Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q2 2016 Earnings Presentation
33 slides from Subsea 7's earnings presentation, Jul 28, 2016
Slide 1: Earnings Presentation Second Quarter 2016
Earnings Presentation Second Quarter 2016 28 July 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
subses 7 Jean Cahuzac CEO
Slide 4: Q2 2016 highlights
Q2 2016 highlights FINANCIAL OPERATIONAL ORDER INTAKE OUTLOOK • Revenue • Strong overall • Order backlog • Market $961m project increased to conditions • Adjusted execution $7.1 billion remain EBITDA • Further cost • Order intake challenging $280m reduction and $1.6 billion • Timing of new • Adjuste
Slide 5: Operational highlights
Operational highlights • Reliable and consistent project execution • Seasonal increase in North Sea activity • Significant progress on some of our major projects Catcher Maria TEN (UK) (Norway) (Ghana) Aasta Hansteen END Martin Linge WND Ph. 1 (Norway) (Egypt) (Norway) (Egypt) 5
Slide 6: Our resizing and reorganising
Our resizing and reorganising • New organisation structure based on our core markets – Increased focus on our commercial and operational strength – Leaner organisation structure reflects new ways of working i-Tech Services Corporate SURF and Conventional (includes Life of Field (includes Renewables
Slide 7: Q2 Backlog and order intake
Q2 Backlog and order intake • Backlog of $7.1 billion(1), as at 30 June 2016 • $1.6 billion(2) order intake including announced awards: – Beatrice wind farm, offshore UK; – Callater, offshore UK Backlog by Execution Date Backlog by segment SURF and 2016 Conventional(3) 2018+ $1.9bn $5.0bn $2.7bn (27
Slide 8: Business Unit outlook
Business Unit outlook Surf and Conventional • Low market activity and uncertain timing of new awards to market • Remaining competitive while maintaining the right project risk profile • Increasing number of early engagement opportunities • Active SURF project tenders include: • Mad Dog 2 (US GoM) •
Slide 9: Ricardo Rosa, CFO
subses 7 Ricardo Rosa CFO
Slide 10: Income statement – key highlights
Income statement – key highlights Three months ended 30 June 16 30 June 15 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 961 1,352 Net operating income (NOI) 177 169 Income before taxes 206 137 Taxation (69) (49) Net income 136 88 Adjusted EBITDA(1) 280 275 Adjusted EBITDA ma
Slide 11: Business Unit performance
Business Unit performance Northern Hemisphere and Life of Field Southern Hemisphere and Global Projects Q2 2016 Q2 2016 $523m $435m $87m $114m Revenue NOI Revenue NOI Northern Hemisphere and Life of Field Southern Hemisphere and Global Projects H1 2016 H1 2016 $854m $847m $124m $263m Revenue NOI Rev
Slide 12: Delivering our resizing programme
Delivering our resizing programme • 2016: in progress Workforce (‘000s) – 5 active vessels to be stacked or released – Reduce the workforce to 8,000 people 14 13 10 9 – Complete by early 2017 – $350 million annual savings Q4 '13 Q4 '14 Q4 '15 Q2 '16 – Up to $100m restructuring charge in 2016 • 2015:
Slide 13: Summary of year to date 2016 cash flow
Summary of year to date 2016 cash flow $ millions Cash and cash equivalents at 31 Dec 2015 947 Decrease of $8 million in net Net cash generated from operating activities 479 operating liabilities Included capital expenditure of Net cash flow used in investing activities (173) $205 million mainly on
Slide 14: New-build vessels programme
New-build vessels programme Seven Waves Seven Rio Seven Sun Seven Cruzeiro Seven Arctic Seven Kestrel Delivered Delivered Due Due Due Due 2014 2015 H2 2016 H1 2017 H1 2017 H1 2017 Capital expenditure ($ millions) Estimated total spend: $1.9bn Forecast Actual spend to date 557 544 499 108 162 55 Upto
Slide 15: Financial guidance
Financial guidance 2016 Guidance Revenue Significantly lower than 2015 Adjusted EBITDA percentage margin Lower than 2015 Administrative expense $240 million - $250 million Net finance charge Up to $5 million Depreciation and Amortisation $380 million - $400 million Full year effective tax rate 30% -
Slide 16: Jean Cahuzac, CEO
subses 7 Jean Cahuzac CEO
Slide 17: Our differentiators
Our differentiators People Technology Project delivery based on our Market-driven and cost-effective expertise and know-how solutions Assets Local presence A diverse fleet of vessels and Strong local businesses and strategic global assets embedded local capability 17
Slide 18: Our People
Our People • Our highly skilled and experienced workforce deliver projects safely and reliably • Reduction in capacity in line with lower expected activity levels and new ways of working • Focus on maintaining competitiveness and protecting our core offering through the cycle 18
Slide 19: Our five strategic technology programmes
Our Technology • Developing and implementing Riser market-leading technology to drive Systems Our five strategic technology programmes down cost • Technology and innovation are Flowline Systems central to the evolution of offshore developments • Early engagement is key to Bundles unlocking cost savi
Slide 20: Our Assets
Our Assets • Fully capable fleet equipped for all methods of subsea construction in harsh and deepwater environments • 38 vessels with flexible capacity to meet market activity – 29 currently in active use (8 chartered and 21 owned) – 5 stacked due to challenging market conditions – 4 under construc
Slide 21: Subsea 7: a world-leading services contractor
Subsea 7: a world-leading services contractor • The foreseeable future remains challenging • Once awarded, large projects can take 12 to 18 months of planning before offshore activity commences • We are driving change within the Group and across the industry to adapt to the lower oil price environme
Slide 22: Q&A
subsed 7 Q&A
Slide 23: Appendix
Appendix • Our global presence • Major project progression • Adjusted EBITDA • Segmental analysis • Supplementary Income Statement • Balance Sheet summary • Our fleet 23 23
Slide 24: Our global presence
Our global presence • Beatrice wind farm, BOWL • Catcher, Premier • Culzean, Maersk • Callater, Apache • Martin Linge, Total • Western Isles, Dana • Aasta Hansteen, Statoil • Montrose, Talisman • Maria, Wintershall • USC & Pipelay, Shell • Mariner, Statoil • SCIRM, BP • DSVi, Various • Stampede, Hes
Slide 25: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 30 June 2016 excluding PLSV and Life of Field day-rate contracts TEN (Ghana) Lianzi Topside (Angola) Martin Linge (Norway) Announced Clair Ridge (UK) size of project Mariner (UK/Norway) Major Persephone Ph 2 (Aust
Slide 26: 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 27: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended Three Months Ended 30 June 2016 30 June 2015 For the period (in $millions) Net operating income 177 169 Depreciation, amortisation and mobilisation 93 106 Impairment of property, plant and equipment 10 – Adj
Slide 28: Segmental analysis
Segmental analysis For the three months ended 30 June 2016 Northern Hemisphere Southern Hemisphere In $ millions (unaudited) Corporate TOTAL and Life of Field and Global Projects Revenue 523 435 3 961 Net operating income 87 114 (24) 177 Finance income 6 Other gains and losses 23 Finance costs - Inc
Slide 29: Restated segments
Restated segments • Six quarters of restated segmental results In $ millions Revenue 2015 2016 Full Half Q1 Q2 Q3 Q4 Q1 Q2 Year Year SURF & Conventional 1,063 1,229 1,068 923 4,283 640 865 1,505 i-Tech Services 116 120 111 99 446 103 93 196 Corporate 2 3 20 3 29 3 3 6 Total Revenue 1,181 1,352 1,200
Slide 30: Income statement – supplementary details
Income statement – supplementary details In $ millions Three months ended 30 June 16 30 June 15 Unaudited Unaudited Administrative expenses (68) (79) Share of net income of associates and joint ventures 27 14 Depreciation and amortisation 93 106 Impairment of property, plant and equipment 10 – Net o
Slide 31: Summary balance sheet
Summary balance sheet 30 Jun 31 Dec 30 Jun 31 Dec 2016 2015 2016 2015 In $ millions Unaudited Audited In $ millions Unaudited Audited Assets Equity & Liabilities Non-current assets Total equity 5,497 5,346 Goodwill 726 767 Non-current liabilities Property, plant and equipment 4,459 4,559 Non-current
Slide 32: Our fleet as at 30 June 2016
Our fleet as at 30 June 2016 • 29 vessels in the active fleet 8 Chartered: 21 Owned: Rockwater 2 Seven Antares Skandi Acergy Seven Borealis Seven Atlantic Seven Waves Normand Seven Seven Oceans Seven Falcon Seven Pacific Grant Candies Seven Condor Seven Osprey Seven Phoenix Normand Subsea Seven Rio
Slide 33: 28-Jul-16 Page 33
28-Jul-16 Page 33