Slide 1: Fourth Quarter and Full Year 2018 Earnings Presentation
Fourth Quarter and Full Year 2018 Earnings Presentation 28 February 2019 1 © Subsea 7 - 2019 subsea7.com
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this presentation 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: Q4 and Full Year 2018 results
Q4 and Full Year 2018 results 16% 16% 75% 76% 70% 70% Unutilised Net Q4 Full Q4 Full Full RCF cash Q4 Year Year Year Q1 Q2 Q3 Q4 Q4 '18 2018 Active Total 2018 Revenue Adj. EBITDA margin Vessel Utilisation Liquidity $1.2bn $4.1 billion share Dividen repurchases d Capex Special dividend Q1 Q2 Q3 Q4 Q1
Slide 4: Q4 Operational highlights
Q4 Operational highlights PUPP (Nigeria) Snorre Expansion (Norway) WND Phase Two (Egypt) 17 Cranes (KSA) Brent Bypass (UK) Hornsea One Windfarm (UK) Life of Field PLSVs (Brazil) 4 © Subsea 7 - 2019 subsea7.com
Slide 5: Backlog and order intake
Backlog and order intake Backlog of $4.9 billion, as at 31 December 2018 • $0.9 billion awarded in the fourth quarter 2021+ • Book-to-bill: $0.5bn – 0.9x in the quarter SURF and – 1.0x in the year Conventional 2020 $1.5bn 2019 Renewables & $4.0bn • Five announced awards: Heavy Lifting $2.8bn $0.4bn
Slide 6: Income statement – Q4 and Full Year highlights
Income statement – Q4 and Full Year highlights Three months ended Twelve months ended 31 December 31 December 31 December 31 December 2018 2017 2018 2017 In $ millions, unless otherwise indicated Unaudited Unaudited Audited Audited Revenue 1,023 1,003 4,074 3,986 Net operating income (NOI) (1) 23 28
Slide 7: Income statement – supplementary details
Income statement – supplementary details Three months ended Twelve months ended 31 December 31 December 31 December 31 December 2018 2017 2018 2017 In $ millions Unaudited Unaudited Audited Audited Administrative expenses (82) (74) (286) (244) Share of net income/(loss) of associates and joint ventu
Slide 8: Business Unit performance
Business Unit performance Fourth Quarter Revenue Full Year Revenue $1,023m $1,003m $4,074m $3,986m $82m $181m $664m Renewables & Heavy $68m $959m Lifting $67m $245m $302m Life of Field $873m $754m $3,164m $2,725m SURF & Conventional Note: 2018 2017 2018 2017 Net operating income (NOI): Corporate seg
Slide 9: 2014 - 2018 costs overview
2014 - 2018 costs overview Maintaining cost discipline as the activity levels recover $ billion Vessels and other 7 costs(1): Including vessel 6.0bn costs, onshore facilities, IT 6 infrastructure and other 0.8 fixed overheads 5 0.4 4.2bn 3.9bn Depreciation and 4 3.4bn amortisation: excludes 2.0 0.8
Slide 10: Summary of 2018 cash flow
Summary of 2018 cash flow $m 669 (98) (167) (238) (180) 1,109 (25) (93) (204) (8) 765 Cash at EBITDA Tax Paid Decrease in Capex Acquisition of Repayment of Share Dividends Other Cash at 1 January 2018 Net Businesses Borrowings Repurchase paid 31 Operating December Liabilities 2018 • Net cash of $507
Slide 11: Priorities for cash
Priorities for cash 2018 Delivery • $155 million investment in Seaway Invest in the business Offshore Cables and two vessels • Continued construction of the new-build reel-lay vessel Seven Vega for long Maintain investment distance tie-backs grade profile • Net cash of $507 million and $656 million
Slide 12: Financial guidance
Financial guidance 2019 Guidance (including IFRS 16 adjustments(1)) Revenue Slightly lower than 2018 Adjusted EBITDA Lower than 2018, double digit percentage margin Net Operating Income Positive for the Group Administrative expense $260 million - $280 million Net finance cost $10 million - $20 milli
Slide 13: 2018 strategic highlights
2018 strategic highlights Technology & Subsea Integration Fleet Renewables Early Engagement Alliance Management Second EHTF 4 Projects Globalisation of Average vessel project awarded awarded Seaway 7 age 10 years Numerous Integrated Upgrade of Seven supplier-led technology SOC acquisition Viking to
Slide 14: Early Engagement
Early Engagement • Significant increase in early engagement activity in all Our supplier-led studies regions • Subsea Integration Alliance and Subsea 7 provide supplier-led solutions • Xodus Group provide client-led solutions • Large greenfield FEED awards to Subsea Integration Alliance by Woodside
Slide 15: Projects completed and awarded
2 8 70+ Projects Projects Integrated concept completed awarded studies and pre-FEEDs Completed and ongoing projects: • Murphy Dalmatian (completed) • BP Mad Dog 2 • TAQA Otter (completed) • Fieldwood Katmai • BP Manuel • ExxonMobil West Barracouta • Woodside SNE Phase 1 (FEED) • Woodside Scarborough
Slide 16: Supervisory Board and Executive Management Team
Supervisory Board: Jean Cahuzac (CEO) John Evans (COO) Olivier Le Peuch (COO) Don Sweet (President) Executive Management Team: Henning Berg (CEO) Stian Sande (Project & Operations) Stuart Fitzgerald (Commercial & Deputy CEO) James Stewart (Technology) 16 © Subsea 7 - 2019 subsea7.com
Slide 17: Creating the right technological solutions
Creating the right technological solutions Continued Early engagement enhancement software of Pipeline SubseaPlan Bundles (Triton) rolled out EHTF LinerBridge technology connector deployed on fully qualified active projects 17 © Subsea 7 - 2019 subsea7.com
Slide 18: 2019 focus areas and opportunities
2019 focus areas and opportunities Focus areas • Managing the SURF market recovery • Maintaining a competitive cost base • Navigating the evolving renewables market Opportunities • Earlier engagement • Technology development • Expanding integrated services 18 © Subsea 7 - 2019 subsea7.com
Slide 19: Business Unit Outlook
Business Unit Outlook SURF and Conventional - Tendering activity increasing particularly in Brazil, Australia, Angola and Nigeria - Increased number of large greenfield projects awarded to market subject to sanction Renewables and Heavy Lifting - 2019 limited execution opportunities - T&I execution
Slide 20: © Subsea 7 - 2019 subsea7.com
20 © Subsea 7 - 2019 subsea7.com
Slide 21: Appendix
Appendix Major project progression Track Record Fleet Financial summaries 21 © Subsea 7 - 2019 subsea7.com
Slide 22: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 31 December 2018 excluding PLSV and Life of Field day-rate contracts Culzean (UK) Borkum II (Germany) Announced WND GFR (Egypt) size of Sonamet (Angola) project Hasbah (Saudi Arabia) Major Sole (Australia) (Over
Slide 23: Track record of projects
• Beatrice wind farm, BOWL • Borkum II, Trianel • Triton Knoll, Innogy • Shearwater, Shell • Aasta Hansteen, Statoil • Buzzard ph. 2, Nexen • Maria, Wintershall • Culzean, Maersk • IRM Services, Equinor • Alligin, BP • IRM Services, BP • Penguins, Shell • Snorre, Equinor • Al-Khalij, Total • SCIRM,
Slide 24: Vessels including active vessels at end Q4'18
33 Vessels including 30 active vessels at end Q4’18 Under Construction Reel-lay Vessel to be named Seven Vega Long-term charter from a vessel-owning joint venture Stacked 24 © Subsea 7 - 2019 Chartered from a third party subsea7.com
Slide 25: Segmental analysis – three months
Segmental analysis For the three months ended 31 December 2018 Renewables & In $ millions (unaudited) SURF & Conventional Life of Field Heavy Lifting Corporate TOTAL Revenue 873 68 82 - 1,023 Net operating income/(loss) 64 (17) (13) (11) 23 Finance income 4 Other gains and losses 11 Finance costs (3
Slide 26: Summary balance sheet
Summary balance sheet 31 December 31 December 31 December 31 December 2018 2017 2018 2017 In $ millions Audited Audited In $ millions Audited Audited Assets Equity & Liabilities Total equity 5,722 5,941 Non-current assets Non-current liabilities Goodwill 751 701 Non-current portion of borrowings 234
Slide 27: Segmental analysis – year
Segmental analysis For the year ended 31 December 2018 Renewables & In $ millions (Audited) SURF & Conventional Life of Field Heavy Lifting Corporate TOTAL Revenue 3,164 245 664 - 4,074 Net operating income/(loss) 231 (12) 4 (23) 200 Finance income 16 Other gains and losses 14 Finance costs (14) Inc
Slide 28: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended 31 Dec. 2018 Three Months Ended 31 Dec. 2017 For the period (in $millions) Unaudited Unaudited Net operating income 23 28 Depreciation, amortisation, mobilisation and impairment 140 148 Adjusted EBITDA 163 1
Slide 29: Summary of year-to-date 2018 cash flow
Summary of year-to-date 2018 cash flow $ millions Cash and cash equivalents at 1 January 2018 1,109 Included an increase in net operating assets of Net cash generated from operating activities 424 $167 million Included cash outflows on SOC acquisition of $155 million including vessels, acquisition o
Slide 30: IFRS 16 'Leases' guidance
IFRS 16 ‘Leases’ guidance • IFRS 16 ‘Leases’ will be effective from 1 January 2019. IFRS 16 2019 forecast impact • Requires the Group to recognise: Income Statement Lease expense Decrease by $100m - $110m a right-of-use asset for long-term leases, to be amortised straight-line over duration of the
Slide 31: Contact: Isabel Green, Investor Relations Director
Contact: Isabel Green, Investor Relations Director eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 31 © Subsea 7 - 2019 subsea7.com