the period (140.3) (76.1) (32.7) (28.9)Adjustments for:Tax charge 21.6 33.1 8.0 9.9Depreciation 99.9 108.5 34.3 34.5Amortisation of intangible assets 10.9 13.2 4.0 4.5

Loss (gain) on sale of property, plant and equipment (0.4) 1.3 (0.2) (0.9)Net movement in provisions, other liabilities andretirement benefit obligations

5.5 (3.8) 2.3 (5.1)

Net finance cost 155.9 114.7 39.0 35.5Share of results of associates (0.1) - - -(Increase)/decrease in inventories and work in

progress(7.5) 10.2 (0.2) (1.7)

(Increase)/decrease in trade and other receivables (26.5) 54.6 (16.8) 13.8Increase/(decrease) in trade and other payables (53.4) (52.6) (4.2) (13.0)

Exchange differences from operating activities 17.2 (9.2) 11.9 5.4Cash generated from operating activities 82.8 193.9 45.4 54.0

Download - Interim Financial Statements - KCA DEUTAG 2017 Interim Financial... · These condensed quarterly consolidated financial statements have been prepared in accordance with IAS 34, Interim

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