Q2 2016 - DOF Group Sub/IR/2016/DOF Subsea Financial... · 2016-08-17 · DOF SUBSEA| Financial Report Q2 2016 5 For the first half of 2016 DOF Subsea had an operating income of NOK

financial report

STRENGTH THROUGH TRANSITION

Q2 2016

DOF Subsea ASThormøhlens gate 53 C5006 BergenNORWAYwww.dofsubsea.com

Index

Financial Report 2nd quarter 2016 . . . . . . . . . . . . . . . . . . .4

Confirmation from the Board of Directors . . . . . . . . . . . .7

Financial statements 2nd 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 Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Note 5 Interest-bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Note 6 Financial instruments and hedging activities . . . . . 18

Note 7 Transactions with related parties . . . . . . . . . . . . . . . . . . 19

Note 8 Investments in associates and joint ventures. . . . . 19

Note 9 Events after the consolidated statement of financial position date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Note 10 Shareholder information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Note 11 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Supplemental information . . . . . . . . . . . . . . . . . . . . . . . . . 22

Condensed statement of comprehensive income 5 last quarters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Condensed statement of financial position 5 last quarters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Financial Report Q2 2016 | DOF SUBSEA

4

HeadlinesIn the 2nd quarter 2016, DOF Subsea had an operating income of NOK 1 623 million (vs. NOK 1 865 million in the 2nd quarter 2015) with an EBITDA of NOK 488 million (NOK 513 million). The EBIT was NOK 219 million (NOK 324 million) after depreciation and im-pairment of NOK 269 million (NOK 189 million). The net financial loss was NOK 83 million (income NOK 12 million) and the profit before tax was NOK 137 million (NOK 336 million).

During the 2nd quarter the Group saw a seasonal increase in the project activity level especially in the North Sea and in North America, however during the quarter several vessels were upgraded and have had class dockings. In addition, vessels were repositioned and the Brazilian built Skandi Salvador was working in the short term project market in Brazil with low utilization. The vessel utilization in the 2nd quarter was 87 %, where the TC vessel utilization was 82 % and the project vessel utilization was 92 %.

Operational events 2nd quarterAs of 30th June 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 2nd quarter 2016 the Asia Pacific region con-ducted IMR work for Shell Philippines, Chevron Australia, OMV and Saipem. In the North Sea, the Group has been doing engineering, survey, light construction and installation work for Shell, Eni, Maersk, BW, Teekay and HMC. In the Gulf of Mexico, the Group has conducted IMR work for Chevron, Husky, FOMG, Noble, and survey and positioning work for HMC. In Brazil, the Group has been engaged in inspection work for Statoil and ROV, survey and installation work for Petrobras.

In April the final delivery of the JV vessel Skandi Acu was done and the vessel has been through an extensive test program before she entered into an 8 year contract in mid-August. In May the RSV contract on Geograph was extended by 18 months. In June Skandi Achiever was awarded several contracts in the project market

including diving contracts in the GOM. The JV vessel Skandi Vitoria and Skandi Niteroi was awarded contracts with Petrobras in May and June. During the 2nd quarter 2016, the utilization of the Group’s vessels was 87 %. The utilization for the project vessels during the quarter was 92 % and for the TC vessels 82 %. The main reasons for the low utilization of the TC vessels were re-positioning of Skandi Vitoria and lead time between charter contracts, dry docking and upgrade of Skandi Niteroi, Skandi Neptune, Skandi Salvador and Skandi Achiever.

All 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.

Consolidated statement of comprehensive income and consolidated statement of financial positionIn the 2nd quarter of 2016, the Group achieved an operating income of NOK 1 623 million compared to an operating income of NOK 1 865 million for the 2nd

quarter of 2015. Operating profit before depreciation (EBITDA) was NOK 488 million (NOK 513 million) and the operating profit after depreciation and write down (EBIT) was NOK 219 million (NOK 324 million). Depreciation and impairment amounted to NOK 269 million (NOK 189 million), of which NOK 127 million was impairment (NOK 38 million).

Net financial loss was NOK 83 million (net financial income NOK 12 million), whereas NOK 77 million (NOK 45 million) of the net financial loss was unrealized gains on financial instruments. The profit before tax was NOK 137 million (NOK 336 million) and the profit for the period was NOK 99 million (NOK 296 million).

Financial Report 2nd quarter 2016

NOK million 2Q 2016 2Q 2015 Change %

Operating income 1 623 1 865 -13 %

Operating expenses 1 135 1 352 -16 %

EBITDA 488 513 -5 %

EBIT 219 324 -32 %

Utilization 2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015

Project vessels 92% 79 % 74 % 76 % 78 %

Time charter vessels 82% 93 % 91 % 97 % 98 %

Fleet 87% 88 % 85 % 88 % 90 %

Key figures (NOK million) 2Q 2016 2Q 2015 YTD 2016 YTD 2015

Operating income 1 623 1 865 2 966 3 422

EBITDA 488 513 983 1 091

EBIT 219 324 373 766

Net interest-bearing debt 9 286 9 125 9 286 9 125

EBITDA proportional method 513 557 1 040 1 220

EBITDA proportional method excluding profit from sale of non-current assets 510 515 966 973

| Financial Report Q2 2016DOF SUBSEA

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For the first half of 2016 DOF Subsea had an operating income of NOK 2 966 million (vs. NOK 3 422 million in 2015) with an EBITDA of NOK 983 including a sales gain of NOK 74 million (NOK 1 091 million including a sales gain of NOK 204 million). The EBIT was NOK 373 million (NOK 766 million) after depreciation and impairment of NOK 610 million (NOK 324 million). The net financial income was NOK 109 million (loss NOK 308 million) and the profit before tax was NOK 482 million (NOK 458 million) and the profit for the period was NOK 415 million (NOK 436 million).

The Group’s total assets were NOK 18 318 million (NOK 18 545 million) where non-current assets amounted to NOK 15 610 million (NOK 15 277 million), including NOK 738 million (NOK 744 million) in intangible assets. Current assets were NOK 2 708 million (NOK 3 268 million) of which NOK 1 085 million (NOK 1 416 million) was cash and cash equivalents.

The total equity was NOK 6 330 million (NOK 6 405 million), including non-controlling interests of NOK 228 million (NOK 255 million). Non-current liabilities, includ-ing non-current provisions for commitments, were NOK 9 333 million (NOK 7 739 million). Current liabilities were NOK 2 655 million (NOK 4 401 million) of which NOK 1 401 million (NOK 3 222 million) were short-term portion of debt. The net interest-bearing debt (NIBD) was NOK 9 286 million (NOK 9 125 million). By the end of 2nd quarter the book equity ratio was 34.6 %, and the value adjusted equity ratio was 40.4 %. 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, installments and change in working capital. Net interest-bearing debt was NOK 9 286 million representing 51 % of total assets and 46 % of value adjusted assets.

Net cash flow from operating activities in the 2nd quarter 2016 was NOK 352 million (NOK 435 million). Cash flow from investing activities was negative NOK 87 million (positive NOK 21 million) of which NOK 66 million is from investment in assets that increase or will increase capacity for the Group. Cash flow from financing activities

was negative NOK 483 million (NOK 119 million) of which NOK 663 million was installment on long term interest bearing debt. At the end of the 2nd quarter the Group’s cash and cash equivalents was NOK 1 085 million (NOK 1 416 million).

Debt, financing and liquidityDuring the quarter the Group has drawn loans on Skandi Hercules and has paid ordinary installments on out-standing debt and repaid the bond loan DOFSUB05. For the newbuilding program owned 50/50 with Technip the 2nd tranche of the financing on Skandi Acu was drawn during the quarter upon final delivery of the vessel.

The Group’s short portion of debt as at 30th of June 2016 totals NOK 1 401 million, and includes balloons, drawn credit facilities and ordinary installments. 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 exchange 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 52.87 per share. The value-adjusted equity per share as per 30th of June was NOK 67.99.

NOK million 30 .06 .2016 30 .06 .2015 Change %

Tangible assets 13 163 13 463 -2 %

Cash and cash equivalents 1 085 1 416 -23 %

NIBD 9 286 9 125 2 %

Total equity 6 330 6 405 -1 %


6

EmployeesAs per 30th of June 2016, the number of employees in the DOF Subsea Group was 1 590 persons. The numbers do not include marine employees that are employed in DOF Management and Norskan.

The FleetAs per 30th of June, the Group fleet comprised 21 owned vessels, 2 chartered-in vessels and 4 vessels under construction. Of the vessels, Skandi Acu had its final delivery in April 2016.

Contract Coverage*

* Contract coverage excludes master service agreements (MSAs) within the

subsea project segment. Under the MSAs only confirmed POs are accounted for.

Events after the consolidated statement of financial position dateIn July 2016, the third party vessel Normand Reach, which has been operating in the Atlantic region since June 2014, was redelivered to Reach Subsea.

During Q2 2016, DOF Subsea and Technip have through their 50/50 owned affiliate taken final delivery of the pipe-lay support vessel Skandi Açu. The vessel commenced as per commitment on August 13th 2016 its 8-year charter contract with Petrobras. It is the first of four PLSVs fixed on long-term charters with Petrobras which were awarded to the joint venture between DOF Subsea and Technip in August 2013.

Shell Australia has awarded DOF Subsea a five year firm contract plus two times two years options for fulltime un-derwater services and multi-purpose supply vessel (MPSV) services to the Prelude FLNG facility, offshore Australia. Under the awarded IMR contract, DOF Subsea will provide project management, engineering and integrated services for IMR programs as well as the dedicated vessel and options for other vessels.

In Asia Pacific, DOF Subsea has secured several contracts and work under existing frame agreements, securing utilization of the vessels Skandi Singapore and Skandi Hercules. The

scope of work includes project management, engineering, light construction and saturation diving.

During Q2 and so far in Q3 2016, DOF Subsea has secured contracts with a total value of NOK 3.3 billion, including options.

Forward looking statementThe Board of Directors is pleased with the financial numbers for 2nd 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 Board of Directors expect the challenging market conditions to continue, with an oil price of about USD 48 per barrel, the current cost focus in the oil industry and over-supply of vessels, a weak market is expected. The cost cutting measures taken so far has 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 exposure to the market conditions going forward.

The firm contract backlog amounts to approximately NOK 20.8 billion, and including options approximately NOK 39.1 billion as at 1st of August 2016. This is equiv-alent to about 6 year’s turnover and a large portion of the fleet is fixed on long-term contracts with solid counterparts. 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.

Bergen, 16th August 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


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Helge MøgsterChairman

Helge SingelstadBoard member

Mons S. AaseCEO/Board member

Hilde DrønenBoard member

Alex Townsend KruegerBoard member

Neil John Hartley Board member

John MogfordBoard member

Ryan N. ZafereoBoard member

We confirm that, to the best of our knowledge, the half-year financial statements for the period 1st of January to 30th of June 2016 have been prepared in accordance with IAS 34 – Interim Financial Reporting, and that the information in the accounts gives a true and fair view of the Group’s assets, liabilities, financial position and overall result. We also confirm that, to the best of our knowledge, the half-year report provides a true and fair view of significant events during the accounting period and their impact on the half-year accounts, the most central risk and uncertainty factors faced by the Group during the next accounting period, and of significant transactions with related parties.

Confirmation from the Board of Directors

Bergen, 16th August 2016The Board of Directors of DOF Subsea AS


8

Amounts in NOK million

Financial statements 2nd quarter 2016

Consolidated statement of comprehensive income

Note 2Q 2016 2Q2015 YTD 2016 YTD 2015 2015

Operating income 1, 2 1 623 1 865 2 966 3 422 6 891

Payroll expenses -414 -532 -842 -1 066 -2 051

Other operating expenses -748 -907 -1 270 -1 556 -3 113

Share of net income of associates and joint ventures 1, 8 23 87 55 87 163

Profit from sale of non-current assets 3 -1 74 204 210

Total operating expenses -1 135 -1 352 -1 983 -2 332 -4 791

Operating profit before depreciation (EBITDA) 1, 2 488 513 983 1 091 2 100

Depreciation and impairment 4 -269 -189 -610 -324 -703

Operating profit (EBIT) 219 324 373 766 1 397

Financial income 3 15 11 35 21 50

Financial expenses 3 -130 -142 -272 -294 -613

Realized gain / loss on financial instruments 3 -44 99 -95 24 -21

Unrealized gain / loss on financial instruments 3 77 45 441 -60 -592

Net financial income / loss -83 12 109 -308 -1 176

Profit / loss before tax 137 336 482 458 221

Tax expense -37 -40 -67 -23 -44

Profit / loss for the period 99 296 415 436 177

Other comprehensive income

Items that may be subsequently reclassified to profit / loss

Currency translation difference (CTA) 28 9 2 -2 73

Cash flow hedges - 7 - 10 23

Share of other comprehensive income of associates and joint ventures 8 148 32 246 -132 -450

Items that will not be subsequently reclassified to profit / loss

Defined benefit plan actuarial gains / losses - - - - -

Other comprehensive income / loss net of tax 176 48 248 -124 -354

Total comprehensive income for the period 275 344 663 311 -176

Total comprehensive income attributable to:

Non-controlling interests -1 6 -15 8 22

Owners of the parents 276 338 678 303 -199


9


Consolidated statement of financial position

Assets Note 30 .06 .2016 30 .06 .2015 31 .12 .2015

Deferred tax asset 286 260 320

Goodwill 452 485 478

Intangible assets 738 744 798

Vessels 4 11 827 10 076 11 999

ROVs 4 897 951 963

Machinery and other equipment 4 415 431 455

Newbuilds 4 23 2 005 7

Tangible assets 13 163 13 463 13 425

Investment in associates and joint ventures 1, 8 635 505 336

Other non-current receivables 6 1 074 565 858

Financial assets 1 709 1 069 1 194

Non-current assets 15 610 15 277 15 417

Trade receivables 1 203 1 329 1 152

Other current receivables 6 419 523 408

Total receivables 1 623 1 852 1 560

Restricted cash 347 434 390

Unrestricted cash and cash equivalents 738 982 1 074

Cash and cash equivalents 5 1 085 1 416 1 464

Asset held for sale 4, 9 - - 477

Current assets including assets held for sale 2 708 3 268 3 501

Total assets 18 318 18 545 18 919


10


Equity and liabilities Note 30 .06 .2016 30 .06 .2015 31 .12 .2015

Paid-in equity 10 3 844 4 069 3 844

Other equity 2 258 2 081 1 579

Non-controlling interests 228 255 269

Total equity 6 330 6 405 5 692

Deferred taxes 1 9 2

Pensions 12 12 12

Non-current provisions for commitments 13 20 15

Bond loans 5 1 295 1 291 1 293

Debt to credit institutions 5 7 866 6 245 8 288

Financial non-current derivatives 6 139 155 163

Other non-current liabilities 19 27 22

Non-current liabilities 9 320 7 719 9 765

Short portion of debt 5 1 401 3 222 1 822

Trade payables 804 775 838

Other current liabilities 6 451 404 526

Current liabilities 2 655 4 401 3 186

Liabilities held for sale 5 - - 260

Current liabilities including liabilities held for sale 2 655 4 401 3 447

Total liabilities 11 988 12 140 13 226

Total equity and liabilities 18 318 18 545 18 919



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Consolidated statement of cash flows

Note 2Q 2016 2Q 2015 YTD 2016 YTD 2015 2015

Operating profit (EBIT) 219 324 373 766 1397

Depreciation and impairment 4 269 189 610 324 703

Profit from sale of non-current assets -3 1 -74 -204 -210

Share of net income of associates and joint ventures 1, 8 -23 -88 -55 -87 -163

Change in trade receivables -166 169 -51 229 405

Change in trade payables 133 73 -35 -22 41

Changes in other working capital 80 -54 88 -107 -17

Exchange rate effect on operating activities -1 -23 -86 -42 -14

Cash flow from operating activities 507 590 770 857 2 143

Interest received 6 3 25 17 32

Interest paid -153 -132 -289 -307 -638

Tax paid -8 -26 -25 -108 -191

Net cash flow from operating activities 352 435 482 459 1 346

Sale of tangible assets 3 - 551 975 992

Purchase of tangible assets 4 -66 -599 -265 -2 472 -3 364

Sale of shares - 417 - 417 417

Dividends received - - 3 3 3

Changes in other receivables and liabilities -25 202 -245 -236 -406

Cash flow from investing activities -87 21 44 -1 312 -2 357

Proceeds of interest-bearing debt 206 441 1 006 2 019 3 891

Installments on interest-bearing debt -663 -542 -1 854 -1 963 -3 420

Dividend / Group contributions paid - - - - -225

Payments to non-controlling interests -26 -18 -26 -18 -18

Cash flow from financing activities -483 -119 -874 37 228

Net change in cash and cash equivalents -218 337 -348 -815 -783

Cash and cash equivalents at the beginning of period 1 300 1 064 1 464 2 120 2 120

Exchange rate effect on cash and cash equivalents 3 14 -31 111 128

Cash and cash equivalents at the end of the period 1 085 1 416 1 085 1 416 1 464


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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 - - - 430 - - 430 -15 415

Other comprehensive income for the period - - - 246 2 - 248 - 248

Total comprehensive income for the period - - - 676 2 - 678 -15 663

Dividends - - - - - - - -

Changes in non-controlling interests - - - - - - - -26 -26

Equity at 30 .06 .2016 1 197 516 2 130 2 174 83 - 6 101 228 6 330

Equity at 01 .01 .2015 1 197 741 2 130 1 793 8 -23 5 847 265 6 112

Profit / loss for the period - - - 428 - - 428 7 436

Other comprehensive income for the period - - - -132 -2 9 -125 1 -124

Total comprehensive income for the period - - - 296 -2 9 303 8 311

Changes in non-controlling interests - - - - - - - -18 -18

Equity at 30 .06 .2015 1 197 741 2 130 2 089 6 -14 6 150 255 6 405

Cash flow hedges and change in defined benefit actuarial gains / losses are presented after tax. Tax rate used is 25-27 %.


13


14


Notes to the financial statements

Note 1 Management reporting

Consolidated statement of comprehensive income

YTD 2016Consistent with

management reportingIFRS 11

impact YTD 2016

Total operating income 3 066 -100 2 966

Total operating expenses -2 044 5 -2 038

Share of net income of associates and joint ventures 17 38 55

Operating profit before depreciation (EBITDA) 1 040 -57 983

Operating profit (EBIT) 426 -53 373

Net financial income / loss 73 36 109

Profit / loss for the period 415 - 415


30 .06 .2016Consistent with


impact 30 .06 .2016

Intangible assets 806 -68 738

Tangible assets 16 663 -3 500 13 163

Financial assets 737 972 1 709

Non-current assets 18 206 -2 596 15 610

Current assets including assets held for sale 3 010 -302 2 708

Total assets 21 216 -2 898 18 318


30 .06 .2016Consistent with


impact 30 .06 .2016

Total equity 6 330 - 6 330

Non-current provisions for commitments 20 -7 13

Non-current liabilities 11 844 -2 524 9 320

Current liabilities including liabilities held for sale 3 022 -367 2 655

Total liabilities 14 886 -2 898 11 988

Total equity and liabilities 21 216 -2 898 18 318

The table below shows the effect of application of IFRS 11 on the main items in the consolidated statement of comprehensive income and the consolidated statement of financial position. The Group uses the proportionate consolidation method when accounting for joint ventures in management reporting.


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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 delivered 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 1Q). 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

2Q 2016

2Q 2015

YTD 2016

YTD 2015

2015

Chartering of vessels 433 634 935 1 205 2 442

Subsea projects 1 227 1 327 2 131 2 413 4 810

Total consistent with management reporting 1 660 1 962 3 066 3 618 7 252

Effect of IFRS 11 -37 -97 -100 -196 -360

Total 1 623 1 865 2 966 3 422 6 891

EBITDA consistent with management reporting

Chartering of vessels 308 426 752 992 1 785

Subsea projects 205 130 288 228 509

Total consistent with management reporting 513 557 1 040 1 220 2 294

Effect of IFRS 11 -25 -44 -57 -129 -194

Total 488 513 983 1 091 2 100


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Note 3 Financial income and expenses

Note 4 Tangible assets

2Q 2016 2Q 2015 YTD 2016 YTD 2015 2015

Interest income 12 9 28 19 41

Other financial income 3 2 7 3 9

Financial income 15 11 35 21 50

Interest expenses -124 -156 -263 -308 -597

Capitalization of interest - 16 - 16 30

Other financial expenses -6 -2 -9 -2 -46

Financial expenses -130 -142 -272 -294 -613

Net gain / loss on non-current debt -25 63 -46 106 117

Net gain / loss on operational capital -15 14 -8 114 102

Net gain / loss on financial derivatives -5 22 -42 -196 -240

Net realized gain / loss on financial instruments -44 99 -95 24 -21

Net unrealized gain / loss on non-current debt 41 19 263 -225 -668

Net unrealized gain / loss on operational capital 10 -55 -25 -33 -8

Net unrealized gain / loss on financial derivatives 25 81 203 198 84

Unrealized gain / loss on financial instruments 77 45 441 -60 -592

Net financial income / loss -83 12 109 -308 -1 176

30 .06 .2016

Vessels & periodic maintenance

ROVs

Machinery & other equipment

Newbuilds

Total

Net booked value 01 .01 . 11 999 963 455 7 13 425

Additions 224 10 15 16 265

Disposals - - - - -

Reclassification -1 - 1 - -

Reclassification held for sale - - - - -

Depreciation -159 -81 -51 - -291

Impairment -319 - - - -319

Currency translation differences 83 4 -5 - 83

Net booked value 30 .06 . 11 827 897 415 23 13 163

30 .06 .2015

Net booked value 01 .01 . 10 476 991 421 255 12 143

Additions 573 38 111 1 751 2 472

Disposals -753 -1 -17 - -771

Reclassification 41 12 -53 - -

Depreciation -164 -85 -38 - -287

Impairment -38 - - - -38

Currency translation differences -59 -3 6 - -56

Net booked value 30 .06 . 10 076 951 431 2 005 13 463


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Note 5 Interest-bearing debt

30 .06 .2016 30 .06 .2015 31 .12 .2015

Non-current interest-bearing debt

Bond loan floating rate 1 295 1 291 1 293

Debt to credit institutions 7 866 6 245 8 288

Total non-current interest bearing debt 9 161 7 536 9 581

Current interest-bearing debt

Bond loan, floating rate - 1 374 422

Debt to credit institutions * 1 314 1 730 1 556

Total current interest-bearing debt 1 314 3 104 1 977

Total non-current and current interest-bearing debt 10 475 10 640 11 558

Net interest-bearing debt

Cash and cash equivalent 1 085 1 416 1 464

Other interest-bearing assets - non-current 104 99 99

Total net interest-bearing debt 9 286 9 125 9 995

Share of debt secured by fixed interest rate30 .06 .2016 Fixed rate Floating rate Total

NOK

Debt to credit institutions 73% 27% 100%

Bond loan 0% 100% 100%

Total NOK 57% 43% 100%

USD

Debt to credit institutions 86% 14% 100%

Total USD 86% 14% 100%

Total debt 69% 31% 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.

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 798 1 029 1 028 2 172 1 682 2 512 9 221

Total repayment 798 1 029 2 328 2 172 1 682 2 512 10 521


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Note 5 Interest-bearing debt (continued from previous page)

Note 6 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 .06 .2016

Liabilities

Assets

30 .06 .2015

Liabilities

Non-current and current portion

Interest rate swaps - cash flow hedges - 138 14 206

Interest rate swaps - cash flow hedges under hedge accounting - - - 19

Foreign exchange contracts cash flow hedges 63 42 22 37

Total non-current and current 63 180 36 262

Non-current portion

Interest rate swaps - cash flow hedges - 134 - 155

Interest rate swaps - cash flow hedges under hedge accounting - - - -

Foreign exchange contracts cash flow hedges 8 5 - -

Total non-current portion 8 139 - 155

Total current portion 54 41 36 107

Committed Received

30 .06 .2016

Amount

Committed Received

30 .06 .2015

Amount

Instrument

Foreign exchange contracts, buy NOK NOK 2 699 NOK 1 285


19


Note 7 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.

Note 8 Investments in associates and joint venturesEntity Proportion of ownership

30 .06 .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 %

30 .06 .2016

Booked value of investments in associates and joint ventures 31.12.2015 336

Share of net income of associates and joint ventures 55

Share of other comprehensive income related to associates and joint ventures 246

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 31 .06 .2016 635

See also note 1 and note 2.


20


Note 10 Shareholder information

Name No . shares Shareholding Voting shares

DOF Subsea Holding AS 119 733 714 100 % 100 %

Note 11 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 beginning on 1 January 2016 are not material to the Group. The Financial Statement is unaudited.

Note 9 Events after the consolidated statement of financial position date

In July 2016, the third party vessel Normand Reach, which has been operating in the Atlantic region since June 2014, was redelivered to Reach Subsea.

During Q2 2016, DOF Subsea and Technip have through their 50/50 owned affiliate taken final delivery of the pipe-lay support vessel Skandi Açu. The vessel commenced as per commitment on August 13th 2016 its 8-year charter contract with Petrobras. It is the first of four PLSVs fixed on long-term charters with Petrobras which were awarded to the joint venture between DOF Subsea and Technip in August 2013.

Shell Australia has awarded DOF Subsea a five year firm contract plus two times two years options for fulltime underwa-ter services and multi-purpose supply vessel (MPSV) services to the Prelude FLNG facility, offshore Australia. Under the awarded IMR contract, DOF Subsea will provide project management, engineering and integrated services for IMR programs as well as the dedicated vessel and options for other vessels.

In Asia Pacific, DOF Subsea has secured several contracts and work under existing frame agreements, securing utilization of the vessels Skandi Singapore and Skandi Hercules. The scope of work includes project management, engineering, light construction and saturation diving.

During Q2 and so far in Q3 2016, DOF Subsea has secured contracts with a total value of NOK 3.3 billion, including options.


21



22


Supplemental information

Condensed statement of comprehensive income 5 last quarters

2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015

Operating income 1 660 1 406 1 642 1 991 1 962

Payroll expenses -414 -428 -475 -510 -534

Other operating expenses -750 -525 -651 -920 -914

Share of net income of associates and joint ventures 14 4 - -9 1

Profit from sale of non-current assets 3 70 5 1 42

Total operating expenses -1 147 -879 -1 122 -1 438 -1 405

Operating profit before depreciation (EBITDA) 513 526 521 553 557

Depreciation and impairment -271 -343 -207 -183 -202

Operating profit (EBIT) 243 184 314 370 355

Financial income 9 16 19 9 9

Financial expenses -132 -146 -179 -151 -149

Realized gain / loss on financial instruments -54 -61 -47 -23 87

Unrealized gain / loss on financial instruments 77 365 40 -538 60

Net financial income / loss -100 173 -166 -704 6

Profit / loss before tax 142 357 148 -333 361

Tax expenses -43 -41 -95 21 -65

Profit / loss for the period 99 316 53 -312 296

The supplemental information below is presented according to internal management reporting, based on the proportionate consolidation method.


23


Condensed statement of financial position 5 last quarters

Assets 2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015

Intangible assets 806 872 962 988 834

Tangible assets 16 663 16 091 15 261 14 972 15 324

Financial assets 737 689 596 487 420

Non-current assets 18 206 17 652 16 818 16 447 16 578

Total receivables 1 754 1 495 1 664 2 080 1 949

Cash and cash equivalents 1 611 1 594 1 465 1 256 1 405

Asset held for sale - - 477 - -

Current assets 3 010 2 900 3 752 3 674 3 414

Total assets 21 216 20 552 20 570 20 121 19 992

Equity and liabilities 2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015

Paid in equity 3 844 3 844 3 844 3 844 4 069

Other equity 2 258 1 979 1 579 1 535 2 081

Non-controlling interests 228 256 269 261 255

Total equity 6 330 6 078 5 692 5 641 6 405

Non-current provisions for commitment 20 19 23 29 23

Other non-current liabilities 11 844 11 463 11 205 9 959 8 986

Non-current liabilities 11 864 11 482 11 228 9 989 9 009

Short portion of debt to credit institutions 1 619 1 938 1 926 3 007 3 312

Other current liabilities 1 464 1 485 1 265 1 403 1 054

Liabilities held for sale - - 260 - -

Current liabilities 3 022 2 991 3 650 4 492 4 577

Total liabilities 14 886 14 474 14 878 14 480 13 586

Total equity and liabilities 21 216 20 552 20 570 20 121 19 992

Key figures

2Q 2016 1Q 2016 4Q 2015 3Q 2015 2Q 2015

Profit per share (NOK) 0.83 2.64 0.45 -2.61 2.47

EBITDA margin 31 % 37 % 31 % 28 % 26 %

EBIT margin 15 % 13 % 19 % 19 % 16 %

Return on net capital 2 % 5 % 1 % -6 % 5 %

Book value equity per share (NOK) 52.87 50.76 47.54 47.11 53.49

Value-adjusted equity per share (NOK) 67.99 68.23 69.26 69.24 70.30

Net interest-bearing debt (NOK million) 12 049 11 823 11 387 10 927 10 431


24

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


25

Skandi Skansen Skandi Patagonia Skandi Vitoria

Skandi Salvador Skandi Santos Skandi Seven


26

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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Q2 2016 - DOF Group Sub/IR/2016/DOF Subsea Financial... · 2016-08-17 · DOF SUBSEA| Financial Report Q2 2016 5 For the first half of 2016 DOF Subsea had an operating income of NOK