DOF ASA Q2 2011
Group income for Q2 totalled NOK 1,581 million (NOK 1,521 million), with an operating result before depreciation (EBITDA) of NOK 495 million (NOK 485 million). Utilization rate for the subsea fleet in Q2 was 91%, with 92% for the supply fleet. The Group has added one new vessel to its fleet in Q2, in connection with DOF Subsea's purchase of the construction support vessel Skandi Constructor (ex "Sarah"). On 1 July, DOF Subsea took delivery of of Skandi Skansen. One vessel, Geosounder, was sold in the second quarter. DOF also completed the sale of one new building (hull no. 081 at Cochin Shipyard). This transaction was completed in July. In April, DOF signed an agreement for three 7year contracts for ConocoPhillips in the North Sea. Three new buildings have been contracted at STX OSV Norge in order to serve these contracts. In July, DOF Subsea was awarded the contract for Goliat FPSO marine with Eni Norge. The contract has a total value of approximately NOK 300 million. In August, Skandi Niteroi was awarded a 4year contract for Petrobras. In April, DOF Subsea completed the issue of a 5year bond loan totalling NOK 750 million. DOF Installer has carried out an issue of NOK 200 million, comprising 10 million new shares. DOF Subsea owns approx. 84% of the shares in DOF Installer subsequent to the share issue. DOF ASA is an international corporation involved in the ownership and operation of a fleet comprising supply and subsea vessels and engineering companies providing services to the subsea market. The Group has a modern fleet with an average age of approximately 6 years. When adjusted for market value, the average age is 3.5 years. As of August 2011, the fleet (partly/wholly owned) had 73 vessels (including new buildings). The fleet is comprised as follows: 20 AHTS, 24 PSV and 29 CSV. In addition, the Group owns a fleet of 45 modern ROVs. The main share of DOF ASA's fleet operates on longterm contracts. As of June, the financial nominal value of these contracts totalled approximately NOK 21 billion, including options with a value of approximately NOK 38 billion. Contractual coverage in 2011 is 87% with 69% for 2012. Main items in the interim accounts for Q2 Operating income amounted to NOK 1,581 million (NOK 1,521 million). Operating result before depreciation (EBITDA) totalled NOK 495 million (NOK 485 million). The operating result (EBIT) was NOK 215 million (NOK 198 million). Total financial costs before unrealised gain/loss on foreign exchange were NOK 310 million (NOK 105 million). Unrealised gain on foreign exchange totalled NOK 86 million (loss of NOK 252 million). The pretax result was negative at NOK 9 million (a loss of NOK 159 million). Net interestbearing liabilities as of 30 June 2011 were NOK 17,039 million (NOK 13,157 million). Prepaid instalments per vessel as of 30 June 2011 were NOK 2,334 million (NOK 3,354 million). Book equity including minority interests as of 30 June 2011 was NOK 6,618 million (NOK 6,525 million). Comments to second quarter operations The supply fleet in the North Sea had a high utilization rate for all vessels in the quarter. Two vessels, Skandi Falcon and Skandi Sotra, have partly operated in in the spot market with a utilization rate close to 100%. The activity in Brazil continues to increase, with the addition of new vessels to the fleet this quarter. Skandi Commander arrived in Brazil in April and started on a 5 year contract with Petrobras mid May. The new building, Skandi Emerald, arrived Brazil from Vietnam early May and started on its contract for OGX in the same month. A number of scheduled dry docks have been executed for the Brazilian fleet in the second quarter. Together with the transit of Skandi Commander and Skandi Emerald to Brazil, these dry docks have resulted in a reduced utilization rate for the fleet in the quarter. A weak USD rate against the BRL has had a negative impact on the EBITDA figures for parts of the Brazilian fleet. As projected, DOF Subsea had a higher level of activity when compared with the first quarter. The utilization
rate for DOF Subsea's total fleet, both TC and project vessels, was 89% in April, 91% in May and 94% in June. For the project fleet alone, utilization was 74% in April, 74% in May and 81% in June. The main reason for the low utilization in April and May was the dry dockings and repositioning of 2 vessels. The level of activity in Asia has been high. One new vessel was added to the fleet in Asia during the second quarter Skandi Hercules which sailed from the North Sea and arrived in Asia at the start of May. This vessel had a good utilization rate both in May and June. The level of activity in Brazil has been high, while the North Sea and Gulf of Mexico have seen a low level of activity in the second quarter. Comments to operations to date this year Total income to date this year has been NOK 2,967 million (NOK 2,650 million), with EBITDA of NOK 869 million (NOK 823 million). Utilization rate of the fleet, in particular the subsea fleet, has been higher in Q2 than in Q1, repeating the trend from last year. The first quarter was impacted by the number of DOF Subsea vessels in transit to new market regions and the execution of a number of scheduled dry dockings. Dry dockings in Q2 were mainly for the supply fleet in Brazil. The Group has received delivery of three new buildings to date this year, all of which have been secured longterm contracts. Moreover, DOF Subsea has purchased a vessel in the secondhand market which, subsequent to delivery, has operated as a subsea/project vessel. One older vessel was sold in the second quarter. To date this year, DOF has contracted three new buildings from STX OSV Norge in connection with three longterm contracts for ConocoPhillips. Depreciation With effect from 1 January 2011, the DOF Group has amended its depreciation estimate. In brief, the amendment involves a reduced degree of decomposition than with previous depreciation estimates. Existing depreciation period is maintained which implies expected useful life for each vessel. Estimated residual value is 50% of original cost price for the vessel. Vessels older than 20 years are based on individual evaluations. Financial result and tax, Q2 Norskan operates with BRL as functional currency. Significant fluctuations between BRL and USD have a considerable impact on the accounts, even though Norskan has a limited degree of exposure to foreign exchange as all longterm contracts are hedged in the same currencies as the operating and financial costs. The financial result includes an unrealised gain on foreign exchange of NOK 86 million, mainly related to Brazil and generated from a weaker USD against BRL. The tax cost is based on an estimate. Balance sheet The Group's net interestbearing debt, including unemployed capital at the end of June, totals approximately NOK 14,705 million. The increase in net interestbearing debt this year mainly involves delivery of three new buildings in the first quarter and the purchase of one vessel in the second quarter. One of these vessels is classified under newbuilds in the balance sheet for June 2011, and is expected to start operation in fourth quarter. The vessel is secured a long term contract. As of 30 June 2011, cash reserves totalled NOK 1,831 million. Net cash flow from investment activities at the end of Q2 was negative at NOK 2,050 million (negative at NOK 2,572 million) and net cash flow from financial activities was NOK 885 million (NOK 1,534 million). Financing and capital structure In April, DOF Subsea issued a 5year bond loan of NOK 750 million, of which NOK 200 million is owned on the company's accounts. Parts of the bond loan due in 2012 have been repurchased. The cash effect of this transaction amounted to approx. NOK 400 million. The DOF Group's remaining liabilities for vessels under construction as of August are approximately NOK 6,350 million and apply to deliveries from the second half of 2011 to the end of 2013. Planned longterm financing of this new building program totals approximately NOK 6,100 million of which approx. NOK 4,500 million has been secured by longterm financing. The majority of these vessels, for which financing has not yet been agreed, have been secured long term contracts with solid clients.
Shareholders There were no significant changes in the company shareholders during the quarter. As of 30 June 2011, the company had 4,186 shareholders. The share price as of 30 June 2011 was NOK 48.10 (NOK 42.30). The fleet/business activities DOF Subsea purchased Skandi Constructor in June (former "Sarah") from Marin Subsea. This vessel is a construction support vessel and is also equipped for well intervention. Since takeover date, the vessel has operated on the subsea project market in the North Sea. The vessel is scheduled to sail to West Africa in September to work on projects. During the first quarter, DOF Subsea took delivery of the new building Skandi Niteroi, which is owned 50/50 with Technip. In the third quarter, the vessel is in progress to be completed as a pipelaying vessel and is expected to start its a longterm contract with Petrobras. In June, DOF Rederi contracted three vessels: 2 with STX MRV 05 design and one with STX MRV 05 ROV design. All vessels are scheduled for delivery in Q4 2012 and shall be utilised for contracts with ConocoPhillips. DOF Subsea has signed a contract for ROV services for one of the vessels. In July, DOF delivered one newbuilding to a subsidiary of Hitec Vision. The vessel is a PSV of STX PSV 09 design. She is the first vessel in a series of two from Cochin Shipyard in India. The impact of this sale on the accounts will occur in the third quarter. The DOF Group is planning to take delivery of the following 7 new buildings in 2 nd half year 2011: DOF Subsea took over Skandi Skansen 1 st July. DOF Subsea is also planning to take over Skandi Singapore at the end of August. Skandi Singapore is a diving vessel and will primarily operate in Asia. The Group's supply segment took delivery of Skandi Saigon on 10 th August. This vessel is a 16,000 BHK anchor handling vessel built at the STX yard in Vietnam. Skandi Saigon's sister vessel, Skandi Pacific, is scheduled for delivery in November. Skandi Hawk, a large PSV also equipped for subsea work, is scheduled for delivery in Q4. Skandi Feistein, the first of 5 new buildings planned for longterm contracts with ConocoPhillips, is scheduled for delivery in November. The last new building scheduled for delivery this year is Skandi Amazonas. This is a large anchor handling vessel, currently under construction in Brazil. Delivery of the vessel is scheduled in December. Market/new contracts The Group s fleet mainly operates in the North Sea, West Africa, Brazil and Asia/Australia. Subsea In August, a longterm contract was signed with Petrobras for Skandi Niteroi. One vessel, Skandi Commander, arrived in Brazil in the second quarter and started on its RSV contract for Petrobras in second half of May. Estimated startup of the third RSV contract is January 2012. DOF Subsea Asia has had a high level of projectrelated activity in the quarter and is expecting a busy second half and that include the arrival of Skandi Hercules and the delivery of Skandi Singapore from the yard in August. Skandi Hercules has achieved a very strong market position and has enjoyed a high utilization rate since its arrival, with good coverage for the second half of the year. Skandi Singapore, scheduled for delivery in Q3, is expected to start operations in September. In July, DOF Subsea was awarded the contract for Goliat FPSO. The contract, signed with Eni Norge, has an approximate value of NOK 300 million and duration from 2011 to 2013. This contract represents an important step forward for DOF Subsea, following the company's strategy to be the leading operator within the mooring and installation market. Supply During the quarter, DOF was awarded three 7year contracts with ConocoPhillips, scheduled for startup in Q4 2012. These involve supply, standby and ROV services. In total, DOF has won 5 longterm contracts with ConocoPhillips to date this year, all of which in the Norwegian sector. The spot market in the North Sea in Q2 has been good for PSV vessels and variable for AHTS vessels.
As of the end of June, 261 vessels were operating in the North Sea market, of which 61 vessels on the North Sea spot market. Outlook DOF has a high contractual coverage for its supply fleet and a low rate of uncertainty regarding earnings from supply. DOF Subsea has secured satisfactory contractual coverage for its project fleet in Q3 and also started operations with new vessels. Currently it is expected that the earnings for the Group will increase in the second half compared with the first half of the year. Declaration of the Board of Directors and CEO We declare that, to the best of our knowledge, the halfyearly accounts for the period 1 January to 30 June 2011 have been prepared in accordance with IAS 34 Interim reports, and that the information in the accounts provides a correct illustration of the company s assets, liabilities, financial position and result as a whole. We also declare that, to the best of our knowledge, the halfyearly report provides a correct overview of significant events during the accounting period and their impact on the halfyearly accounts, the most central risk and uncertainty factors faced by the Group during the next accounting period and of significant transactions with closely related parties. The Board of Directors for DOF ASA, 17 August 2011 Helge Møgster Helge Singelstad Oddvar Stangeland (Chairman of the Board) Wenche Kjølås Britt Mjellem Mons Aase (CEO) IR contact persons: Mons S Aase, CEO +47 91661012 msa@dof.no Hilde Drønen, CFO +47 91661009 hdr@dof.no DOF ASA, NO5392 Storebø, www.dof.no
THE GROUPS SUMMARIZED PROFIT AND LOSS ACCOUNT (MNOK) Note Q2 2011 Q2 2010 Acc Q2 2011 Acc Q2 2010 2010 Operating income 2 1 581 1 521 2 967 2 650 5 462 operating expenses vessels 2 1 086 1 036 2 097 1 828 3 753 Operating profit before depreciation EBIT 2 495 485 869 823 1 709 Depreciation 4 279 287 542 524 1 166 Writedown 0 7 Operating profit EBIT 215 198 321 299 543 Net profit from associated companies 0 1 1 2 5 Financial income 143 53 208 131 178 Unralized profit/ loss on currencies 86 252 196 340 83 Financial costs 453 159 816 353 1 000 Net financial costs 224 357 410 560 743 Pretax profit 9 159 90 261 200 Taxes 8 6 50 24 20 15 Result 15 208 66 281 215 Profit attributable to Non controlling interest 8 58 56 85 75 Controlling interest 4 150 10 196 140 COMPREHENSIVE STATEMENT (MNOK) Note Q2 2011 Q2 2010 Acc Q2 2011 Acc Q2 2010 2010 Currency translation differences 14 88 76 38 90 Other income and costs 5 1 25 1 1 Other comprehensive income 9 88 50 38 89 Total comprehensive income 6 297 116 320 126 Total comprehensive income attrubutable to Non controlling interest 9 78 70 75 72 Controlling interest 3 219 126 245 54 KEY FIGURES Q2 2011 Q2 2010 Acc Q2 2011 Acc Q2 2010 2010 EBITDA margin 1) 31 % 32 % 29 % 31 % 31 % EBIT margin 2) 14 % 13 % 11 % 11 % 10 % Cashflow per share 3) 2,03 4,17 2,89 6,62 9,70 Profit per share ex. noncontrolling interest 4) 0,07 1,65 0,11 2,15 1,53 Profit per share ex. unrealized loss/gain 5) 1,11 0,48 2,88 0,65 3,27 Return on net capital 6) 0 % 5 % 2 % 7 % 5 % Equity ratio 7) 24 % 28 % 24 % 28 % 25 % Net interest bearing debt 17 039 13 157 17 039 13 157 15 469 Net interest bearing debt ex. unemployed capital 14 705 9 803 14 705 9 803 13 544 No of shares 91 037 975 91 037 975 91 037 975 91 037 975 91 037 975 Face value per share 2 2 2 2 2 1 (Operating profit before depreciation in percent of operating income) 2 (Operating profit in percent of operating income) 3 (Result incl. minority share ex unrealized gain/loss on currencies/average no of shares) 4 (Result ex minority share)/average no. of shares 5 (Result before taxes + depreciation + unrealized loss on currencies + minority)/average no of shares 6 (Profit after taxes in percent of booked equity) 7 (Equity/total capital)
THE GROUPS'S SUMMARIZED BALANCE SHEET (MNOK) Note 30.06.2011 30.06.2010 31.12.2010 ASSETS Deferred taxes 13 0 29 Goodwill 469 451 478 Intangible assets 482 451 506 Vessel and equipments 20 626 16 051 19 707 Newbuildings 2 334 3 354 1 925 Tangible assets 22 960 19 405 21 632 Investment in affiliated companies 114 57 71 Investments in shares 9 9 9 Other noncurrent receivables 267 147 205 Financial assets 390 213 285 Noncurrent assets 23 832 20 069 22 423 Accounts receivables 1 189 1 100 1 051 Other current receivables 972 610 933 Current receivables 2 161 1 710 1 984 Restricted deposits 5 866 966 948 Cash and cash equivaltents 5 966 869 1 696 Cash and cash equivalents incl. restricted deposits 1 831 1 835 2 645 Currrent assets 3 992 3 545 4 629 Total Assets 27 825 23 614 27 053 EQUITY AND LIABILITIES Share capital 182 182 182 Share premium fond 678 678 678 Other equity 3 074 2 938 3 118 Noncontrolling interests 2 684 2 726 2 750 Equity 6 618 6 525 6 728 Deferred taxes 360 336 402 Other provisions and derivates 67 186 90 Noncurrent provisions and commitments 428 522 493 Bond loan 3 153 684 2 754 Debt to credit institutions 13 561 9 777 13 085 Other noncurrent liabilities 484 556 600 Noncurrent liabilities 17 198 11 017 16 438 Debt to credit institutions 7 1 466 4 257 1 876 Accounts payable 438 358 415 Other current liabilities *) 1 676 935 1 103 Current liabilities 3 580 5 550 3 393 Total liabilities 21 206 17 089 20 325 Total equity and liabilities 27 825 23 614 27 053 *) Other current liabilities includes an overdraft facilities draw on a newbuild delivered in first quarter. A longterm loan has been drawn for this newbulid in third quarter.
EQUITY STATEMENT Paidin capital Retained earnings Currency translation differences Total Noncomtrolling interest Total equity Balance at 01.01.2011 860 2 701 417 3 118 2 750 6 728 Result /loss for the year 10 10 56 66 Other comprehensive income 13 49 36 14 50 Share issues Transaction with nonconrolling interests 6 6 Balance at 30.06.2011 860 2 703 368 3 071 2 686 6 618 Balance at 01.01.2010 860 2 841 330 3 171 2 777 6 809 Result /loss for the year 196 196 85 281 Other comprehensive income 68 68 30 38 Share issues Transaction with nonconrolling interests 35 35 Balance at 30.06.2010 860 2 645 262 2 907 2 757 6 525 CASH FLOW STATEMENT (MNOK) Acc Q2 2011 Acc Q2 2010 2010 Profit before taxes 90 261 200 Profit/loss on disposal of tangible assets 1 37 37 Depreciation and write offs of tangible assets 549 524 1 166 Changes in accounts receivables 195 136 184 Changes in accounts payable 23 142 198 Foreign exchange gain/losses 192 209 83 Changes in other working capital 142 20 122 Share of profit/loss from assosiates 1 2 5 Cash from operating activities 343 690 1 112 Interest income/cost 470 285 814 Interest received 44 23 58 Interest paid 443 347 827 Tax paid for the period 45 2 73 Net cash from operating activities 368 649 1 084 Payments received fro sale of tangible assets 12 240 460 Purchase of tangible assets 1 957 2 813 5 708 Payments received for sale of shares 0 0 0 Purchase of shares and associates 44 0 19 Payments received /purchase of other noncurrent receivables 61 0 85 Net cash from investering activities 2 050 2 572 5 352 Proceeds from borrowings 2 675 5 415 10 718 Repayment fo borrowings 1 797 3 912 6 070 Payments from nonconrolling interests 7 32 41 Equity payments received 0 0 0 Net cash from financing activities 885 1 534 4 689 Net changes in cash and cash equivalents 797 390 421 Cash and cash equivalents at the start of the period 2 645 2 214 2 214 Exchange gain/loss on cash and cash equivalents 17 11 10 Cash and cash equivalents at the end of the period 1 831 1 835 2 645
Notes to the Condensed Financial statements Note 1 General This interim report has been prepared in accordance with the standard for interim reporting (IAS34). Amendments to the standards and their interpretation may result in amended figures. The accounting principles and calculation methods applied for the last annual accounts published have been applied to this document. The interim report has not been audited and should be read in the context of the annual report for 2010. The Financial statement are unaudited. Note 2 Segment informasjon Operating income and EBITDA per segment Operating Income Acc Q2 2011 Acc Q2 2011 2010 PSV 358 393 747 AHTS 476 452 877 CSV 2 133 1 805 3 837 Total 2 967 2 650 5 462 EBITDA Acc Q2 2011 Acc Q2 2011 2010 PSV 136 132 270 AHTS 200 194 370 CSV 533 497 1 069 Total 869 823 1 709 Note 3 Events after balance date DOF completed the sale of one new building (hull no. 081 at Cochin Shipyard). This transaction was completed in July. DOF Subsea was awarded the contract for Goliat FPSO marine with Eni Norge in July. The contract has a total value of approximately NOK 300 million In August, Skandi Niteroi was awarded a 4year contract for Petrobras. Note 4 Depreciaiton With effect from 1 January 2011, the DOF Group has amended its depreciation estimate. In brief, the amendment involves a reduced degree of decomposition than with previous depreciation estimates. Existing depreciation is maintained which implies expected useful life for each vessel. Estimated residual value is 50 % of original cost price for the vessel. Vessels older than 20 years are based on individual evaluations. Note 5 Cash and cash equivalent 30.06.2011 30.06.2010 31.12.2010 Cash and cash equivalent 966 966 948 Restricted cash 866 869 1 696 Total cash and cash equivalent 1 831 1 835 2 645 Note 6 Transaction with related parties Transactions with realated parties are governed by market terms and conditions inaccordance with the "arm's length principle". Note 7 Current part of noncurrent debts Current part of noncurrent debts amounts to NOK 1 466 million at 30.06.2011. Note 8 Taxes Taxes per 30 June 2011 are an estimate.
SHARE CAPITAL AND SHAREHOLDERS Largest shareholders as of 30.06.11 Name No. shares Shareholding Voting shares MØGSTER OFFSHORE AS 46.210.050 50,76 % 50,76 % ODIN NORGE 6.033.952 6,63 % 6,63 % PARETO AKSJE NORGE 4.955.692 5,44 % 5,44 % SKAGEN VEKST 4.827.873 5,30 % 5,30 % PARETO AKTIV 2.248.939 2,47 % 2,47 % MP PENSJON PK 1.845.600 2,03 % 2,03 % ODIN OFFSHORE 1.731.563 1,90 % 1,90 % PARETO VERDI 1.204.898 1,32 % 1,32 % VESTERFJORD AS 873.650 0,96 % 0,96 % KANABUS AS 801.684 0,88 % 0,88 % NORDEA BANK NORGE ASA MARKETS 758.217 0,83 % 0,83 % MUSTAD INDUSTRIER AS 640.000 0,70 % 0,70 % DNB NOR SMB 550.000 0,60 % 0,60 % HOLBERG NORGE 515.550 0,57 % 0,57 % MOCO AS 498.100 0,55 % 0,55 % PACTUM AS 400.000 0,44 % 0,44 % CITIBANK N.A. NEW YORK BRANCH 370.565 0,41 % 0,41 % FORSVARETS PERSONELLSERVICE 356.200 0,39 % 0,39 % ODIN NORGE II 352.940 0,39 % 0,39 % ODIN MARITIM 339.800 0,37 % 0,37 % Total 75.515.273 82,95 % 82,95 % Total other shareholders 15.522.702 17,05 % 17,05 % Total no of shares 91.037.975 100 % 100 %