HitecVision AS First six months 2015

Transcription

1 HitecVision AS First six months 2015

2 HitecVision AS First six months 2015 HitecVision is a leading investor in the international oil and gas industry, and the largest private equity investor in Europe to specialize exclusively in this industry. From its offices in Stavanger, Oslo and Houston, HitecVision invests in mid-size companies across the whole oil and gas sector in Europe and North America, including oilfield services and technology companies and exploration and production (E&P) companies. The staff of 60 is largely drawn from the oil industry itself, combining the company s over 25 years of investment history in this industry with the staff s operational know-how and experience to create value in the portfolio companies. Over the last 25 years, HitecVision has invested in, established or acquired over 150 companies (including addons) and exited more than 100 of these. HitecVision currently advises five private equity funds with a total committed capital base of USD 5 billion, drawn from an institutional investor base that comprises leading European and American institutions, pension funds, fund-of-funds, sovereign wealth funds, endowments and family offices. HIGHLIGHTS The backdrop for this report is the decline in the oil price over the last year, and the corresponding industry downturn, which is affecting our activities in several ways. On the one hand, most of the Funds portfolio companies are feeling the impact of the downturn although to a varying degree. The growth challenges of recent years have in many cases been replaced by challenges related to downscaling and right-sizing of companies, combined with increased margin pressure. Our focus in this situation is on operational issues to help the companies adjust to the new situation and regain profitability at lower volumes, as well as structural and financial issues. On the other hand, the new situation opens interesting opportunities, both investment opportunities for the funds, and business and acquisition opportunities for the portfolio companies, and we are also focusing on these. The current industry climate is not conducive to exit activities. Nevertheless, in the first half of the year, we have exited two companies: Fund IV company Seabox AS was sold to National Oilwell Varco in April, and Agility Contracting AS, a subsidiary of Fund V portfolio company Agility Group, was sold to NLI, also in April. We have also added the fourth new platform investment to Fund VII: Houston based Underwater Integrity Systems, a buy and build platform aiming to consolidate small and mid-size providers of subsea asset integrity products and services. FINANCIAL RESULTS HitecVision s revenues for the first six months of 2015 were NOK million, against NOK million for the corresponding period in Net income after tax was NOK 40.1 million, against NOK 38.8 million for the first six months of HitecVision paid out dividends of NOK 156 million in May. SOLIDITY Due to the long term nature of fund advisory agreements, a significant part of the company s revenues is fairly transparent for several years to come. HitecVision also has a strong balance sheet with an equity ratio of 78%, enabling it to meet its investment obligations in relation to the funds. SHAREHOLDER MATTERS As at 18 th August 2015, HitecVision had 180 registered shareholders. The HitecVision share is listed on the A list of Norwegian Over The Counter (NOTC) market, organized by the Norwegian Securities Dealers Association. HitecVision publishes annual and half year reports. Further key events are provided on the next page.

3 FUND DETAILS: Fund VII Final closing: 3 rd April 2014 Committed capital: 1900 MUSD 62.5 MUSD Fund maturity: Fund VII is in the early stages of its investment period. The Fund made its fourth platform investment through the start-up of Houstonbased Underwater Integrity Systems, in March. The Fund is targeting a portfolio of up to 14 platform investments, primarily within the North Sea region and North America. Equity investments per portfolio company is expected to range from USD 50 million to USD 300 million. The Fund expects to make a number of add-on acquisitions to several of the portfolio companies. In addition to the founding of UIS, key events during the first half year include the acquisition and delisting of Rocksource ASA (subsequently renamed PURE E&P AS); and CapeOmega s acquisition of Noreco s holding in the Oselvar field. Fund VI Final closing: 2 nd December 2011 Committed capital: 1546 MUSD 11.6 MUSD Fund maturity: Fund VI is fully invested, i.e. it is closed for new direct investments, and the remaining capital will be used for add-on and follow-on investments in the existing 11 portfolio companies. Our main activities regarding this portfolio are focused on growing the companies organically and through acquisitions. Key events during the first half include completion of the merger of three portfolio companies to form the new Global Maritime Group; Flux Group s acquisition of Vest Ventil, and Offshore Merchant Partners saleand-leaseback transaction with PGS. HitecVision Asset Solutions Final closing: 2 nd June 2010 Committed capital: 420 MUSD 15.8 MUSD Fund maturity: Fund HVAS is fully invested and the remaining capital will be used for follow-on investments in the remaining two portfolio companies. A key event in the first half is Atlantica Beta s completion of its first well for Petrobras, offshore Brazil. Fund V Final closing: 10 th March 2008 Committed capital: 816 MUSD 8.2 MUSD Fund maturity: Fund V is fully invested, i.e. it is closed for new direct investments, and the remaining capital will be used for add-on and follow-on investments in the existing portfolio companies. Following a number of realisations, the Fund has five remaining portfolio companies. Our main activities regarding this portfolio are focused on growing the companies organically and through acquisitions, and improving their performance. Some of the companies have matured to a degree where they may be preparing for exits. Key events in the first half of 2015 include Agility Group s sale of Agility Contracting. Fund IV Final closing: 31 st May 2006 Total committed capital: 300 MUSD 9.8 MUSD Fund maturity: Fund IV is fully invested, and the remaining capital will be used for add-on and follow-on investments in the existing portfolio companies. Following a number of exits, the company has three remaining portfolio companies. Our main activities regarding these companies are related to preparing them for exits, and in the first half of the year, Seabox AS was sold to National Oilwell. Other key events include Apply s NOK 2 billion contract to build the living quarters for the Johan Sverdrup field, and the acquisition of IT provider Network Scenario, now Netscenario. Stavanger, 27th August 2015 The Board of HitecVision AS

4 HitecVision Group (all figures in NOK 1,000) INCOME STATEMENT Operating revenue Income from associated companies Total revenues Operating expenses Depreciation & amortisation Net operating income Net financial income/-loss (432) 251 (63) Net income before taxes Income tax (5 517) (7 124) (5 082) Net income BALANCE SHEET Tangible fixed assets Financial fixed assets Long term receivables Short term receivables Cash and deposits Total assets Equity Deferred tax liability Current liabilities to financial institutions Tax payable Dividend payable Other current liabilities Total equity and liabilities

5 PORTFOLIO COMPANIES FUND VII: Circle Group CapeOmega Pure E&P Underwater Integrity Solutions Circle Group is an oilfield products and services company targeting the drilling, well completion and well intervention markets, primarily in Norway. The company is an entrepreneurial start-up by a seasoned management team. The plan is to develop Circle Group through a series of targeted acquisitions. CapeOmega is a start-up E&P company focusing on increased value creation in mature oil and gas fields on the Norwegian Continental Shelf. The plan is to build a late-life E&P company and achieve operational excellence through the use of state of the art technology and learning from repeated late life operations. Pure E&P (formerly Rocksource), is a Norwegian exploration focused E&P company pursuing growth opportunities on the Norwegian Continental Shelf (NCS). The company was established through the acquisition of Rocksource ASA, which was listed on the Oslo Stock Exchange. Underwater Integrity Solutions, located in Houston, is a recently established buyand-build platform within the subsea asset integrity market, focused on bundling asset-light service offerings. UIS will focus on acquiring companies that provide engineering, data management, inspection, maintenance and bespoke repair of subsea assets. PORTFOLIO COMPANIES - FUND VI: Spike Exploration Spike Exploration is an independent E&P company that pursues exploration and appraisal opportunities in the North Sea. The company has built a portfolio of opportunities through a combination of farm-ins to existing licenses and awards of new acreage in the official licensing rounds. Global Maritime Global Maritime Group is a result of the merger of the Fund s portfolio companies Global Maritime, Deep Sea Mooring, and Vryhof Anchors. The company is structured into six key business areas: Consultancy & Engineering; Marine Warranty; Dynamic Positioning; Products & Technology; Marine Contracting; and Deep Sea Mooring. Headquartered in Norway, it is present in over 20 countries. Axis Offshore Axis Offshore is a provider of high specification offshore Accommodation & Support Vessels (floatels) servicing the offshore oil & gas industry. The company is a joint venture between Danish shipowner J. Lauritzen A/S and HitecVision. Axis Offshore owns and operates the high-specification ASV mono-hull Dan Swift, which is currently on charter to Petrobras in Brazil, and has two high-specification DP3 semi-submersible ASVs under construction. Momek Group Momek Group, headquartered in Mo i Rana, is one of the largest industrial contractors in Northern Norway, providing services to the oil & gas, mining and process industries. Momek Group operates through three divisions: Fabrication; Maintenance and Modification; and Civil. Suretank Group Suretank Ltd. is a world-leading manufacturer of Cargo Carrying Units for the Offshore Oil and Gas Industry. Headquartered in Ireland, the company is a global supplier of offshore tanks and offshore containers with design and manufacturing facilities in Ireland, UK, US, Brazil, Poland, Thailand and China as well as sales offices in several other key markets. 5

6 Energy Drilling Offshore Merchant Partners DeepWell Energy Drilling is a tender drilling company offering cost-effective solutions to the offshore drilling market. The company is led by a management team with considerable experience from the tender drilling market and has one unit in operations on long term contract, one unit recently delivered, and one under construction. Offshore Merchant Partners is an alternative finance and asset management company targeting the offshore oil and gas industry. The company focuses on deal structuring, financing and management of offshore assets, and aims to be the advisor of dedicated pools of capital to be invested in mobile offshore oil and gas assets with long dated return profiles. DeepWell is a well intervention company primarily providing cased hole wireline services to oil companies. The company is headquartered in and has its operational base outside of Haugesund, Norway. Aquamarine Subsea Aquamarine Subsea is an international service company providing asset integrity, management, and life cycle service solutions to riser and subsea equipment owners in the drilling, work-over and production markets. Flux Group Flux Group is a buy and build platform consolidating small and mid-size providers of products and related services in the oil & gas value chain. Over the past year, Flux has established attractive positions in valves and piping. PORTFOLIO COMPANIES FUND HVAS: Ocean Installer Ocean Installer AS is a subsea service provider within the Subsea construction, Umbilicals, Risers and Flowlines (SURF) segment. The company performs full Engineering Procurement Construction and Installation ( EPCI ) SURF work, based on leased vessels. Ocean Installer is based in Stavanger and operates in several geographic markets globally. Atlantica Tender Drilling Houston-based Atlantica Tender Drilling Ltd designs, fabricates and operates safe and efficient tender drilling units. Atlantica Tender Drilling Ltd has designed and built two tender drilling rigs, where one is in operation off the coast of West Africa and one offshore Brazil, while two more tender drilling rigs are under construction for delivery in 2015 and Exited: Troms Offshore Supply Troms Offshore was the Fund's investment platform in the PSV segment. Troms Offshore was established to create a leading niche Platform Supply Vessel (PSV) company which will provide offshore services to oil companies through owning and operating high-end large PSVs built to the "Clean Design" class specifications. The Fund realised its investment in 2013 through a sale of the company to Tidewater Inc. PORTFOLIO COMPANIES - FUND V: Axon Energy Products Axon Energy Products is an acquisition platform in the drilling and well equipment segment, and has made 17 acquisitions since its inception. The platform is headquartered in Houston, Texas, and consists of several companies in the US, Europe and the Middle East. 6

7 Align Align is a group of colompanies providing process and safety-critical products and solutions as well as services that maintain lifecycle-long performance. Align has a strong position and extensive experience in selected niche markets within the Norwegian oil and gas industry and selected international markets. Core Energy Core Energy is an oil and gas company established with the aim of capturing the value potential in and around mature oil and gas fields on the Norwegian Continental Shelf (NCS) The company acquires interests in producing fields on the NCS, creating value through focusing on increased oil and gas recovery, near field exploration and adjacent field developments. Teresoft Teresoft is Norwegian supplier of drilling and well performance software and solutions, and consists of the companies edrilling, Oiltec and Trade Tech. Partly exited: Agility Group Agility Group is an industrial holding company with two operating subsidiaries; Agility Subsea Fabrication, a leading subsea fabricator that specialises in subsea manifold modules and integrated template systems, and Minox, a process technology company providing compact de-aeration solutions to the global oil and gas market. Exited: Merrick Systems Tampnet Merrick Systems was a well-established provider of software and other industrial information technologies for the upstream and midstream oil and gas industry. Headquartered in Houston, Merrick establised a global infrastructure to sell, implement and support its technologies. The Fund realized its investment in 2014 through a trade sale to P2 Energy Solutions. Pioneering the offshore communications industry, Tampnet has developed a high capacity, resilient and low latency communication network of fiber backbone cables and radio links, serving the Norwegian and the UK offshore oil and gas sector. The Fund realized its investment in 2012 through a sale of the company to EQT Infrastructure. Naxys Naxys was a supplier of advanced subsea acoustic sensor products and systems which developed into a world leading subsea monitoring company with unique products for subsea leak detection and condition monitoring. The Fund realized its investment in 2012 through a sale of the company to GE. Stream Stream was a leading provider of products, solutions and services connected to piping, valves and instrumentation within the energy and offshore business. The company was a leading supplier to the Norwegian oil and gas industry and represented several of the world s leading suppliers in the Norwegian market. The Fund realized its investment in 2013 through a sale of the company to MRC Global. Spring Energy Spring Energy Norway AS was an oil and gas company established by a group of E&P professionals with extensive experience and an excellent track record from the Norwegian Continental Shelf. The company built up a significant portfolio of exploration assets, discoveries and oil production. The Fund realized its investment in December 2012 through a sale of the company to Tullow Oil plc. 7

8 PORTFOLIO COMPANIES - FUND IV: Aarbakke Group Aarbakke is a leading supplier of precision manufacturing services to the oil and gas industry, specializing in machining and assembly of subsea and downhole equipment to extreme quality standards. The company develops, constructs, machines, tests and controls products for most of the major technology suppliers to the oil industry, in particular specialized products in short series. Partly exited: Apply Subsea Technology Group Apply is one of the largest providers of technology, engineering and construction services for the Norwegian oil and gas industry, and the largest global provider of Living Quarters for offshore platforms. Apply has three business areas: Upstream Facilities; Living Quarters & Helidecks; and Rig & Modules. Apply TB, a building facilities contractor, has been demerged to form a separate entity. The Fund realised part of its investment in 2012 through a sale of Apply Nemo to the Kongsberg Group. Subsea Technology Group is a holding company for the Fund's investments in several technology and services companies. The currently active companies are Ross Offshore, a leading provider of consultancy, engineering and project management services, and Ross Netscenario, a specialist in hosting and managing IT solutions for businesses in the oil and gas industry. The Fund realized parts of its investment in 2011 through a sale of the company s former subsidiaries Bennex and Poseidon to Siemens, and in 2015 through the sale of subsidiary Seabox to NOV. Exited: Noble Denton Holding SPG Noble Denton was an independent, market leading consultancy firm offering services to the global offshore, shipping and insurance industries. The Group had its head office in the UK, and additional offices in 15 different locations throughout the world. The fund realised its investment in 2009 through a sale to Germanischer Lloyd. Vector is an internationally recognized manufacturer of proprietary pipe connection and sealing solutions and subsea applications. Vector has manufacturing facilities in Norway and Wales, and distribution centers worldwide. The Fund realized its investment in 2012 through a sale of the company to the Freudenberg Group. Icarus supplies piping materials and manufactured valves to the oil, -petrochemical and chemical industries for extreme service conditions. The Fund realized its investment in 2013 through a sale of the company to its management. Technor The Technor platform consisted of a number of companies in different segments in the oil and gas industry, including manufacturing and distribution of electrical equipment for hazardous environments (Technor Group) and industrial valves for a wide range of applications (Valco Group). All companies in the platform were sold to various industrial and financial buyers in the period