q3 2016 - dof group sub/ir/2016/dof subsea financial report q3 2016.pdfduring the 3rd quarter 2016...
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financial report
STRENGTH THROUGH TRANSITION
Q3 2016
DOF Subsea ASThormøhlens gate 53 C5006 BergenNORWAYwww.dofsubsea.com
Index
Financial Report 3rd quarter 2016 . . . . . . . . . . . . . . . . . . .4
Financial statements 3rd quarter 2016 . . . . . . . . . . . . . . .8
Consolidated statement of comprehensive income . . . . . . . . . . . 8
Consolidated statement of financial position . . . . . . . . . . . . . . . . . . 9
Consolidated statement of financial position . . . . . . . . . . . . . . . . 10
Consolidated statement of cash flows. . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated statement of changes in equity . . . . . . . . . . . . . . . . 12
Notes to the financial statements . . . . . . . . . . . . . . . . . . 14
Note 1 Management reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Note 2 Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Note 3 Financial income and expenses . . . . . . . . . . . . . . . . . . . . 16
Note 4 Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Note 5 Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Note 6 Net interest-bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Note 7 Financial instruments and hedging activities . . . . . 19
Note 8 Transactions with related parties . . . . . . . . . . . . . . . . . . 20
Note 9 Investments in associates and joint ventures. . . . . 20
Note 10 Events after the consolidated statement of financial position date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Note 11 Shareholder information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Note 12 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Note 13 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Supplemental information . . . . . . . . . . . . . . . . . . . . . . . . . 24
Condensed statement of comprehensive income 5 last quarters . . . . . . . . . . . . . . . . . . . . 24
Condensed statement of financial position 5 last quarters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Financial Report Q3 2016 | DOF SUBSEA
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HeadlinesIn the 3rd quarter of 2016, DOF Subsea had an oper-ating income of NOK 1 132 million (vs. NOK 1 904 million in the 3rd quarter of 2015) with an EBITDA of NOK 396 million (NOK 452 million). The EBIT was NOK 62 million (NOK 273 million) after depreciation and impairment of NOK 334 million (NOK 179 million). The net financial income was NOK 129 million (loss NOK 605 million) and the profit before tax was NOK 191 million (loss NOK 332 million). The operating in-come for the first 9 months of 2016 was NOK 4 098 million (NOK 5 326 million) with an EBITDA of NOK 1 379 million (NOK 1543 million) and an EBIT of NOK 436 million (NOK 1 039 million) after depreciations and impairment of NOK 944 million (NOK 503 million). The financial income was NOK 238 million (loss NOK 913 million) giving a profit before tax of NOK 673 million (NOK 126 million).
Key figures (NOK million) 3Q 2016 3Q 2015 YTD 2016 YTD 2015
Operating income 1 132 1 904 4 098 5 326
EBITDA 396 452 1 379 1 543
EBIT 62 273 436 1 039
Net interest-bearing debt 8 864 9 595 8 864 9 595
EBITDA proportional method 447 553 1 487 1 773
EBITDA proportional method excluding profit from sale of non-current assets 447 552 1 413 1 526
In July the Group was awarded a 5+2+2 year IMR contract with Shell Australia, in August the JV vessel Skandi Acu entered into a 8 year contract with Petrobras and Skandi Salvador was awarded a 1+1 year IMR contract with Petrobras. In September the Group entered into an agreement with AKASTOR ASA to sell the vessel Skandi Santos with esti-mated delivery to the new owners in November/December. The agreement is dependent on inspection of the vessel and final approval. During the 3rd quarter the Group saw a mixed project activity level, especially in the North Sea and in North America. During the quarter several vessels have been in dock for upgrade and maintenance in addition idle time between projects has increased and vessel were repo-sitioned. The vessel utilization in the 3rd quarter was 80 %, where the TC vessel utilization was 82 % and the project vessel utilization was 75 %.
Operational events 3rd quarterAs of 30th of September 2016, the Group’s fleet comprised 21 owned vessels, 2 chartered-in vessels, and 4 vessels under construction, a ROV fleet of 63 units and 4 ROVs on order.
During the 3rd quarter 2016 the Asia Pacific region conducted IMR work for Shell Philippines, Chevron Australia and Saipem in Indonesia. In the Atlantic region, the Group has been doing engineering, survey, light construction and in-stallation work for Shell, Eni, Maersk, Teekay, BW, HMC, Repsol and Yinson. In the North American region, the Group has conducted IMR work for Chevron, Husky, Statoil, Shell, Emera, Noble, and survey and positioning work for HMC. In Brazil, the Group has been engaged in inspection work, survey and installation work for Petrobras.
In July, Shell Australia awarded the Group a 5+2+2 year IMR contract. Under the IMR contract the Group will provide project management, engineering and support services for the Prelude field off the coast of Western Australia. In August the JV vessel Skandi Acu entered into a 8 year contract with Petrobras after the vessel had been through an extensive test program. The vessel is a state of the art PLSV with a 650 ton tiltable lay tower. In August Petrobras awarded the Group a 1+1 year IMR contract on the Skandi Salvador, and several contracts was won in the APAC region securing the utilization of the Skandi Singapore and Skandi Hercules. In September the Group entered into an agreement to sell the vessel Skandi Santos with estimated delivery to the new owners in November/December. The Group also took first delivery of the JV vessel Skandi Buzios from Vard and the vessel will install the 650 ton tiltable lay tower in Holland, thereafter the vessel will undergo an extensive test program before she will enter into an 8 years contract with Petrobras in 2nd quarter 2017. During the 3rd quarter 2016, the utilization of the Group’s vessels was 80 %. The utilization for the project vessels during the quarter was 75% and for the TC vessels 82 %. The main reasons for the low utilization of the TC vessels were repair, maintenance and re-positioning of Skandi Achiever, idle time on Skandi Salvador before she entered into contract with Petrobras, repair and maintenance on Skandi Hercules and Skandi Singapore and idle time between projects on several vessels in the Subsea regions.
Utilization 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
Project vessels 75% 92% 79 % 74 % 76 %
Time charter vessels 82% 82% 93 % 91 % 97 %
Fleet 80% 87% 88 % 85 % 88 %
All utilization of vessel numbers is based on actual avail-able days not excluding days at yard for dry-docking, repair/upgrading, transit or idle time between projects and charter contracts.
Financial Report 3rd quarter 2016
| Financial Report Q3 2016DOF SUBSEA
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Consolidated statement of comprehensive income and consolidated statement of financial positionIn the 3rd quarter of 2016, the Group achieved an operating income of NOK 1 132 million compared to an operating income of NOK 1 904 million for the 3rd quarter of 2015. Operating profit before depreciation (EBITDA) was NOK 396 million (NOK 452 million) and the operating profit after depreciation and write down (EBIT) was NOK 62 million (NOK 273 million). Depreciation and impairment amounted to NOK 334 million (NOK 179 million), of which NOK 194 million was impairment.
NOK million 3Q 2016 3Q 2015 Change %
Operating income 1 132 1 904 -41 %
Operating expenses 735 1 452 -49 %
EBITDA 396 452 -12 %
EBIT 62 273 -77 %
Net financial income was NOK 129 million (net financial loss NOK 605 million), whereas NOK 225 million (loss NOK 450 million) of the net financial income was unrealized gains on financial instruments. The profit before tax was NOK 191 million (loss NOK 332 million) and the profit for the period was NOK 170 million (loss NOK 312 million).
For the first 9 months 2016 DOF Subsea had an operating income of NOK 4 098 million (vs. NOK 5 326 million in 2015) with an EBITDA of NOK 1 379 including a sales gain of NOK 73 million (NOK 1 543 million including a sales gain of NOK 205 million). The EBIT was NOK 436 million (NOK 1 039 million) after depreciation and im-pairment of NOK 944 million (NOK 503 million). The net financial income was NOK 238 million (loss NOK 913 million) and the profit before tax was NOK 673 million (NOK 126 million) and the profit for the period was NOK 585 million (NOK 123 million).
The Group’s total assets were NOK 17 661 million (NOK 18 553 million) where non-current assets amounted to NOK 15 259 million (NOK 15 086 million), including NOK 647 million (NOK 810 million) in intangible assets. Current assets were NOK 2 402 million (NOK 3 467 million) of which NOK 1 137 million (NOK 1 487million) was cash and cash equivalents.
NOK million 30 .09 .2016 30 .09 .2015 Change %
Tangible assets 12 918 13 295 -3 %
Cash and cash equivalents 1 137 1 487 -24 %
NIBD 8 864 9 595 - 8 %
Total equity 6 437 5 641 14 %
The total equity was NOK 6 437 million (NOK 5 641 million), including non-controlling interests of NOK 222 million (NOK 261 million). Non-current liabilities, including non-current provisions for commitments, were NOK 8 944 million (NOK 8 593 million). Current lia-bilities were NOK 2 280 million (NOK 4 320 million) of which NOK 1 396 million (NOK 2 909 million) were short-term portion of debt. The net interest-bearing debt (NIBD) was NOK 8 864 million (NOK 9 595 mil-lion). By the end of 3rd quarter the book equity ratio was 36,5 %, and the value adjusted equity ratio was 41 %. The value-adjusted equity ratio is calculated by adjusting the book equity and total assets by excess values on all owned vessels.
Cash and cash equivalents has changed due to refinancing of vessels, repayment of debt, instalments and change in working capital. Net interest-bearing debt was NOK 8 864 million representing 51 % of total assets and 47 % of value adjusted assets.
Net cash flow from operating activities in the 3rd quarter 2016 was NOK 350 million (NOK 301 million). Cash flow from investing activities was negative NOK 40 million (negative NOK 167 million) of which NOK 29 million is from investment in assets that increase or will increase capacity for the Group. Cash flow from financing activities was negative NOK 242 million (negative NOK 67 million) of which NOK 444 million was instalment on long term interest bearing debt. At the end of the 3rd quarter the Group’s cash and cash equivalents was NOK 1 137 million (NOK 1 487 million).
Debt, financing and liquidityDuring the quarter the Group has paid ordinary instal-ments on outstanding debt. For the new building program owned 50/50 with Technip the 1st tranche of the financing on Skandi Buzios was drawn during the quarter upon 1st delivery of the vessel, the 2nd tranche will be drawn medio January.
Financial Report Q3 2016 | DOF SUBSEA
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The Group’s short portion of debt as at 30th of September 2016 totals NOK 1 396 million, and includes balloons, drawn credit facilities and ordinary instalments. The Group is in progress to refinance balloons and loans that mature over the next 12 months.
Financial riskThe Group’s operating income is in NOK, USD, AUD, GBP and BRL while the Group’s loans are distributed between NOK and USD. This exposes the Group to the risk of ex-change rate fluctuations. The Group has an active exchange rate policy, and uses derivatives to hedge the exchange rate exposure.
The Group is exposed to fluctuations in interest rates. Part of the Group’s loans has fixed interest rates, reducing the exposure. The Group has an active interest rate policy, and uses derivatives to hedge the interest rate exposure.
ShareholdersThe shares in DOF Subsea AS are 100 % owned by DOF Subsea Holding AS. The number of outstanding shares is 119,733,714, with book equity of NOK 53,76 per share. The value-adjusted equity per share as per 30th of September was NOK 65,00.
EmployeesAs per 30th of September 2016, the number of full time employees in the DOF Subsea Group was 1 372 persons. The numbers do not include marine employees that are employed in DOF Management and Norskan.
The FleetAs per 30th of September, the Group fleet comprised 21 owned vessels, 2 chartered-in vessels and 4 vessels under construction.
Contract Coverage** Contract coverage excludes master service agreements (MSAs) within
the subsea project segment. Under the MSAs only confirmed POs are
accounted for.
Forward looking statementThe Board of Directors is pleased with the financial numbers for 3rd quarter of 2016. In order to adjust the Group’s capacity to the challenging market conditions, needed cost cutting measures have continued in 2016. The organization has been adapted to the underlying activity, vessels have been re-allocated between regions in order to secure utilization and chartered-in vessels from 3rd parties have been redelivered.
The firm contract backlog amounts to approximately NOK 18.5 billion, and including options approximately NOK 35.6 billion as at 30th of September 2016. However, the Group is exposed to the short-term market conditions on the subsea project vessels. On these vessels, management is working to increase the backlog.
The Board of Directors expect the challenging market conditions to continue, with an oil price of about USD 45 per barrel, the current cost focus in the oil industry and over-supply of vessels, a weak market is expected. This increase the risk for further impairment of the Group’s non-current assets. The cost cutting measures taken so far have proved to be needed, and the Board of Directors and the Management has a strong focus on continuously adjusting the Group’s capacity and risk ex-posure to the market conditionsgoing forward.
Bergen, 15th November 2016The Board of DOF Subsea AS
Contact information:Mons S. Aase, CEO +47 916 61 012Marianne Møgster +47 993 06 916
DOF Subsea ASThormølens gate 53 C5006 Bergen www.dofsubsea.com
| Financial Report Q3 2016DOF SUBSEA
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Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Financial statements 3rd quarter 2016
Consolidated statement of comprehensive income
Note 3Q 2016 3Q2015 YTD 2016 YTD 2015 2015
Operating income 1, 2 1 132 1 904 4 098 5 326 6 891
Payroll expenses -394 -510 -1 236 -1 576 -2 051
Other operating expenses -370 -915 -1 640 - 2 472 -3 113
Share of net income of associates and joint ventures 1, 8 29 -27 84 59 163
Profit from sale of non-current assets - 1 73 205 210
Total operating expenses -735 -1 452 -2 719 -3 783 -4 791
Operating profit before depreciation (EBITDA) 1, 2 396 452 1 379 1 543 2 100
Depreciation and impairment 4 -334 -179 -944 -503 -703
Operating profit (EBIT) 62 273 436 1 039 1 397
Financial income 3 5 8 39 29 50
Financial expenses 3 -113 -145 -385 -439 -613
Realized gain / loss on financial instruments 3 12 -17 -83 7 -21
Unrealized gain / loss on financial instruments 3 225 -450 666 -510 -592
Net financial income / loss 129 -605 238 -913 -1 176
Profit / loss before tax 191 -332 673 126 221
Tax expense -21 20 -88 -3 -44
Profit / loss for the period 170 -312 585 123 177
Other comprehensive income
Items that may be subsequently reclassified to profit / loss
Currency translation difference (CTA) -35 -35 -33 -37 73
Cash flow hedges - 10 - 20 23
Share of other comprehensive income of associates and joint ventures 8 -28 -202 218 -334 -450
Items that will not be subsequently reclassified to profit / loss
Defined benefit plan actuarial gains / losses - - - - -
Other comprehensive income / loss net of tax -63 -228 185 -352 -354
Total comprehensive income for the period 107 -540 770 -229 -176
Total comprehensive income attributable to:
Non-controlling interests -6 7 -21 14 22
Owners of the parents 113 -547 791 -243 -199
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Amounts in NOK million
Consolidated statement of financial position
Assets Note 30 .09 .2016 30 .09 .2015 31 .12 .2015
Deferred tax asset 266 319 320
Goodwill 381 490 478
Intangible assets 647 810 798
Vessels 4 11 600 9 899 11 999
ROVs 4 893 930 963
Machinery and other equipment 4 392 454 455
Newbuilds 4 32 2 013 7
Tangible assets 12 918 13 295 13 425
Investment in associates and joint ventures 1, 8 637 275 336
Other non-current receivables 6 1 056 706 858
Financial assets 1 693 981 1 194
Non-current assets 15 259 15 086 15 417
Trade receivables 780 1 451 1 152
Other current receivables 6 486 528 408
Total receivables 1 265 1 980 1 560
Restricted cash 305 392 390
Unrestricted cash and cash equivalents 831 1 095 1 074
Cash and cash equivalents 5 1 137 1 487 1 464
Asset held for sale 4, 9 - - 477
Current assets including assets held for sale 2 402 3 467 3 501
Total assets 17 661 18 553 18 919
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Equity and liabilities Note 30 .09 .2016 30 .09 .2015 31 .12 .2015
Paid-in equity 10 3 844 3 844 3 844
Other equity 2 370 1 535 1 579
Non-controlling interests 222 261 269
Total equity 6 437 5 641 5 692
Deferred taxes 1 7 2
Pensions 12 12 12
Other non-current liabilities - 2 -
Non-current provisions for commitments 13 21 15
Bond loans 5 1 296 1 292 1 293
Debt to credit institutions 5 7 519 7 076 8 288
Financial non-current derivatives 6 98 176 163
Other non-current liabilities 18 28 22
Non-current liabilities 8 931 8 572 9 765
Short portion of debt 5 1 396 2 909 1 822
Trade payables 510 873 838
Other current liabilities 6 374 537 526
Current liabilities 2 280 4 320 3 186
Liabilities held for sale 5 - - 260
Current liabilities including liabilities held for sale 2 280 4 320 3 447
Total liabilities 11 224 12 912 13 226
Total equity and liabilities 17 661 18 553 18 919
Consolidated statement of financial position
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Amounts in NOK million
Consolidated statement of cash flows
Note 3Q 2016 3Q 2015 YTD 2016 YTD 2015 2015
Operating profit (EBIT) 62 273 436 1 039 1 397
Depreciation and impairment 4 334 179 944 503 703
Profit from sale of non-current assets - -1 -73 -205 -210
Share of net income of associates and joint ventures 1, 8 -29 27 -84 -59 -163
Change in trade receivables 423 -123 372 106 405
Change in trade payables -294 98 -329 76 41
Changes in other working capital -32 40 56 -67 -17
Exchange rate effect on operating activities 7 -49 -79 -91 -14
Cash flow from operating activities 472 444 1 243 1 303 2 143
Interest received 2 7 28 24 32
Interest paid -110 -126 -399 -433 -638
Tax paid -14 -24 -39 -132 -191
Net cash flow from operating activities 350 301 832 761 1 346
Sale of tangible assets - 1 551 976 992
Purchase of tangible assets 4 -29 -106 -294 -2 578 -3 364
Sale of shares - - - 417 417
Purchase of shares -2 - -2 - -
Dividends received - - 3 3 3
Changes in other receivables and liabilities -9 -62 -254 -298 -406
Cash flow from investing activities -40 -167 4 -1 478 -2 357
Proceeds of interest-bearing debt -687 825 319 2 844 3 891
Instalments on interest-bearing debt 444 -667 -1 410 -2 630 -3 420
Dividend / Group contributions paid - -225 - -225 -225
Payments to non-controlling interests - - -26 -18 -18
Cash flow from financing activities -242 -67 - 1 116 -29 228
Net change in cash and cash equivalents 68 67 -280 -746 -783
Cash and cash equivalents at the beginning of period 1 085 1 416 1 464 2 119 2 120
Exchange rate effect on cash and cash equivalents -16 3 -47 114 128
Cash and cash equivalents at the end of the period 1 137 1 487 1 137 1 487 1 464
A fleet loan was refinanced in 1st quarter 2016 and the loan was increased with NOK 113 million. In 3rd quarter 2016 the finance transaction is presented net. In 1st and 2nd quarter 2016 the finance transaction was presented gross, with NOK 800 million as Proceeds of interest-bearing debt, and NOK 687 million as Instalments on interest-bearing debt. Cash flow from finance transactions of NOK 242 million are all related to instalments on interest-bearing debt.
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Consolidated statement of changes in equity
Share
capital
Share
premium
Other paid-in capital
Retained earnings
Currency translation
differences
Cash flow
hedges
Total
Non- controlling
interests
Total
equity
Equity at 01 .01 .2016 1 197 516 2 130 1 498 81 - 5 422 269 5 692
Profit / loss for the period - - - 606 - - 606 -21 585
Other comprehensive income for the period - - - 218 -33 - 185 - 185
Total comprehensive income for the period - - - 824 -33 - 791 -21 770
Changes in non-controlling interests - - - - - - - -26 -26
Equity at 30 .09 .2016 1 197 516 2 130 2 324 46 - 6 213 222 6 437
Equity at 01 .01 .2015 1 197 741 2 130 1 793 8 -23 5 847 265 6 112
Profit / loss for the period - - - 109 - - 109 14 123
Other comprehensive income for the period - - - -334 -37 20 -352 - -352
Total comprehensive income for the period - - - -225 -37 20 -243 14 -229
Dividends - -225 - - - - -225 - -225
Changes in non-controlling interests - - - - - - - -18 -18
Equity at 30 .09 .2015 1 197 516 2 130 1 568 -29 -4 5 379 261 5 641
Cash flow hedges and change in defined benefit actuarial gains / losses are presented after tax. Tax rate used is 25-34 %.
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Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Notes to the financial statements
Note 1 Management reporting
Consolidated statement of comprehensive income
YTD 2016Consistent with
management reportingReconciliation
to equity method YTD 2016
Total operating income 4 298 -200 4 098
Total operating expenses -2 824 22 -2 802
Share of net income of associates and joint ventures 12 71 84
Operating profit before depreciation (EBITDA) 1 487 -107 1 379
Operating profit (EBIT) 521 -86 436
Net financial income / loss 173 64 238
Profit / loss for the period 585 - 585
Consolidated statement of financial position
30 .09 .2016Consistent with
management reportingReconciliation
to equity method 30 .09 .2016
Intangible assets 714 -67 647
Tangible assets 17 072 -4 154 12 918
Financial assets 728 965 1 693
Non-current assets 18 514 -3 255 15 259
Current assets including assets held for sale 2 742 -340 2 402
Total assets 21 256 -3 595 17 661
Consolidated statement of financial position
30 .09 .2016Consistent with
management reportingReconciliation
to equity method 30 .09 .2016
Total equity 6 437 - 6 437
Non-current provisions for commitments 19 -6 13
Non-current liabilities 12 154 -3 224 8 931
Current liabilities including liabilities held for sale 2 645 -366 2 280
Total liabilities 14 819 -3 595 11 224
Total equity and liabilities 21 256 -3 595 17 661
The Group uses the proportionate consolidation method when accounting for joint ventures in management reporting. The table below shows the effect of proportional consolidation method used in management reporting.
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Amounts in NOK million
Note 2 Segment information
The Group applies the equity method to account for joint ventures, as required by IFRS 11. The segment reporting below is presented according to internal management reporting, based on the proportionate consolidation method of accounting for joint ventures. The bridge between management reporting and the figures reported in the financial statements is pre-sented below.
Presentation of segments includes information that is reported to the chief operating decision-makers on a regular basis. Corporate expenses and similar are allocated to the segments proportionately based on the estimated split of services de-livered to each segment.
Figures reported in the chartering of vessels segment are covering all vessels on long-term charters to external customers, and includes sales gains from the sale of vessels (Skandi Protector in 1st quarter). The subsea projects segment is covering the Group’s integrated service activities in survey, subsea construction and inspection, maintenance and repair services (IMR).
Operating income consistent with management reporting
3Q 2016
3Q 2015
YTD 2016
YTD 2015
2015
Chartering of vessels 497 607 1 432 1 812 2 442
Subsea projects 734 1 384 2 866 3 797 4 810
Total consistent with management reporting 1 231 1 992 4 298 5 609 7 252
Reconciliation to equity method -100 -87 -200 -283 -360
Total 1 131 1 904 4 098 5 326 6 891
EBITDA consistent with management reporting
Chartering of vessels 350 384 1 102 1 376 1 785
Subsea projects 97 169 385 396 509
Total consistent with management reporting 447 553 1 487 1 773 2 294
Reconciliation to equity method -50 -101 -107 -231 -194
Total 397 452 1 380 1 543 2 100
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Note 3 Financial income and expenses
3Q 2016 3Q 2015 YTD 2016 YTD 2015 2015
Interest income 3 8 31 26 41
Other financial income 1 - 8 3 9
Financial income 5 8 39 29 50
Interest expenses -106 -160 -369 -468 -597
Capitalization of interest - 13 - 29 30
Other financial expenses -7 2 -16 - -46
Financial expenses -113 -145 -385 -439 -613
Net gain / loss on non-current debt -23 5 -69 111 117
Net gain / loss on operational capital 17 5 9 119 102
Net gain / loss on financial derivatives 19 -27 -23 -224 -240
Net realized gain / loss on financial instruments 12 -17 -83 7 -21
Net unrealized gain / loss on non-current debt 96 -330 358 -555 -668
Net unrealized gain / loss on operational capital -2 -5 -27 -39 -8
Net unrealized gain / loss on financial derivatives 131 -115 335 84 84
Unrealized gain / loss on financial instruments 225 -450 666 -510 -592
Net financial income / loss 129 -605 238 -913 -1 176
Note 4 Intangible assets
Goodwill in relation to the acquisition of CSL UK Ltd has since acquisition been allocated to the cash generating unit Subsea projects. As a result of changes in 2016, goodwill related to CSL UK Ltd will be defined as separate cash generating unit, and impairment for 2016 is based on this definition. Based on impairment tests, goodwill related to CSL UK Ltd is impaired with NOK 62 million.
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Amounts in NOK million
Note 5 Tangible assets
30 .09 .2016
Vessels & periodic maintenance
ROVs
Machinery & other equipment
Newbuilds
Total
Net booked value 01 .01 . 11 999 963 455 7 13 425
Additions 234 13 22 61 330
Disposals - - - - -
Reclassification - 36 - -36 -
Reclassification held for sale - - - - -
Depreciation -238 -121 -71 - -430
Impairment -451 - - - -451
Currency translation differences 57 1 -14 - 44
Net booked value 30 .09 . 11 600 893 392 32 12 918
30 .09 .2015
Net booked value 01 .01 . 10 476 991 421 255 12 143
Additions 611 128 80 1 759 2 578
Disposals -753 -1 -17 - -771
Reclassification 32 -48 16 -1 -
Depreciation -249 -132 -61 - -441
Impairment -62 - -1 - -63
Currency translation differences -157 -8 15 - -150
Net booked value 30 .09 . 9 899 930 454 2 013 13 295
The challenging market condition for offshore service vessels has continued. In 3rd quarter 2016 the Group faced lower marked values for some of the Group`s vessels. Impairment indicators are observed and an impairment test for vessels in the Group has been performed. Impairment tests are performed in line with accounting principle presented in annual report for 2015. Impairment of NOK 132 million has been recognised in 3rd quarter 2016. YTD the Group has recognized an impairment of NOK 451 million.
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Note 6 Net interest-bearing debt
30 .09 .2016 30 .09 .2015 31 .12 .2015
Non-current interest-bearing debt
Bond loan floating rate 1 296 1 300 1 293
Debt to credit institutions 7 519 7 111 8 288
Total non-current interest bearing debt 8 815 8 411 9 581
Current interest-bearing debt
Bond loan, floating rate - 926 422
Debt to credit institutions * 1 300 1 844 1 556
Total current interest-bearing debt 1 300 2 770 1 977
Total non-current and current interest-bearing debt 10 115 11 181 11 558
Net interest-bearing debt
Cash and cash equivalent 1 137 1 487 1 464
Other interest-bearing assets - non-current 114 99 99
Total net interest-bearing debt 8 864 9 595 9 995
Share of debt secured by fixed interest rate30 .09 .2016 Fixed rate Floating rate Total
NOK
Debt to credit institutions 74 % 26 % 100 %
Bond loan 0 % 100 % 100 %
Total NOK 58 % 42 % 100 %
USD
Debt to credit institutions 67 % 33 % 100 %
Total USD 67 % 33 % 100 %
Total debt 62 % 38 % 100 %
* ) Current interest-bearing debt includes liabilities held for sale.Non-current interest-bearing debt in the consolidated statement of financial position includes amortized cost.Amortized costs and accrued interest expenses are excluded in the figures below.
* ) Included in the remaining balance 2016, NOK 274 million is related to balloon that are in process to be refinanced.
A long-term loan has been provided by Eksportfinans and is invested as a restricted deposit. The repayment terms on the loan from Eksportfinans are equivalent with the reduction on the deposit. The loan will be fully repaid in 2020. The cash deposit is included in restricted deposits.
Debt repayment profile
Remaining
balance 2016* 2017 2018 2019 2020 Thereafter Total
Bond loan - - 1 300 - - - 1 300
Debt to credit institutions 550 1 018 1 017 2 143 1 673 2 458 8 859
Total repayment 550 1 018 2 317 2 143 1 673 2 458 10 159
| Financial Report Q3 2016DOF SUBSEA
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Amounts in NOK million
Note 6 Interest-bearing debt (continued from previous page)
Note 7 Financial instruments and hedging activities
Financial covenantsThe Group’s long-term financing agreements include the following covenants: - The Group shall have available cash of at least NOK 500 million at all times - The Group shall have value-adjusted equity to value-adjusted assets of at least 30% - The Group shall have book equity of at least NOK 3 000 million at all times - The Group shall have positive working capital at all times, excl. short portion of debt to credit institutions - The fair value of the Group’s vessels shall always be at least 100-130% of the outstanding loan amount
In addition to the above mentioned financial covenants, the loan agreements are also subject to the following covenants:- The Group’s assets shall be fully insured - There shall not be any change to classification, management or ownership of the ships without the prior written approval of the lenders- DOF ASA shall be the principal shareholder in DOF Subsea AS, and own a minimum of 50.1 % of the shares- DOF Subsea AS shall not merge or demerge activities without the prior written approval of the lenders - DOF Subsea AS shall report financial information to the lenders and Oslo Stock Exchange on a regular basis - The Group’s vessels shall be operated in accordance with applicable laws and regulations
The Group is in compliance with all covenants.
Assets
30 .09 .2016
Liabilities
Assets
30 .09 .2015
Liabilities
Non-current and current portion
Interest rate swaps - cash flow hedges 7 98 12 227
Interest rate swaps - cash flow hedges under hedge accounting - - - 4
Foreign exchange contracts cash flow hedges 118 14 13 120
Total non-current and current 125 111 25 351
Non-current portion
Interest rate swaps - cash flow hedges 7 98 - 154
Interest rate swaps - cash flow hedges under hedge accounting - - - -
Foreign exchange contracts cash flow hedges - - 8 22
Total non-current portion 7 98 8 176
Total current portion 118 14 18 175
Committed Received
30 .09 .2016
Amount
Committed Received
30 .09 .2015
Amount
Instrument
Foreign exchange contracts, buy NOK NOK 2 884 NOK 1 911
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Note 10 Events after the consolidated statement of financial position date
There were not any subsequent events following the consolidated statement of financial position date.
Note 9 Investments in associates and joint ventures
Entity Proportion of ownership
30 .09 .2016
Joint ventures
DOFCON Brasil Group 50 %
Associated companies
Canadian Subsea Shipping Company AS 45 %
Marin IT AS 35 %
DOF Management AS 34 %
Master & Commander AS 20 %
DOF Subsea Ghana Ltd 49 %
30 .09 .2016
Booked value of investments in associates and joint ventures 31.12.2015 336
New investments 2
Share of net income of associates and joint ventures 84
Share of other comprehensive income related to associates and joint ventures 218
Dividend received from associates and joint ventures -3
Disposal of investments in associates and joint ventures -
Booked value of investments in associates and joint ventures 30 .09 .2016 637
See also note 1 and note 2.
Note 8 Transactions with related parties
Description of transactions with related parties is given in the Annual Report for 2015. There are no major changes in type of transactions between related parties during the quarter. During the quarter the Group has had Skandi Chieftain, owned by DOF ASA, on BB charter.
| Financial Report Q3 2016DOF SUBSEA
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Amounts in NOK million
Note 11 Shareholder information
Name No . shares Shareholding Voting shares
DOF Subsea Holding AS 119 733 714 100 % 100 %
Note 12 General
This interim report has been prepared in accordance with the standard for interim reporting (IAS34). The accounting principles and calculation methods applied for the last annual accounts published have been applied to the quarterly financial report. Amendments and interpretations to the standards which are effective for the financial year be-ginning on 1 January 2016 are not material to the Group. The Financial Statement is unaudited.
Note 13 Definitions
The Group`s financial information is prepared in accordance with international reporting standards (IFRS). It is manage-ment`s intent to provide additional performance measures that are regularly reviewed to provide an enhanced insight into the operating performance and financial positions. Additional performance measures presented may be determined or calculated differently by other companies.
Operating profit before depreciation (EBITDA)Operating profit before depreciation (EBITDA) is defined as operating profit including gains and losses on sale of non-current assets less impairment of tangible- and intangible assets, depreciation of tangible assets and amortizations on contract assets. Earnings before interest, tax, depreciations and amortization (EBITDA) are a key financial parameter for the Group. This measure is useful in evaluating operating profitability on a more variable cost basis as it excludes depreciations, impairments and amortization expenses related primarily to capital expenditures and acquisitions that occurred in the past.The EBITDA margin presented is defined as operating profit before depreciation (EBITDA) divided by total revenues.
Operating profit (EBIT)Operating profit (EBIT) is defined as “operating profit before depreciation (EBITDA)” after depreciations, impairments and amortizations but before net financial income/loss items and tax expenses.
Net interest-bearing debt Net interest-bearing debt consists of both current and non-current interest-bearing liabilities less interest bearing financial assets, cash and cash equivalents. Cash and cash equivalent will include restricted cash. Current interest-bearing debt in-cludes interest-bearing debt related to asset held for sale. Net interest-bearing debt is a measure of the Group’s net indebtedness that provides an indicator of the overall statement of financial position strength. The use of the term ‘net debt’ does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure.
Equity ratioEquity ratio is defined as total equity divided by total assets at the reporting date.
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Note 13 Definitions (continued from previous page)
Market valueCalculated average vessel value between two independent brokers’ estimates based on the principle of “willing buyer and willing seller”.
Utilization of vesselUtilization of vessel numbers is a measure of Group`s ability to keep vessels in subsea operations and on contracts with clients. Utilization of vessel numbers is based on actual available days not excluding days at yard for dry-docking, repair/upgrading, transit or idle time between projects and charter contracts.
Owned vessels Owned vessels are defined as all vessels owned by subsidiaries and joint venture companies in the Group.
Contract Coverage Sum of undiscounted revenue related to secured contracts in the future and optional contract extensions as determined by the client in the future. Contract coverage excludes master service agreements (MSA`s) within the project segment. Under the MSA`s only confirmed PO`s are accounted for.
Firm contract back-log Sum of undiscounted revenue related to secured contracts in the future. Secured contracts are contract signed with clients, in the past, covering future delivery of services.
Back-log optionsSum of undiscounted revenue related to optional contract extensions as determined by the client in the future.
Back-log including optionsSum of undiscounted revenue related to secured contracts in the future and optional contract extensions as determined by the client in the future.
| Financial Report Q3 2016DOF SUBSEA
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Amounts in NOK million
Financial Report Q3 2016 | DOF SUBSEA
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Amounts in NOK million
Supplemental information
Condensed statement of comprehensive income 5 last quarters
3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
Operating income 1 232 1 660 1 406 1 642 1 991
Payroll expenses -395 -414 -428 -475 -510
Other operating expenses -385 -750 -525 -651 -920
Share of net income of associates and joint ventures -5 14 4 - -9
Profit from sale of non-current assets - 3 70 5 1
Total operating expenses -785 -1 147 -879 -1 122 -1 438
Operating profit before depreciation (EBITDA) 447 513 526 521 553
Depreciation and impairment -352 -271 -343 -207 -183
Operating profit (EBIT) 95 243 184 314 370
Financial income - 9 16 19 9
Financial expenses -125 -132 -146 -179 -151
Realized gain / loss on financial instruments 6 -54 -61 -47 -23
Unrealized gain / loss on financial instruments 219 77 365 40 -538
Net financial income / loss 100 -100 173 -166 -704
Profit / loss before tax 195 142 357 148 -333
Tax expenses -25 -43 -41 -95 21
Profit / loss for the period 170 99 316 53 -312
The supplemental information below is presented according to internal management reporting, based on the proportionate consolidation method.
| Financial Report Q3 2016DOF SUBSEA
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Amounts in NOK million
Condensed statement of financial position 5 last quarters
Assets 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
Intangible assets 714 806 872 962 988
Tangible assets 17 072 16 663 16 091 15 261 14 972
Financial assets 728 737 689 596 487
Non-current assets 18 514 18 206 17 652 16 818 16 447
Total receivables 1 439 1 754 1 495 1 664 2 080
Cash and cash equivalents 1 611 1 594 1 303 1 256 1 405
Asset held for sale - - - 477 -
Current assets 2 742 3 010 2 900 3 752 3 674
Total assets 21 256 21 216 20 552 20 570 20 121
Equity and liabilities 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
Paid in equity 3 844 3 844 3 844 3 844 3 844
Other equity 2 370 2 258 1 979 1 579 1 535
Non-controlling interests 222 228 256 269 261
Total equity 6 437 6 330 6 078 5 692 5 641
Non-current provisions for commitment 19 20 19 23 29
Other non-current liabilities 12 154 11 844 11 463 11 205 9 959
Non-current liabilities 12 174 11 864 11 482 11 228 9 989
Short portion of debt to credit institutions 1 606 1 619 1 938 1 926 3 007
Other current liabilities 1 464 1 4851 039 1 403 1 054
Liabilities held for sale - - - 260 -
Current liabilities 2 645 3 022 2 991 3 650 4 492
Total liabilities 14 819 14 886 14 474 14 878 14 480
Total equity and liabilities 21 256 21 216 20 552 20 570 20 121
Key figures
3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015
Profit per share (NOK) 1.42 0.83 2.64 0.45 -2.61
EBITDA margin 36 % 31 % 37 % 31 % 28 %
EBIT margin 8 % 15 % 13 % 19 % 19 %
Return on net capital 3 % 2 % 5 % 1 % -6 %
Book value equity per share (NOK) 53.76 52.87 50.76 47.54 47.11
Value-adjusted equity per share (NOK) 65.00 67.99 68.23 69.26 69.24
Net interest-bearing debt (NOK million) 12 002 12 049 11 823 11 387 10 927
Financial Report Q3 2016 | DOF SUBSEA
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DOF Subsea vessels
DOF Subsea currently owns one of the largest fleets of high-end construction vessels (including newbuilds) in the world. Offering a versatile, new generation of high power and purpose-built vessels with broad offshore capabilities.
Owned vessels
Skandi Acergy
Geograph Geoholm Geosea
Geosund
Skandi Carla
Skandi Constructor
Skandi Achiever
Skandi SingaporeSkandi Neptune Skandi Niteroi
Skandi Hawk Skandi Hercules
Skandi AfricaSkandi Açu
| Financial Report Q3 2016DOF SUBSEA
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Skandi Skansen Skandi Patagonia Skandi Vitoria
Skandi Salvador Skandi Santos Skandi Seven
Financial Report Q3 2016 | DOF SUBSEA
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DOF Subsea vessels (continued)
DOF Subsea invests in the next generations of vessels. An ambitious New Build program utilises new technology and smart engineering to ensure efficient and environmental friendly operations in the future.
Newbuilds in joint ventures and associated companies
Chartered vessels
DOF Subsea charters in vessels on short and long-term contracts based on operational needs, building greater flexibility and a complementary fleet mix to meet our clients’ subsea challenges.
Skandi Buzios (NB-824) Skandi Olinda Skandi Recife
Skandi TBN (NB-834) (Part owned)
Harvey Deep Sea
AUSTRALIA
DOF Subsea Australia Pty Ltd5th Floor, 181 St. Georges TcePerth, Wa 6000 AUSTRALIAPhone: +61 8 9278 8700Fax: +61 8 9278 [email protected]
DOF Management AustraliaLevel 1, 441 South RoadBentleigh, Vic. 3204AUSTRALIAPhone: +61 3 9556 5478Mobile: +61 418 430 939
BRAZIL
DOF Subsea Brasil Serviços LtdaMacae address:Rua Fiscal Juca, 330 Q: W2 – L: 0001 Loteamento Novo Cavaleiros Vale Encantado – Macaé/RJ BRAZIL - CEP 27933-450Rio address:Rua Lauro Muller, 116 Salas 2802 a 2805,Torre do Rio Sul - Botafogo22290-160, Rio de Janeiro, R.J.,BRAZIL - CEP: 27910-000Phone: +55 22 2123-0100Fax: +55 22 [email protected]
CANADA
DOF Subsea Canada26 Allstone Street, Unit 2Mount Pearl, NewfoundlandCANADA, A1N 0A4Phone: +1 709 576 2033Fax: +1 709 576 [email protected]
SINGAPORE
DOF Subsea Asia Pacific Pte Ltd460 Alexandra Road# 15-02PSA Building, 119963SINGAPOREPhone: +65 6561 2780Fax: +65 6561 [email protected]
GLOBAL HQ
DOF Subsea ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 [email protected]
NORWAY
DOF Subsea Norway ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 [email protected]
SEMAR ASOksenøystein 121366 Lysaker NORWAYPhone: +47 67 12 40 06Fax: +47 67 12 40 06 [email protected]
DOF Management ASAlfabygget5392 StorebøNORWAY
Thormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 56 18 10 00Fax: +47 56 18 10 [email protected]
ANGOLA
DOF Subsea AngolaBelas Business Park-Talatona Edificio Bengo, 1º AndarSala 106/107, LuandaRepublic of AngolaPhone: +244 222 43 28 58Fax: +244 222 44 40 68Mobile: +244 227 28 00 96 +244 277 28 00 [email protected]
DOF Management Pte Ltd460 Alexandra Road# 15-02PSA Building, 119963SINGAPOREPhone: +65 6868 1001Fax: +65 6561 2431
UNITED KINGDOM
DOF Subsea UK LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 614 000Fax: +44 1224 614 [email protected]
DOF Subsea S&P UK LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 614 000Fax: +44 1224 614 [email protected]
CSL EngineeringHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 285 566Fax: +44 1224 285 [email protected]
DOF (UK) LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 12 24 58 66 44Fax: +44 12 24 58 65 [email protected]
USA
DOF Subsea USA Inc5365 W. Sam Houston Parkway Suite 400, Houston, Texas 77041, USAPhone: +1 713 896 2500Fax: +1 713 726 [email protected]
DOF Subsea ASThormøhlens gate 53 C
5006 BergenNORWAY
www.dofsubsea.com
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