Quarterly Presentation Q4 2017 Group
Group at a glance 2005 established NOK 4.6bn 1) Revenues 2017 NOK 16.1bn Firm backlog Q4 17 1 214 2) Subsea employees worldwide Q4 17 Integrated Supplier of subsea offshore services Modern State-of-the-art asset base 27 3) Subsea vessels 71 4) ROVs 1) Note: According to management reporting 2) Note: Excluding marine crew 3) Note: Including newbuilds Skandi Olinda and Skandi Recife and chartered-in vessels Harvey Deep Sea, Skandi Chieftain and Skandi Darwin 4) Note: Including 2 AUVs 2
More than a decade of structural growth and consolidation 2005 2008 2010 2013 2014 2016 established following the acquisition of Geoconsult. The Company was listed second half 2005. First Reserve acquires 49% of, which in the following is delisted from the Oslo Stock Exchange Large and global organisation following multiple acquisitions from 2005-2010 Covus Subsea Century Subsea SWG Offshore CSL SEMAR Awarded four PLSV long-term contracts in joint venture with TechnipFMC Expanding organisation on the back of several large contract awards. Number of employees and vessels peaking at 1 858 and 27, respectively Focus on consolidation and streamlining of business operations to improve efficiency and competitiveness in weak market Development in number of Subsea Employees 1) 1858 1667 1492 1566 1354 1246 1278 1214 897 1014 553 563 337 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Development in number of vessels in operation 2) 24 25 26 27 24 25 21 21 18 16 13 11 11 2017 Delivery of two newbuilds entering into long-term contracts 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Owned vessels Chartered-in vessels Total 1) Note: Marine crew not included 2) Note: Newbuilds not included 3 3) Note: Year-end numbers
Global footprint Bergen Aberdeen St John s 10 386 4 243 Houston NORTH AMERICA ATLANTIC Kuala Lumpur Singapore Brunei Manila Macaé Rio de Janeiro Luanda Jakarta Darwin Buenos Aires BRAZIL 5 288 ASIA PACIFIC Perth Melbourne 6 297 1) Note: Number of employees as at end of Q4 17, excluding marine crew 2) Note: Vessels in operation as at end of Q4 17, including 3 chartered-in vessels (excluding newbuilds under construction) 4
Several major and attractive contracts commenced in 2017 IMR contract offshore Angola 16 months + 3x4 months options Scope comprising project management, engineering, vessels and ROV services Jan 2017 ENI Angola Long-term contract with Petrobras 18 months + 18 months options On contract with Petrobras since 2010 Vessel owned in joint venture with TechnipFMC First-pipe lay vessel built in Brazil Jan 2017 Skandi Vitoria Apr 2017 Skandi Buzios Long-term contract with Petrobras 8 years + 8 years options Vessel owned in joint venture with TechnipFMC Built in Norway with 650t VLS Jul 2017 Husky Energy Long-term IMR contract offshore Eastern Canada 10 years + 10 years options IMR scope comprising project management, engineering, vessel and ROV services High strategic importance through strengthened presence in the Canadian market Nov 2017 Prelude FLNG Long-term FLNG IMR contract awarded in Australia with Shell 5 years + 4 years options IMR scope comprising project management, engineering, logistics, vessel and ROV services 5
Local Multi-regional Global holds a leading position in the subsea IMR market through its global presence and integrated solutions offering Positioning Improved competitive position for DOF Subsea when market normalises multiple competitors have scaled down operations or entered financial distress Geographies Illustrative Favourable competitive dynamics in tendering for mid-sized subsea IMR projects Larger EPCI providers typically invited to tender, however less capable and willing to meet specific project requirements due to relatively small project size Vessel suppliers are not invited to tenders due to lack of engineering and project execution capabilities benefits from offering an integrated engineering and vessel solution = Chapter 11 / financial distress Source: ABGSC Dayrate / Support services Small to medium EPCI contracts Larger EPCI contracts Capabilities 6
Key financials 1) Revenue EBITDA 2) Firm backlog NOK million NOK million NOK billion 8,000 2,500 25 7,000 6,000 2,000 20 5,000 1,500 15 4,000 3,000 1,000 10 2,000 500 5 1,000-2012 2013 2014 2015 2016 2017-2012 2013 2014 2015 2016 2017-2012 2013 2014 2015 2016 2017 1) Note: Figures according to management reporting 2) Note: EBITDA excl. profit from sale of non-current assets 7
Segment highlights
Two business segments Group Subsea IMR Projects Long-term Chartering 1) Framework agreements Engineering capabilities Opex spending Long-term charters Vessel capabilities Capex spending Revenues 2017 2) NOK 3 127 million EBITDA 2017 3) NOK 323 million ~10% margin* Firm backlog 4) NOK 3.7bn Revenues 2017 2) NOK 1 423 million EBITDA 2017 3) NOK 1 084 million ~76% margin Firm backlog 4) NOK 12.4bn 1 214 Employees Q4 17 18 vessels in operation 5) Q4 17 7 vessels in operation Q4 17 2 newbuilds Q4 17 * Reduced EBITDA margin due to one-off events in North America and APAC 1) Note: Long-term chartering comprises 5 PLSVs in operation and 2 PLSVs under construction, plus Skandi Acergy and Skandi Patagonia 4) Note: Firm backlog as at end of Q4 17 9 2) Note: According to management reporting 3) Note: According to management reporting 5) Note: Including 3 chartered-in vessels
Subsea IMR Projects Numerous projects completed worldwide Built a leading subsea projects division for over a decade Subsea project activity established with a global footprint in all key offshore regions High quality asset base leveraging unrivaled subsea and vessel operating competence A clear action plan to pursue further opportunities Continue to increase the scope and complexity of operations Strengthen presence in selected geographies Further build project backlog with core focus on IMR projects Selected IMR projects Last 5 years Selected Mooring projects Last 5 years ENI Angola IMR Contract (2017-2018) Goliat Field Support ENI (2016) Saipem CRX/Nene (2014) Call-off for Light Construction Services and Seabed Survey Services Statoil (2012-2015) Technip Frame Agreement (2012-2015) ConocoPhillips ROV Services (2012 and onwards) Freeport McMoran IMR Support (2013-2016) Saipem JSM Export Line Support (2014-2015) ROV Support Vessel Petrobras (2011 and onwards) Lam Son Mooring Replacement (2017) Yinson OCTP FPSO Field Dev. (2016-2017) Bongkot Mooring Replacement PTTEP (2017) Raroa Mooring OMV (2016-2017) Gina Krog TMRS Teekay (2016) Catcher Mooring Installation BWO (2016) Goliat FPSO Marine Installation ENI (2011-2015) Lam Son Mooring Installation PTSC (2014) Knarr Mooring Project Teekay (2013-2014) Banff Re-instatement Project Teekay (2013-2014) 10
Subsea IMR Projects Selected contracts included in backlog Location Client Scope Commencement Duration Angola ENI Angola IMR 2017 16 months + 12 months Eastern Canada Husky Energy IMR 2017 10 years + 10 years Prelude Australia Shell Australia IMR 2017 5 years + 4 years Brazil Petrobras Inspection 2016 1 year + 1 year Gorgon, Janz and Wheatstone Chevron Australia IMR 2015 3 years + 2 years Malampaya Shell Philippines IMR 2014 7 years + 3 years North Sea Conoco Phillips IMR 2011 8 years + 13 years Asia Pacific North Sea / Atlantic Brazil North America Leading supplier of IMR services in the region Leading supplier of mooring services in the North Sea and West Africa Strong position being one of the major suppliers of IMR services Gradually built up the region, becoming a top three supplier of IMR services in the GoM 11
Long-term Chartering provides state-of-the-art vessels to leading players Skandi Acergy Skandi Acu Skandi Africa 7 vessels in operation 2 contracted newbuilds NOK 12.4bn firm backlog per Q4 17 Construction support vessel Construction & pipe laying vessel Construction & pipe laying vessel Operations High-end vessels operating advanced subsea projects for third party EPCI contractors Skandi Niteroi Skandi Patagonia Skandi Vitoria Contracts Strong long-term contract coverage Construction & pipe laying vessel Dive support vessel Construction & pipe laying vessel Remuneration Day-rate based Skandi Buzios Skandi Recife Skandi Olinda Selected clients Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel 12
Long-term Chartering Successful strategic alliance with TechnipFMC in Brazil State-of-the art PLSV fleet co-owned through JV with TechnipFMC, the #1 global provider of flexible pipes 50% 50% DOFCON Brazil AS (established 2009) 6 vessels USD 2 billion invested Exposure to larger projects Reduced redeployment risk State-of-the-art vessels Attractive financing terms Skandi Vitoria and Skandi Niteroi first ever pipe-lay vessels built in Brazil Skandi Açu and Skandi Buzios built in Norway and delivered on-hire to Petrobras in August 2016 and April 2017, respectively Skandi Açu, Skandi Buzios, Skandi Refice and Skandi Olinda all awarded 8 + 8 year contracts with Petrobras Skandi Recife and Skandi Olinda currently under construction, with construction of both vessels progressing according to plan 13
4 th Quarter 2017
Q4 2017 highlights The operating revenue for the quarter was NOK 1 275 million 1) with an EBITDA of NOK 402 million 1) and an overall vessel utilisation of 78% Several short-term contracts awarded within the Subsea IMR Projects segment, increasing the utilisation of both assets and personnel compared to previous quarters The IMR contract on the Prelude field with Shell in Australia commenced in November Skandi Niteroi awarded short-term contract in Brazil In December, completed a private placement towards DOF ASA to raise NOK 500 million in equity. In connection with the private placement, the maturity of bond DOFSUB07 was extended from May 2018 to October 2019 for NOK 100 million and May 2020 for the remaining NOK 408 million Firm backlog as at 31 December 2017 was NOK 16.1 billion 1) Note: Figures according to management reporting 15
NOK million EBITDA margin Quarterly performance 1) 2,500 2,000 1,500 1,000 500 40% 35% 30% 25% 20% 15% 10% 5% - Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Operating income EBITDA EBITDA margin NOK million Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Operating income 1 871 1 530 1 963 1 904 2 025 1 656 1 962 1 991 1 642 1 406 1 660 1 232 1 128 982 1 199 1 093 1 275 EBITDA 550 502 543 552 502 458 515 553 516 456 510 447 320 279 400 332 402 EBITDA margin 29,4% 32,8% 27,7% 29,0% 24,8% 27,7% 26,2% 27,8% 31,4% 32,4% 30,7% 36,3% 28,4% 28,4% 33,4% 30,4% 31,5% Current assets 3 470 3 247 3 252 2 998 4 223 3 414 3 414 3 674 3 752 2 900 3 010 2 742 2 483 2 808 2 595 2 501 2 607 Non-current assets 16 340 16 012 16 151 16 215 15 796 16 726 16 578 16 447 16 818 17 652 18 206 18 514 18 043 18 087 18 428 17 926 17 829 Total assets 19 810 19 258 19 403 19 213 20 019 20 140 19 992 20 121 20 570 20 552 21 216 21 256 20 526 20 896 21 023 20 427 20 436 Current liabilities 3 167 3 470 3 741 3 607 4 505 4 139 4 577 4 492 3 650 2 991 3 022 2 645 2 478 2 444 3 010 3 051 2 440 Non-current liabilities 11 427 10 126 9 701 9 668 9 402 9 924 9 009 9 988 11 228 11 482 11 864 12 174 11 993 12 503 11 942 11 221 11 648 Equity 5 216 5 662 5 962 5 938 6 112 6 077 6 405 5 641 5 692 6 078 6 330 6 437 6 055 5 948 6 071 6 156 6 348 Total equity and liablilites 19 810 19 258 19 404 19 213 20 019 20 140 19 991 20 121 20 570 20 551 21 216 21 256 20 526 20 896 21 023 20 427 20 436 1) Note: Figures according to management reporting, and excluding profit from sale of non-current assets 16 0%
Condensed profit & loss 1) Pofit & Loss (NOK million) 4Q 2017 4Q 2016 2017 2016 Operating income 1 068 1 001 3 849 5 099 Payroll expenses -368-376 -1 420-1 611 Other operating expenses -462-407 -1 593-2 047 Share of net income of associates and joint ventures 54 70 303 154 Profit from sale of non-current assets - 96-5 170 Operating profit beforedepreciation (EBITDA) 292 385 1 135 1 764 Depreciation and impairment -201-375 -999-1 318 Operating profit (EBIT) 91 10 136 446 Financial income 13 20 55 59 Financial expenses -132-145 -521-530 Realised net gain / loss onderivative instruments and currency position 8-98 -80-181 Unrealised net gain / loss on derivative instruments and currency position -194-193 288 473 Net financial income / loss -305-417 -259-179 Profit / loss beforetax -215-407 -123 266 Income tax expense -161-23 -150-111 Profit / loss for the period -375-430 -273 155 1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the Quarterly Financial Report 17
Condensed balance sheet 1) Assets (NOK million) 31.12.2017 31.12.2016 Equity and liabilities (NOK million) 31.12.2017 31.12.2016 Tangible assets 11 773 11 950 Goodwill 366 373 Deferred tax asset 243 269 Investment in associates and joint ventures 1 027 717 Non-current receivables 1 125 1 169 Non-current assets 14 534 14 479 Trade receivables 855 791 Other current receivables 252 317 Total current receivables 1 107 1 108 Restricted cash 311 305 Unrestricted cash and cash equivalents 786 757 Cash and cash equivalents 1 097 1 062 Paid-in equity 4 344 3 844 Other equity 1 778 1 987 Non-controlling interests 226 224 Total equity 6 348 6 055 Bond loans 1 914 1 297 Debt to credit institutions 6 518 7 208 Financial non-current derivatives 24 98 Other non-current liabilities 24 29 Non-current liabilities 8 481 8 632 Current portion of debt 1 191 1 114 Trade payables 392 500 Other current liabilities 325 347 Current liabilities 1 909 1 961 Current assets 2 204 2 170 Total liabilities 10 390 10 594 Total assets 16 738 16 648 Total equity and liabilities 16 738 16 648 1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the Quarterly Financial Report 18
NOK million Debt maturity profile 1) Debt maturity profile, 2018E 2022E 3,500 3,000 2,500 2,000 1,500 1,000 500-2018E 2019E 2020E 2021E 2022E Thereafter Bond Loan Bank Debt Balloons 1) Note: Figures according to management reporting and based on exchange rates as at end of Q4 17 The figures reflect amortisation and balloon payments on outstanding debt 19
NOK billion Backlog 1) As at 31 December 2017, the Group s firm contract backlog was NOK 16.1 billion 20.0 15.0 10.0 5.0 0.0 2018 2019 2020 2021 2022 Thereafter Options 1.1 0.6 0.5 0.5 0.3 15.1 Firm 2.8 2.5 2.3 2.0 1.8 4.7 1) Note: Figures based on remaining backlog as at end of Q4 17 and exchange rates as at end of Q4 17 2) Note: Contract backlog excludes master service agreements (MSAs) within the Subsea IMR Projects segment only confirmed POs are included in the backlog 20
Years Modern high-end fleet Year of delivery fleet Fleet age 9.0 8.0 2000-2006 25% Newbuilds 8% 2013-2017 17% 7.0 6.0 5.0 Skandi Africa, Ship of the Year 2015 4.0 3.0 2007-2012 50% 2.0 1.0 Skandi Acu, PLSV built 2016 Majority of the fleet is younger than 10 years Modern fleet with a value adjusted average fleet age of 6.4 years High-end vessels, capable of a wide scope of worldwide operations - Average fleet age Value adjusted average fleet age Skandi Buzios, PLSV built 2017 1) Note: Excluding newbuilds under construction and chartered-in vessels 2) Note: Figures as at end of Q4 17 21
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