DOF Group (DOFG) Q4 2019 earnings summary

Executive summary

• Q4 operational EBITDA was NOK 805m excluding hedge accounting, the strongest since Q2 2016; fleet utilization averaged 83%.

• Improved PSV and AHTS performance in the North Sea and stronger Subsea IMR project earnings; Brazil earnings remained stable.

• Long-term refinancing remained unfinished, with completion targeted in Q1 2020; 100% of DOF Subsea AS shares were acquired.

Financial highlights

• Q4 management-reported EBITDA was NOK 749m, or NOK 805m excluding hedge accounting; IFRS EBITDA was NOK 519m vs. NOK 373m YoY.

• FY 2019 EBITDA excluding hedge accounting was NOK 2.861bn vs. NOK 2.246bn; IFRS revenue was NOK 6.276bn vs. NOK 6.051bn.

• FY net loss widened to NOK 2.881bn from NOK 1.502bn; FY impairments were NOK 1.449bn, including NOK 932m in deferred tax assets and NOK 209m in goodwill.

• FY operating cash flow was NOK 1.539bn vs. NOK 1.259bn; investments were NOK 1.312bn, and financing activity was a NOK 722m outflow.

Outlook and guidance

• 2020 operational EBITDA was expected to be in line with or slightly above 2019; backlog included NOK 5.671bn of 2020 contracts.

• Backlog coverage was 83% in Q1, 65% in Q2 and 61% for the next 12 months; total backlog was NOK 18bn at year-end, including options.

• Management and the Board believed a long-term financial solution could be achieved within Q1 2020, without assurance of success.