Brooge Energy

Equity raise planned for Phase III project

Brooge Energy 12 May 2021 Update
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Brooge Energy

Equity raise planned for Phase III project

FY20 results

Oil & gas

12 May 2021

Price

US$9.2

Market cap

US$1,010m

Net debt ($m) at 31 Dec 2020

255

Shares in issue

109.6m

Free float

14.4%

Code

BROG

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.1)

(12.7)

(16.2)

Rel (local)

(8.6)

(17.6)

(40.8)

52-week high/low

US$11.2

US$7.8

Business description

Brooge Energy is an oil storage and service provider strategically located in the Port of Fujairah in the UAE. Current storage capacity stands at 399,324m3 and will be increased by 602,064m3 once Phase II storage facility is completed.

Next events

Update on Phase III

Q221

Phase II start-up

Q321

Analyst

Marta Szudzichowska

+44 (0)20 3077 5700

Brooge Energy is a research client of Edison Investment Research Limited

Brooge Energy (BROG) is preparing to raise equity capital for its Phase III oil storage facility. With the feasibility study almost complete, securing project funding would be the next step towards starting construction. Meanwhile, BROG’s Phase I operations are negatively affected by current low demand for ancillary services, despite high demand for oil storage. While this lowers our FY21 forecasts, the underlying long-term fundamentals are unaffected. Our updated valuation, based on Phase I and Phase II, using a blend of DCF, EV/EBITDA and P/E approaches, decreases to $10.3/share from $11.4/share.

Year-end

Revenue
($m)

Adjusted EBITDA*
($m)

Operating
cash flow ($m)

Net debt**
($m)

Capex
($m)

12/19

44

37

53

100

(60)

12/20

42

29

37

255

(97)

12/21e

68

54

39

249

(33)

12/22e

130

112

102

148

0

Note: *Profit before finance costs, income tax expense (currently not applicable in the UAE), depreciation, listing expenses and net change in the value of derivative financial instruments. **Including financial leases, excluding restricted cash.

Margin decline in FY20, should improve with Phase II

BROG’s Phase I facility continues to operate at full capacity, reflecting high oil storage demand. However, in FY20 the company reported a 5% y-o-y drop in revenue as an increase from higher fixed fees ($1.3m from offtake contracts announced in Q420) was more than offset by low demand for ancillary services ($5.2m) among new customers. Combined with higher costs, this reduced the EBITDA margin to 69% from 84% in FY19. We should see a full-year impact of the new contracts in FY21. Meanwhile, in Q321 BROG should start to benefit from new revenue from Phase II, leading to EBITDA margin expansion, as management expects most costs to remain relatively unchanged.

Phase III update

On 19 April 2021, BROG filed a shelf registration statement (Form F-3) with the US Securities and Exchange Commission (SEC). The company intends to conduct an underwritten public offering of ordinary shares to fund construction of the Phase III project, which is expected to add up to 3,500,000m3 capacity, at a total cost of around $1bn. On completion, BROG will become the largest oil storage provider in the Port of Fujairah. The terms of the proposed offering will be disclosed in the forthcoming final prospectus supplement. For now, we exclude this from our modelling and valuation.

Valuation: $10.3/share; Phase III potential upside

Our valuation is a blend of DCF and FY22e P/E and EV/EBITDA multiples. Our updated valuation decreases to $10.3/share from $11.4/share, affected by lower expected ancillary services revenue, leading to margin contraction. In this note, we still ascribe no value to Phase III, pending further information from management on project development and the financing schedule. However, we highlight the potential for significant upside to our current $10.3/share valuation.

High demand for oil storage, not for ancillary services

BROG is developing its oil storage terminal facilities in three phases. Phase I has been operational since 2017, while Phase II is expected to be fully operational in Q321. The feasibility study for Phase III, which will make BROG the largest storage operator in Fujairah, will be completed soon. Based on current management assumptions, Phase III construction should start in H221 and complete by mid-2023, once the financing and project development plans are in place. Meanwhile, BROG is engaged in discussions with global oil majors to ensure that Phase III capacity is fully contracted (with multi-year take-or-pay contracts) prior to commencing construction.

Phase I operations ran at full capacity in 2020, with a combination of high storage demand and high automation, which resulted in no adverse impact from the COVID-19 pandemic-induced restrictions. Phase II is already fully contracted; on completion, BROG’s storage capacity will expand by 602,064m3, which, together with Phase I, will take the total capacity of the BPGIC Terminals to 1,001,388m3, making BROG the second largest independent storage operator in Fujairah.

Additionally, BROG is involved in negotiations (extended to Q221) for the 25,000b/d, low-sulphur, modular refinery with Phase I offtaker Al Brooge International Advisory (BIA). The refinery will be operated and maintained by BROG, while BIA will build and own it. BROG’s management expects the refinery activities to commence in H122.

Drop in demand for ancillary services to impact on FY21

The global shortage of oil storage space has increased demand for BROG’s terminals from trading companies that require reliable storage facilities, crucial for their ability to trade physical oil. In Q420, BROG took advantage of that situation and novated part of Phase I’s contracts, leading to a reduction of customer concentration risk (previously BIA was the only customer). The contracts with the five new customers (traders), for 58% of Phase I oil storage capacity, at 50% and 60% premium on a fixed fee over the previous contracts, were announced in December 2020. However, the new customers have no or minimal requirement for ancillary services (eg throughput services, blending, heating, and inter-tank transfers).

Ancillary services revenue may vary based on end-user needs, depending on expected refinery product prices and trading activity. Reduction in demand for ancillary services was observed globally in recent months (experienced also by Vopak, BROG’s peer), as oil storage facilities have been used more by traders, who typically have low demand for ancillary services.

Under the terms of the offtake contracts mentioned above, BROG will provide storage at its Phase I facility up to one year, consisting of an initial six-month period plus an additional six-month renewal period, subject to mutual agreement. That means in FY21 we will likely observe further deterioration in Phase I’s ancillary service revenue, putting pressure on Brooge’s operating margin.

Phase II to boost margin

Looking at the Phase II project, which management expects to be operational in Q321, its storage capacity is already fully contracted, and agreements can be renegotiated not earlier than after two years. The main customer is BIA (the Phase I offtaker). Based on historic operations, we would expect fixed storage fee and demand for ancillary service in Phase II to be broadly similar to Phase I levels before the addition of new Phase I 2020 contracts. Additionally, the EBITDA margin should expand with Phase II commencing, as direct costs (for example employee costs) would not increase in proportion to revenue increase and general and administrative (G&A) expenses would remain unchanged.

Estimate change: Lower revenue, higher costs in FY21

Our short-term financial forecasts will be driven by the Phase I and Phase II storage projects, and ancillary services revenue, which may vary. Consequently, there is significant uncertainty about the timing for revenue and cash flow forecasts for ancillary services. In FY20, ancillary services contributed 39% of revenue (versus 46% in FY19), down 18% y-o-y to $16.5m; 23% below our estimates. The discrepancy between actuals and our estimates came from our assumption of ancillary services for the new contracts signed in Q420, which we had based on FY19 historical demand (when BIA was the main customer for the whole of that year), while in the event, the new customers-traders used no ancillary services.

In this note, we update our forecasts to reflect the changes in ancillary services revenue, direct costs, and G&A expenses. Key components of our overall 29% reduction in FY21 EBITDA estimates comprise: 1) decline in ancillary service revenue for Phase I, which reduces our FY21 EBITDA estimate by 23%; 2) 5% reduction to reflect increase in direct costs, mainly due to higher employee cost; and 3) 1% decline from higher G&A expenses (Exhibit 1).

In our revised forecasts, we expect Phase I ancillary service revenue of $5.8m in FY21 (versus $16.5m in 2020), taking into account that 58% of the storage capacity is being used by five customers-traders that will have no or minimal requirement of ancillary services by the end-Q321 (12-month agreements). For Phase II, we have assumed 44% revenue from ancillary services, as the main offtaker would be BIA, historically using ancillary services. For FY22, we have assumed 44% ancillary revenue each for Phase I and II compared with 46% in our previous estimates (10% decline in ancillary services revenue versus previous estimates, reflecting uncertainties on ancillary services, Exhibit 1).

The company’s FY20 revenue from fixed fees was in line with our estimates and improved 6% y-o-y supported by new contracts. We leave our assumptions for FY21–22 unchanged, including the additional contribution from the new contracts of $7m in FY21.

In FY20, BROG’s direct costs went up 27% y-o-y mainly driven by higher employee expenses due to an increase in the cost of outsourced staff at the Fujairah plant, disaster management charges, and the port charges ($1.6m, previously netted off). The increase in G&A expenses (+147% y-o-y) to $6.5m, was mainly due to higher consultancy and audit charges. Those items are likely to recur, and we estimate that overall G&A expenses will remain at c $6m going forward, in line with management guidance.

The aforementioned factors led to a drop in FY20 EBITDA margin to 69% (versus 84% in 2019 and 80% Edison estimate). We forecast an EBITDA margin of 80% in FY21 (versus 89% previously) and 86% in FY22, supported by Phase II full contribution.

Exhibit 1: 2020 actuals versus estimates, changes to 2021–22 Edison forecasts

$m

New

Old

Difference

2020

2021e

2022e

2020e

2021e

2022e

2020e

2021e

2022e

Phase I

Fixed consideration

25.3

31.9

25.6

25.4

32.0

25.6

0%

0%

0%

Ancillary services

16.5

5.8

20.5

21.6

22.1

22.6

-23%

-74%

-10%

Phase II

Fixed consideration

-

16.8

38.7

-

16.8

38.7

N/A

0%

0%

Ancillary services

-

13.3

30.9

-

14.7

34.2

N/A

-10%

-10%

Refinery 25,000bbld

-

-

13.9

-

-

13.9

N/A

N/A

0%

Total revenue

41.8

67.8

129.6

46.9

85.5

135.0

-11%

-21%

-4%

Direct costs

12.9

17.7

25.5

10.5

15.2

24.5

24%

17%

4%

G&A expenses

6.5

6.0

6.1

4.9

5.0

5.1

33%

20%

20%

Adjusted EBITDA

29.1

53.9

112.0

37.5

76.3

121.2

-23%

-29%

-8%

Adj. EBITDA margin

69%

80%

86%

80%

89%

90%

Source: Brooge Energy accounts, Edison Investment Research

Financials: High capex increases net debt

In November 2020, BROG issued a $200m bond to repay the Phase I financing facilities, fund capital projects for Phase II, repay payables, and pre-fund the liquidity account. Under the bond agreement, on the company level, Brooge Petroleum and Gas Investment Company (BPGIC) is subject to the following financial covenants: to maintain $8.5m in the liquidity account; leverage ratio not to exceed 5.5x at end-2020 (versus 4.9x reported end-2020), 3.5x at end-2021 and 3.0x anytime thereafter; and maintain positive working capital. At the group level, BROG is required to maintain a minimum equity ratio of 25% (versus 29.7% actual in FY20).

As of 31 December 2020, BROG’s net debt was $166m (excluding restricted cash and lease liabilities) leading to group’s net debt-to-EBITDA at 5.7x (versus 1.9x at end-2019, Exhibit 2), while net debt excluding restricted cash and including lease liabilities was $255m. We forecast FY21 operating cash flow of $39m, comfortably covering the $33m remaining capex for the Phase II project (total over 2019-2021e was $160.6m). This leads to our forecast end FY21 net debt of $160m (excluding restricted cash and lease liability) Overall, and, at this point excluding any future outlays or financing for the Phase III project, we expect BROG to generate positive free cash flow from FY21.

The company is preparing to raise equity capital for its Phase III oil storage facility, and on 19 April 2021 filed a shelf registration statement (Form F-3) with the SEC. BROG intends to conduct an underwritten public offering of ordinary shares to fund the construction of the Phase III project. If the registration statement is declared effective by the SEC, up to $500m of various securities, including ordinary shares may be offered and sold by the company from time to time. The registration statement additionally relates to the potential sale of up to 6m ordinary shares that may be offered from time to time. The final terms will be published in the forthcoming final supplemental prospectus.

For Phase III, with the feasibility study expected to be completed in Q221, and with visibility around the planned equity raise, management should be able to provide more details project development plans in Q2–Q321. This would give a clear roadmap for the project, at which point we would be able to incorporate Phase III into our model and valuation.

Exhibit 2: Net debt* and net debt*/EBITDA estimates

Source: Brooge Energy accounts, Edison Investment Research. Note: *Net debt excluding restricted cash and lease liabilities. Does not take into consideration the impact of Phase III on debt as pending further detail on project development and financing.

Valuation

We value BROG using a blend of DCF and leveraged and unleveraged multiples, arriving at a valuation of $10.3/share, down from $11.4/share. The decrease in the blended valuation reflects the decline in ancillary services revenue and costs increase, leading to lower profit margin impacting both DCF and multiple valuations.

Exhibit 3: BROG valuation based on historical peer multiples and Edison DCF

Source: Edison Investment Research, Refinitiv. Note: Prices as at 11 May 2021.

Our base case DCF valuation reduces to $11.7/share from $12.4/share, reflecting the impact of our revised estimates for FY21 on Phase I (significant decline in ancillary services revenue due to 12-month contracts with new customers, using little or no ancillary services, and higher costs based on FY20 cost increases). Additionally, we implement a more conservative approach to our revenue forecasts for FY22 and beyond to capture the uncertainties on ancillary service revenues. That results in 10% lower ancillary services revenue compared to our previous assumptions (Exhibit 1), leading to a 4% drop in total revenue (Phase I and Phase II). These assumptions drive a reduction in our FY22 estimated EBITDA margin (to 86% versus 90% previously, but still a step up from our current estimated FY21 EBITDA margin of 80%) and in our valuation. This was partially balanced by the positive impact of rolling forward to 2021 forecasts. In Exhibit 4, we provide sensitivity to the impact of varying costs of capital and terminal growth on the DCF valuation. Exhibit 5 shows the consequent impact on our blended valuation.

Exhibit 4: DCF ($/share) sensitivity to terminal growth and WACC

Exhibit 5: Blended valuation ($/share) sensitivity to terminal growth and WACC

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

13.6

14.5

15.7

17.1

18.9

21.1

24.2

7%

11.2

11.9

12.6

13.5

14.6

15.9

17.5

8%

9.4

9.9

10.4

11.0

11.7*

12.5

13.5

9%

8.0

8.4

8.8

9.2

9.7

10.2

10.9

10%

7.0

7.2

7.5

7.8

8.1

8.5

9.0

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

10.9

11.2

11.6

12.1

12.7

13.4

14.4

7%

10.1

10.3

10.6

10.9

11.2

11.7

12.2

8%

9.5

9.7

9.8

10.0

10.3*

10.5

10.9

9%

9.0

9.2

9.3

9.4

9.6

9.8

10.0

10%

8.7

8.8

8.9

9.0

9.1

9.2

9.4

Source: Edison Investment Research. Note: *Base case.

Source: Edison Investment Research. Note: *Base case.

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

13.6

14.5

15.7

17.1

18.9

21.1

24.2

7%

11.2

11.9

12.6

13.5

14.6

15.9

17.5

8%

9.4

9.9

10.4

11.0

11.7*

12.5

13.5

9%

8.0

8.4

8.8

9.2

9.7

10.2

10.9

10%

7.0

7.2

7.5

7.8

8.1

8.5

9.0

Source: Edison Investment Research. Note: *Base case.

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

10.9

11.2

11.6

12.1

12.7

13.4

14.4

7%

10.1

10.3

10.6

10.9

11.2

11.7

12.2

8%

9.5

9.7

9.8

10.0

10.3*

10.5

10.9

9%

9.0

9.2

9.3

9.4

9.6

9.8

10.0

10%

8.7

8.8

8.9

9.0

9.1

9.2

9.4

Source: Edison Investment Research. Note: *Base case.

Exhibit 4: DCF ($/share) sensitivity to terminal growth and WACC

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

13.6

14.5

15.7

17.1

18.9

21.1

24.2

7%

11.2

11.9

12.6

13.5

14.6

15.9

17.5

8%

9.4

9.9

10.4

11.0

11.7*

12.5

13.5

9%

8.0

8.4

8.8

9.2

9.7

10.2

10.9

10%

7.0

7.2

7.5

7.8

8.1

8.5

9.0

Source: Edison Investment Research. Note: *Base case.

Exhibit 5: Blended valuation ($/share) sensitivity to terminal growth and WACC

Terminal growth/
WACC

0%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

6%

10.9

11.2

11.6

12.1

12.7

13.4

14.4

7%

10.1

10.3

10.6

10.9

11.2

11.7

12.2

8%

9.5

9.7

9.8

10.0

10.3*

10.5

10.9

9%

9.0

9.2

9.3

9.4

9.6

9.8

10.0

10%

8.7

8.8

8.9

9.0

9.1

9.2

9.4

Source: Edison Investment Research. Note: *Base case.

Our DCF approach is based on Phase I and Phase II only. Although BROG has achieved important milestones for the Phase III project by undertaking pre-construction work, including front-end engineering, the soil investigation and environmental report, and the ongoing the feasibility study (commissioned in February 2021) for the Phase III oil storage facility, management has yet to finalise and report details on timings and the financing structure. Phase III will be transformational for BROG and will involve an investment of c $1.1bn and it is likely to be a mix of debt and equity. BROG is involved in an ongoing process of negotiations with banks to secure financing of this investment and recently announced a proposed equity raise up to $500m (subject to the registration statement being declared effective by the SEC). There is, therefore, significant upside potential to our valuation of the company. We will update our valuation once we have more clarity about all the developments, including funding.

Our peer-based valuation of BROG uses FY22e multiples. In light of market volatility last year, we have factored in peer metrics since FY18 to account for historical and actual valuations. The peer group average P/E from FY18 to date is 12.6x and 10.2x for EV/EBITDA (unchanged from the previous note). Our valuation was negatively affected by the aforementioned downward revision in our forecasts.

On our assumptions for FY22, BROG currently trades at a P/E of 11.5x and EV/EBITDA of 11.3x (EV calculated with net debt excluding restricted cash and including lease liabilities). Looking at the peer group multiples for FY22e (Exhibit 7), BROG trades at a premium on both metrics (peers currently trade at an FY22e P/E of 11.4x and an EV/EBITDA of 9.2x) and we believe the premium the market is attributing to BROG accounts for the fact that it is a growing company with efficient operations and significant expansion potential in the near future.

As mentioned in our initiation note, we highlight that there is no extensive group of listed midstream companies identical to BROG. Most of its peers are North American companies that, in addition to storage terminals, also own pipeline networks or distribution infrastructure, and have seen their valuations and earnings directly affected by the pandemic as oil demand reduced and oil exports and trading decreased. Exhibit 6 shows the impact of COVID-19 on the share prices of BROG’s peers.

Exhibit 6: Peer market value and Brent evolution since December 2019

Source: Refinitiv, Edison Investment Research. Note: Prices as at 11 May 2021.

Dutch company Koninklijke Vopak appears to be most similar to BROG. Although significantly bigger than BROG in market value and storage capacity, Vopak’s business model is more in line with BROG than the North American peers. Like BROG, Vopak’s share price has largely held its value in 2020. Since the market recovered from the pandemic-related collapse in March/April 2020, BROG’s share price has increased 7%, while Vopak’s decreased 8%. Exhibit 7 shows the peer group valuation.

Exhibit 7: Peer group valuation

 

Market cap
($m)

EV*
($m)

P/E FY21e
(x)

P/E FY22e
(x)

EV/EBITDA FY21e (x)

EV/EBITDA FY22e (x)

P/CF FY21e
(x)

P/CF FY22e
(x)

FCF yield FY21e (%)

FCF yield FY22e (%)

Net debt*/
EBITDA FY21e (x)

Net debt*/
EBITDA FY22e (x)

Dividend yield FY21e
(%)

Edison estimate - BROG

1,010

1,266

34.9

11.5

23.5

11.3

0.2

0.1

0.6%

10.0%

4.6

1.3

0.0%

Peer group:

Delek Logistics Partners

1,664

2,634

9.9

8.7

9.9

8.7

7.5

6.7

13.0%

15.2%

4.0

3.1

9.8%

Enable Midstream Partners

3,570

8,092

9.4

11.9

8.2

8.7

4.8

5.4

17.2%

6.4%

4.3

4.6

8.1%

Energy Transfer

25,764

86,725

6.8

8.2

7.2

7.7

3.4

3.8

21.9%

25.5%

4.2

4.2

6.4%

Enterprise Products Partners

50,587

80,144

10.8

10.8

9.7

9.7

7.8

7.7

9.8%

10.4%

3.4

3.2

7.8%

Genesis Energy

1,211

5,515

N/A

9.4

8.9

8.2

4.3

3.3

16.3%

17.4%

5.6

5.0

6.1%

Holly Energy Partners

2,261

3,834

10.2

9.8

10.8

10.2

7.4

7.3

12.2%

12.6%

3.6

3.4

6.5%

Kinder Morgan

40,695

73,673

16.3

19.6

10.0

10.7

8.0

8.9

10.4%

9.4%

4.3

4.5

6.0%

Koninklijke Vopak

5,841

9,164

11.4

10.7

9.7

9.2

7.3

7.0

5.6%

7.8%

3.1

2.8

4.2%

Magellan Midstream Partners

10,581

15,573

11.9

11.4

11.3

10.9

9.8

9.2

10.2%

9.7%

3.5

3.4

8.6%

MPLX

29,177

51,020

10.6

10.2

9.6

9.4

7.0

6.8

12.5%

11.5%

3.7

3.6

9.7%

NGL Energy Partners

285

4,474

N/A

N/A

8.9

7.8

0.9

0.9

-6.8%

88.2%

7.0

5.8

13.6%

Noble Midstream Partners

1,374

3,395

7.2

6.8

9.0

8.5

4.6

4.4

15.7%

17.1%

3.8

N/A

4.9%

NuStar Energy

1,957

6,739

17.1

13.9

9.4

9.1

5.7

5.3

12.5%

13.7%

5.4

5.2

9.0%

ONEOK

23,734

37,514

16.8

15.7

11.7

11.3

10.0

9.5

8.2%

9.2%

4.2

4.0

7.0%

PBF Logistics

991

1,653

7.2

7.7

7.6

7.8

5.7

5.8

17.1%

16.5%

2.7

N/A

7.6%

Pembina Pipeline Corp

17,353

29,454

20.3

18.8

10.6

10.3

9.3

9.0

7.9%

9.2%

3.7

3.5

5.4%

Phillips 66 Partners

8,200

13,177

11.1

8.6

10.0

9.3

8.4

7.5

10.5%

10.6%

3.3

3.0

9.7%

Plains All American Pipeline

7,134

19,129

8.2

7.3

8.8

8.4

5.0

4.6

17.3%

17.9%

4.5

4.1

7.3%

Plains GP Holdings

1,951

21,487

10.7

9.3

10.1

9.6

3.9

3.7

34.6%

42.9%

4.3

3.9

7.2%

Shell Midstream Partners

5,895

7,257

10.1

9.8

8.7

8.2

8.4

7.9

10.1%

10.6%

3.1

2.5

11.7%

Williams Companies

31,159

56,073

21.5

20.7

10.6

10.4

8.9

8.5

8.6%

9.4%

4.2

4.0

6.4%

Peer group average

12,923

25,558

12.0

11.4

9.6

9.2

6.6

6.3

12.6%

17.7%

4.1

3.9

7.8%

Source: Edison Investment Research, Refinitiv estimates. Note: Prices as at 11 May 2021. *For Brooge calculated with net debt excluding restricted cash and including lease liabilities.

Exhibit 8: Financial summary

 

 

$m

2018

2019

2020

2021e

2022e

31 December

 

 

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

36

44

42

68

130

Cost of Sales

(10)

(10)

(13)

(18)

(25)

Gross Profit

26

34

29

50

104

EBITDA

 

 

30

37

29

54

112

Adjusted EBITDA

 

 

30

37

29

54

112

Operating Profit (before amort. and except.)

 

 

24

31

23

44

98

Intangible Amortisation

0

0

0

0

0

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

24

31

23

44

98

Net Interest

(8)

(107)

(6)

(15)

(10)

Profit Before Tax (norm)

 

 

16

(75)

17

29

88

Profit Before Tax (FRS 3)

 

 

16

(75)

17

29

88

Tax

0

0

0

0

0

Profit After Tax (norm)

16

(75)

17

29

88

Profit After Tax (FRS 3)

16

(75)

17

29

88

Average Number of Shares Outstanding (m)

80.0

88.1

88.0

109.6

109.6

EPS - normalised fully diluted (c)

 

 

20.1

(85.5)

19.5

26.4

80.0

Dividend per share (c)

0.0

0.00

0.00

0.00

0.00

Gross Margin (%)

73.2

76.9

69.1

73.9

80.3

EBITDA Margin (%)

83.5

84.1

69.5

79.5

86.4

Operating Margin (before GW and except.) (%)

67.5

70.9

55.6

65.0

75.6

BALANCE SHEET

Fixed Assets

 

 

198

285

392

416

402

Intangible Assets

0

0

0

0

0

Tangible Assets

198

263

367

391

377

Restricted bank balance

0

0

9

9

9

Other

0

22

16

16

16

Current Assets

 

 

2

22

40

30

30

Stocks

0

0

0

0

0

Debtors

2

2

1

1

1

Cash

0

20

21

11

11

Restricted bank balance

0

0

18

18

18

Current Liabilities

 

 

(111)

(95)

(44)

(44)

(44)

Creditors

(9)

(61)

(14)

(14)

(14)

Short term leases

(2)

(2)

(10)

(10)

(10)

Short term borrowings

(99)

(15)

(7)

(7)

(7)

Other (Derivative warrant liability)

(1)

(17)

(13)

(13)

(13)

Long Term Liabilities

 

 

(28)

(103)

(260)

(244)

(143)

Long term borrowings

0

(74)

(180)

(164)

(63)

Long term leases

(28)

(29)

(79)

(79)

(79)

Other long-term liabilities

(0)

(0)

(1)

(1)

(1)

Net Assets

 

 

61

109

129

158

245

CASH FLOW

Operating Cash Flow

 

 

28

53

37

39

102

Net Interest

0

0

0

0

0

Tax

0

0

0

0

0

Capex

(0)

(60)

(97)

(33)

0

Amount deposited in restricted bank account

0

0

(27)

0

0

Acquisitions/disposals

0

0

0

0

0

Financing

(36)

30

(8)

0

0

Dividends

0

0

0

0

0

Net Cash Flow

(8)

24

(96)

6

102

Opening net debt*/(cash)

 

 

121

129

100

255

249

Other (increase in lease liability)

0

6

(60)

(0)

0

Closing net debt*/(cash)

 

 

129

100

255

249

148

Closing net debt* excluding financial leases

99

69

166

160

59

Source: Brooge Energy accounts, Edison Investment Research. Note: *Net debt excluding restricted cash.


General disclaimer and copyright

This report has been commissioned by Brooge Energy and prepared and issued by Edison, in consideration of a fee payable by Brooge Energy. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Brooge Energy and prepared and issued by Edison, in consideration of a fee payable by Brooge Energy. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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