FINANCIAL REPORT. 4 th Quarter and total year 2005 financial statements DeepOcean ASA

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1 4 th Quarter and total year 2005 financial statements DeepOcean ASA DeepOcean ends 2005 with a strong 4 th quarter Yearly revenue up 25 %, pre-tax profit MNOK 85 (MNOK 34 in 2004) Market outlook for 2006 and onwards looks promising Capacity increased in 2006 with 3 more vessels in addition to the 7 now being operated Order book at the end of the year MNOK 2,700 After the acquisition of the Oceanteam Group in August 2005, the company has been through a merging process and is now structured to reach new goals for the future. The company controls 10 vessels, 4 modern ROV-systems together with state of the art ROV and survey equipment. In addition, the company has ordered 6 new ROV systems as well as survey equipment to be installed on the vessels controlled by DeepOcean for the 2006 season. One of the vessels, M/V Atlantic Challenger, is owned by the company. Besides Norway, DeepOcean is represented in Mexico, United Kingdom and the Netherlands. The company was listed on Oslo Stock Exchange on December 7 th, As may be derived from the above, the 2005 actual figures are influenced by the acquisition that took place in the 3rd quarter, and the yearly figures will, thus, not be comparable with any previous period. Pro-forma figures are therefore included to ease comparisons. 4 th quarter pro-forma accounts: MNOK % Change Revenues Pre-tax profit n.a. 4th quarter figures show significant increase compared to The main reasons for this positive development are increased operating income, improved project margins and higher utilization of resources in the 4th quarter 2005, together with a positive outcome of an agreement solving a dispute with Rovtech Ltd. The industry normally has seasonal variations with relatively weak 4th quarter in the North Sea region, while the seasonal factor is not that clear in the Gulf of Mexico. While 4th quarter in 2004 showed the low season activity typical for the industry, 4th quarter in 2005 showed improved project activity, which is in accordance with the general positive tendency in the market. Year 2005 pro-forma accounts: MNOK % Change Revenues Pre-tax profit The total 2005 figures show a strong growth both in revenue and especially in profit. The significant improvement in pre-tax profit can be explained by the Company s revenue increase, in addition to an improvement from a relatively weak start of 1st quarter 2004, and a strong 4th quarter 2005 with the background as described above. One reason for the positive 2005 development is found in the new market segment which the company entered into, by winning the decommissioning contract for Total E&P Norge AS on the Frigg field. In addition, the main markets in the North Sea have experienced increased activity Date: Page 1 of 9

2 with higher utilization, which corresponds well with the general picture for the industry at the moment. Depreciation has increased mainly due to a larger fixed assets base as a consequence of the acquisition of Oceanteam AS. Net finance has improved with NOK 11.6 million. The main reasons for this positive development are interest paid on the company s large bank deposit during 4th quarter and agio on, among other factors, a Euro loan and USD receivables. Merger The merging process has continued throughout the last quarter, and has started to show positive effects. Marketing synergies are already in force, and planned cost savings were executed in the 4th quarter. The full effects are expected to be shown in Financing and investments DeepOcean accomplished a private placement in October, with a net cash in-flow in the 4th quarter of NOK 265 million, giving financial strength to further growth for the company. During 4th quarter 2005 the company placed orders for new equipment of NOK 180 million. Recruiting 4t quarter was characterized with heavy recruitment activities in order to increase the company s offshore manpower resources, to be able to execute all the work for During this quarter 35 new employees were recruited. Charters In the 4th quarter the company has taken on new charters / declared options for 4 of the vessels that will be used for the 2006 season; Edda Fonn, Polar Prince, Multraship Commander and Bold Endeavour. Order book The company has a strong order book which shows about NOK 2.7 billion by year end Market and future outlook The market for 2006 and onwards seems very promising for the company with many and large projects coming up. The historical tendency of a relative weaker 1 st quarter will still pertain, as several of the North Sea projects will commence later in the year, and the period is characterised by heavy investment and seasonal start up activities. The year as a whole is, however, expected to be very good. DeepOcean has increased its capacity, and will in March/April this year start operating three more vessels in addition to the 7 vessels operated by the group now. With the new capacity, turnover is expected to exceed NOK 1 billion in Board of Directors DeepOcean ASA February 16 th, 2006 Contacts: CEO Kåre Johannes Lie (Mob.: ) CFO Gerhard Skåleskog (Mob.: ) Group Controller Håvard Framnes (Mob.: ) Date: Page 2 of 9

3 4. kvartals rapport DeepOcean ASA DeepOcean avslutter 2005 med et godt 4. kvartal 25% økning i årlig omsetning, resultat før skatt MNOK 85 (MNOK 34 i 2004) Lovende markedsutsikter for 2006 og fremover Kapasiteten i 2006 økt med 3 fartøy i tillegg til de 7 selskapet allerede disponerer Ordreboken ved årsslutt var MNOK Etter sammenslåingen med Oceanteam gruppen i august 2005, har selskapet vært igjennom en sammenslåingsprosess og er nå strukturert for å nå nye mål neste år. Selskapet kontrollerer 10 fartøyer, 4 moderne ROV systemer sammen med avansert ROV og survey utstyr. I tillegg til eksisterende utstyrsmasse har selskapet bestillt 6 nye ROV systemer samt survey utstyr, som skal installeres på fartøyer kontrollert av DeepOcean. Ett av skipene, M/V Atlantic Challenger, eies av konsernet. Deepocean er nå representert i Mexico, Storbritannia og i Nederland i tillegg til Norge. Selskapet ble notert på Oslo Børs 7. desember Som det utledes av det ovenstående er 2005 resultatene påvirket av selskapsovertakelsen som fant sted i høst, slik at regnskapet ikke vil kunne sammenlignes med tidligere perioder. Det legges derfor frem pro-forma tall for å gjøre sammenligningene enklere. 4. kvartals pro-forma regnskap: MNOK % Endring Inntekter 194,1 161,9 19,9 Overskudd før skatt 20,7-0,3 i.a. Regnskapet for 4. kvartal viser en markant økning i forhold til samme periode i De viktigste årsakene til denne positive utviklingen er økte inntekter, forbedrede prosjektmarginer og høyere utnyttelse av ressursene i 4. kvartal I tillegg oppnådde selskapet et positivt utfall i forbindelse med en disputt med Rovtech Ltd. Bransjen har sesongmessige variasjoner, vanligvis med et svakt 4. kvartal i Nordsjøen, mens sesongvariasjonen ikke er så fremtredende i Mexico gulfen. Mens regnskapet for 4. kvartal i 2004 gjenspeilte den typiske lavsesong aktiviteten, viste 4. kvartal i 2005 økt aktivitet, noe som samsvarer med den generelt positive trenden i markedet pro-forma regnskap: MNOK % Endring Inntekter 705,7 561,9 25,6 Overskudd før skatt 85,7 34,3 150,0 Regnskapet for 2005 viser en sterk vekst i inntekter og spesielt i overskudd før skatt. Den markante økningen i overskuddet kan forklares med inntektsveksten, i tillegg til et relativt svakt 1. kvartal i 2004 og det sterke 4. kvartalet i 2005 med årsaker nevnt ovenfor. Et viktig bidrag til den positive 2005 utviklingen skriver seg fra det nye markedssegmentet som selskapet gikk inn i når DeepOcean vant fjerningskontrakten med Total E&P Norge AS på Friggfeltet. Også i selskapets tradisjonelle hovedmarkeder har DeepOcean økt aktivitet med høyere utnyttelse i tråd med den generelle utviklingen i bransjen. Date: Page 3 of 9

4 Avskrivningene er økt noe hovedsakelig på grunn av økt verdi på anleggsmidler som følge av merverdier i forbindelse med oppkjøpet av Oceanteam AS. Netto finans er forbedret med NOK 11,6 millioner. Hovedforklaringen på endringen er renter på selskapets betydelige bankinnskudd i 4. kvartal og agio på blant annet et Euro lån og utestående USD fordringer. Sammenslåing Prosessen med å slå sammen virksomhetene i DeepOcean og tidligere Oceanteam har fortsatt gjennom 4. kvartal og har begynt å vise positive effekter. Deler av forventede markedsmessige synergieffekter er allerede tatt ut, og tiltak for kostnadsbesparelser er effektuert og forventes å vise resultater i Finansiering og investering DeepOcean gjennomførte en rettet emisjon i oktober med et netto proveny tilsvarende NOK 265 millioner, som gir finansiell styrke til fortsatt vekst for selskapet. Gjennom 4. kvartal 2005 har selskapet plassert ordrer på nytt utstyr for NOK 180 millioner. Rekruttering Gjennom 4. kvartal har det vært stor rekrutteringsaktivitet i konsernet. Det har vært spesiell fokus på å øke antall offshore mannskap for å møte den høye aktiviteten som kommer i I løpet av kvartalet er 35 personer ansatt. Charters I 4. kvartal har selskapet inngått nye charters / forlenget opsjoner på 4 av fartøyene som skal brukes i 2006 sesongen; Edda Fonn, Polar Prince, Bold Endeavour og Multraship Commander. Ordrebok Selskapet har en solid ordrebok på ca NOK 2,7 milliarder ved årets slutt Markedet og fremtidsutsiktene Markedet i 2006 og videre fremover anses som svært lovende, med gjennomføring av flere store prosjekter for selskapets vedkommende. Det historisk sett relativt svake 1. kvartal forventes også i 2006 ettersom flere av de store Nordsjøprosjektene ikke starter før et stykke ut i året. Samtidig er kvartalet preget av tunge investeringer og oppstartsaktiviteter. Året som helthet forventes imidlertid å være svært godt. DeepOcean har økt sin kapasitet og vil i mars/april 2006 mobilisere ytterligere 3 fartøyer i tillegg til de 7 konsernet har operert siden slutten av Med denne nye kapasiteten forventes omsetning i 2006 å overstige NOK 1 milliard. Styret i DeepOcean ASA 16. februar 2006 Kontakter: CEO Kåre Johannes Lie (Mob.: ) CFO Gerhard Skåleskog (Mob.: ) Group Controller Håvard Framnes (Mob.: ) Date: Page 4 of 9

5 Pro-forma financial statement Pro-forma income statement MNOK 4q q Revenue Total revenue Project cost Other operating costs Total operating expenses EBITDA Depreciation EBIT Net finance cost 5 (1) (5) (13) Earnings before tax (0) 34 Taxes 6 26 (0) 10 Net earnings (0) 25 Earnings per share 0,31 1,16 (0,01) 0,50 Date: Page 5 of 9

6 Pro-forma balance sheet MNOK ASSETS Intangible fixed assets Tangible fixed assets Financial assets 2 Total fixed assets Trade receivables Cash and cash equivalents Other current assets Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Subscribed equity Retained earnings 71 (7) Total equity Long term debt Other long term liabilities Total long term liabilities Payables Short term debt Other short term liabilities Total short term liabilities TOTAL EQUITY AND LIABILITIES Date: Page 6 of 9

7 Actual financial statements Actual income statement MNOK 4q q Revenue Total revenue Project cost Other operating costs Total operating expenses EBITDA (1) 30 Depreciation EBIT (4) 15 Net finance cost (2) Earnings before tax (4) 13 Taxes 6 18 (1) 4 Net earnings (2) 10 Earnings per share 0,31 1,28 (0,10) 0,43 Date: Page 7 of 9

8 Actual balance sheet MNOK ASSETS Intangible fixed assets Tangible fixed assets Financial assets 2 2 Total fixed assets Trade receivables Cash and cash equivalents Other current assets Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Subscribed equity Retained earnings Total equity ,999 Long term debt Other long term liabilities 38 7 Total long term liabilities Payables Short term debt Other short term liabilities Total short term liabilities TOTAL EQUITY AND LIABILITIES Specification of changes in equity MNOK q q 2004 Equity Capital increase Dividend (5) 0 0 Net earnings in period (2) Currency effects 7 5 (0) 0 Equity The capital increase in 2005 is due to the acquisition of Oceanteam AS in addition to a private placement. In total, the share capital was increased by NOK ,50 by issuance of new shares. Date: Page 8 of 9

9 Cash flow statement MNOK 4q q Cash flow from operations Cash flow from investment activities (41) (333) (7) (9) Cash flow from financial activities Changes in cash over the period Cash at beginning of period Cash at end of period Segment information MNOK Survey/ IMR Other Elim. Total constr. Revenue (1) 549 EBIT Revenue EBIT (5) (4) 15 Summary of significant accounting principles As from 1 January 2005, the company prepares its financial statements in accordance with International Financial Reporting Standards. Comparable figures for 2004 have been restated accordingly. This interim report is prepared in accordance with IAS 34. The consolidated financial statements have been prepared based on a historical cost convention, modified by the revaluation of financial assets and liabilities at fair value through profit and loss. The accounts of Oceanteam AS and its subsidiaries have been included in the consolidated accounts of DeepOcean ASA from 1 August Thus, in the actual financial statement per 3rd quarter, the accounts of Oceanteam AS and its subsidiaries are only included for the months of August and September. The un-audited pro-forma financial information has been produced to illustrate the effect on the income statements as if the amalgamation and business combination between DeepOcean ASA and Oceanteam Group had occurred on the first day in each period. Date: Page 9 of 9