Slide 1: Earnings Presentation Second Quarter 2014
Earnings Presentation Second Quarter 2014 31 July 2014 12:00 noon UK time
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: Strong second quarter both operationally and financially
Strong second quarter both operationally and financially FINANCIAL OPERATIONAL NEW BUILDS • Revenue increased 13% • Good overall project • The Seven Waves built from prior year second execution within cost estimates; quarter started operations mid • Efficient offshore May, three months • 24% Adjuste
Slide 4: Backlog and order in-take
Backlog and order in-take • Backlog ended Q2 at $11.2 billion, consistent with previous guidance • Order intake in Q2: $1.6 billion, which included contracts below $50m value and escalations on existing contracts • New awards announced: Catcher in the UK; IRM for BP and Holstein Deep in US GOM Backl
Slide 5: Income statement – key highlights
Income statement – key highlights Three months ended 30 Jun 14 30 Jun 13 In $ millions, unless otherwise indicated Revenue 1,905 1,681 Net operating income (NOI) 350 41 Income before taxes 362 20 Taxation (98) (33) Net income/(loss) 265 (13) Adjusted EBITDA1 452 139 Adjusted EBITDA margin 23.7% 8.3%
Slide 6: Territory performance – Q2 2014
Territory performance – Q2 2014 AFGOM Brazil $661m $265m $85m $57m Revenue NOI Revenue NOI APME NSC $732m $243m $156m $22m Revenue NOI Revenue NOI Note: excludes contribution from Corporate segment Page 6
Slide 7: Income statement – supplementary details
Income statement – supplementary details Three months ended In $ millions 30 Jun 14 30 Jun 13 Administrative expenses (67) (66) Share of net income of associates and joint ventures 27 62 Net operating income 350 41 Net finance income/(costs) 2 (10) Other gains and losses 10 (11) Income before taxes
Slide 8: Overview of 1H 2014 cash flow
Overview of 1H 2014 cash flow $ millions Cash and cash equivalents at 31 Dec 2013 650 Includes decrease in net operating Net cash generated from operating activities 716 assets of $151m Includes capital expenditure of $428m Net cash flow used in investing activities (397) mainly on new vessel constr
Slide 9: Summary balance sheet
Summary balance sheet 30 Jun 31 Dec 30 Jun 31 Dec In $ millions 2014 2013 In $ millions 2014 2013 Assets Equity & Liabilities Non-current assets Total equity 6,843 6,612 Goodwill 2,649 2,585 Non-current liabilities Property, plant and equipment 4,375 4,098 Non-current portion of borrowings 644 636 O
Slide 10: Full year 2014 financial guidance
Full year 2014 financial guidance No change to previously communicated guidance for the year • Group revenue expected to increase from 2013 level • Adjusted EBITDA expected to increase moderately from that achieved in 2013 after adding back the $355 million full life loss recognised on the Guará-Lul
Slide 11: Capital expenditure for on-going vessel new-build programme
Capital expenditure for on-going vessel new-build programme1 $ millions Total = $2.0 billion (E) 267 640 557 300 210 Up to 31 Dec 2013 2014 E 2015 E 2016 E Forecast Actual spend to date Note: 1 Includes four PLSVs being constructed for long-term contracts with Petrobras (including the Seven Waves),
Slide 12: Fleet investments to meet growth objectives: vessels under construction
Fleet investments to meet growth objectives: vessels under construction Ship Vessel Type Rationale Operational Seven Waves Under 5-year contract with 2nd Quarter 2014 Petrobras Pipelay Support Vessel (commenced operations (PLSV) mid May) Seven Rio Under 5-year contracts 4th Quarter 2015 Seven Sun wi
Slide 13: Market overview
Market overview SURF: • Uncertainty on timing of SURF project awards remains a feature of the market as IOCs continue to focus on capex discipline Life-of-Field: • Demand for Life-of-Field remains strong, particularly in the UK sector of the North Sea, as operators’ opex remains high on existing fie
Slide 14: Market outlook – Africa and Gulf of Mexico
Market outlook Africa SURF: • Tendering in West and East Africa remains high but timing of market awards remains uncertain • One large project in Egypt, which had been cancelled by the operator in 2013, may be awarded to market late 2014/early 2015 Conventional: • Near-term outlook unclear with IOCs
Slide 15: Market outlook – APME
Market outlook APME SURF: • Emerging deep-water prospects in Asia with potential market awards for large projects in Indonesia and India • Market award of large SURF projects unlikely near-term in Australia as local development costs remain a major challenge for our clients Life-of–Field: • Further
Slide 16: Market outlook – Brazil
Market outlook Brazil Territory financial turn-around on track • Good operational progress on the Guará-Lula NE project since the beginning of the year; all four buoys fully commissioned and completion of riser installation expected by year end • Renewal of our PLSV contracts completed and the new-b
Slide 17: Market outlook – North Sea and Canada
Market outlook North Sea and Canada SURF: • Good level of tendering activity in the UK • Statoil expected to postpone capex projects in Norway until 2015 • Our technology remains a key differentiator – Strong interest from operators for our Bundle solution Life-of-Field: • Continuing strong demand f
Slide 18: Addressing clients’ needs in a capex-constrained environment
Addressing clients’ needs in a capex-constrained environment Our approach: • Engage early with our clients to design cost-effective solutions – Focus on “fit-for-purpose” engineering without compromising risk profile – Our engineering capabilities and our fleet operational capability covers the whol
Slide 19: Summary
Summary • A strong quarter both operationally and financially – 24% Adjusted EBITDA margin – Good overall project execution and significant progress on the Guará- Lula project in Brazil – High Group vessel utilisation at 91% • High order backlog at $11.2 billion; we continue to focus on building qua
Slide 20: Appendix
subses 7 Appendix www.subsea7.com seabed-to-surface
Slide 21: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 30 June 2014 excl. PLSVs and Life-of-Field day-rate contracts CLOV (Angola) Delta S2 (Norway) G1-GS15 (India) Laggan Tormore (UK) Knarr (Norway) Brazil Block 31 GES (Angola) Guará Lula NE (Brazil) Africa, Gulf of
Slide 22: Backlog progression
Backlog progression Backlog progression ($ billions) 11.8 11.8 11.6 11.2 10.2 10.4 9.1 8.7 8.3 8.1 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Page 22
Slide 23: Segmental analysis
Segmental analysis For the three months ended 30 June 2014 In $ millions AFGOM APME BRAZIL NSC CORP TOTAL Revenue 661 243 265 732 4 1,905 Net operating income from ops 85 22 57 156 30 350 Finance income 9 Other gains and losses 10 Finance costs (7) Income before taxes 362 For the three months ended
Slide 24: 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 year-on-year or with other
Slide 25: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended Three Months Ended For the period (in $millions) 30 Jun 2014 30 Jun 2013 Net operating income 350 41 Depreciation, amortisation and mobilisation 98 87 Impairment 4 11 Adjusted EBITDA 452 139 Revenue 1,905 1,
Slide 26: Gorgon heavy lift and umbilicals - Australia
Gorgon heavy lift and umbilicals - Australia • Located 130km off the northwest coast of Western Australia • The Gorgon project is one of the world's largest natural gas projects • Heaviest and deepest subsea lifts in the history of Subsea 7 – 20 subsea structures and foundations (up to circa 1,000Te
Slide 27: CLOV Block 17 - Angola
CLOV Block 17 - Angola • Technology-rich SURF project • High local content with Sonamet fabrication facility • Successful deployment of the Seven Borealis to install – 40km of pipe-in-pipe production, 60km of water injection, 32km of gas export, and 37 spools and 15 jumpers • Two Hybrid Riser Towers
Slide 28: Aasta Hansteen gas field - Norway
Aasta Hansteen gas field - Norway • Technology-rich SURF project • 1,200m water depth, deepest in North Sea • 300km off northern Norway, harsh environment • First SCRs (x4) in the Norwegian Sea, manufactured at Vigra spoolbase • First installation of BUTTING Bubi® mechanically lined pipe by reeling
Slide 29: Our operational facilities
Our operational facilities Spoolbases Fabrication Yards Page 29
Slide 30: Rigid pipelay/heavy lift assets
Rigid pipelay/heavy lift assets 1 1 1 1 Owned and operated by a joint venture Page 30
Slide 31: Diving Support Vessels
Diving Support Vessels 1 1 Formerly Seven Havila Page 31
Slide 32: Construction/vertical flex-lay assets
Construction/vertical flex-lay assets 1 1 2 1 1 Long-term charter 2 Long-term charter from a vessel-owning joint venture Page 32
Slide 33: Construction/horizontal flex-lay assets
Construction/horizontal flex-lay assets 1 2 2 1 Formerly the Seven Sisters 2 Long-term charter Page 33
Slide 34: Life-of-Field/Light Construction Vessels
Life-of-Field/Light Construction Vessels 1 2 2 2 3 2 1 Long-term charter from a vessel-owning joint venture 2 Long-term charter 3 Call-out contract Page 34
Slide 35: Other assets
Other assets Jack-up vessel Trenching vessel 1 … and over 175 ROVs 1 Long-term charter Page 35
Slide 36: Under construction
Under construction Construction/vertical Flex-lay Vessels Diving Support Vessel Page 36
Slide 37: Vessel Divestments from 2011 to the end of Q2 2014
Vessel Divestments from 2011 to the end of Q2 2014 Rigid Pipelay / Construction: Jun 2011 Sep 2011 Jan 2013 DSV: Construction / Horizontal Flex-lay: Jan 2013 Aug 2013 LOF / Light Construction: Aug 2011 Feb 2013 Page 37
Slide 38: Terminated Long-Term Vessel Charters from 2011 to the end of Q2 2014
Terminated Long-Term Vessel Charters from 2011 to the end of Q2 2014 DSV: May 2011 LOF / Light Construction: Dec 2012 Jan 2014 Jan 2014 Mar 2014 Page 38
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