Brooge Energy Ltd. (“Brooge Energy” or the “Company”) (NASDAQ:
BROG), a midstream oil storage and service provider strategically
located outside the Strait of Hormuz, in 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 six months ended June 30, 2021. All figures are in U.S.
dollars.
Nicolaas L. Paardenkooper, CEO of Brooge Energy
and BPGIC, commented, “We are pleased to have delivered year over
year growth in revenue as our business benefitted from higher fixed
storage rates. In addition, we were awarded five new contracts with
more attractive terms. Demand for oil storage remains strong and we
are benefitting from our strategic location in Fujairah with our
storage units currently at full capacity. With additional capacity
coming on line we are well positioned to meet the anticipated
strong demand.”
Mr. Paardenkooper continued, “We continue to
execute on our strategic priorities. During the first half of the
year, we made significant progress with our Phase II project and
subsequent to second quarter end construction was completed and we
applied for the necessary regulatory permits to start testing and
commissioning. With customers in place and operations now underway,
we are now generating revenue from the Phase II facility which we
expect to be reflected in our financial results for the second half
of 2021. With respect to Phase III, the feasibility study has been
completed by Ernst & Young and we can move ahead with this
project. We also made the strategic decision to add a new platform
for growth with the signing of a refinery agreement with a large
oil trader. This is a low-risk project for us as the trading
partner will assume the cost of construction as well as any oil
price risk, while we will do what we do best which is operate the
facility. When operational, the facility will drive additional
revenue for us with attractive margins. We are very excited about
these new initiatives and the opportunity ahead to grow our
business.”
Operational Highlights in 2021 to
Date:
Phase I:
- Customers have
renewed fixed lease contracts for 233,072 cubic meters (cbm) of
Phase I storage capacity, at a premium that is up to 70% higher
than the starting fixed lease storage price of the earlier
contracts. The contract renewals consist of a total of 190,072 cbm
signed with two clients on three-year terms each consisting of one
year plus a two-year mutual renewal clause. The remaining 43,000
cbm was renewed by a client for a three-year term consisting of six
months plus six months, subject to mutual renewal for an additional
two years.
Phase II:
- Applied for and received approval for a permit to start testing
and commissioning, which was the final regulatory step ahead of
starting Phase II Storage Facility operations.
- Phase II is fully contracted, and the Company has already
commenced receipt of advanced income for Phase II storage fees,
which are anticipated to contribute to its revenues in the second
half of 2021.
- In September 2021, subsequent to the reporting period, Phase II
operations launched, with the Company receiving its first
cargo.
Phase III:
- Ernst & Young completed the
feasibility study for the Phase III oil storage facility and
refinery. The feasibility study supports the financial viability of
the Company’s Phase III expansion plan, highlighting upcoming
infrastructure investments in the region as a key driver of
sustainable storage demand and rising domestic and export demand
for refined products as a key driver of refinery demand.
Corporate Governance:
- Appointed Nariman Karbhari and Tony
Boutros as independent members of its Board of Directors effective
as of May 16, 2021.
Operational Milestones for Remainder of
2021:
- Phase III is
anticipated to commence construction which will expand capacity by
up to 2.5 million cbm (the total land for Phase III has the
potential to host up to 3.5 million cbm of storage capacity) and
will include a modular 25,000 barrel per day (“bpd”) refinery, and
a larger 180,000 bpd conventional refinery.
Financial Information for the Six Months
Ended June 30, 2021:
Revenue for the six-month
period ended June 30, 2021 increased to $23.3 million as compared
to $22.9 million for the same period ended June 30, 2020 primarily
due to higher storage rates in 2021 as compared to 2020. In 2020,
higher storage demand was triggered especially after the WTI crash,
and a global shortage of storage was highlighted more specifically
in Fujairah, which drove the storage fees higher and the demand for
ancillary services lower. In addition, the Company’s high tech, and
high-speed facilities with the lowest product loss ratios attracted
increasingly more attention enabling the business to obtain five
new customers with higher premiums.
The decrease of $4.1 million in ancillary
services as compared to six months ended June 2020 was offset by
$4.5 million from new contracts at higher storage rates and terms
of agreement. Ancillary services revenue also includes port charges
of $1.3 million that are paid by the Company to the port authority
and recharged to the customers.
Direct costs increased by $1.1 million or 17.2%
from $6.1 million in the six-month period ended June 30, 2020 to
$7.2 million in the six-month period ended June 30, 2021. The major
reasons for this increase are as follows:
- An increase of $0.6 million in port expenses due to the
increased port activity and movement with the introduction of more
customers.
- An increase in depreciation of $0.05 million due to the
addition of general office fixed assets during the year.
- An increase of $0.2 million in inventory in preparation for the
opening of Phase II operations.
- An increase of $0.1million in insurance charges and an increase
of $0.1 million in maintenance charges for the port equipment
The Company’s gross profit for the six-month
period ended June 30, 2021, was $16.1 million compared with $16.7
million in the same period of the prior year, representing a
decrease of 4.0% compared to previous half year. This decrease of
$0.6 million in gross profit is a result of increase in revenue by
$0.4 million and increase in direct costs by $11 million, as
explained above.
General and administrative expenses increased
by $1 million or 38.9% from $2.7 million in June 2020 to $3.7
million in June 2021. The major reasons for this increase are:
- An increase of $0.39 million in salaries and wages which is due
to the new recruitments starting from April 2020.
- An increase of $0.66 million in professional charges which
includes legal, consultancy, and research charges as well as
professional audit fees of $0.06 million due to the audit of BEL
and BPGIC for the half year and year end.
- An increase in insurance charges of $0.2 million which includes
insurance for executive level employees and directors. Moreover, an
additional increase of $0.04 million in board member fees.
These increases were partially offset by:
- Repairs and maintenance costs which decreased during first six
months of 2021 by $0.09 million.
- Due to restrictions associated with the COVID-19 pandemic,
travelling expenses decreased by $0.062 million, advertisement
expenses decreased by $0.057 million and business promotion
expenses decreased by $0.087 million.
During the six-month period ended June 30, 2021, finance costs
increased 64.8% over the same period of the prior year to $5.6
million from $3.4 million, respectively. The main reasons for the
increase in finance costs are:
- The finance costs on borrowings & bank charges includes
interest expense of $4.8 million, on the $200 million Bond
Financing Facility as compared to $2.3 million in interest expense
for the six-month period ended June 30, 2020 on term loans which
were settled in November 2020 with the proceeds from the new
bonds.
Adjusted EBITDA was $15.3
million or 65.7% of revenue, in the six-month period ended June 30,
2021, compared with $17.0 million, or 73.9% of revenue, for the
same period of the prior year. This represented a decline of $1.6
million, or 10.0%. The main reasons for decline of Adjusted EBITDA
for the six-month period ended June 30, 2021 are as follows:
- There was an increase of total
direct costs of $1.1 million from $6.1 million in the six-month
period ended June 30, 2020 to $7.2 million in the six-month period
ended June 30, 2021 which is 17.2% over the previous period June
2020. Also, general and administrative expenses increased by 39% or
$1 million from $2.7 million in June 2020 to $3.7 million in June
2021.
- This overall increase in revenue by
$0.3 million and increase in expenses by $2.1 million contributed
to the decrease in Adjusted EBITDA.
During the first six months of 2021, the Company
generated net profit of $11.1 million, compared to $16.2 million in
the same period in 2020. The decrease in 2021 is primarily due to
higher finance costs and a lower non-cash benefit from changes in
fair value of derivative warrant liability.
Balance Sheet and Liquidity:The Company had
cash and bank balances of $37.2 million at June 30, 2021.
During the first six months of 2021, capital
expenditures amounted to $14.7 million. During the period the
Company made net payments of $11.5million towards the Phase II
construction, of which $1.1 million was provided from the Company’s
operating cash flow and the balance of $10.4 million from the
proceeds of the 2020 Bond Financing Facility.
Capital expenditures in remainder of 2021 are
expected to be approximately $14.1 million, which is expected to be
funded primarily through cash from operations and from the
remainder of the proceeds from the 2020 Bond Financing Facility.
These planned capital expenditures will consist primarily of
expenditures related to the construction of the Phase II
facility.
Additional Subsequent Events:On
July 1, 2021, the BPGIC III signed a refinery agreement with an oil
trading company for a 25,000 barrel per day modular refinery. The
refinery is intended to produce high-in-demand, IM compliant, very
low sulphur fuel oil as a step towards more environmentally
friendly solutions. BPGIC III will sublease land to the oil trading
company, which will be responsible for constructing the refinery
including bearing the full cost of construction. Following
completion of construction, BPGIC III will be responsible for
operating the refinery, earning revenue from tolling fees on
take-or-pay basis. The agreement between the BPGIC III and the oil
trading company includes a tolling contract for a tenure of twenty
years, consisting of a five-year contract to commence upon
completion of the construction of the refinery, and three renewal
periods of five years each.
In September 2021, phase II construction has
been completed and operations have commenced as of September 9,
2021.
Earnings Conference Call and Webcast
Information |
Date: |
September 15, 2021 |
Time: |
8:00 a.m. ET / 4:00 p.m. UAE |
Dial-in numbers: |
Toll
Free: 1-877-425-9470 |
|
Toll/International: 1-201-389-0878 |
|
United Arab Emirates Toll
Free: 800 035 703 290 |
Instructions: |
Request the “Brooge Energy Call” or Conference ID: 13723052 |
Live webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1495735&tp_key=7744e1a890 |
A dial-in replay of the call will also be
available to those interested, until September 22, 2021. To access
the replay, dial +1 844-512-2921 (United States) or +1 412-317-6671
(International) and enter replay pin number: 13723052.
About Brooge Energy
LimitedBrooge Energy conducts all its business and
operations through its wholly owned subsidiaries, BPGIC and BPGIC
III, Fujairah Free Zone Entities. Brooge Energy is a midstream oil
storage and service provider strategically located outside the
Strait of Hormuz in 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
ReconciliationAdjusted 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:
|
|
Adjusted EBITDA |
|
|
Six Months ended |
|
|
|
|
|
|
|
$ |
|
30-Jun-21 |
|
|
30-Jun-20 |
|
Profit for the year/ period |
|
11,074,894 |
|
|
16,166,652 |
|
Adjustments for: |
|
|
|
|
|
|
Depreciation charge |
|
2,918,162 |
|
|
2,875,273 |
|
Finance costs |
|
5,556,008 |
|
|
3,370,988 |
|
Net changes in estimated fair value of derivative warrant
liabilities |
|
(2,536,780 |
) |
|
(5,307,225 |
) |
Net changes in fair value of derivative financial instruments |
|
(1,716,742 |
) |
|
(179,758 |
) |
Total Adjustments |
|
4,220,648 |
|
|
759,278 |
|
Adjusted EBITDA |
|
15,295,542 |
|
|
16,925,930 |
|
Revenues |
|
23,286,003 |
|
|
22,893,875 |
|
Adjusted EBITDA % of Revenues |
|
65.70 |
% |
|
73.93 |
% |
* Discussion of reconciliations of Adjusted EBITDA (a non-IFRS
financial measure) to Profit (an IFRS financial measure) is
presented below under “Adjusted EBITDA Reconciliation.”
Forward-Looking StatementsThis
press release contains statements, including all information
relating to matters that are not historical facts, including the
expected revenues from Phase II and the anticipated construction of
Phase III, that constitute “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Such statements reflect
management’s current views based on certain assumptions, and they
involve risks and uncertainties. Actual results, events or
performance may differ materially from the forward-looking
statements due to a number of important factors, and will be
dependent upon a variety of factors, including risks described in
public reports filed by Brooge Energy with the SEC, including under
the caption “Risk Factors” in Brooge Energy’s Annual Report on
Annual Report on Form 20-F for the year ended December 31, 2020,
filed with the SEC on April 5, 2021, as amended by Amendment No. 1
to the Annual Report on Form 20-F/A filed with the SEC on April 6,
2021. Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made.
Brooge Energy does not undertake any obligation to update or revise
the forward-looking statements, whether as a result of new
information, future events or otherwise.
Investor ContactKCSA Strategic
CommunicationsValter Pinto, Managing Director+1
212-896-1254BROG@kcsa.com
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME |
For the period ended 30 June 2021 |
|
|
|
|
|
|
|
|
|
|
|
Six-month |
|
|
Six-month |
|
|
|
period ended |
|
|
period ended |
|
|
|
30 June |
|
|
30 June |
|
|
|
2021 |
|
|
2020 |
|
|
|
USD |
|
|
USD |
|
|
|
|
|
|
|
|
Revenue |
|
23,286,003 |
|
|
22,893,875 |
|
Direct costs |
|
(7,202,719 |
) |
|
(6,146,872 |
) |
|
|
|
|
|
|
|
GROSS PROFIT |
|
16,083,284 |
|
|
16,747,003 |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
(3,744,100 |
) |
|
(2,696,346 |
) |
Finance costs |
|
(5,556,008 |
) |
|
(3,370,988 |
) |
Other income |
|
38,196 |
|
|
- |
|
Changes in fair value of |
|
|
|
|
|
|
derivative financial instruments |
|
1,716,742 |
|
|
179,758 |
|
Changes in fair value of |
|
|
|
|
|
|
derivative warrant liability |
|
2,536,780 |
|
|
5,307,225 |
|
|
|
|
|
|
|
|
NET PROFIT |
|
11,074,894 |
|
|
16,166,652 |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
PROFIT AND TOTAL COMPREHENSIVE |
|
|
|
|
|
|
INCOME FOR THE PERIOD |
|
11,074,894 |
|
|
16,166,652 |
|
|
|
|
|
|
|
|
Earnings per share attributable to |
|
|
|
|
|
|
the ordinary shareholders of the Group: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share (cents) |
|
0.126 |
|
|
0.184 |
|
|
|
|
|
|
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION |
|
|
|
|
|
|
|
At 30 June |
|
|
At 31 December |
|
|
|
2021 |
|
|
2020 |
|
|
|
USD |
|
|
USD |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
396,489,660 |
|
|
367,303,525 |
|
Capital advances |
|
14,726,245 |
|
|
16,418,065 |
|
Restricted bank balance |
|
8,500,000 |
|
|
8,500,000 |
|
Derivative financial instrument |
|
1,716,742 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
421,432,647 |
|
|
392,221,590 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Inventories |
|
325,380 |
|
|
321,789 |
|
Trade and other receivables |
|
4,743,304 |
|
|
690,232 |
|
Bank balances and cash |
|
28,714,494 |
|
|
39,389,935 |
|
|
|
|
|
|
|
|
|
|
33,783,178 |
|
|
40,401,956 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
455,215,825 |
|
|
432,623,546 |
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
8,801 |
|
|
8,801 |
|
Share premium |
|
101,777,058 |
|
|
101,777,058 |
|
Shareholders’ account |
|
73,059,743 |
|
|
73,059,743 |
|
General reserve |
|
680,643 |
|
|
680,643 |
|
Accumulated losses |
|
(35,832,674 |
) |
|
(46,907,568 |
) |
|
|
|
|
|
|
|
Total equity |
|
139,693,571 |
|
|
128,618,677 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Borrowings |
|
174,030,646 |
|
|
180,014,715 |
|
Lease liability |
|
80,047,117 |
|
|
79,289,507 |
|
Provisions |
|
962,158 |
|
|
913,848 |
|
|
|
|
|
|
|
|
|
|
255,039,921 |
|
|
260,218,070 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Derivative warrant liability |
|
10,625,064 |
|
|
13,161,844 |
|
Borrowings |
|
14,000,000 |
|
|
7,000,000 |
|
Accounts payable, accruals and other payables |
|
23,893,704 |
|
|
13,829,897 |
|
Lease liability |
|
11,963,565 |
|
|
9,795,058 |
|
|
|
|
|
|
|
|
|
|
60,482,333 |
|
|
43,786,799 |
|
|
|
|
|
|
|
|
Total liabilities |
|
315,522,254 |
|
|
304,004,869 |
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
455,215,825 |
|
|
432,623,546 |
|
|
|
|
|
|
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