Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q4 2015 Earnings Presentation
35 slides from Subsea 7's earnings presentation, Mar 2, 2016
Slide 1: Earnings Presentation Fourth Quarter and Full Year 2015
Earnings Presentation Fourth Quarter and Full Year 2015 2 March 2016 12:00 noon UK time 1
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this announcement may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘s
Slide 3: Jean Cahuzac, CEO
A =z J ean Cahuzac CEO
Slide 4: 2015 highlights
2015 highlights • Good results delivered in a challenging market • Order intake of $3.4 billion • Remained disciplined in managing contracted risks • Total Vessel Utilisation: 72% full year, 62% fourth quarter – Active Vessel Utilisation: 78% full year, 74% fourth quarter • Delivered our cost reduct
Slide 5: 2015 financial results
2015 financial results Fourth quarter financial highlights Full year financial highlights • Fourth quarter revenue $1.0bn • Revenue $4.8bn • Adjusted EBITDA margin 30% • Adjusted EBITDA margin 26% • Adjusted diluted earnings per • Adjusted diluted earnings per share(1) of $0.29 share(1) of $1.45 • I
Slide 6: Good operational performance
Good operational performance • Strong project execution Major project progression(1) • Significant projects in the fourth OFON 2 (Nigeria) quarter included: Clair Ridge (UK) Montrose (UK) – TEN – Erha North Lianzi Topside (Angola) – Lianzi SURF and Topside Martin Linge (Norway) – BC-10 TEN (Ghana) –
Slide 7: Q4 Backlog and order intake
Q4 Backlog and order intake • Backlog of $6.1 billion(1), as at 31 December 2015 • $0.4 billion order intake including announced awards: – West Nile Delta platform extension and tie-in, offshore Egypt; – East Nile Delta Phase 3, offshore Egypt • West Nile Delta Phase 2 awarded in February 2016 Backl
Slide 8: Ricardo Rosa, CFO
A =z Ricardo Rosa CFO
Slide 9: Income statement – key highlights
Income statement – key highlights Three months ended Twelve months ended 31 Dec 15 31 Dec 14 31 Dec 15 31 Dec 14 In $ millions, unless otherwise indicated Unaudited Unaudited Audited Audited Revenue 1,025 1,395 4,758 6,870 Impairment of Goodwill (521) (1,183) (521) (1,183) Net operating (loss)/incom
Slide 10: Income statement – supplementary details
Income statement – supplementary details In $ millions Three months ended Twelve months ended 31 Dec 15 31 Dec 14 31 Dec 15 31 Dec 14 Unaudited Unaudited Audited Audited Administrative expenses (68) (81) (305) (315) Share of net income of associates 2 2 63 69 and joint ventures Depreciation and amor
Slide 11: 2015 Business Unit performance
2015 Business Unit performance Northern Hemisphere and Life of Field Southern Hemisphere and Global Projects Q4 2015 Q4 2015 $717m $305m $245m $(49)m Revenue NOI Revenue NOI Northern Hemisphere and Life of Field Southern Southern Hemisphere Hemisphere and and Global Global Projects 12 months to 31 D
Slide 12: Delivering our resizing programme
Delivering our resizing programme • Announced ‘000s Workforce – Remove 12 vessels from the 15 14 13 active fleet 10 10 – Reduce the workforce by 2,500 people 5 – by early 2016 • Delivered 0 Q4 '13 Q4 '14 Q4 '15 – Removed 13 vessels from the active fleet – Reduced the workforce by Vessels 3,600 peopl
Slide 13: 2015 Operating expense overview
2015 Operating expense overview $ bn • People(1): Offshore and onshore 7 personnel 6.0 6 • Procurement of materials and 0.8 other direct project costs: 5 0.4 Variable cost linked to volume of 4.2 work and subject to project profile 4 2.0 0.8 • Vessels and other costs(2): 0.4 3 Including vessels cost
Slide 14: Summary balance sheet
Summary balance sheet 31 Dec 31 Dec 31 Dec 31 Dec 2015 2014 2015 2014 In $ millions Audited Audited In $ millions Audited Audited Assets Equity & Liabilities Total equity 5,346 5,562 Non-current assets Non-current liabilities Goodwill 767 1,322 Non-current portion of borrowings 524 576 Property, pla
Slide 15: Summary of full year 2015 cash flow
Summary of full year 2015 cash flow $ millions Cash and cash equivalents at 31 Dec 2014 573 Increase of $64 million in net Net cash generated from operating activities 1,049 operating liabilities Included capital expenditure of Net cash flow used in investing activities (554) $639 million mainly on
Slide 16: Capital expenditure for vessel new-build programme
Capital expenditure for vessel new-build programme(1) # vessels under construction at 6 5 4 0 year end $ millions 557 544 499 340 Forecast Actual spend to date Upto 31 Dec 2013 2014 2015 2016 E (1) Comprises four PLSVs being constructed for long-term contracts with Petrobras (including Seven Waves,
Slide 17: Financial guidance
Financial guidance 2016 Guidance Revenue Significantly lower than 2015 (unchanged) Adjusted EBITDA percentage margin Significantly lower than 2015 (unchanged) Admin expense $240 million - $250 million Net finance charge $5 million - $10 million Depreciation and Amortisation $400 million - $420 milli
Slide 18: Jean Cahuzac, CEO
A =z J ean Cahuzac CEO
Slide 19: Market outlook remains challenging in 2016
Market outlook remains challenging in 2016 • SURF: – Timing of project awards to market remains uncertain – Highly competitive market for smaller projects – Market share expected to be maintained – Some PLSV long-term contracts potentially at risk offshore Brazil • Conventional and Hook-up: Low acti
Slide 20: Our initiatives
Our initiatives Actively adapt to industry conditions without losing focus on long term strategic priorities Resize and Develop a Form leading reorganise our partnership industry alliances business approach Drive business Invest in improvements technology Enable projects to progress in a lower oil p
Slide 21: Reorganised and resized our business
Reorganised and resized our business • Simplified our organisation structure • Resized our workforce to 9,800 people (2014: 13,400) • Resized our active fleet from 27 vessels (2014: 39) (7) (1) 39 (5) 1 27 2014 Stacked Scrapped Returned to New-build Mar 2016E owner delivered • Additional measures ma
Slide 22: Drive business improvements to lower costs
Drive business improvements to lower costs Project A • Implementing business improvements – Deliver fit-for-purpose Initial price Concept Local Angolan Competition Sourcing Sourcing, Final price solutions optimsiation content Content reduction reduction and specifications, specification SoW negociat
Slide 23: Form leading industry alliances
Form leading industry alliances We have expanded our offering and are engaging earlier Concept Pre-FEED FEED Procurement Installation Commission Influence over field Client expenditure development costs on field development 23
Slide 24: Develop a partnership approach
Develop a partnership approach • We are an acknowledged leading strategic partner in our markets • We have developed long- term preferred supplier agreements with several clients • This supports early engagement and delivers mutual benefits 24
Slide 25: Invest in technology
Invest in technology Delivering market-driven cost-efficient solutions Developing technologies that reduce the cost of development and increase reliability and performance during life of the field 25
Slide 26: Summary
Summary • Challenging market • Strengthening our competitive position • Lowering the project costs • Long-term fundamentals remain intact • Focusing on our strategic priorities 26 26
Slide 27: Q&A
Q&A 27
Slide 28: Appendix
Appendix • Our global presence • Major project progression • Adjusted EBITDA • Segmental analysis • Our fleet 28 28
Slide 29: Our global presence
Our global presence • Catcher, Premier • Martin Linge, Total • Culzean, Maersk • Aasta Hansteen, Statoil • Western Isles, Dana • Maria, Wintershall • Montrose, Talisman • Mariner, Statoil • USC & Pipelay, Shell • Gullfax, Statoil • SCIRM, BP • Knarr, BG • DSVi, Various • Heidelberg, Anadarko • Stamp
Slide 30: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 31 December 2015 excluding PLSV and Life of Field day-rate contracts OFON 2 (Nigeria) Clair Ridge (UK) Montrose (UK) Lianzi Topside (Angola) Southern Martin Linge (Norway) Hemisphere TEN (Ghana) Northern Mariner (
Slide 31: Adjusted EBITDA
Adjusted EBITDA • Adjusted earnings before interest, taxation, depreciation and amortisation (‘Adjusted EBITDA’) is a non-IFRS measure that represents net income before additional specific items that are considered to impact the comparison of the Group’s performance either period-on-period or with o
Slide 32: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended For the period (in $millions) 31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014 Net operating (loss)/income (415) (1,082) 144 (254) Depreciation, amor
Slide 33: Segmental analysis
Segmental analysis For the three months ended 31 December 2015 Northern Hemisphere Southern In $ millions (unaudited) Corporate TOTAL and LOF Hemisphere and GP Revenue 305 717 3 1,025 Net operating (loss)/income excluding goodwill (49) 245 (90) 106 impairment Impairment of goodwill (351) (170) - (52
Slide 34: Our fleet as at 31 December 2015
Our fleet as at 31 December 2015 • 30 vessels in the active fleet 9 Chartered: 21 Owned: Rockwater 2 Skandi Acergy Seven Antares Seven Atlantic Skandi Neptune Seven Borealis Seven Falcon Normand Seven Seven Oceans Seven Ospray Grant Candies Seven Condor Seven Pelican Normand Subsea Seven Rio Kommand
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