Brooge Energy Reports Revenue of $41.8 Million for the Year Ending December 31, 2020

Brooge Energy Reports Revenue of $41.8 Million for the Year Ending December 31, 2020




Brooge Energy Reports Revenue of $41.8 Million for the Year Ending December 31, 2020

Net income improves to $17.2 million for 2020, compared with a loss of $75.3 million for 2019

Earns $0.19 per basic and diluted share in 2020, compared with a loss of $0.94 per basic and diluted share in 2019

Completed the issuance of a USD$200 million 5-year senior secured bond with proceeds, among other purposes, to fund remaining capital expenditures ahead of the launch of the Company’s Phase II oil storage facility

At December 31, 2020, the Company had $47.9 million of cash and bank balances

NEW YORK, April 05, 2021 (GLOBE NEWSWIRE) — 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:

Phase II:

Phase III:

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:

  1. 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.
  2. 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.
  3. 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:

  1. 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.
  2. 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.
  3. Penalty charges for $0.7 million are the pre-settlement charges paid towards settlement of the Phase 1 loan in 2020.
  4. Accretion expense on asset retirement obligation has been recognized of $0.07 million.
  5. 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.
  6. 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:

  1. 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.
  2. 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