HitecVision AS First six months 2013

(1)

HitecVision AS

(2)

HitecVision AS – First six months 2013

HitecVision is a leading investor in the international oil and gas industry, and the largest private equity investor in Europe to specialize exclusively in this industry. From its offices in Stavanger, Oslo and Houston, HitecVision invests in mid-size companies across the whole oil and gas sector in Europe and North America, including oilfield services and technology companies and exploration and production (“E&P”) companies. The staff of 40 is largely drawn from the oil industry itself, combining the company’s over 25 years of investment history in this industry with the staff’s operational know-how and experience to create value in the portfolio companies.

Over the last 25 years, HitecVision has invested in, established or acquired close to 150 companies (including add-ons) and exited almost 100 of these. Several companies have gone public following HitecVision ownership. HitecVision currently advises four private equity funds with a total committed capital base of USD 3 billion, drawn from a professional investor base that comprises leading European and American financial institutions, pension funds, fund-of-funds, endowments and family offices.

Highlights

The first six months of 2013 has been a

satisfactory period for HitecVision. Following the

establishment late in 2011 of HitecVision VI,

HitecVision is the advisor to four funds with a

total committed capital base of USD 3 billion,

which provide a stable revenue stream in the

form of advisory fees. In addition, increased exit

activity has led to higher revenues in the form of

returns from the company’s investments.

Revenues for the first six months of 2013 were

NOK 145.0 million, against NOK 97.9 million for

the corresponding period in 2012. Net income

after tax was NOK 66.6 million, against NOK

29.0 million for the first six months of 2012. The

increase in revenues and profitability is mainly a

consequence of several exits from the funds in

2012 and early 2013.

We have continued to add new portfolio

companies to HitecVision VI: Bergen-based

Deep Sea Mooring is a significant provider of

rented mooring equipment, pre-lay mooring

solutions and ancillary services to E&P

companies and drilling rig operators on the

Norwegian Continental Shelf, while the Irish

company Suretank Ltd. is a world-leading

manufacturer of Cargo Carrying Units for the

offshore oil and gas Industry.

Realisations during the period include Troms

Offshore, which was sold to Tidewater Inc.,

Technor Italsmea, which was sold to Marechal

Electric SA, and ITM, which was sold to Bandak

Group AS.

HitecVision paid a NOK 80 million dividend to its

shareholders in April.

FINANCIAL RESULTS

HitecVision achieved operating revenues of NOK

145.0 million in the first half of 2013 (up 48% on

the corresponding period last year) and net

income after taxes of NOK 66.6 million (up

129%).

SOLIDITY

Due to the long term nature of fund advisory

agreements, a significant part of the company’s

revenues is fairly transparent for several years to

come. HitecVision also has a strong balance

sheet with an equity ratio of 55%.

SHAREHOLDER MATTERS

As at 19

th

August 2013, HitecVision had 180

registered shareholders, compared to 174 one

year ago. The HitecVision share is listed on the A

list of Norwegian Over The Counter (NOTC)

market, organized by the Norwegian Securities

Dealers Association. HitecVision publishes

annual and half year reports.

FUND DETAILS:

Fund VI

Key data:

Final closing: 2nd December 2011

Committed capital: 1546 MUSD

HitecVision committed capital: 11.25 MUSD

Fund maturity: 2011 - 2021

Fund VI is in its investment period, and has so

far made six platform investments. The Fund is

(3)

targeting up to 14 portfolio companies, primarily

in Northern Europe and North America. Equity

investments per portfolio company is expected to

range from USD 50 million to USD 250 million. In

addition, the Fund expects to make a number of

add-on acquisitions to the portfolio companies.

The Fund has made two platform investments so

far in 2013:

•

Deep Sea Mooring is a significant provider of

rented mooring equipment, pre-lay mooring

solutions and ancillary services to E&P

companies and drilling rig operators on the

Norwegian Continental Shelf. The company

is based in Bergen.

•

Suretank Ltd. is a world-leading

manufacturer of Cargo Carrying Units for the

Offshore Oil and Gas Industry. The company

is headquartered in Ireland with design and

manufacturing facilities in Ireland, UK,

Poland, Thailand and China as well as sales

offices in USA, Norway and Brazil.

HitecVision Asset Solutions

Key data:

Final closing: 2nd June 2010

Fund maturity: 2010 – 2018

HVAS is fully invested, i.e. it is closed for new

direct investments, and the remaining capital will

be used for follow-on investments in the existing

portfolio companies. Following the realisation of

the investment of Troms Offshore, the Fund has

two portfolio companies.

Our main activities regarding this portfolio are

centered on day-to-day work growing the

companies, which to a large degree involves

chartering, building or acquiring new vessels of

the types used by the respective companies, as

well as ensuring satisfactory utilization levels for

the vessels.

Fund V

Key data:

Final closing: 10th March 2008

Fund V is fully invested, i.e. it is closed for new

be used for add-on and follow-on investments in

the existing portfolio companies. Following the

realisation of the Tampnet and Spring Energy

investments in 2012, the Fund has seven

portfolio companies.

Our main activities regarding this portfolio are

centered on growing the companies organically

and through acquisitions, and improving their

performance. Some of the companies have

matured to a degree where they may be

preparing for exits.

Fund IV

Key data:

Final closing: 31st May 2006

Total committed capital: 300 MUSD

Fund IV is fully invested, i.e. it is closed for new

be used for add-on and follow-on investments in

the existing portfolio companies. Following the

realisation of the Vector and Icarus investments

late in 2012 and early in 2013, the Fund has four

portfolio companies.

The companies in this portfolio have now been in

the Fund’s ownership for some time. Structural

changes have been completed, and the

companies’ are performing well in a generally

strong market. Our main activities regarding

these companies are related to preparing them

for exits, and several partial exits have been

concluded so far in 2013.

MARKET OUTLOOK

The market for oil service companies and E&P

companies is strong, and is generally expected

to remain so for some time. Spending in the

Norwegian oil and gas industry is at a record

high, and is expected to remain at high levels for

the foreseeable future. With this background, we

see good growth prospects for our portfolio

companies and interesting investment and exit

opportunities for our Funds.

Stavanger, 29th August 2013

The Board of HitecVision AS

(4)

4

HitecVision Group

(all figures in NOK 1,000)

INCOME STATEMENT

30.06.2013

31.12.2012

30.06.2012

Operating revenue

103 511

175 374

86 166

Income from associated companies

41 492

25 659

11 737

Total revenues

145 003

201 033

97 903

Operating expenses

72 507

137 048

60 839

Depreciation & amortisation

1 078

2 042

1 064

Net operating income

71 418

61 943

35 999

Net financial income/-loss

(272)

(819)

(35)

Net income before taxes

71 146

61 124

35 964

Income tax

(4 497)

(10 614)

(6 933)

Net income

66 649

50 510

29 030

BALANCE SHEET

Tangible fixed assets

6 017

6 487

5 809

Financial fixed assets

186 997

141 530

160 989

Long term receivables

23 029

25 984

28 879

Short term receivables

9 564

27 457

8 199

Cash and deposits

8 010

19 085

10 086

Total assets

233 618

220 543

213 962

Equity

127 850

60 768

119 260

Deferred tax liability

4 971

5 798

2 538

Long term liabilities to financial institutions

45 000

Current liabilities to financial institutions

28 122

-

11 263

Tax payable

6 242

5 395

9 285

Dividends payable

-

80 000

-Other current liabilities

21 434

23 582

26 616

Total equity and liabilities

233 618

220 543

213 962

(5)

5

PORTFOLIO COMPANIES - FUND IV:

Current:

Valco Group AS:

www.valcogroup.no

Valco Group manufactures and services industrial valves for a wide range of applications within the Marine sector, Oil & Gas upstream, Oil & Gas downstream and Energy & Industry, with cryogenic valves as specialty. The Group has two main manufacturing companies: Westad Industri AS in Norway and SNRI SAS in France, as well as specialized trading and servicing companies.

Aarbakke Group AS:

www.aarbakke.com

Aarbakke is a leading supplier of precision manufacturing services to the oil and gas industry, specializing in machining and assembly of subsea and downhole equipment to extreme quality standards. The company develops, constructs, machines, tests and controls products for most of the major technology suppliers to the oil industry, in particular specialized products in short series.

Partly exited:

Technor AS:

www.technor.com

The Technor companies manufacture and distribute electrical equipment for use in hazardous environments, as well as providing qualified staff to the oil and gas industry. Technor Italsmea, the largest company in the group, was sold in 2013, and the remaining companies in the group are Atex in France and Energy People in Norway.

The Fund realised part of its investment in 2013 through a sale of the company’s subsidiary Technor Italsmea to the Marechal Electric Group.

Apply AS:

www.apply.no

Apply is one of the largest providers of technology, engineering and construction services for the Norwegian oil and gas industry, and the largest global provider of Living Quarters for offshore platforms. Following the sale of Apply Nemo in 2012, Apply has three business areas: Upstream Facilities; Living Quarters & Helidecks; and Rig & Modules. Apply TB, a building facilities contractor, has been demerged to form a separate entity. Apply has an annual turnover of about 3 billion NOK and about 2000 employees.

The Fund realised part of its investment in 2012 through a sale of Apply Nemo to the Kongsberg Group.

Subsea Technology Group AS:

www.rossoffshore.no

www.sea-box.no

Subsea Technology Group is a holding company for the Fund's investments in several technology and services companies. Ross Offshore is a leading provider of consultancy, engineering and project management services for the upstream oil and gas industry, specializing in the supply of high-level personnel with proven experience, up-to-date technical skills and in-depth knowledge within their fields. Seabox is a provider of innovative solutions for Increased Oil Recovery (IOR). In particular, the company has developed SWIT, a patented technology for seabed treatment of raw seawater, making it suitable for injection into oil reservoirs. The Fund realized part of its investment in 2011 through a sale of the company’s former subsidiaries Bennex and Poseidon to Siemens.

Exited:

Noble Denton Holdings Ltd.: www.nobledenton.com

Noble Denton was an independent, market leading consultancy firm offering services to the global offshore, shipping and insurance industries. The Group had its head office in the UK, and additional offices in 15 different locations throughout the world.

The fund realised its investment in 2009 through a sale to Germanischer Lloyd.

SPG AS:

www.vectortg.com

www.icarus-be.com

Vector was an internationally recognized manufacturer of proprietary pipe connection and sealing solutions and subsea applications. Vector had

manufacturing facilities in Norway and Wales, and distribution centers worldwide. The Fund realized its investment in 2012 through a sale of the company to the Freudenberg Group.

Icarus supplied piping materials and manufactured valves to the oil, -petrochemical and chemical industries for extreme service conditions. The Fund realized its investment in 2013 through a sale of the company to its management.

(6)

6

PORTFOLIO COMPANIES - FUND V:

Current:

Axon Energy Products AS:

www.axonep.com

Axon Energy Products is a group of companies supplying technology and products to the drilling and well service industry. The group is headquartered in Houston, Texas, and has manufacturing facilities and sales offices in several locations in the USA, as well as in Canada, France, the UK, Norway, UAE, Iraq and China.

Agility Group AS:

www.agilitygroup.no

Agility Group is a full-service engineering, procurement and construction company situated in multiple locations in Norway, in addition to Shanghai in China. The Group is organized into the following business areas: Concepts & Technology; Solutions; Subsea Fabrication; and Maintenance & Modification. The Group has revenues of over 1.5 bn. NOK, and more than 1200 employees.

Stream AS:

www.stream.no

Stream is a leading provider of products, solutions and services connected to piping, valves and instrumentation within the energy and offshore business. The company is a leading supplier to the Norwegian oil and gas industry and represents several of the world’s leading suppliers in the Norwegian market.

Align AS:

www.align.no

Align is a group of companies providing process and safety-critical products and solutions as well as services that maintain lifecycle-long performance. This perspective ensures optimal operations and lower lifecycle costs. Align has a strong position and extensive experience in selected niche markets within the Norwegian oil and gas industry and the maritime industry, and selected international markets.

Reef Subsea AS:

www.reefsubsea.com

Reef Subsea AS is an expanding subsea services company. The company has three business areas: IRM & Construction; Installation & Trenching; and Dredging & Excavation. Reef Subsea is a 50/50 joint venture between Oslo Stock Exchange-listed GC Rieber Shipping ASA and HitecVision.

Core Energy AS:

www.coreenergy.no

Core Energy is an oil and gas company established with the aim of capturing the value potential in and around mature oil and gas fields on the Norwegian

Continental Shelf (NCS) The company acquires interests in producing fields on the NCS, creating value through focusing on increased oil and gas recovery, near field exploration and adjacent field developments.

errick Systems, Inc:

www.merricksystems.com

Merrick Systems is a well-established provider of industrial information technologies for the upstream and midstream oil and gas industry. Recognized for its industry expertise and innovative technologies, Merrick is committed to delivering best of breed solutions to improve production operations extending oil and gas producing asset life, lowering lifting costs, increasing production and optimizing operations. Headquartered in Houston, Merrick is establishing a global infrastructure to sell, implement and support its technologies around the world.

Exited:

Spring Energy Norway AS:

www.springenergy.no

Spring Energy Norway AS was an oil and gas company established by a group of Exploration & Production (E&P) professionals with extensive experience and an excellent track record from the Norwegian Continental Shelf (NCS). The company quickly became qualified by the authorities both as a license holder and an operator on the NCS, and participated in exploration, appraisal and development projects on the NCS. Over the Fund’s investment period, the company built an attractive license portfolio.

The Fund realized its investment in 2012 through a sale of the company to Tullow Oil.

(7)

7

Tampnet AS: www.tampnet.com

Pioneering the offshore communications industry, Tampnet has developed a high capacity, resilient and low latency communication network of fibre backbone cables and radio links, serving the Norwegian and the UK offshore oil and gas sector. The Fund realized its investment in 2012 through a sale of the company to EQT Infrastructure.

Naxys:

www.naxys.no

Naxys was established in 1999 by industry specialists in acoustic subsea warfare systems. Since the start, the company has been researching and developing acoustic sensor products and systems in close cooperation with leading companies within the oil and gas industry, developing into a world leading subsea monitoring company with unique products for subsea leak detection and condition monitoring. The Fund realized its investment in 2012 through a sale of the company to GE.

PORTFOLIO COMPANIES – FUND HVAS:

Current:

Ocean Installer AS:

www.oceaninstaller.com

Ocean Installer AS aims to become a significant service provider within the Subsea construction, Umbilicals, Risers and Flowlines (SURF) segment. The company has established the required organization and systems for this, and performs full Engineering Procurement Construction and Installation (“EPCI”) SURF work, based on a combination of owned and leased vessels. Ocean Installer is based in Stavanger with offices in Aberdeen and Houston.

Atlantica Tender Drilling Ltd:

www.atlanticatd.com

Houston-based Atlantica Tender Drilling Ltd (formerly Bassdrill) designs, fabricates and operates safe and efficient tender drilling units. Atlantica Tender Drilling Ltd manages and part owns one tender drilling barge which is in operation off the coast of West Africa, while two tender drilling semisubmersibles and one tender drilling barge are under construction for delivery 2013 - 2015. The semis are being built against long term contracts with Petrobras and Total, respectively

.

Exited:

Troms Offshore Supply AS:

www.tromsoffshore.no

Troms Offshore was the Fund's investment platform in the PSV segment. Troms Offshore has been established to create a leading niche Platform Supply Vessel (PSV) company which will provide offshore services to oil companies through owning and operating high-end large PSVs built to the "Clean Design" class specifications

The Fund realised its investment in 2013 through a sale of the company to Tidewater Inc.

PORTFOLIO COMPANIES - FUND VI:

Current:

Spike Exploration AS:

www.spike-x.com

Spike Exploration is an independent E&P company that pursues exploration and appraisal opportunities in the North Sea. The company is building a portfolio of opportunities through a combination of farm-ins to existing licenses and awards of new acreage in the official licensing rounds.

Global Maritime AS:

www.globalmaritime.com

Global Maritime is a maritime consulting and engineering company delivering a range of technical services required for the design, construction and completion of complex offshore development projects. Its civil and structural engineers, naval architects, mechanical & marine engineers and master mariners supply the highest quality of services to major oil & gas operators, EPC companies, yards and offshore construction companies. With offices in 13 countries, it covers most of the world’s key oil & gas locations.

(8)

8

Axis Offshore Pte Ltd.:

www.axisoff.com

Axis Offshore is a provider of high specification offshore Accommodation & Support Vessels (floatels) servicing the offshore oil & gas industry. The company is a joint venture between Danish shipowner J. Lauritzen A/S and HitecVision. Axis Offshore owns and operates the high-specification ASV mono-hull Dan Swift, which is currently on charter to Petrobras in Brazil, and also has a high specification DP3 semi-submersible ASV under construction, with options with the yard for two further units.

Momek Group:

www.momek.no

Momek Group is become one of the largest industrial contractors in Northern Norway, providing services to the oil & gas, mining and process industries. Momek has an annual turnover of about NOK 350 million and approximately 250

employees. The company has its main office and fabrication facilities in Mo i Rana. Momek Group operates through three divisions: Fabrication & Engineering; Maintenance and Modification; and Civil.

Deep Sea Mooring:

www.deepseamooring.com

Deep Sea Mooring is a significant provider of rented mooring equipment, pre-lay mooring solutions and ancillary services to E&P companies and drilling rig operators on the Norwegian Continental Shelf.

Suretank Grup Ltd.

www.suretank.com

Suretank Ltd. is a world-leading manufacturer of CCUs (Cargo Carrying Units) for the Offshore Oil and Gas Industry. Headquartered in Ireland, the company is a global supplier of offshore tanks and offshore containers with design and

manufacturing facilities in Ireland, UK, Poland, Thailand and China as well as sales offices in USA, Norway and Brazil.