Q4 2015 Presentation 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 3 chartered-in vessels The market value of owned vessels in operation is about NOK 16 billion, with a value adjusted age of approx. 6.2 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 1 566 employees Subsea employees: 1 566 Of which offshore engineers and project staff: 1 150 Norway Brazil Canada US UK Asia Pacific Angola 264 400 47 221 218 402 14 3
DOF Subsea Group In brief Condensed figures 5 last quarters Q4 last five years 2 500 35% 2 000 30% 25% NOK million 1 500 1 000 20% 15% 500 10% 5% Key figures Back-log incl. options Market value of fleet * According to internal Management reporting Approx. NOK 39 billion Approx. NOK 16 billion - Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 0% Operating revenue EBITDA EBITDA margin 4
Recent events Fleet Skandi Africa commenced long-term charter with Technip Delivery of first of 4 PLSVs, installation of topside equipment in progress Sale of Skandi Inspector Sale of Skandi Protector with delivery to new owners in January 2016 Contracts Several subsea projects awarded in Asia Pacific and Atlantic region during Q4 2015 Finance Financing Skandi Acu in JV with Technip Refinancing of Skandi Achiever, Skandi Neptune, Skandi Patagonia, Geoholm, Geograph and Skandi Hercules Bond repurchase in Q1 2016 of NOK 62 million 5
Ownership structure DOF ASA (51%) First Reserve Corporation (49%) DOF Subsea Holding (100%) DOF Subsea 2005 Established 20 570 NOK million total assets Modern high-end fleet and equipment 1 566 highly-skilled employees 21 owned subsea vessels 4 vessels on order 3 vessels on charter 62 ROVs, 5 ROVs on order 6
Our global footprint Bergen Aberdeen St John s 8 496 3 268 NORTH AMERICA Houston Macaé Rio de Janeiro ATLANTIC 1 Luanda Kuala Lumpur Singapore Jakarta Manila Brunei Darwin Buenos Aires BRAZIL 4 402 ASIA PACIFIC Perth Melbourne 8 400 7
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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 Owned vessels Chartered vessels MV of owned fleet (r.a.) * As per 31 st March 2015 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 Jan: Delivery of first PLSV 8
Modern high-end fleet Majority of the fleet delivered after 2007 Modern fleet with a value adjusted average fleet age of approx. 6.2 High-end vessels capable of a wide scope of worldwide operations 9
Business management Global business management system accredited by DNV to: Business Management System ISO 9001: 2008 Health and Safety System OHSAS 18001:2007 Environmental Management System ISO 14001:2004 Sustainability reporting according to Global Reporting Initiative G4 implemented Achieved Carbon Disclosure Project reporting result of 99B (2014 report) IMCA International Contractor membership 2009 10
HSEQ key statistcs 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 11
DOF Subsea Projects DOF Subsea has built a global presence over the last 10 years 8 000 Operating income by segment 2 500 DOF Subsea has developed the project business gradually 7 000 6 000 2 000 Increased project activity and complexity driving growth 5 000 4 000 1 500 Project business going forward Gradually increase the complexity of work done (Step by Step) Build a larger project back-log Mix between owned and chartered in vessels 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 Chartering of vessels Subsea projects * According to internal Management reporting 1 000 500 0 Q4 2013 Q4 2014 Q4 2015 Subsea projects 1 476 1 447 1 013 Chartering of vessels 395 577 630 Total revenue 1 871 2 024 1 643 Chartering of vessels Subsea projects 12
Operational highlights Q4 2015 In Asia Pacific, DOF Subsea has delivered IMR services to Shell Philippines and Chevron Australia. In the North Sea, DOF Subsea has delivered survey and light construction services for Shell, Statoil, Total, OMV and Allseas. In North America, DOF Subsea has delivered IMR services for Freeport McMoran, Chevron and S&P services for Chevron and HMC. In Brazil, DOF Subsea has delivered ROV, survey and installation services for BW Offshore, Chevron and Petrobras. In Canada, DOF Subsea commenced ROV services for Husky under the longterm IMR contract. Ship of the Year 2015 Skandi Africa commenced the 5 year time charter contract with Technip. 13
Contract coverage 45 40 35 30 NOK billion 25 20 15 10 5-2016 2017 2018 2019 2020 2021 2022 2023 Firm 21 18 15 12 9 7 5 4 Option 18 17 17 16 16 15 14 14 * Figures based on remaining back-log from beginning of year DOF Subsea Group has solid cash flow visibility over the next 3-5 years By end-december 2015 the total back-log (incl. options) was approx. NOK 39 billion Firm contracts counts for approx. NOK 21 billion Options counts for approx. NOK 18 billion 14
Financials
Condensed profit & loss (IFRS 11) Operating income was NOK 1 565 million in Q4 2015, down from NOK 1 931 million in Q4 2014. EBITDA (excl. gain on sale of assets) was NOK 553 million in Q4 2015, up from NOK 462 million in Q4 2014. EBIT (excl. gain on sale of assets) was NOK 353 million in Q4 2015, up from NOK 302 million in Q4 2014. * The financial numbers are presented according to IFRS 11. See DOF Subsea financial report Q4 2015 note 1 for details. 16
Condensed balance sheet (IFRS 11) From year end 2014 non-current assets has increased to NOK 15 417 million from NOK 14 336 million From year end 2014 total receivables has decreased to NOK 1 560 million from NOK 1 964 million From year end 2014 cash and cash equivalents has decreased to NOK 1 464 million from NOK 2 120 million Total liabilities as per 31 st December 2015 was NOK 13 226 million The net interest bearing debt as per 31 st December 2015 was NOK 9 995 million The book equity was NOK 5 692 million giving a book equity ratio of 30.1 % to total assets as per 31 st December 2015 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 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 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 EBITDA 411 470 489 417 329 471 595 550 502 543 552 502 458 515 553 516 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% 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 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 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 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 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 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 * According to internal Management reporting 0% 18
Debt maturity profile Debt maturity profile DOF Subsea AS level, 2016E 2020E 3 500 3 000 DOFSUB05 - NOK 750 million - Maturity April 2016 2 500 2 000 1 500 DOFSUB07 - NOK 1 300 million - Maturity May 2018 1 000 500-2016E 2017E 2018E 2019E 2020E After Bond Loan Bank Debt Balloons Liabilities held for sale 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. 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 Strengthened financial position 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 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 Increasing supply of engineering capabilities 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 strong back-log of NOK 39 billion 24
Thank you!