Brooge Energy Ltd. (“Brooge Energy” or the “Company”) (NASDAQ:
BROG), a midstream oil storage and service provider strategically
located outside the Strait of Hormuz, adjacent to the Port of
Fujairah in the United Arab Emirates (“UAE”) through its
wholly-owned subsidiaries Brooge Petroleum and Gas Investment
Company FZE (“BPGIC”) and Brooge Petroleum and Gas Investment
Company Phase III FZE (“BPGIC III”), today announced its financial
results for the year ending December 31, 2020.
Nicolaas L. Paardenkooper, CEO of Brooge Energy
and BPGIC, said, “In 2020, we continued to operate Phase I of our
operational footprint at full capacity yielding favorable margins
and profitability during the year. The midstream sector continues
to be of significant strategic importance, supporting the
infrastructure and storage needs of the oil industry and ultimately
allowing the market to work more efficiently. During the year we
were also able to complete the issuance of $200 million in proceeds
from a bond offering, part of which was used towards construction
of Phase II.”
Mr. Paardenkooper continued, “We expect Phase II
construction to be completed in Q2 2021. Phase II is fully
contracted and after completion, our storage capacity will be
expanded by approximately 600,000 cbm, which equates to 3.8 million
barrels. This increases the total capacity of the BPGIC Terminals
to approximately one million cubic meters, or the equivalent of 6.3
million barrels. By this point, we will be the second largest
non-captive storage operator in Fujairah.”
Operational Highlights
in 2020 to Date:Phase
I:
- Signed three new oil storage
contracts for its Phase I facility at 50% premium.
- Signed two new oil storage
contracts for its Phase I facility at 60% premium.
- Signed offtake contract with an oil
trading company which is one of the “Super major” oil companies in
the world to provide oil storage in Phase I for an initial six
month period commencing April 28, 2020.
Phase II:
- Commenced hydrotesting for Phase II
storage facility expansion.
Phase III:
- Engaged Ernst & Young to
perform a feasibility study for the Phase III oil storage
facility.
- Commenced preconstruction work on
Phase III oil storage facility, including the Soil Investigation
and Environmental Impact Assessment (“EIA”).
- Completed final basic design, Front
End Engineering Designs, for Phase III oil storage terminals and
refinery.
Operational Milestones for Remainder of
2021:
- Phase II construction to be
completed in Q2 2021 and will operate at, or near, full capacity by
Q3 ’21. Phase II is fully contracted, expanding storage capacity by
approximately 600,000 cbm, which equates to 3.8 million
barrels.
- Phase III will commence
construction which will expand capacity by up to 3.5 million m3 of
storage capacity in Fujairah.
Financial Information for the Year
Ending December 31, 2020:Revenue for the
year ended December 31, 2020 decreased to $41.8 million as compared
to $44.1 million for the same period ended December 31, 2019
primarily due to ancillary revenue in 2020 decreasing by $5.1
million to $14.9 million as compared to $20.1 million in 2019.
In order to minimize customer concentration
risk, the Company made a decision to diversify its customer base by
signing new contracts. In 2020 the Company obtained five new
customers as compared to 2019, each of which has no or minimal
requirement for ancillary services. The decrease of $5.1 million
was partially offset by $1.3 million from new contracts at higher
storage rates and terms of agreement. Ancillary services revenue
also includes port charges of $1.6 million that are paid by the
Company to the port authority and recharged to the customers.
The Company’s gross profit decreased to $28.9
million in 2020 from $33.9 million in 2019 mainly due to a decrease
in ancillary revenues of $5.1 million, which is offset by an
increase in storage revenues of $1.3 million and an increase in
direct costs attributable to cost of production of $1.1 million as
explained above.
General and administrative expenses increased by
$3.8 million or 147% from $2.6 million in 2019 to $6.5 million in
2020. The major reasons for this increase are:
- Increase in
salaries and addition of new staff towards the mid of 2019 which
resulted in an increase of $0.5 million in 2020 compared to
2019.
- Increase of
$1.9 million in consultancy charges, which comprises of legal
charges of lawyers and investor relations which were for a partial
period in 2019 as compared to full year in 2020. This also includes
an increase in audit charges during 2020 when compared to
2019.
- During the year
2020, the Company opted for an insurance cover of directors and key
management liability for $0.6 million which was not taken in 2019
resulting in a straight increase. Also during the year 2020, board
member fees of $0.4 million was accounted which was not there in
2019.
During the year 2020, there was an increase in
finance cost by 45% in 2020 as compared to 2019 from $5.7 million
in 2019 to $8.3 million in 2020. The main reasons for the increase
in finance cost are:
- The increase in
finance costs on borrowings & bank charges includes the balance
of prepaid documentation fees on Phase 1 term loan of around $0.5
million, which was expensed out in 2020 in full as the loan was
settled in the month of November 2020, which contributed as a
direct increase in 2020 as against 2019.
- The finance
costs on borrowings & bank charges also includes an amount of
$4.3 million, being interest for the year 2020 on the new $200
million Bond Financing Facility which was not there in 2019.
- Penalty charges
for $0.7 million are the pre-settlement charges paid towards
settlement of the Phase 1 loan in 2020.
- Accretion
expense on asset retirement obligation has been recognized of $0.07
million.
- There is an
increase in interest on lease liability on account of Phase III
land as per IFRS 16. Interest on lease liability for Phase III
amounting to $0.6 million was accounted for one month of December
2020.
- The Company
signed the Phase III Land Lease during the year 2020. As per the
Phase III Land Lease, there is a rental free period for first 18
months until July 2021. However, as per IFRS 16, land lease
interest and depreciation had to be accounted for one month of
December 2020 even though the rental free period had not expired
and there was no actual outflow of cash towards lease rentals. This
reduced the overall net profit by $0.64 million in 2020.
Adjusted EBITDA declined by $8.0 million in 2020
when compared to 2019 from $37.1 million (84.1% of revenue) for the
year ended December 31, 2019 to $29.1 million (69.5% of revenue)
for the year ended December 31, 2020. The main reasons for decline
of Adjusted EBITDA in 2020 are:
- There was a net
decline in revenue of $2.2 million in 2020. This $2.2 million was
due to a decrease in ancillary business to the extent of $5.2
million during the last quarter of 2020 with an increase of $1.3
million in storage rental fixed revenues due to the Company’s
legacy customer releasing additional capacity of 124,854 m3 over
and above the 129,000 m3 released earlier for the Super Major.
Ancillary services revenue also includes port charges of $1.6
million that are paid by the Company to the port authority and
recharged to the customers as against 2019. There was an increase
of total direct costs by $2.7 million from $10.2 million in 2019 to
$12.9 million in 2020 which is around 27% over the previous year
2019. Also, general and administrative expenses increased by 147%
or $3.8 million from $2.6 million in 2019 to $6.4 million in
2020.
- This overall
decline in revenue by $2.3 million and increase in expenses by $6.5
million contributed to the decrease in Adjusted EBITDA.
During the year 2020, the Company generated net
profit of $17.2 million, as against net loss of $75.3 million in
2019. The loss in 2019 was primarily due to a non-cash expense of
$98.6 million.
Balance Sheet and Liquidity:The Company had
cash and bank balances of $47.9 million at December 31, 2020.
During the year 2020, the Company’s net
expenditure towards capital expenses amounted to $97.2 million.
During the year 2020, the Company made net payments of $81.2
million towards the Phase II construction, $28.8 million out of
which went from the Company’s operating cash flow and the balance
of $52.4 million out of the proceeds of the Bond Financing
Facility.
During the year, Brooge completed the issuance
of a USD $200 million 5-year senior secured bond with a borrowing
limit of USD$ 250 million in the Nordic bond market. The bond,
which will mature in September 2025, provides a flexible financial
platform to support our future growth agenda and marks a key
milestone for the Company in entering the international bond
market.
Capital expenditures in 2021 are expected to be
approximately $33.1 million, which is expected to be funded
primarily through cash from operations and from the remainder of
the proceeds from the Bond Financing Facility. These planned
capital expenditures will consist primarily of expenditures related
to the construction of the Phase II facility.
Earnings Conference
Call and Webcast Information
Date: |
April 7, 2021 |
Time: |
8:00 a.m. ET / 4:00pm UAE |
Dial-in numbers: |
+1 877-425-9470 (U.S.), 800 035 703 290 (UAE), +1-201-389-0878
(International) |
Instructions: |
Request the “Brooge Energy Call” or Conference ID: 13718379 |
Live webcast: |
http://public.viavid.com/index.php?id=144209 |
A dial-in replay of the call will also be
available, to those interested, until April 14, 2021. To access the
replay, dial +1 844-512-2921 (United States) or +1 412-317-6671
(International) and enter replay pin number: 13718379.
About Brooge Energy Limited
Brooge Energy conducts all of its business and operations through
its wholly-owned subsidiaries, Brooge Petroleum and Gas Investment
Company FZE (“BPGIC”) and Brooge Petroleum and Gas Investment
Company Phase III FZE (“BPGIC III”), Fujairah Free Zone Entities.
Brooge Energy is a midstream oil storage and service provider
strategically located outside the Strait of Hormuz adjacent to the
Port of Fujairah in the United Arab Emirates. Its oil storage
business differentiates itself from competitors by providing
customers with fast order processing times, excellent customer
service and high accuracy blending services with low oil losses.
For more information please visit at www.broogeenergy.com
Adjusted EBITDA is not a financial measure
presented in accordance with IFRS. Adjusted EBITDA should not be
considered in isolation or as a substitute for or superior to
analysis of our results, including net income, prepared in
accordance with IFRS. Because Adjusted EBITDA is a non-IFRS
measure, it may be defined differently by other companies in our
industry, our definition of this Non-IFRS financial measure may not
be comparable to similarly titled measures of other companies,
thereby diminishing the utility. We encourage investors and others
to review our financial information in its entirety and not rely on
a single financial measure.
We present Adjusted EBITDA as a supplemental
performance measure because we believe that the presentation of
this non-IFRS financial measure will provide useful information to
investors in assessing our financial condition and results of
operations. Profit (loss) is the IFRS measure most directly
comparable to Adjusted EBITDA. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some, but not
all, items that affect net income. Some limitations of Adjusted
EBITDA are:
- Adjusted EBITDA does reflect
finance costs of, or the cash requirements necessary to service
interest on our debts; and
- Adjusted EBITDA excludes
depreciation and although these are non-cash charges, the assets
being depreciated may have to be replaced in the future.
Management compensates for the limitations of
Adjusted EBITDA as an analytical tool by reviewing the comparable
IFRS measure, understanding the difference between Adjusted EBITDA
and profit (loss) and incorporating this knowledge into its
decision-making processes. We believe that investors benefit from
having access to the same financial measures that our management
uses in evaluating our operating results.
The following table presents a reconciliation of
net income to Adjusted EBITDA, the most directly comparable IFRS
financial measure for the indicated periods:
|
|
For the Year Ended December 31, |
|
$ |
|
2018 |
|
2019 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
Profit (loss) for the year/ period |
|
|
16,060,652 |
|
|
(75,284,923) |
|
|
17,159,113 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
Depreciation charge |
|
|
5,716,063 |
|
|
5,785,745 |
|
|
5,799,023 |
|
Finance costs |
|
|
6,951,923 |
|
|
5,730,535 |
|
|
8,306,150 |
|
Listing Expenses |
|
|
- |
|
|
101,773,877 |
|
|
- |
|
Net changes in estimated fair value of derivative warrant
liabilities |
|
|
- |
|
|
(1,273,740) |
|
|
(2,547,542) |
|
Net changes in fair value of derivative financial instruments |
|
|
1,190,073 |
|
|
328,176 |
|
|
340,504 |
|
Total Adjustments |
|
|
13,858,059 |
|
|
112,344,593 |
|
|
11,898,135 |
|
Adjusted EBITDA |
|
|
29,918,711 |
|
|
37,059,670 |
|
|
29,057,248 |
|
Revenues |
|
|
35,839,268 |
|
|
44,085,374 |
|
|
41,831,537 |
|
Adjusted EBITDA % of Revenues |
|
|
83.48 |
% |
|
84.06 |
% |
|
69.46 |
% |
Forward-Looking Statements This
press release contains “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995, that involve risks and
uncertainties concerning BPGIC’s, BPGIC III’s and Brooge Energy’s
expected financial performance, as well as their strategic and
operational plans. The actual results may differ materially from
expectations, estimates and projections due to a number of risks
and uncertainties and, consequently, you should not rely on these
forward looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “would,” “could,”
“should,” “believes,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. These risks and uncertainties include, but are not
limited to: (1) the ultimate geographic spread, duration and
severity of the coronavirus outbreak and the effectiveness of
actions taken, or actions that may be taken, by governmental
authorities to contain the outbreak or ameliorate its effects; (2)
Brooge Energy’s and its subsidiaries’ ability to obtain financing
for Phase III on commercially reasonable terms; (3) Brooge Energy’s
and its subsidiaries’ ability to negotiate and enter into
development and offtake agreements on commercially reasonable
terms; (4) the results of technical and design feasibility studies,
including the Soil Investigation and the Environmental Impact
Assessment report for Phase III; (5) the loss of any end-users; (6)
changes in customer demand with respect to ancillary services
provided by Brooge Energy and its subsidiaries including
throughput, blending, heating, and intertank transfers; (7) Brooge
Energy’s and its subsidiaries’ ability to effectively manage the
risks and expenses associated with the construction of Phase II,
Phase III and other growth and expansion projects; and (8) other
risks and uncertainties indicated from time to time in filings with
or submissions to the SEC by Brooge Energy. Readers are referred to
the most recent reports filed with or furnished to the SEC by
Brooge Energy. Readers are cautioned not to place undue reliance
upon any forward-looking statements, which speak only as of the
date made, and we undertake no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise.
Investor Contact KCSA Strategic
Communications Valter Pinto / Elizabeth Barker +1 212-896-1254 or
+1 212-896-1203 BROG@kcsa.com
|
|
2020 |
|
|
2019 |
|
|
|
$ |
|
|
(Restated)$ |
|
|
|
|
|
|
|
|
Revenue |
|
|
41,831,537 |
|
|
|
44,085,374 |
|
Direct costs |
|
|
(12,944,760 |
) |
|
|
(10,202,465 |
) |
GROSS PROFIT (LOSS) |
|
|
28,886,777 |
|
|
|
33,882,909 |
) |
Listing expenses |
|
|
- |
|
|
|
(101,773,877 |
|
General and administrative expenses |
|
|
(6,456,884 |
) |
|
|
(2,608,984 |
) |
Finance costs |
|
|
(8,306,150 |
) |
|
|
(5,730,535 |
) |
Change in estimated fair value of derivative warrant
liabilities |
|
|
2,547,542 |
|
|
|
1,273,740 |
|
Changes in fair value of derivative financial instruments |
|
|
(340,504 |
) |
|
|
(328,176 |
|
Other Income |
|
|
828,332 |
|
|
|
- |
|
PROFIT (LOSS) AND TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE
YEAR |
|
|
17,159,113 |
|
|
|
(75,284,923 |
) |
(Loss) / Earnings per share |
|
|
|
|
|
|
|
|
-Basic and diluted |
|
|
0.19 |
|
|
|
(0.94 |
) |
|
|
|
|
|
|
|
|
|
Selected Non-IFRS Financial Data |
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
|
29,057,248 |
|
|
|
37,059,670 |
) |
Adjusted EBITDA Margin(1) |
|
|
69.46 |
|
|
|
84.06 |
|
Balance Sheet Data
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
(Restated) $ |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
392,221,590 |
|
|
|
284,893,352 |
|
Current assets |
|
|
40,401,956 |
|
|
|
22,359,108 |
|
TOTAL ASSETS |
|
|
432,623,546 |
|
|
|
307,252,460 |
|
Equity |
|
|
128,618,677 |
|
|
|
109,416,415 |
|
Non-current liabilities |
|
|
260,218,070 |
|
|
|
102,799,150 |
|
Current liabilities |
|
|
43,786,799 |
|
|
|
95,036,895 |
|
TOTAL EQUITY AND LIABILITIES |
|
|
432,623,546 |
|
|
|
307,252,460 |
|
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