Disclaimer This presentation should be read in conjunction with Vard - - PowerPoint PPT Presentation

This presentation should be read in conjunction with Vard Holdings Limited’s results for the period ended 31 March 2015 in the SGXNet announcement. Financial figures are presented according to SFRS. This presentation may contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements,

• r industry results, to be materially different from any future results, performance or

achievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding our present and future business strategies and the environment in which we will

• perate in the future. As these statements and financial information reflect our current views

concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. You are cautioned not to place undue reliance on these forward looking statements, which are based on the Company’s current view of future events.

Disclaimer

13.05.2015 | Page 2

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1Q 2015 Results Presentation

Vard Holdings Limited

13 May 2015

• Revenue of NOK 3 063 million, up 14.6% from NOK 2 672 million in 1Q 2014
• EBITDA (before restructuring cost) of NOK 65 million, down from NOK 171 million in

1Q 2014

• EBITDA margin (EBITDA before restructuring cost to total operating revenues) of 2.1% (1Q 2014: 6.4%)
• Significant unrealized foreign exchange losses contributing to net loss for the period
• Order intake of NOK 248 million; no new vessel contracts. Order intake may vary

significantly on a quarter-by-quarter basis

• 32 vessels in the order book as at 31 March 2015, of which 18 are VARD designs
• Prospects for new orders weak in the short to medium term. Fierce competition for

a limited number of projects in the market

• Challenging transition from still high workload and delivery of large complex

projects, to a situation of lower yard utilization in Europe

• Strict cost-cutting program in progress
• Brazil still a critical focus area
• Organizational changes made to strengthen management follow-up of critical areas

1Q 2015 Highlights

13.05.2015 | Page 4

Changes to the Executive Management Team structure announced

• Organizational changes reflecting areas of increased

management focus

• Brazil: Appointment of a senior Finance Officer reporting

directly to the CEO

• Equipment and Systems: Further development of «internal

suppliers» and strengthening of third-party business, e.g. Vard Electro, Seaonics, and Vard Marine

• Corporate Development: Overseeing structural and strategic

initiatives to secure short- and long-term competitiveness of the Group

• Business Development Asia: Focus on growth opportunities
• utside VARD’s traditional home markets

13.05.2015 | Page 5

t

New Executive Management Team structure

CEO Roy Reite

Acting Chief Financial Officer Geir Ingebrigtsen Operations Brazil Knut Ola Tverdal Operations NO, RO, VN Magne Bakke Sales & Marketing Magne Håberg Corporate Development Vittorio Zane IR & Business Development Asia Holger Dilling Equipment & Systems Stig Bjørkedal Finance Officer Brazil Jan Ivar Nielsen

13.05.2015 | Page 6

Business update

1Q 2015

2 PSVs

• Troms Mira from Vard Vung Tau (Vietnam) to

Tidewater

• Stril Barents from Vard Aukra (Norway) to Simon

Møkster Shipping

2 OSCVs

• Skandi Africa from Vard Søviknes (Norway) to

DOF

• Far Sleipner from Vard Langsten (Norway) to

Farstad Shipping

1 Other (Research and Surveillance Vessel)

• Marjata from Vard Langsten (Norway) to the

Norwegian Navy

No new vessel contracts were secured in 1Q 2015 Two contracts were terminated during the quarter Vessel deliveries New contracts As at 31 March 2015, the Group had 32 vessels in the order book, 18 of which will be of VARD’s own design.

Vessel deliveries and new contracts – 1Q 2015

13.05.2015 | Page 8

t

«Skandi Angra» (Pro31) – delivered from Vard Niterói on 4 May 2015

13.05.2015 | Page 9

2010 2011 2012 2013 2014 1Q 2015 2010 2011 2012 2013 2014 1Q 2015

Order book value at the end of the period (NOK million)1) New order intake during the period (NOK million)1)

17 031 16 675 0 Vessels 248 27 Vessels 12 555 15 096 28 Vessels 11 117 19 356 16 Vessels 9 501 1) Includes firm orders only. Includes variation orders and trading packages 16 Vessels 9 450 17 743 15 Vessels 14 174

Order book development

13.05.2015 | Page 10

15 630

Order book status

Order book as of 31 March 2015 (# of vessels)

12 17 3 18 5

5 10 15 20 25 2014 2015 2016 2017

Delivery year

Delivery year Norway / Romania Brazil Vietnam Total

2017 1 AHTS 1 OSCV 1 OSCV 3 2016 1 AHTS 4 PSV 5 OSCV 1 OSCV 4 Other 1 PSV 1 OSCV 17 2015 3 PSV 3 OSCV 2 Other 2 AHTS 4 Other 3 PSV 17 2014 2 AHTS 5 PSV 5 OSCV 3 Other 1 AHTS 1 PSV 1 PSV 18 delivered

13.05.2015 | Page 11

Order book by region and vessel type

By Region Order book 31 Dec 2014 Deliveries 1Q 2015 Order intake 1Q 2015 Order book 31 Mar 2015 Norway / Romania 20 4

• 16

Brazil 12

• 12

Vietnam 7 1

• 41)

Total 39 5

• 321)

By Vessel Type Order book 31 Dec 2014 Deliveries 1Q 2015 Order intake 1Q 2015 Order book 31 Mar 2015 AHTS 4

• 4

PSV 13 2

• 91)

OSCV 12 2

• 10

Other 10 1

• 9

Total 39 5

• 321)

13.05.2015 | Page 12

1) Two terminated vessels excluded from order book until contract with new client is secured

• Still high workload, but yard utilization decreasing in 2H 2015,

first in Romania and subsequently in Norway

• Production schedules adjusted following extension of delivery

dates on several projects, resulting in improved workload balance

• Measures put in place to reduce cost related to lower capacity

utilization, and increase flexibility as the activity level declines

• Reduction of overheads
• Reduction of outsourced and subcontracted labour
• Temporary and permanent reduction of own work force
• Strict cost-cutting program in progress
• Improved efficiency and cost control in projects
• Work with key suppliers to increase overall competitiveness

Operations – Romania and Norway

13.05.2015 | Page 13

• Stable operations at the yard
• One PSV successfully delivered during the first quarter, and

another one in April

• Work on two terminated vessels continues in anticipation of

contracts with a new client

• Additional three vessels in the order book, including first-ever

OSCV, securing work for the yard well into 2016

Operations – Vietnam

13.05.2015 | Page 14

Operations – Brazil (Vard Promar)

• Additional cost overruns incurred related to completion phase
• f first LPG carriers
• Efficiency in early production stages has reached an acceptable

level, with positive impact on remaining LPG vessel projects

• Need for continued development and improvement of
• perational stability and efficiency at the yard
• Special focus on also improving later production stages
• Resources from the European yards mobilized to support the

development

• Progress of PLSV projects according to schedule

13.05.2015 | Page 15

Operations – Brazil (Vard Niterói)

• Pro31 – «Skandi Angra» delivered to DOF on 4 May 2015;

additional cost overruns incurred during completion phase

• Still high activity at the yard; downsizing continues in line with

decreasing workload as vessels near completion

• Three more vessels in advanced production stages
• Final testing and commissioning work ongoing on EP01 (first

LPG carrier to Transpetro)

• Two more vessels in outfitting stage (Pro33 and EP02)

13.05.2015 | Page 16

Financial highlights

1Q 2015

Revenues and margins

500 1 000 1 500 2 000 2 500 3 000 3 500 1Q 2014 1Q 2015

2 672 3 063

Revenues (NOK million) EBITDA1) (NOK million) and EBITDA Margin (%)

50 100 150 200 250 1Q 2014 1Q 2015

171 65 6.4% 2.1% 13.05.2015 | Page 18

1) EBITDA before restructuring cost

Statement of income – major items

(NOK million) 1Q ended 31 March

D(%)

2015 2014 Revenue 3 063 2 672

14.6%

Materials, subcontract cost and others (2 189) (1 799)

21.7%

Salaries and related costs (663) (552)

20.1%

EBITDA before restructuring cost 65 171

(62.0%)

EBITDA % 2.1% 6.4%

n/m

Operating profit 9 123

(92.7%)

Net financial income / (cost) (216) (6)

n/m

Profit before tax (206) 119

n/m

Profit for the period (226) 85

n/m

13.05.2015 | Page 19

Significant foreign exchange losses contributing to net loss for the period

• Unusually high volatility in USD/NOK and USD/BRL foreign

exchange rates during the quarter

• As previously disclosed, VARD is primarily exposed through a

yard construction loan in Brazil denominated in USD with 15 years maturity

• Loan in USD to reflect USD revenue streams from contracts in Brazil,

while functional currency is BRL

• Net foreign exchange losses of NOK 207 million in 1Q 2015
• NOK 174 million unrealized, of which 171 million related to the yard

construction loan at Vard Promar

• Unrealized losses have been partially reversed since the end of

the quarter due to opposite foreign exchange developments

13.05.2015 | Page 20

174 36 235

500 1 000 1 500 2 000 2 500 31 Mar 2014 31 Dec 2014 31 Mar 2015 Restricted Cash Non-restricted Cash

Cash and cash equivalents, and construction loans

(1) Cash and cash equivalents less sum of short-term and long-term interest bearing liabilities, excluding construction financing

Construction Loans (NOK million)

7 663 7 473 2 000 4 000 6 000 8 000 31 Dec 2014 31 Mar 2015

Net Cash (NOK million)1

392

• 157
• 300
• 200
• 100

100 200 300 400 500 31 Dec 2014 31 Mar 2015

Cash and Cash Equivalents (NOK million)

2 002 1 692 13.05.2015 | Page 21 2 121

Major balance sheet items

(NOK million) As at 31 March 2015 31 December 2014 Non-current assets 3 714 3 786 Current assets 15 005 15 663 Total assets 18 719 19 449 Total equity 3 811 3 864 Loans and borrowings, current, and construction loans 8 052 8 069 Trade and other payables and construction work in progress 2 216 3 266 Other current liabilities 3 084 2 798 Long-term loans and borrowings 1 270 1 204 Other non-current liabilities 286 248 Total liabilities 14 908 15 585 Total equity and liabilities 18 719 19 449

13.05.2015 | Page 22

Cash flow highlights

(NOK million) 1Q ended 31 March 2015 2014 Cash flows from operating activities (556) 311 Cash flows from investing activities (64) (23) Cash flows from financing activities 170 (2) Net change in cash and cash equivalents (450) 286 Cash and cash equivalents excluding restricted cash at the beginning of the financial period 1 966 1 663 Effects of currency translation differences (59) (2) Cash and cash equivalents excluding restricted cash at the end of the financial period 1 457 1 947 Restricted cash at the end of financial period 235 174 Cash and cash equivalents at the end of the financial period 1 692 2 121

13.05.2015 | Page 23

Earnings per share

Note: Earnings per ordinary share for the financial period attributable to equity holders of the parent. SGD amounts are translated from NOK based on the exchange rates prevailing at the reporting dates.

1Q ended 31 March 2015 2014 Earnings for the period (NOK million) (92) 92 Earnings for the period (SGD million) (16) 19 Weighted average number of shares (million) 1 180 1 180 Earnings per share (NOK) (0.08) 0.08 Earnings per share (SGD cents) (1.36) 1.61

• Adj. weighted average number of shares (million)

1 180 1 180 Diluted earnings per share (NOK) (0.08) 0.08 Diluted earnings per share (SGD cents) (1.36) 1.61 Exchange rates (SGD/NOK) 5.891 4.767

13.05.2015 | Page 24

Net asset value per share

Note: Net asset value at the end of the financial period, and at the end of the last financial year, attributable to equity holders of the parent. SGD amounts are translated from NOK based on the exchange rates prevailing at the reporting dates.

As at 31 March 2015 31 December 2014 Net asset value at the end of the period (NOK million) 4 140 4 132 Net asset value at the end of the period (SGD million) 703 735 Number of shares (million) 1 180 1 180 Net asset value per ordinary share (NOK) 3.51 3.50 Net asset value per ordinary share (SGD) 0.60 0.62 Exchange rate (SGD/NOK) 5.891 5.622

13.05.2015 | Page 25

Outlook

1Q 2015

Outlook

• Rapidly declining order book
• Prospects for new orders weak in the short to medium term
• Increased counterparty risk as a result of the current market

environment; fierce competition for a limited number of projects currently under development in the market

• Challenging transition from still high workload and delivery of large and

complex projects, to a situation of lower yard utilization in Europe

• Brazil still a critical focus area, with pending delivery of remaining vessels

from Niterói, and continued need for development and improvement in Vard Promar

• Organizational changes made to strengthen management follow-up of

critical areas

• VARD expects the EBITDA margin for FY2015 to be broadly in line with

FY2014

13.05.2015 | Page 27

Q&A Q&A

1Q 2015