FIRST SIX MONTHS 2009 H1

Transcription

1 FIRST SIX MONTHS 2009 H1 09

2 FIRST SIX MONTHS HIGHLIGHTS The recession provides a challenging backdrop for all companies in the private equity industry, including HitecVision. However, in spite of this environment, we have been able to close several transactions, and move forward the value creation plans of the portfolio companies of the funds we advise. Revenues for the first six months of 2009 were NOK million, against NOK 88.2 million for the corresponding period in Net income after tax and minority interests was NOK 60.8 million, against NOK 40.8 million for the first six months of Total committed capital in funds advised by HitecVision was NOK 7.8 billion. Key milestones during the first six months include: Realisation of all remaining investments in Fund III, including the Fund s shares in the listed companies Norwegian Energy Company ASA (Noreco) and ProSep, Inc. Realisation of all deferred and conditional payments related to last year s secondary sale of Fund III s investments in RigNet, Inc, Norse Cutting & Abandonment AS and SPT Group AS. The start of the formal process of winding up Fund III. This is the first of our funds to have gone through the full cycle from start of the investment period to full realisation of all investments, all within the original seven-year term of the Fund. Realisation of Fund IV portfolio company Noble Denton Group in a trade sale to Germanischer Lloyd. A distribution of a NOK 110 million dividend to HitecVision s shareholders. In addition, one of our main tasks over the period has been to assist the Funds portfolio companies in handling the market downturn. The current market situation has so far only influenced their revenue level and profitability to a limited degree. However, several of the companies now see a reduction in their order intake, indicating tougher times ahead. Consequently, increased sales efforts, cost reduction measures and balance sheet restructurings have been main issues on the agenda. FINANCIAL RESULTS HitecVision achieved operating revenues of NOK million in the first half of 2009 (up 40% on the corresponding period last year) and net income after taxes and minority interests of NOK 60.8 million (up 49%). Revenues are derived as follows: Advisory fees (Fund III, IV and V): NOK 45.0 million Return on investments (Fund III and IV): NOK 70.8 million Share of income from associated company: NOK 7.7 million SOLIDITY HitecVision has a strong balance sheet with no interest-bearing debt and excellent liquidity, enabling the company to meet all its investment obligations in relation to funds under management as well as to finance its further planned expansion. Due to the long term nature of fund advisory agreements, a significant part of the company s revenues are predictable for several years to come. SHAREHOLDER MATTERS As at 21st August 2009, HitecVision had 177 registered shareholders, compared to 174 one year ago. The HitecVision share is listed on the A-list of Norwegian Over The Counter (NOTC) market, organised by the Norwegian Securities Dealers Association. HitecVision publishes annual and half year reports. 2

3 FUND DETAILS 3 FUND III FUND IV FUND V KEY DATA: KEY DATA: KEY DATA: Final closing: 30th June 2002 Final closing: 31st May 2006 Final closing: 10th March 2008 Total committed capital: 690 MNOK Total committed capital: 300 MUSD Committed capital: 816 MUSD HitecVision committed capital: 60 MNOK HitecVision committed capital: 9.75 MUSD HitecVision committed capital: 16 MUSD* Advisory fee: 2.5% of committed capital Advisory fee: 1.75% of committed capital Advisory fee: 1.85% of committed capital* Fund maturity: Fund maturity: Fund maturity: *) Through HV Capital AS (50% owned associated company) When Fund III had its final closing on the 30th June 2002, it was the largest fund ever raised amongst independent investors in Norway. The Fund was set up with an investment horizon of seven years (against the 10 years that is standard in the industry), and we are satisfied to report that on the 30th June 2009, the general assembly of the Fund could make the decision to wind up the Fund. Through its term, the Fund invested in nine portfolio companies and made a number of add-on acquisitions to these. All investments had been fully exited by the end of the second quarter. Please refer to the back of the report for more details on the portfolio companies. In addition to the decision to formally wind up the Fund, other highlights in the first six months of 2009 include: Realisation of the Fund s shares in the listed companies Norwegian Energy Company ASA (Noreco) and ProSep, Inc. Both shareholdings were sold in the open market. Fund IV 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. Highlights in the first half of 2009 include: The exit of the global consultancy business Noble Denton Group in a trade sale to Germanischer Lloyd. The Fund originally invested in NDG in 2006, and during the period to 2008 the company grew to three times its previous size, through a combination of organic growth and strategic acquisitions. The launch of Valco Group AS, based on a restructuring of the Fund s investment in Technor, during which the valves businesses in Technor were established as an independent group of companies. Leirvik Module Technology (LMT) acquired Reanco Team, a specialist in the offshore living quarters aftermarket sector, and established Leirvik Emtunga, based on the remains of its bankrupt former competitor Emtunga AB. Fund V is in its investment period. The Fund is targeting eight to ten portfolio companies, primarily in Europe and North America, with revenues between USD 50 million to 300 million. Equity investments per portfolio company is expected to range from USD 30 million to 150 million. In addition the Fund expects to make a number of add-on investments to the portfolio companies. Due to the prevailing market conditions, the Fund has not made any new investments during the first six months, but has instead been focusing on supporting its existing portfolio companies. Highlights in the first half of 2009 include: The establishment of Pinnacle Energy Products, a Houston-based platform for further acquisitions within the drilling and downhole technology field. Spring Energy was approved by Norwegian authorities as an operator on the Norwegian Continental Shelf. Realisation of all deferred and conditional payments related to last year s secondary sale of the Fund s investments in RigNet, Inc, Norse Cutting & Abandonment AS and SPT Group AS. A major oil discovery was made on the Grosbeak prospect, where Spring Energy holds a 20% share. Stavanger, 27th August 2009 The Board of HitecVision AS

4 INCOME STATEMENT 4 all figures in NOK Operating revenues Investment income Total revenues Operating expenses Depreciation & amortisation Net operating income Net financial income /(loss) Net income before taxes Income tax (4 585) (9 960) (4 726) Net income before minority interests Minority interests (27 148) (59 911) (11 210) Net income after minority interests BALANCE SHEET all figures in NOK Intangible fixed assets Tangible fixed assets Financial fixed assets Receivables Current asset investments Cash and deposits Total assets Total Equity net of minority interests Minority interests Total Equity Current liabilities to financial institutions Tax payable Dividends payable Other current liabilities Total equity and liabilities

5 PORTFOLIO COMPANIES 5 FUND III RIGNET, INC VALCO AS APPLY AS ALL PORTFOLIO COMPANIES ARE EXITED: PROSEP INC ProSep, Inc. supplies process technology to the oil and gas industry from companies based in Canada, Norway, USA and Asia. The company is listed on the Toronto Stock Exchange. RigNet is a leading provider of highperformance communications networks and real-time data services for the oil and gas industry. The company operates globally from its head office in Houston, USA. The Fund s investment in RigNet was sold in secondary transaction to Cubera Private Equity in KNOWLEDGE SYSTEMS, INC Revenues for 2008: MNOK 665 Valco develops, produces and markets valves and valve related products out of manufacturing platforms in Norway and France for the marine, upstream and down-stream oil and gas and industrial sectors. VECTOR GROUP AS Revenues for 2008: NOK 1.0 bn APPLY provides Electro Engineering & Technical Services within two main areas: oil & gas and construction & building. EXITED: NOBLE DENTON GROUP LTD NORWEGIAN ENERGY COMPANY ASA (NORECO) Noreco is an independent oil company, founded in Stavanger in The company is building a strong pan- North sea presence organically and through acquisitions, as a base for further international expansion. Noreco was listed on the Oslo Stock Exchange in November APL ASA APL is a world leader within loading, offloading and mooring systems for the oil and gas industry. Its solutions have been tailored for such applications as offshore terminals, FPSOs and shuttle tankers. HitecVision led the company s Management Buy-Out from Statoil in APL was listed on the Oslo Stock Exchange in March 2005, and the Fund s investment was fully realized within six months after the IPO. APL is currently part of BW Offshore. REVUS ENERGY ASA Revus Energy was an independent Norwegian oil company. It was established in 2002 with support from HitecVision, developed to a mid-size company, and listed on Oslo Stock Exchange in The Fund s investment was fully realised at that time. Revus Energy is now part of Wintershall, a German oil and gas company. MTEM LTD With patented technology MTEM (Multi-Transient Electro-Magnetic) provides a complete electro-magnetic survey acquisition and processing technique for prospects both on land and offshore. MTEM was established as a spin-off from the University of Edinburgh, with financing from HitecVision and two other investors. When the technology had been commercialised, the company was sold in a trade sale to PGS ASA in June Knowledge Systems innovative Drillworks software, training and consulting services are used by most major and independent oil companies to avoid trouble while drilling and improve exploration and drilling success. The company is based in Houston, USA. KSI was sold in a trade sale to Halliburton in May 2008, and now forms part of Halliburton. NORSE CUTTING & ABANDONMENT AS NCA has a leading position in several markets within subsea activities. NCA s services, based on its proprietary cutting technologies, are used in connection with subsea platform removals and modifications, and well slot recovery programs. The company s IOS Offshore subsidiary is a leading marine anchors rental business. NCA is based in Norway with a Houston based subsidiary serving the Gulf of Mexico market. The Fund s investment in NCA was sold in a secondary transaction to Cubera Private Equity in SPT GROUP AS SPT provides a combination of software and consultancy services relating to multiphase flow simulation and reservoir simulation. The company operates globally with head office in Norway. The major part of the Fund s investment in SPT was sold to Altor Private Equity in 2006, while the rest was sold in secondary transaction to Cubera Private Equity in FUND IV CURRENT: TECHNOR AS Revenues for 2008: MNOK 409 The Technor Group manufactures and distributes electronic and electromechanic products to niche markets within the upstream and downstream oil and gas industry. Technor has operations in Norway, France, Italy, Singapore and the UAE. Revenues for 2008: MEUR 106 Vector Group is a leading provider of specialist flanges and other pipe connectors to the oil, gas and petrochemical industries. The company also maintains a large pipe and valve trading operation. Vector operates out of main offices in Norway, Belgium and Wales, with sales offices in Scotland, England, the Netherlands, Dubai, Malaysia, Australia and the USA. The company s main products have strong market positions and have rapid growth over the last years. AARBAKKE GROUP AS Revenues for 2008: MNOK 845 Aarbakke is an independent provider of subcontracting and fabrication services to the international oil and gas industry, specializing in precision machining services primarily to subsea and downhole field applications. SØRCOGRUPPEN AS Revenues for 2008: NOK 2.1 bn. SørcoGruppen consists of a number of entities operating in various niches within the oil and gas industry. The major companies are Sørco, Leirvik Maritime Technology, and Nemo Engineering SUBSEA TECHNOLOGY GROUP AS Revenues for 2008: MNOK 837 STG is structured into two operational units: STG Products and STG Engineering. Combined the companies services and solutions cover the full life cycle of a field, from field evaluation and exploration drilling, through the development phase to subsea operations and inspection, maintenance and decommissioning. STG has operations in Norway, the UK and the US. Revenues for 2008: MGBP 100 Noble Denton is an independent, market leading consultancy firm which offers services to the global offshore, shipping and insurance industries. The Group has its head office in the UK, and additional offices in 15 different locations throughout the world. Noble Denton was sold in a trade sale to Germanischer Lloyd in March FUND V CURRENT: SPRING ENERGY NORWAY AS Revenues for 2008: N/A Spring Energy Norway AS is an oil and gas company established by a group of Exploration & Production professionals with extensive experience and an excellent track record from the Norwegian Continental Shelf (NCS). Spring Energy will participate in exploration, appraisal and development projects on the NCS, with the objective of developing a risk balanced portfolio over the next 3 to 5 years. The company was qualified as a license partner in July 2008 and as an operator in May PINNACLE ENERGY PRODUCTS AS Revenues for 2008: N/A Pinnacle Energy Products has been established in order to build a strategic platform within drilling and well technology and services. Pinnacle is led from a base in Houston, and currently has two operating companies, Hitec Products Drilling in Stavanger, and Drilling Controls Inc. in Houston.

6 F A S E T T Forsidefoto: Geir Egil Bergjord HITECVISION AS POSTAL ADDRESS: P.O. BOX STAVANGER NORWAY VISITOR ADDRESS: JÅTTÅVÅGVEIEN STAVANGER NORWAY PHONE FAX CONTACT@HITECVISION.COM S TAVA N G E R - O S L O - A B E R D E E N - H O U S T O N