DOF Subsea Group Q3 2019 highlights The operating revenue for the - - PowerPoint PPT Presentation

Quarterly Presentation Q3 2019

DOF Subsea Group

DOF Subsea

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Q3 2019 highlights

• The operating revenue for the quarter was NOK 1 458 million1), EBITDA was NOK 545 million1) and overall

vessel utilisation was 78%

• During the 3rd quarter, the Group recognised an impairment of tangible assets of NOK 363 million, goodwill of

NOK 162 million and deferred tax asset of NOK 162 million, due to continued challenging market for vessel services and uncertainty regarding the long-term financial solution

• Strong operational performance within the Subsea/IMR Project segment during the quarter, with all vessels

within the segment in operation by end of September

• The Group secured several short-term contracts in the Subsea/IMR Project segment
• The Group is making progress with its stakeholders, including a constructive dialogue with banks and

bondholders in order to find a long-term financial solution

1) Note: Figures according to management reporting

DOF Subsea

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DOF Subsea Group at a glance

2005

DOF Subsea established

NOK 1.5bn1)

Revenues Q3’19

1 3192)

Subsea employees worldwide Q3’19

NOK 13.7bn

Firm backlog Q3’19

273)

Subsea vessels

74

ROVs

Modern

State-of-the-art asset base

Integrated

Supplier of subsea

• ffshore services

1) Note: According to management reporting 2) Note: Excluding marine crew 3) Note: Including chartered-in vessels Harvey Deep-Sea, Harvey Subsea and Skandi Darwin

DOF Subsea

Global footprint

ATLANTIC NORTH AMERICA BRAZIL ASIA PACIFIC

Macaé Rio de Janeiro Buenos Aires Houston St John’s Aberdeen Bergen Luanda Singapore Manila Melbourne Jakarta Brunei Kuala Lumpur Darwin Perth

387 9 332 8 311 5 289 5

1) Note: Number of employees as at end of Q3’19 (excluding marine crew). 2) Note: Vessels in operation as at end of Q3’19, including 3 chartered-in vessels.

Local operating model ensuring on-the-ground responsiveness towards clients’ needs 4

DOF Subsea

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Large and global organisation following multiple acquisitions from 2005-2010

More than a decade of structural growth and consolidation

SEMAR Focus on consolidation and streamlining of business operations to improve efficiency and competitiveness in weak market DOF Subsea established following the acquisition

• f Geoconsult. The Company was listed on the

Oslo Stock Exchange second half 2005. First Reserve acquires 49% of DOF Subsea, which in the following is delisted from the Oslo Stock Exchange Expanding organisation on the back of several large contract awards. Number of employees and vessels peaking at 1 858 and 27, respectively

2010

Century Subsea Covus Subsea CSL

2005 2008 2014 2016

Awarded four PLSV long-term contracts in joint venture with TechnipFMC

2013

SWG Offshore

1) Note: Marine crew not included 2) Note: Newbuild not included 3) Note: Period-end numbers

2018

Delivery of two newbuilds entering into long-term contracts and commencement of two long-term IMR contracts

2017

Delivery of one JV newbuild entering into long-term contract and award of several long-term contracts within both business segments

2019

Delivery of the last JV newbuild entering into a long- term contract and award of several contracts within both business segments 337 553 563 897 1014 1246 1492 1354 1667 1858 1566 1278 1214 1311 1319 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Development in number of DOF Subsea Employees1)

11 11 13 16 18 21 24 25 26 27 24 21 25 27 27 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Development in number of vessels in operation2)

Owned vessels Chartered-in vessels Total

DOF Subsea

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Key financials1)

Revenue EBITDA2) Firm backlog

1) Note: Figures according to management reporting 2) Note: EBITDA excl. profit from sale of non-current assets LTM = Last Twelve Months

• 1 000

2 000 3 000 4 000 5 000 6 000 7 000 8 000 2012 2013 2014 2015 2016 2017 2018 LTM NOK million 0% 5% 10% 15% 20% 25% 30% 35% 40%

• 500

1 000 1 500 2 000 2 500 2012 2013 2014 2015 2016 2017 2018 LTM NOK million EBITDA margin

• 5

10 15 20 25 2012 2013 2014 2015 2016 2017 2018 Q3 2019 NOK billion

Segment highlights

DOF Subsea

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Two business segments

DOF Subsea Group Long-term Chartering1)

Revenues Q3’192) NOK 489 million EBITDA Q3’193) NOK 364 million ~74% margin Firm backlog4) NOK 10.3bn

1) Note: Long-term Chartering comprises 7 PLSVs in operation, plus Skandi Acergy and Skandi Patagonia 2) Note: According to management reporting 3) Note: According to management reporting 4) Note: Firm backlog as at end of Q3’19 5) Note: Including 3 chartered-in vessels

9 vessels in

• peration Q3’19

Long-term charters Vessel capabilities Capex spending

Subsea / IMR Projects

Revenues Q3’192) NOK 969 million EBITDA Q3’193) NOK 181 million ~19% margin Firm backlog4) NOK 3.4bn 1 319 Employees Q3’19 18 vessels in

• peration5) Q3’19

Engineering capabilities Framework agreements Opex spending

DOF Subsea

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Numerous projects completed and ongoing worldwide

Built a leading subsea projects division for over a decade

• Subsea project activity established with a global footprint in all key offshore regions
• High quality asset base leveraging unrivalled subsea and vessel operating competence

A clear action plan to pursue further opportunities

• Continue to increase the scope and complexity of operations

− Strengthen presence in selected geographies − Further build project backlog with core focus on IMR projects

Subsea/IMR Projects

Selected Mooring projects – Last 5 years Selected IMR projects – Last 5 years

✓ 3 Petrobras ROV Contracts (2019-2021) ✓ ConocoPhillips ROV Services (2019-2024) ✓ Petrobras DSV Contract (2018-2021) ✓ Petrobras RSV Contract (2018-2020) ✓ ENI Angola IMR Contract (2017-2019) ✓ Husky Energy IMR Contract (2017-2027) ✓ Shell Prelude IMR Contract (2017-2022) ✓ Chevron Gorgon IMR Contract (2015-2020) ✓ Shell Malampaya IMR Contract (2014-2021) ✓ Helang FPSO Mooring and Hook-up (2019) ✓ Ehra FPSO Mooring Replacement (2019) ✓ Egina FPSO Hook-up (2018) ✓ Lam Son Mooring Replacement (2017) ✓ Bergading FPSO Pre-Tensioning (2017) ✓ Yinson OCTP FPSO Field Dev. (2016-2017) ✓ Bongkot Mooring Replacement PTTEP (2017) ✓ Raroa Mooring OMV (2016-2017) ✓ Gina Krog TMRS Teekay (2016) ✓ Catcher Mooring Installation BWO (2016)

DOF Subsea

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DOF Subsea provides state-of-the-art vessels to leading players

Skandi Acergy Skandi Acu Skandi Africa Skandi Niteroi Skandi Patagonia Skandi Vitoria Skandi Buzios Skandi Recife Skandi Olinda

Day-rate based

Remuneration

Strong long-term contract coverage

Contracts

High-end vessels operating advanced subsea projects for third party EPCI contractors

Operations Selected clients Construction support vessel Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel Dive support vessel Construction & pipe laying vessel

9 vessels in

• peration

No contracted newbuild NOK 10.3bn firm backlog per Q3’19

Long-term Chartering

DOF Subsea

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Selected long-term contracts

• Long-term FLNG IMR contract

awarded in Australia with Shell

• 5 years + 4 years options
• IMR scope comprising project

management, engineering, logistics, vessel and ROV services

• Utilising Skandi Darwin

Prelude FLNG Nov 2017

• Long-term contract with

Petrobras

• 8 years + 8 years options
• Vessel owned in joint venture

with TechnipFMC

• Built in Brazil with 300t VLS
• Long-term DSV contract with

Petrobras

• 3 years + 2 years options
• ROV and diving services

Skandi Recife Jun 2018

• Long-term contract with

Petrobras

• 8 years + 8 years options
• Vessel owned in joint venture

with TechnipFMC

• Built in Brazil with 300t VLS
• Long-term contract with

Petrobras in Brazil

• Vessel and ROV services

Skandi Salvador Aug 2018 Skandi Achiever Sep 2018 Skandi Olinda Feb 2019

3rd quarter 2019

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Quarterly performance1)

1) Note: Figures according to management reporting, and excluding profit from sale of non-current assets

0% 5% 10% 15% 20% 25% 30% 35% 40% 500 1 000 1 500 2 000 2 500 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 EBITDA margin NOK million Operating revenue EBITDA EBITDA margin

NOK million

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Operating revenue 1 962 1 991 1 642 1 406 1 660 1 232 1 128 982 1 199 1 093 1 275 1 053 1 203 1 184 1 166 1 103 1 257 1 458 EBITDA 515 553 516 456 510 447 320 279 400 332 402 310 372 376 342 365 445 545 EBITDA margin 26,2 % 27,8 % 31,4 % 32,4 % 30,7 % 36,3 % 28,4 % 28,4 % 33,4 % 30,4 % 31,5 % 29,4 % 30,9 % 31,8 % 29,3 % 33,1 % 35,4 % 37,4 % Current assets 3 414 3 674 3 752 2 900 3 010 2 742 2 483 2 808 2 595 2 501 2 607 2 399 2 474 2 320 2 532 2 317 2 219 2 393 Non-current assets 16 578 16 447 16 818 17 652 18 206 18 514 18 043 18 087 18 428 17 926 17 829 16 881 17 684 17 523 17 818 18 840 18 571 18 102 Total assets 19 992 20 121 20 570 20 552 21 216 21 256 20 526 20 896 21 023 20 427 20 436 19 280 20 158 19 843 20 350 21 156 20 790 20 495 Current liabilities 4 577 4 492 3 650 2 991 3 022 2 645 2 478 2 444 3 010 3 051 2 440 2 345 2 879 2 983 3 484 3 533 3 932 4 657 Non-current liabilities 9 009 9 988 11 228 11 482 11 864 12 174 11 993 12 503 11 942 11 221 11 648 10 485 11 110 10 798 11 130 11 915 11 126 11 119 Equity 6 405 5 641 5 692 6 078 6 330 6 437 6 055 5 948 6 071 6 156 6 348 6 450 6 170 6 063 5 735 5 708 5 732 4 719 Total equity and liablilites 19 991 20 121 20 570 20 551 21 216 21 256 20 526 20 896 21 023 20 427 20 436 19 280 20 158 19 843 20 350 21 156 20 790 20 495

DOF Subsea

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Backlog1)

1) Note: Contract backlog includes DOF Subsea’s share of joint venture vessels, but excludes master service agreements (MSAs) within the Subsea/IMR Projects segment – only confirmed POs are included in the backlog

As at 30 September 2019, the Group’s firm contract backlog was NOK 13.7 billion

Q4 2019 2020 2021 2022 2023 Thereafter Option 0,02 0,45 0,99 1,18 1,22 14,83 Firm 1,21 3,13 2,46 1,94 1,68 3,29 2 4 6 8 10 12 14 16 18 20 NOK Billion Firm Option

DOF Subsea

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Modern high-end fleet

• Modern fleet with a value adjusted average fleet age of 5.81) years
• High-end vessels, capable of a wide scope of worldwide operations

1) Note: Excluding chartered-in vessels, and as at the end of Q3’19

Skandi Vinland, CSV built 2017 Skandi Buzios, PLSV built 2017 Skandi Recife, PLSV built 2018 Skandi Olinda, PLSV built 2019 2000-2006; 6 2007-2012; 12 2013-2019; 6

Year of delivery DOF Subsea fleet1)

• 2,0

4,0 6,0 8,0 10,0 12,0

Fleet age

Average fleet age age Value adjusted average fleet age

DOF Subsea

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Focus on sustainable operations

• Segment-leader regarding sustainability reporting and

score

• DOF’s total ESG score1 ranks with the top 10 of 100

largest companies2 on OSE

• The Group’s ‘Safe the RITE way’ program creates the

basis for safeguarding our people and the environment

• Continue to improve the Group’s standard to align

with UN Sustainable Development Goals

Sustainability review: DOF in top 10 again

For a second year in a row, DOF’s total ESG score* ranks with the top 10 of 100 largest (by market cap) companies on Oslo Stock

• Exchange. DOF’s score of 3.2 is well above

the “energy sector” average of 0.986.

Sustainable operations, 5 years of GRI reporting

Annual DOF Sustainability report 2018, according to the GRI guideline. The DOF Sustainability Report for 2018 is available at: www.dof.com/Sustainability

ECO Advisor, a marine DSS

Begun in 2019, together with industry leaders including Kongsberg, DOF is developing a proactive, intelligent, and dynamic decision support system (DSS) for optimal vessel operations, giving fuel- and maintenance- reductions. The DSS will be a gamechanger in how marine operational decisions are made by providing more accurate, timely, and easy consumable information to decision makers. The project is funded through sponsorship and support from Innovation Norway.

1) Scoring done by The Governance Group 2) Based on market capitalisation

Appendix

DOF Subsea

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Condensed profit & loss1)

1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the DOF Subsea Quarterly Financial Report

Profit & loss (NOK million) 3Q 2019 3Q 2018 YTD 2019 YTD 2018 Operating revenue 1150 958 2 956 2 797 Operating expenses

• 848
• 766
• 2 291
• 2 278

Share of net income of associates and joint ventures 32 78 200 300 Profit from sale of non-current assets 3 3 1 Operating profit before depreciation (EBITDA) 338 271 868 820 Depreciation and impairment

• 762
• 197
• 1120
• 623

Operating profit (EBIT)

• 425

73

• 252

198 Financial income 18 15 59 41 Financial expenses

• 149
• 126
• 437
• 360

Realised net gain / loss on derivative instruments and currency position

• 46
• 59
• 72
• 91

Unrealised net gain / loss on derivative instruments and currency position

• 312

11

• 193

29 Net financial income / loss

• 488
• 159
• 643
• 380

Profit / loss before tax

• 913
• 86
• 896
• 182

Income tax expense

• 178
• 12
• 205
• 28

Profit / loss for the period

• 1090
• 98
• 1101
• 210

DOF Subsea

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Condensed balance sheet1)

1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the DOF Subsea Quarterly Financial Report

Assets (NOK million) 30.09.2019 30.09.2018 31.12.2018 Tangible assets 10 755 11 232 11 100 Goodwill 85 359 337 Deferred tax asset 58 222 220 Investment in associates and joint ventures 1 866 1346 1 553 Non-current receivables 994 1 128 1 204 Non-current assets 13 759 14 287 14 414 Trade receivables 879 806 631 Other current receivables 276 288 289 Total current receivables 1 155 1 094 920 Restricted cash 136 214 223 Unrestricted cash and cash equivalents 549 534 919 Cash and cash equivalents 686 748 1142 Current assets 1 841 1 841 2 062 Total assets 15 600 16 129 16 476 Equity and liabilities (NOK million) 30.09.2019 30.09.2018 31.12.2018 Paid-in equity 4 344 4 344 4 344 Other equity 193 1 520 1 197 Non-controlling interests 182 199 194 Total equity 4 719 6 063 5 735 Bond loans 2 168 1 930 2 480 Debt to credit institutions 4 292 5 591 5 278 Lease liabilities 337 10 Other non-current liabilities 27 18 34 Non-current liabilities 6 824 7 549 7 793 Current portion of debt 3 160 1 772 2 177 Trade payables 531 410 406 Other current liabilities 366 334 366 Current liabilities 4 057 2 516 2 949 Total liabilities 10 880 10 066 10 742 Total equity and liabilities 15 600 16 129 16 476

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DISCLAIMER

This presentation by DOF Subsea AS is designed to provide a high-level overview of aspects of the operations of the DOF Subsea AS

• Group. The material set out in the presentation is current as at 19 August 2019.

This presentation contains forward-looking statements relating to operations of the DOF Subsea AS Group that are based on management’s own current expectations, estimates and projections about matters relevant to DOF Subsea AS‘s future financial

• performance. Words such as “likely”, “aims”, “looking forward”, “potential”, “anticipates”, “expects”, “predicts”, “plans”, “targets”, “believes”

and “estimates” and similar expressions are intended to identify forward-looking statements. References in the presentation to assumptions, estimates and outcomes and forward-looking statements about assumptions, estimates and

• utcomes, which are based on internal business data and external sources, are uncertain given the nature of the industry, business risks,

and other factors. Also, they may be affected by internal and external factors that may have a material effect on future business performance and results. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or results of the DOF Subsea AS Group or the likelihood that the assumptions, estimates or outcomes will be achieved. While management has taken every effort to ensure the accuracy of the material in the presentation, the presentation is provided for information only. DOF Subsea AS , its officers and management exclude and disclaim any liability in respect of anything done in reliance on the presentation. All forward-looking statements made in this presentation are based on information presently available to management and DOF Subsea AS assumes no obligation to update any forward looking- statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of any offer to buy any securities or otherwise engage in any investment activity. You should make your own enquiries and take your own advice (including financial and legal advice) before making an investment in the company's shares or in making a decision to hold or sell your shares.

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