Quarterly presentation Q1 2016 DOF Subsea Group
DOF Subsea Group
DOF Subsea Group in brief Fleet One of the largest subsea vessel owners in the world Owns and operates a fleet of 21 vessels, plus 4 newbuilds on order In addition 2 chartered-in vessels The market value of owned vessels in operation is about NOK 16 billion, with a value adjusted age of approx. 5.9 years Operates 62 ROVs and 4 ROVs and 1 AUV on order Global organization Head office in Bergen Regional offices in Australia, Singapore, Norway, UK, Angola, US, Canada and Brazil Total of 1 468 employees Subsea employees: 1 468 Of which offshore engineers and project staff: 898 Norway Brazil Canada US UK Asia Pacific Angola 290 360 54 202 195 352 15 3
DOF Subsea Group in brief Condensed figures 5 last quarters Key figures Back-log incl. options Market value of fleet * According to internal Management reporting Approx. NOK 38 billion Approx. NOK 16 billion 4
Recent events Fleet Delivery of first of 4 PLSVs, Skandi Açu Delivered Skandi Protector to the new owners Contracts Several subsea projects awarded in Asia Pacific and Atlantic region during Q4 2015 Several IMR and subsea projects awarded with a total value in excess of NOK 500 million The awards increase the Group s presence in the Canadian and West-African markets Extension of RSV contract with Petrobras on Geograph by 18 months Finance Refinancing Skandi Achiever, Skandi Neptune, Skandi Patagonia, Geoholm, Geograph and Skandi Hercules Bond repurchase in Q1 2016 of NOK 62 million Repaid outstanding amount of DOFSUB05 at maturity in April 5
Skandi Açu Delivery of first of 4 PLSVs in joint venture with Technip Sea trials on going Skandi Açu Build 2016 Design VARD 3 05 Type Subsea / PLSV LOA 146.0 m Breadth 30.0 m Draught 8.5 m DWT 10 800t Accommodation 120 persons TLS tower 650t 6
DOF Subsea Group overview DOF ASA (51%) First Reserve Corporation (49%) DOF Subsea Holding (100%) DOF Subsea 2005 Established 20 552 NOK million total assets Modern high-end fleet and equipment 1 468 highly-skilled employees 21 owned subsea vessels 4 vessels on order 2 vessels on charter 62 ROVs, 5 ROVs on order 7
Our global footprint Bergen Aberdeen St John s 8 500 2 256 NORTH AMERICA Houston Macaé Rio de Janeiro ATLANTIC 1 Luanda Kuala Lumpur Singapore Jakarta Manila Brunei Darwin Buenos Aires BRAZIL 3 352 ASIA PACIFIC Perth Melbourne 9 360 8
DOF Subsea timeline DOF Subsea fleet evolution DOF Subsea employees Number of operated vessels 28 24 20 16 12 8 4 0 MV of fleet 200520062007200820092010201120122013201420152016 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 - NOK million Number of employees 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Owned vessels Chartered vessels MV of owned fleet (r.a.) * As per 31 st March 2016 Employees 2005-2010 2011 2012 2013 2014 2015 2016 Fleet: From 11 to 21 vessels Fleet: 24 vessels Fleet: 25 vessels Fleet: 26 vessels Fleet: 28 vessels Fleet: 24 vessels Fleet: 23 vessels DOF Subsea was established in 2005 DOF Subsea was listed on the Oslo Stock Exchange in 2005, and taken private by DOF and FRC in 2008 Established a global footprint, present in all major offshore oil & gas regions Built a global organization through organic growth and acquisitions Developed global Business Management System, and achieved global ISO certification JV with Technip Expanded the fleet by taking delivery of 10 newbuilds Feb: Delivery of Skandi Niteroi May: Sale of Geosounder Jun: Acquisition Skandi Constructor Jul: Delivery of Skandi Skansen Sep: Delivery of Skandi Singapore Mar: Sale of OSCV newbuild Mar: Signed OSCV newbuild contract Mar: Chartered Skandi Hawk Feb: Signed OSCV newbuild contract Feb: Chartered Harvey Deep-Sea Mar: Sale of Geobay Jun: Delivery of Skandi Bergen Aug: Signed newbuild contracts for 4 x PLSVs Nov: Chartered Normand Reach Global ISO recertification Jan: Delivered Skandi Bergen to new owners Mar: Chartered Ross Candies Mar: Chartered Chloe Candies Nov: Delivered Skandi Skolten to new owners Feb: Delivered Skandi Aker to new owners Mar: Delivery of Skandi Africa May: Acquired Skandi Hawk June: Sale of Skandi Arctic Nov: Sale of Skandi Inspector Jan: Delivered Skandi Protector to new owners Apr: Delivery of Skandi Açu 9
Modern high-end fleet Majority of the fleet delivered after 2007 Modern fleet with a value adjusted average fleet age of approx. 5.9 High-end vessels capable of a wide scope of worldwide operations 10
Business management Global business management system accredited by DNV to: Business Management System ISO 9001: 2015 Health and Safety System OHSAS 18001:2007 Environmental Management System ISO 14001:2015 Sustainability reporting according to Global Reporting Initiative G4 implemented Achieved Carbon Disclosure Project reporting result of 99B (report for 2014) IMCA International Contractor membership ISO recertification in 2016 2009 11
HSEQ key statistics Substantial HSE-improvement since 2005 Substantial increase in activity level measured by total man-hours DOF Subsea HSEQ-statistics 12,0 6 000 000 Frequence: Incident / 1 000 000 man-hour 10,0 8,0 6,0 4,0 2,0 5 000 000 4 000 000 3 000 000 2 000 000 1 000 000 Man-hours - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTI TR Man-hours 0 12
DOF Subsea Projects DOF Subsea has built a global presence over the last 10 years 8 000 Operating income by segment 1 800 DOF Subsea has developed the project business gradually Increased project activity and complexity driving growth IMR focused operations Project business going forward Gradually increase the complexity of work done Build a larger project back-log with focus on IMR Mix between owned and chartered in vessels 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2013 2014 2015 Subsea projects 4 971 5 187 4 810 Chartering of vessels 1 609 2 236 2 442 Total 6 580 7 422 7 252 1 600 1 400 1 200 1 000 800 600 400 200 0 Q1 2014 Q1 2015 Q1 2016 Subsea projects 1 035 1 086 904 Chartering of vessels 496 570 502 Total revenue 1 531 1 656 1 406 Chartering of vessels Subsea projects * According to internal Management reporting Chartering of vessels Subsea projects 13
Contract coverage 40 35 30 NOK billion 25 20 15 10 5-2016 2017 2018 2019 2020 2021 2022 2023 Firm 20 17 15 12 9 7 5 4 Option 18 17 17 16 15 15 14 13 * Figures based on remaining back-log from beginning of April 2016 DOF Subsea Group has a good cash flow visibility over the next 3-5 years By end-march 2016 the total back-log (incl. options) was approx. NOK 38 billion Firm contracts counts for approx. NOK 20 billion Options counts for approx. NOK 18 billion 14
Financials
Condensed profit & loss (IFRS 11) Operating income was NOK 1 343 million in Q1 2016, down from NOK 1 558 million in Q1 2015 EBITDA (excl. gain on sale of assets) was NOK 425 million in Q1 2016, up from NOK 373 million in Q1 2015 EBIT (excl. gain on sale of assets) was NOK 84 million in Q1 2016, down from NOK 237 million in Q1 2015 16
Condensed balance sheet (IFRS 11) From year end 2015 non-current assets has increased to NOK 15 543 million from NOK 15 417 million From year end 2015 total receivables has decreased to NOK 1 400 million from NOK 1 560 million From year end 2015 cash and cash equivalents has decreased to NOK 1 300 million from NOK 1 464 million Total liabilities as per 31 st March 2016 was NOK 12 165 million The net interest bearing debt as per 31 st March 2016 was NOK 9 474 million The book equity was NOK 6 078 million giving a book equity ratio of 33.3 % to total assets as per 31 st March 2016 17
Quarterly performance (excl. asset sales) 2 500 2 000 Operating income EBITDA EBITDA margin 40% 35% 30% NOK million 1 500 1 000 25% 20% 15% 500 10% 5% - Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 0% NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Operating income 1 223 1 384 1 354 1 288 1 225 1 679 1 804 1 871 1 530 1 963 1 904 2 025 1 656 1 962 1 991 1 642 1 406 EBITDA 411 470 489 417 329 471 595 550 502 543 552 502 458 515 553 516 456 EBITDA margin 33,6% 34,0% 36,1% 32,4% 26,9% 28,1% 33,0% 29,4% 32,8% 27,7% 29,0% 24,8% 27,7% 26,2% 27,8% 31,4% 32,4% Current assets 2 782 2 962 2 704 2 612 3 077 3 319 3 119 3 470 3 247 3 252 2 998 4 223 3 414 3 414 3 674 3 752 2 900 Non-current assets 16 455 16 230 16 056 16 012 16 043 16 344 16 330 16 340 16 012 16 151 16 215 15 796 16 726 16 578 16 447 16 818 17 652 Total assets 19 238 19 192 18 760 18 624 19 120 19 663 19 450 19 810 19 258 19 403 19 213 20 019 20 140 19 992 20 121 20 570 20 552 Current liabilities 2 543 2 495 2 260 1 989 2 000 2 805 2 808 3 167 3 470 3 741 3 607 4 505 4 139 4 577 4 492 3 650 2 991 Non-current liabilities 11 723 11 735 11 439 11 534 12 051 11 862 11 474 11 427 10 126 9 701 9 668 9 402 9 924 9 009 9 988 11 228 11 482 Equity 4 970 4 963 5 061 5 102 5 069 4 996 5 167 5 216 5 662 5 962 5 938 6 112 6 077 6 405 5 641 5 692 6 078 * According to internal Management reporting 18
Debt maturity profile Debt maturity profile DOF Subsea AS level, 2016E 2020E 3 000 2 500 DOFSUB05 (Repaid) - NOK 750 million - Maturity April 2016 2 000 1 500 DOFSUB07 - NOK 1 300 million - Maturity May 2018 1 000 500-2016E 2017E 2018E 2019E 2020E 2021E Thereafter Bond Loan Bank Debt Balloons The figures reflects amortization and balloon payments on debt drawn. Debt maturity profile excludes approx. NOK 0.4 billion in payments to Eksportfinans which is serviced by a corresponding amount of restricted cash. The bond loan DOFSUB05 was repaid end-april 2016 19
Risk mitigating factors Diversified bluechip customers reduce counterparty risk Value added services provide increased earnings potential Modern, highend fleet provides safe collateral Recent sale of vessels confirm values Strong back-log provides stable earnings Spare leveraging capacity on existing fleet Global presence provide access to more market opportunities Risk mitigating factors Strong bank and investor relationships provide access to credit Weaker subsea market 20
Outlook
Challenging fundamentals for subsea activity Demand Weak and volatile oil price Continued cost focus by oil companies Reduced offshore E&P spending Uncertain project timing Counterpart risk Increased focus on newer, technologically advanced and flexible vessels and engineering capabilities DOF Subsea owns the world s most sophisticated fleet and has a global organization 22
Challenging fundamentals for subsea activity Supply Fleet of subsea vessels increasing Several vessels in lay-up Number of subsea contractors to be reduced Reduced demand Increasing supply Weaker market conditions 23
Challenging fundamentals for subsea activity Reduced E&P spending Low and volatile oil price Increased supply of subsea vessels Lower rig activity and delayed field development Improved access to qualified personnel Lower IMR activity globally Weak subsea market and pressure on margins Number of niche subsea players DOF Subsea has mitigated the weaker fundamentals through a global footprint, a diversified portfolio of clients, strengthened balance sheet and a back-log of NOK 38 billion 24
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