Brooge Energy (US:BROG)2020-06-30 20:08Revenue and Growth - Brooge Energy Limited's revenues for the year ended December 31, 2019, were entirely derived from the Initial Phase I End User and BIA, accounting for 100% of total revenues [425]. - The Group's monthly revenue is primarily driven by fixed storage fees charged to BIA and the Super Major, with a total committed capacity of 129,000 m as of April 2020 [421]. - The operational commencement of the BIA Refinery is anticipated in the Third Quarter of 2021, which is expected to generate additional revenue for the Group [428]. - The Group's revenues are expected to diversify into three types of fees once the BIA Refinery is operational: refinery operations fees, fixed fees for storage, and variable fees for ancillary services [431]. - Revenue increased from $35.8 million in 2018 to $44.1 million in 2019, primarily due to operating Phase I at full storage capacity for the entire year [478]. - Ancillary services fee revenue increased from $15.1 million in 2018 to $20.1 million in 2019, representing a growth of 33% [479]. - Storage fee revenue increased from $20.7 million in 2018 to $23.9 million in 2019, reflecting the full operational capacity of Phase I [479]. Financial Performance - The Group incurred cash expenses of $3.2 million related to its Nasdaq listing and recorded a non-cash expense of $98.6 million due to the business combination, significantly impacting profitability for the year [432]. - The company experienced a net loss of $76.6 million in 2019, a significant decline from a net profit of $16.1 million in 2018, mainly due to a non-cash expense of $98.6 million related to a business combination [473]. - Adjusted EBITDA improved from $29.9 million (83.48% of revenue) in 2018 to $37.1 million (84.1% of revenue) in 2019, after adding back one-time listing expenses [517]. - The company reported a net loss of $76.6 million for the year ended December 31, 2019, primarily due to a non-cash listing expense of $98.6 million related to the business combination [497][514]. - General and administrative expenses increased by 28.6% from $2.0 million in 2018 to $2.6 million in 2019, with employee costs rising by 24.9% to $1.5 million [502]. Costs and Expenses - The Group's cost structure is primarily composed of employee costs and depreciation, with direct costs remaining stable across activity levels at the terminal [431]. - Direct costs rose by 6.2% from $9.6 million in 2018 to $10.2 million in 2019, primarily due to increased operational activity [489]. - Employee costs and related benefits increased by 9.5% from $2.8 million in 2018 to $3.1 million in 2019, driven by a higher number of staff [490]. - Listing expenses incurred in 2019 amounted to $101.8 million, impacting the financial results for that year [471]. - The company incurred total listing expenses of $101.8 million, which included $3.2 million in actual expenses related to the Nasdaq listing [514][517]. Capital Expenditures and Financing - Capital expenditures in 2019 amounted to $87.3 million, primarily for the construction of Phase II, with expectations of approximately $79.3 million in additional capital expenditures in 2020 [547][548]. - The Company obtained a Phase II Financing Facility amounting to $95.3 million (AED 350.0 million) in 2018 to partially finance the construction of Phase II, with an interest rate of 3 month EIBOR + 3% margin [587]. - The company anticipates funding future capital requirements through cash generated from operations and potential additional borrowings [523]. Debt and Financial Distress - As of December 31, 2019, the Group's current liabilities exceeded its current assets by $57 million, indicating financial distress [580]. - The company was not in compliance with its debt covenants, including the debt service coverage ratio, during the year ended December 31, 2019, which could have led to immediate repayment demands from lenders [550]. - The company had a total loan amount of $88.7 million as of December 31, 2019, with various term loans due in 2020 [549]. - BPGIC failed to make a payment of principal and interest totaling $6.6 million due on February 28, 2020, and $2.2 million due on April 30, 2020, constituting events of default [563]. Future Outlook and Expansion - The Group's future revenue growth will depend on securing additional land and developing or acquiring new facilities, which are capital-intensive endeavors [435]. - BPGIC is pursuing a major expansion (Phase III) with a new land lease of approximately 450,000 m and plans for storage capacity of up to 3.5 million m and refinery production of up to 180,000 bpd [437]. - The Phase II facility is expected to become operational in the Fourth Quarter of 2020, with the Phase II End User utilizing the facility as a sub-lessee of BIA [423]. - The Company expects to generate significant operating cash flows from Phase 2 operations, scheduled to start in Q4 2020 [583]. Management and Governance - The Group's management has expressed significant doubt about its ability to continue as a going concern due to uncertainties in cash flow timing and quantum [584]. - The Business Combination Agreement was consummated on December 20, 2019, resulting in the merger of Twelve Seas and Brooge Energy Limited, with BPGIC becoming a wholly-owned subsidiary [448].