q4 2016 - dof group sub/ir/2016/dof subsea... · the value-adjusted equity per share at year-end...
TRANSCRIPT
financial report
STRENGTH THROUGH TRANSITION
Q4 2016
DOF Subsea ASThormøhlens gate 53 C5006 BergenNORWAYwww.dofsubsea.com
Index
Financial Report 4th quarter 2016 . . . . . . . . . . . . . . . . . . .4
Financial statements 4th 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 Q4 2016 | DOF SUBSEA
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HeadlinesThe operating income for 2016 was NOK 5 099 million (vs. NOK 6 891 million in 2015) with an EBITDA of NOK 1 764 million (NOK 2 100 million) and an EBIT of NOK 446 million (NOK 1 397 million) after depreciation and impairment of NOK 1 318 million (NOK 703 million). The financial loss was NOK 179 million (loss NOK 1 176 million) giving a profit before tax of NOK 266 million (NOK 221 million) and a profit after tax of NOK 155 million (NOK 177 million).
In the 4th quarter of 2016, DOF Subsea had an operating income of NOK 1 001 million (vs. NOK 1 565 million in the 4th quarter of 2015) with an EBITDA of NOK 385 million (NOK 558 million). The EBIT was NOK 10 million (NOK 358 million) after depreciation and impairment of NOK 375 million (NOK 200 million). The net financial loss was NOK 417 million (loss NOK 263 million), and the loss before tax was NOK 407 million (profit NOK 95 million).
Key figures (NOK million) 4Q 2016 4Q 2015 2016 2015
Operating income 1 001 1 565 5 099 6 891
EBITDA 385 558 1 764 2 100
EBIT 10 358 446 1 397
Net interest-bearing debt 8 357 9 995 8 357 9 995
EBITDA proportional method 415 521 1 901 2 294
EBITDA proportional method excluding profit from sale of non-current assets 319 516 1 732 2 042
During the quarter the Group sold the Skandi Santos with delivery to the new owners in mid-November where DOF Subsea continued to operate the ROVs. Skandi Constructor was moved from the Atlantic region to the Asia Pacific region where she has been working for Shell Philippines. In the 4th quarter the Group saw a mixed project activity level, mainly due to weak markets in the North Sea and North America. During the quarter several vessels have been in dock for upgrade and maintenance. In addition, idle time between projects has increased, and vessels were repositioned. The vessel utilisation in the 4th quarter was 78%, where the TC vessel utilisation was 82% and the project vessel utilisation was 74%.
Operational events 4th quarterAs at 31st of December 2016, the Group’s fleet comprised 20 owned vessels, 1 chartered-in vessel and 4 vessels under construction, plus a fleet of 65 ROVs and 4 ROVs on order.
During the 4th quarter 2016, the Asia Pacific region conducted IMR work for Shell Philippines, Chevron Australia, Woodside and OMV in New Zealand. In the Atlantic region, the Group has been doing engineering, survey, light construction and in¬stallation work for Shell, Teekay, HMC, Repsol and Yinson. In the North America region, the Group has conducted IMR and diving work for Chevron and Shell, and survey and positioning work for HMC. In Brazil, the Group has been engaged in inspection work, survey and installation work for Petrobras.
In September, the Group entered into an agreement to sell the vessel Skandi Santos, and the vessel was delivered to the new owners mid-November. During the quarter the Skandi Constructor was transferred from the Atlantic region to the Asia Pacific Region where the vessel con-ducted IMR work for Shell Philippines. In the Atlantic region both Skandi Skansen and Geosund were transferred from the North Sea to West Africa where both vessels entered into medium term contracts. In December, the joint venture company, DOFCON Brasil, agreed with Petrobras to postpone the contract commencement date for the Brazillian built PLSVs by 18-20 months.
During the 4th quarter 2016, the utilisation of the Group’s vessels was 78%. The utilisation for the project vessels during the quarter was 74%, and 82% for the TC vessels. The main reasons for the low utilisation of the TC vessels were repair, maintenance and re-positioning of Skandi Constructor, Geosund and Skandi Skansen, in addition to dry-docking of Skandi Hawk, idle time on Skandi Salvador before she entered into contract with Petrobras, repair and maintenance on Geosea and idle time between projects on several vessels in the Subsea regions.
Utilisation 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015
Project vessels 74% 75% 92% 79 % 74 %
Time charter vessels 82% 82% 82% 93 % 91 %
Fleet 78% 80% 87% 88 % 85 %
All utilisation of vessel numbers are based on actual available days not excluding days at yard for dry-docking, repair/upgrading, transit or idle time between projects and charter contracts.
Consolidated statement of comprehensive income and consolidated statement of financial positionIn the 4th quarter of 2016, the Group achieved an operating income of NOK 1 001 million compared to an operating income of NOK 1 565 million in the 4th quarter of 2015.
Financial Report 4th quarter 2016
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Operating profit before depreciation (EBITDA) was NOK 385 million (NOK 558 million), and the operating profit after depreciation and impairment (EBIT) was NOK 10 million (NOK 358 million). Depreciation and impairment amounted to NOK 375 million (NOK 200 million).
NOK million 4Q 2016 4Q 2015 Change %
Operating income 1 001 1 565 -36 %
Operating expenses 616 1 008 -39 %
EBITDA 385 558 -31 %
EBIT 10 358 -97%
Net financial loss was NOK 417 million (net financial loss NOK 263 million), where NOK 193 million (loss NOK 82 million) of the net financial loss was unrealised loss on financial instruments. The loss before tax was NOK 407 million (profit NOK 95 million), and the loss for the period was NOK 430 million (profit NOK 53 million).
In 2016, DOF Subsea had an operating income of NOK 5 099 million (vs. NOK 6 891 million in 2015) with an EBITDA of NOK 1 764 including a sales gain of NOK 170 million (NOK 2 100 million including a sales gain of NOK 210 million). The EBIT was NOK 446 million (NOK 1 397 million) after depreciation and impairment of NOK 1 318 million (NOK 703 million). The net financial loss was NOK 179 million (loss NOK 1 176 million), and the profit before tax was NOK 266 million (NOK 221 million). The profit for the period was NOK 155 million (NOK 177 million).
The Group’s total assets were NOK 16 648 million (NOK 18 919 million) where non-current assets amounted to NOK 14 479 million (NOK 15 417 million), including NOK 642 million (NOK 798 million) in intangible assets. Current assets were NOK 2 170 million (NOK 3 501 million) of which NOK 1 062 million (NOK 1 464million) was cash and cash equivalents.
NOK million 31 .12 .2016 31 .12 .2015 Change %
Tangible assets 11 950 13 425 -11 %
Cash and cash equivalents 1 062 1 464 -27 %
NIBD 8 357 9 995 -16 %
Total equity 6 055 5 692 6 %
The total equity was NOK 6 055 million (NOK 5 692 million), including non-controlling interests of NOK 224 million (NOK 269 million). Non-current liabilities were NOK 8 620 million (NOK 9 765 million). Current liabilities were NOK 1 961 million (NOK 3 447 million) of which NOK 1 114 million (NOK 1 822 million) were current
portion of debt. The Group’s total equity and liabilities were NOK 16 648 million. The net interest-bearing debt (NIBD) was NOK 8 357 million (NOK 9 995 million). By year-end 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 have changed due to refinancing and sale of vessels, repayment of debt, instalments and changes in working capital. Net interest-bearing debt was NOK 8 357 million representing 50% of total assets and 47% of value adjusted assets. Net cash flow from operating activities in the 4th quarter 2016 was NOK 27 million (NOK 585 million). Cash flow from investing activities was positive NOK 759 million (negative NOK 879 million) of which NOK 185 million is from investment in assets that increase or will increase capacity for the Group. Cash flow from financing activities was negative NOK 867 million (positive NOK 257 million) of which NOK 869 million was instalment and repayments on long term interest bearing debt. At the end of the 4th quarter, the Group’s cash and cash equivalents was NOK 1 062 million (NOK 1 464 million).
Debt, financing and liquidityDuring the quarter, the Group has paid ordinary instal-ments on outstanding debt, refinanced 2 vessels and repaid the debt related to Skandi Santos.
The Group’s current portion of debt by year-end was NOK 1 114 million, and includes balloons, drawn credit facilities and ordinary instalments.
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 exchange rate fluctuations. The Group has an active exchange rate policy, and uses derivatives to hedge the exchange rate exposure.
Financial Report Q4 2016 | DOF SUBSEA
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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 50,58 per share. The value-adjusted equity per share at year-end 2016 was NOK 61,25.
EmployeesAs at year-end, the number of full time employees in the DOF Subsea Group was 1 278 persons. The number does not include marine employees that are employed in DOF Management and Norskan.
The FleetAs at year-end, the Group’s fleet comprised 20 owned vessels, 1 chartered-in vessels and 4 vessels under construction.
Contract Backlog*
* Contract backlog excludes master service agreements (MSAs) within the subsea
project segment. Under the MSAs only confirmed POs are accounted for.
Events after the concolidated statement of financial position datePetrobras awarded the Brazillian built PLSV Skandi Vitoria an 18-month contract. The vessel commenced as per contract on 16 January 2017.
In Asia Pacific, DOF Subsea was awarded a 3-year IMR frame agreement with one of the major oil and gas companies in the region. In addition, a Safety Case has been secured for Geoholm, and the vessel will be available in the Asia Pacific region from the beginning of Q2 2017.
In February 2017, Geoholm was awarded a contract by Technip Oceania Pty Ltd, part of TechnipFMC in Australia, for the provision of ROV and light construction support services for the Shell Prelude FLNG project, operated by
Shell Australia.
In Atlantic, DOF Subsea has received a letter of award (LOA) for one subsea vessel from an oil major. The duration of the contract is over a year, and has commencement in Q1 2017.
Forward looking statementThe Board of Directors is pleased with the financial numbers for 2016. In order to adjust the Group’s capacity to the challenging market conditions, needed cost cutting measures have been implemented. The organisation has been adapted to the underlying activity, vessels have been re-allocated between regions in order to secure utilisation and chartered-in vessels from third parties have been redelivered.
As at 31 December 2016, the firm contract backlog amounts to approximately NOK 18.9 billion, and including options approximately NOK 39. 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 and maintain the utilisation of the vessels.
The Board of Directors expects the challenging market conditions to continue. With an oil price of about USD 55 per barrel, the current cost focus in the oil industry and oversupply of vessels, a weak market is expected within the Groups two segments. The market conditions increase the risk for further impairment of the Group’s non-current assets, and challenge the Group’s liquidity position. The cost cutting measures taken so far have proved to be needed, and the Board of Directors and the Management have a strong focus on continuously adjusting the Group’s capacity and risk exposure to the market conditions going forward.
Bergen, 16th February 2017The 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
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Financial Report Q4 2016 | DOF SUBSEA
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Amounts in NOK million
Financial statements 4th quarter 2016
Consolidated statement of comprehensive income
Note 4Q 2016 4Q 2015 2016 2015
Operating income 1, 2 1 001 1 565 5 099 6 891
Payroll expenses -376 -475 -1 611 -2 051
Other operating expenses -407 -641 -2 047 -3 113
Share of net income of associates and joint ventures 1, 9 70 103 154 163
Profit from sale of non-current assets 96 5 170 210
Total operating expenses -616 -1 008 -3 335 -4 791
Operating profit before depreciation (EBITDA) 1, 2 385 558 1 764 2 100
Depreciation and impairment 4, 5 -375 -200 -1 318 -703
Operating profit (EBIT) 10 358 446 1 397
Financial income 3 20 21 59 50
Financial expenses 3 -145 -174 -530 -613
Realised gain / loss on financial instruments 3 -98 -28 -181 -21
Unrealised gain / loss on financial instruments 3 -193 -82 473 -592
Net financial income / loss -417 -263 -179 -1 176
Profit / loss before tax -407 95 266 221
Tax expense -23 -41 -111 -44
Profit / loss for the period -430 53 155 177
Other comprehensive income
Items that may be subsequently reclassified to profit / loss
Currency translation difference (CTA) - 110 - 73
Cash flow hedges - 3 - 23
Share of other comprehensive income of associates and joint ventures 9 13 -116 231 -450
Items that will not be subsequently reclassified to profit / loss
Defined benefit plan actuarial gains / losses - - - -
Other comprehensive income / loss net of tax 13 3 231 -354
Total comprehensive income for the period -417 56 386 -176
Total comprehensive income attributable to:
Non-controlling interests - -15 -21 22
Owners of the parents -417 71 407 -199
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Amounts in NOK million
Consolidated statement of financial position
Assets Note 31 .12 .2016 31 .12 .2015
Deferred tax asset 269 320
Goodwill 4 373 478
Intangible assets 642 798
Vessels 5 10 686 11 999
ROVs 5 859 963
Machinery and other equipment 5 378 455
Newbuilds 5 28 7
Tangible assets 11 950 13 425
Investment in associates and joint ventures 1, 9 717 336
Other non-current receivables 7 1 169 858
Financial assets 1 887 1 194
Non-current assets 14 479 15 417
Trade receivables 791 1 152
Other current receivables 7 317 408
Total receivables 1 108 1 560
Restricted cash 305 390
Unrestricted cash and cash equivalents 757 1 074
Cash and cash equivalents 6 1 062 1 464
Asset held for sale 5, 10 - 477
Current assets including assets held for sale 2 170 3 501
Total assets 16 648 18 919
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Amounts in NOK million
Equity and liabilities Note 31 .12 .2016 31 .12 .2015
Paid-in equity 11 3 844 3 844
Other equity 1 987 1 579
Non-controlling interests 224 269
Total equity 6 055 5 692
Deferred taxes 1 2
Pensions 12 12
Other non-current liabilities - -
Non-current provisions for commitments 13 15
Bond loans 6 1 297 1 293
Debt to credit institutions 6 7 208 8 288
Financial non-current derivatives 7 98 163
Other non-current liabilities 17 22
Non-current liabilities 8 620 9 765
Current portion of debt 6 1 114 1 822
Trade payables 500 838
Other current liabilities 7 347 526
Current liabilities 1 961 3 186
Liabilities held for sale 6 - 260
Current liabilities including liabilities held for sale 1 961 3 447
Total liabilities 10 594 13 226
Total equity and liabilities 16 648 18 919
Consolidated statement of financial position
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Amounts in NOK million
Consolidated statement of cash flows
Note 4Q 2016 4Q 2015 2016 2015
Operating profit (EBIT) 10 358 446 1 397
Depreciation and impairment 5 374 200 1 318 703
Profit from sale of non-current assets -97 -5 -170 -210
Share of net income of associates and joint ventures 1, 9 -70 -104 -154 -163
Change in trade receivables -11 299 361 405
Change in trade payables -10 -35 -339 41
Changes in other working capital -35 50 21 -17
Exchange rate effect on operating activities 17 77 -62 -14
Cash flow from operating activities 180 840 1 423 2 143
Interest received 2 8 30 32
Interest paid -154 -205 -553 -638
Tax paid -1 -59 -40 -191
Net cash flow from operating activities 27 585 859 1 346
Sale of tangible assets 938 16 1 489 992
Purchase of tangible assets 5 -185 -786 -479 -3 364
Sale of shares - - - 417
Purchase of shares 2 - - -
Dividends received - - 3 3
Changes in other receivables and liabilities 5 -108 -249 -406
Cash flow from investing activities 759 -879 763 -2 357
Proceeds of interest-bearing debt - 1 047 319 3 891
Instalments on interest-bearing debt -869 -790 -2 279 -3 420
Dividend / Group contributions paid - - - -225
Payments to non-controlling interests 2 - -24 -18
Cash flow from financing activities -867 257 -1 983 228
Net change in cash and cash equivalents -81 -37 -361 -783
Cash and cash equivalents at the beginning of period 1 137 1 487 1 464 2 120
Exchange rate effect on cash and cash equivalents 6 14 -41 128
Cash and cash equivalents at the end of the period 1 062 1 464 1 062 1 464
Financial Report Q4 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 - 5 423 269 5 692
Profit / loss for the period - - - 177 - - 177 -21 155
Other comprehensive income for the period - - - 231 - - 231 - 231
Total comprehensive income for the period - - - 407 - - 407 -21 386
Changes in non-controlling interests - - - - - - - -24 -24
Equity at 31 .12 .2016 1 197 516 2 130 1 906 81 - 5 832 224 6 055
Equity at 01 .01 .2015 1 197 741 2 130 1 793 8 -23 5 847 265 6 112
Profit / loss for the period - - - 155 - - 155 21 177
Other comprehensive income for the period - - - -450 73 23 -354 1 -353
Total comprehensive income for the period - - - -295 73 23 -199 22 -176
Dividends - -225 - - - - -225 - -225
Changes in non-controlling interests - - - - - - - -18 -18
Equity at 31 .12 .2015 1 197 516 2 130 1 498 81 - 5 423 269 5 692
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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 5 426 -328 5 099
Total operating expenses -3 534 46 -3 489
Share of net income of associates and joint ventures 9 145 154
Operating profit before depreciation (EBITDA) 1 901 -137 1 764
Operating profit (EBIT) 540 -94 446
Net financial income / loss -229 49 -179
Profit / loss for the period 155 - 155
Consolidated statement of financial position
31 .12 .2016Consistent with
management reportingReconciliation
to equity method 31 .12 .2016
Intangible assets 714 -72 642
Tangible assets 16 530 -4 580 11 950
Financial assets 799 1 088 1 887
Non-current assets 18 043 -3 564 14 479
Current assets including assets held for sale 2 483 -314 2 170
Total assets 20 526 -3 878 16 648
Consolidated statement of financial position
31 .12 .2016Consistent with
management reportingReconciliation
to equity method 31 .12 .2016
Total equity 6 055 - 6 055
Non-current provisions for commitments 21 -8 13
Non-current liabilities 11 972 -3 353 8 620
Current liabilities including liabilities held for sale 2 478 -517 1 961
Total liabilities 14 471 -3 878 10 594
Total equity and liabilities 20 526 -3 878 16 648
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 include sales gains from the sale of vessels (Skandi Protector in 1st quarter and Skandi Santos in 4th 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
4Q 2016
4Q 2015
2016
2015
Chartering of vessels 448 630 1 881 2 442
Subsea projects 679 1 013 3 545 4 810
Total consistent with management reporting 1 127 1 642 5 426 7 252
Reconciliation to equity method -127 -77 -328 -360
Total 1 001 1 565 5 099 6 891
EBITDA consistent with management reporting
Chartering of vessels 403 408 1 505 1 785
Subsea projects 12 113 396 509
Total consistent with management reporting 415 521 1 901 2 294
Reconciliation to equity method -30 37 -137 -194
Total 385 558 1 764 2 100
Financial Report Q4 2016 | DOF SUBSEA
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Amounts in NOK million
Note 3 Financial income and expenses
4Q 2016 4Q 2015 2016 2015
Interest income 18 14 49 41
Other financial income 2 6 10 9
Financial income 20 21 59 50
Interest expenses -115 -147 -484 -597
Capitalisation of interest - 1 - 30
Other financial expenses -30 -28 -46 -46
Financial expenses -145 -174 -530 -613
Net gain / loss on non-current debt -92 6 -161 117
Net gain / loss on operational capital -9 -17 - 102
Net gain / loss on financial derivatives 2 -16 -21 -240
Net realised gain / loss on financial instruments -98 -28 -181 -21
Net unrealised gain / loss on non-current debt -65 -114 293 -668
Net unrealised gain / loss on operational capital 5 31 -22 -8
Net unrealised gain / loss on financial derivatives -133 - 201 84
Unrealised gain / loss on financial instruments -193 -82 473 -592
Net financial income / loss -417 -263 -179 -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 strategic and organisational changes in 2016, goodwill related to CSL UK Ltd will be defined as a separate cash generating unit. Based on impairment tests, goodwill related to CSL UK Ltd is impaired with NOK 72 million.
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Amounts in NOK million
Note 5 Tangible assets
31 .12 .2016
Vessels & periodic maintenance
ROVs
Machinery & other equipment
Newbuilds
Total
Net booked value 01 .01 . 11 990 963 455 7 13 425
Additions 380 12 73 53 517
Disposals -823 - -19 - -842
Reclassification - 43 -11 -32 -
Depreciation -335 -158 -97 - -590
Impairment -632 -5 -19 - -656
Currency translation differences 96 4 -3 - 97
Net booked value 31 .12 . 10 686 859 378 28 11 950
31 .12 .2015
Net booked value 01 .01 . 10 477 991 421 255 12 143
Additions 738 137 110 2 379 3 364
Disposals -784 - -19 - -803
Reclassification 2 590 22 8 -2 626 -6
Reclassification held for sale* -477 - - - -477
Depreciation -335 -176 -83 - -594
Impairment -80 -6 -3 - -89
Currency translation differences -127 -5 20 - -112
Net booked value 31 .12 . 11 999 963 455 7 13 425
*) At 31.12.2015 the vessel Skandi Protector was classified as vessel held for sale.
The challenging market condition for offshore service vessels has continued. In the 4th quarter 2016, the Group faced lower market 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 205 million has been recognised in the 4th quarter of 2016. YTD the Group has recognised an impairment of NOK 656 million.
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Amounts in NOK million
Note 6 Net interest-bearing debt
31 .12 .2016 31 .12 .2015
Non-current interest-bearing debt
Bond loan floating rate 1 297 1 293
Debt to credit institutions 7 208 8 288
Total non-current interest bearing debt 8 505 9 581
Current interest-bearing debt
Bond loan, floating rate - 422
Debt to credit institutions * 1 033 1 556
Total current interest-bearing debt 1 033 1 977
Total non-current and current interest-bearing debt 9 851 11 558
Net interest-bearing debt
Cash and cash equivalent 1 062 1 464
Other interest-bearing assets - non-current 119 99
Total net interest-bearing debt 8 357 9 995
Share of debt secured by fixed interest rate31 .12 .2016 Fixed rate Floating rate Total
NOK
Debt to credit institutions 86 % 14 % 100 %
Bond loan - 100 % 100 %
Total NOK 66 % 34 % 100 %
USD
Debt to credit institutions 67 % 33 % 100 %
Total USD 67 % 33 % 100 %
Total debt 66 % 34 % 100 %
* ) Current interest-bearing debt for 2015 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.
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 2017 2018 2019 2020 2021 Thereafter Total
Bond loan - 1 300 - - - - 1 300
Debt to credit institutions 1 033 1 059 1 823 1 752 841 1 769 8 277
Total repayment 1 033 2 359 1 823 1 752 841 1 769 9 577
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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
31 .12 .2016
Liabilities
Assets
31 .12 .2015
Liabilities
Non-current and current portion
Interest rate swaps - cash flow hedges 25 80 8 193
Interest rate swaps - cash flow hedges under hedge accounting - - - -
Foreign exchange contracts cash flow hedges 40 105 3 139
Total non-current and current 66 185 12 332
Non-current portion
Interest rate swaps - cash flow hedges 25 80 - 147
Interest rate swaps - cash flow hedges under hedge accounting - - - -
Foreign exchange contracts cash flow hedges 12 18 3 16
Total non-current portion 37 98 3 163
Total current portion 28 87 8 169
Committed Received
31 .12 .2016
Amount
Committed Received
31 .12 .2015
Amount
Instrument
Foreign exchange contracts, buy NOK NOK 3 214 NOK 2 472
Financial Report Q4 2016 | DOF SUBSEA
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Amounts in NOK million
Note 10 Events after the consolidated statement of financial position date
Petrobras awarded the Brazillian built PLSV Skandi Vitoria an 18-month contract. The vessel commenced as per contract on 16 January 2017.
In Asia Pacific, DOF Subsea was awarded a 3-year IMR frame agreement with one of the major oil and gas companies in the region. In addition, a Safety Case has been secured for Geoholm, and the vessel will be available in the Asia Pacific region from the beginning of Q2 2017.
In February 2017, Geoholm was awarded a contract by Technip Oceania Pty Ltd, part of TechnipFMC in Australia, for the provision of ROV and light construction support services for the Shell Prelude FLNG project, operated by Shell Australia.
In Atlantic, DOF Subsea has received a letter of award (LOA) for one subsea vessel from an oil major. The duration of the contract is over a year and has commencement in Q1 2017.
Note 9 Investments in associates and joint ventures
Entity Proportion of ownership
31 .12 .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 %
31 .12 .2016
Booked value of investments in associates and joint ventures 31.12.2015 336
New investments -
Share of net income of associates and joint ventures 154
Share of other comprehensive income related to associates and joint ventures 230
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 717
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 bareboat charter.
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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) is 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 amortisation 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 amortisations 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 equivalents will include restricted cash. Current interest-bearing debt includes 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 Q4 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”.
Utilisation of vesselUtilisation of vessel is a measure of the Group`s ability to keep vessels in subsea operations and on contracts with clients. Utilisation of vessel numbers are based on actual available days not excluding days at yard for dry-docking, repair/upgrading, transit or idle time between projects and charter contracts.
Contract backlog Sum of undiscounted revenue related to secured contracts in the future and optional contract extensions as determined by the client in the future. Contract backlog excludes master service agreements (MSA`s) within the project segment. Under the MSA`s only confirmed PO`s are accounted for.
Firm contract backlog Sum of undiscounted revenue related to secured contracts in the future. Secured contracts are contracts signed with clients, in the past, covering future delivery of services.
Backlog optionsSum of undiscounted revenue related to optional contract extensions as determined by the client in the future.
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Amounts in NOK million
Financial Report Q4 2016 | DOF SUBSEA
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Amounts in NOK million
Supplemental information
Condensed statement of comprehensive income 5 last quarters
4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015
Operating income 1 128 1 232 1 660 1 406 1 642
Payroll expenses -376 -395 -414 -428 -475
Other operating expenses -430 -385 -750 -525 -651
Share of net income of associates and joint ventures -3 -5 14 4 -
Profit from sale of non-current assets 96 - 3 70 5
Total operating expenses -713 -785 -1 147 -879 -1 122
Operating profit before depreciation (EBITDA) 415 447 513 526 521
Depreciation and impairment -396 -352 -271 -343 -207
Operating profit (EBIT) 19 95 243 184 314
Financial income 14 - 9 16 19
Financial expenses -161 -125 -132 -146 -179
Realised gain / loss on financial instruments -106 6 -54 -61 -47
Unrealised gain / loss on financial instruments -149 219 77 365 40
Net financial income / loss -402 100 -100 173 -166
Profit / loss before tax -383 195 142 357 148
Tax expenses -47 -25 -43 -41 -95
Profit / loss for the period -430 170 99 316 53
The supplemental information below is presented according to internal management reporting, based on the proportionate consolidation method.
| Financial Report Q4 2016DOF SUBSEA
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Amounts in NOK million
Condensed statement of financial position 5 last quarters
Assets 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015
Intangible assets 714 714 806 872 962
Tangible assets 16 530 17 072 16 663 16 091 15 261
Financial assets 799 728 737 689 596
Non-current assets 18 043 18 514 18 206 17 652 16 818
Total receivables 1 294 1 439 1 754 1 495 1 664
Cash and cash equivalents 1 611 1 189 1 303 1 256 1 405
Asset held for sale - - - - 477
Current assets 2 483 2 742 3 010 2 900 3 752
Total assets 20 526 21 256 21 216 20 552 20 570
Equity and liabilities 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015
Paid in equity 3 844 3 844 3 844 3 844 3 844
Other equity 1 987 2 370 2 258 1 979 1 579
Non-controlling interests 224 222 228 256 269
Total equity 6 055 6 437 6 330 6 078 5 692
Non-current provisions for commitment 21 19 20 19 23
Other non-current liabilities 11 972 12 154 11 844 11 463 11 205
Non-current liabilities 11 993 12 174 11 864 11 482 11 228
Short portion of debt to credit institutions 1 372 1 606 1 619 1 938 1 926
Other current liabilities 1 054 1 4641 106 1 039 1 403
Liabilities held for sale - - - - 260
Current liabilities 2 478 2 645 3 022 2 991 3 650
Total liabilities 14 471 14 819 14 886 14 474 14 878
Total equity and liabilities 20 526 21 256 21 216 20 552 20 570
Key figures
4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015
Profit per share (NOK) -3.59 1.42 0.83 2.64 0.45
EBITDA margin 37 % 36 % 31 % 37 % 31 %
EBIT margin 2 % 8 % 15 % 13 % 19 %
Return on net capital -7 % 3 % 2 % 5 % 1 %
Book value equity per share (NOK) 50.58 53.76 52.87 50.76 47.54
Value-adjusted equity per share (NOK) 61.25 65.00 67.99 68.23 69.26
Net interest-bearing debt (NOK million) 12 041 12 002 12 049 11 823 11 387
Financial Report Q4 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 Hawk Skandi Hercules
Skandi AfricaSkandi Açu
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Skandi Skansen
Skandi Patagonia Skandi Vitoria
Skandi Salvador Skandi Seven
Skandi SingaporeSkandi Neptune Skandi Niteroi
Financial Report Q4 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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