Presentation Q1 2017 9th May 2017 First Quarter 2017 financial - - PowerPoint PPT Presentation

Presentation Q1 2017

9th May 2017

May 17

First Quarter 2017 financial highlights

Quarterly dividend increased to USD 0.1850 per share

– Increase of 0.25 cents vs. Q4 – 5% increase annualized – USD 0.74 per share annualized – Dividend yield of 9.9% p.a. – 14th consecutive quarterly dividend increase

EBITDA was USD 71.2m vs. USD 74.4m in Q4

– EBITDA adjusted for finance lease effects was USD 79.1m vs. USD 82.8m in Q4 – Reduction mainly explained by USD 4.0m lower income from Lewek Connector

Net profit after tax was USD 36.8m vs. USD 0.7m in Q4

– Change in deferred tax (non-cash) was USD 3.7m

Adjusted net profit was USD 33.4m vs. USD 36.9m in Q4

First Quarter 2017 2

May 17

Recent events

Successful delivery of two newbuilding container vessels – MSC Rifaya and MSC Leanne Termination of charter contract for Lewek Connector – Entered into a new 4 months bareboat contract at a rate of USD 40,000 /d – Expect reduced earnings after cancellation of bareboat contract – Vessel marketed for offshore construction and cable installation work

3 First Quarter 2017

May 17

Recent events (cont.)

Agreement with Farstad to restructure two bareboat charters – Charter rates for the next 5 years reduced to NOK 99,400 /d – Charter rates increases to NOK 209,300 /d in 2022 and 2023 – Balloon payment of NOK 128m in 2023 with potential earlier prepayments based on cash sweep – Part payment in 316 million shares in Farstad Shipping ASA Refinancing of American Shipping Company bonds with nominal value of USD 201 million – Net cash proceeds of USD 156 million – Subscription of USD 50 million in new five year unsecured bond

4 First Quarter 2017

May 17

New transactions

Shipping- and offshore markets – Most shipping and offshore segments show signs of having levelled out after a period of decreasing asset values – Low asset values should make 2017 an attractive timing for new investments Market for sale & leaseback transactions – Increased activity level with improved quality of potential transactions – Banks are generally more conservative, which makes leasing a more competitive financing alternative – Competition from Chinese Leasing Companies – Target of USD 350 million in new transactions in 2017 remain unchanged Ocean Yield receives strong interest from banks and bond investors

5 First Quarter 2017

Charter backlog by client end of Q1 2017

May 17 6

12 % 4 % 6 % 6 % 13 % 7 % 14 % 9 % 3 % 26 %

*EBITDA backlog based

• n management’s

estimates on DB-1, certain

• ptions not being

exercised, LIBOR forward curve, USDNOK and adj. for finance leases

Major European container line

EBITDA* backlog of USD 2.8 billion

• Avg. remaining

charter tenor of 11.4 years

First Quarter 2017

May 17

Fleet overview per Q1 2017

7

10 6 6 4 3 1 2 1 1 Product tankers Subsea construction 2 Container vessels1 FPSO Offshore supply Gas carriers Car carriers Chemical tankers

# Delivered # To be delivered

1) 49.5% ownership in six container vessels and 2) 75.0% ownership in SBM Installer First Quarter 2017

May 17

Quarterly EBITDA and net profit

8

Net profit per quarter (USDm) EBITDA per quarter (USDm) 55.2 53.9 Q4 Q1 2015 56.0 Q3 56.4 Q2 63.4 Q1 2016 Q4 74.4 58.7 54.2 Q4 55.4 Q2 56.6 Q1 2014 Q3 Q2 68.7 Q3 53.2 Q1 0217 71.2 32.7 Q3 30.5 28.1 Q4 24.5 Q3 Q1 2014 22.7 25.8 Q2 Q4 17.1 Q4 Q2 0.7 28.3 Q3 Q1 2015 28.6 Q2 25.5 Q1 2016 18.6 Q1 2017 36.8

First Quarter 2017

May 17

Adjusted EBITDA and net profit

9

EBITDA adjusted for finance lease effects (USDm) 55.4 Q1 2014 53.2 Q4 Q3 69.3 Q1 2016 59.8 59.6 Q2 Q1 2015 58.4 57.3 Q3 75.6 Q4 54.2 63.6 Q3 82.8 Q4 Q1 2017 Q2 79.1 55.1 Q2 Adjusted net profit (USDm) 26.3 Q4 Q1 2015 Q1 2014 Q2 Q2 Q2 27.1 27.4 Q3 28.0 25.6 26.8 Q4 26.2 Q4 27.6 Q3 36.9 Q3 31.6 Q1 2016 Q1 2017 29.0 33.4 33.4

First Quarter 2017

May 17

Growth in cash dividends for 14 consecutive quarters

10

18.25 Q3 Q1 2016 15.75 15.25 Q1 2015 17.25 Q4 Q2 16.25 13.75 14.75 Q2 16.75 Q4 12.50 14.25 13.00 Q1 2014 Q2 Q3 Q1 2017 18.50 Q3 +10% Q4 17.75

1See Q1 2017 Financial Report Note 18 2Per 08.05.2017, Q1 2017 DPS annualized,

share price of NOK 64.75, NOK/USD of 8.6.

24.66 Q3 Q1 2016 23.21 Q1 0217 22.34 19.73 20.17 Q2 Q2 20.25 Q4 20.55 Q2 19.54 19.60 Q1 2014 Q3 19.10 21.28 Q3 Q4 19.86 23.94 Q4 Q1 2015 Dividend yield

9.9%2 p.a.

Pay-out ratio on adjusted Q1 EPS

83%

Adjusted earnings yield

11.9%2 p.a.

First Quarter 2017

Adjusted earnings per share (USD cents)1 Dividend per share (USD cents)

Profit & loss

May 17 11

Income statement

Revenues Revenues from Lewek Connector reduced by USD 4.0m Full quarter earnings from GasChem Beluga Depreciation Reduced depreciation on Lewek Connector Financials Financial income includes USD 5.7m gain from sale of AMSC bonds Financial expenses includes USD 0.4m of non-cash interest related to build-up of potential de-mobilization expense Deferred tax expense Change in deferred tax is offset against deferred tax asset on balance sheet

Comments

Q4 Q1 Amounts in USD million 2016 2017 Operating revenues 61.2 57.2 Finance lease revenue 15.8 16.1 Income from investment in associates 4.9 5.3 Total revenues and other income 82.0 78.6 Vessel operating expenses (4.4) (4.2) Wages and other personnel expenses (1.5) (1.8) Other operating expenses (1.6) (1.4) EBITDA 74.4 71.2 Depreciation and amortization (25.5) (24.5) Impairment charges and other non recurring items (36.2)

• Operating profit

12.7 46.8 Financial income 5.0 9.2 Financial expenses (17.7) (17.0) Foreign exchange gains/losses 13.3 (0.6) Mark to market of derivatives (10.2) 2.1 Net financial items (9.6) (6.2) Net profit before tax 3.1 40.5 Tax payable (0.2) (0.0) Change in deferred tax (2.2) (3.7) Income tax expense (2.4) (3.7) Net profit after tax 0.7 36.8 Non-controlling interests 0.7 0.4 Equity holders of the parent 0.0 36.4 Earnings per share (USD) 0.00 0.25

First Quarter 2017

Q4 Q1 Amounts in USD million 2016 2017 Net profit 0.7 36.8

• Impairment charges

36.2

• Gain on AMSC bonds
• (5.7)
• Cancellations/repayment of loans

0.9 0.1

• Foreign exchange gains/losses

(13.3) 0.6

• Mark to market of derivatives

10.2 (2.1)

• Tax payable
• Changes in deferred tax, net

2.2 3.7 Adjusted net profit 36.9 33.4

Adjusted net profit

May 17 12

Adjustments Comments

• USD/NOK cross currency and interest rate swaps
• Mainly related to bond and bank loans in NOK
• Related to Aker ASA / Hartmann facility
• Largely related to the vessel Lewek Connector

First Quarter 2017

• Non-cash and offset against deferred tax assets on

balance sheet

Balance sheet

May 17 13

Balance sheet

*Non-controlling interest of USD 11.3 million relates to the vessel SBM Installer

First Quarter 2017

Q4 Q1 Q4 Q1 ASSETS (USDm) 2016 2017 EQUITY AND LIABILITIES (USDm) 2016 2017 Goodwill 9.8 9.8 Equity to holders of the parent 804.2 813.5 Vessels and equipment 1,243.8 1,228.6 Non-controlling interests* 11.0 11.3 Investments in associates 187.4 186.6 Total equity 815.2 824.8 Finance lease receivables and related assets 703.5 695.9 Investments in AMSC Bonds 197.5 50.7 Interest-bearing debt 1,380.4 1,256.7 Restricted cash deposits 23.8 23.3 Mob fee, advances and deferred revenue 37.4 45.2 Other non-current assets 1.2 1.5 Mark to market of derivatives 26.1 24.1 Shares in Farstad Shipping ASA 0.0 12.5 Non-current provisions and other 28.8 29.3 Deferred tax assets 20.5 16.7 Total non-current liabilities 1,472.7 1,355.3 Total non-current assets 2,387.5 2,225.5 Interest-bearing short term debt 173.4 106.2 Liability related to associates 57.7 0.0 Mark to market of derivatives 41.3 41.3 Trade- and other interest-free receivables 21.7 23.3 Trade and other payables 14.4 17.3 Cash and cash equivalents 165.5 96.1 Total current liabilities 286.8 164.8 Total current assets 187.2 119.4 Total liabilities 1,759.5 1,520.1 Total assets 2,574.7 2,344.9 Total equity and liabilities 2,574.7 2,344.9 Equity ratio 31.7 % 35.2 %

May 17

Update on bank loans

Dhirubhai-1 loan facility amendment – Prepaid USD 37.8m (cash management reasons) down to USD 30m – Three quarterly instalments of USD 10m with first instalment in Q1’18 – USD 20.0m in restricted cash has been released in Q2’18 – Substantial free cash flow from vessel going forward Lewek Connector loan facility – Removal of bareboat charter requirement against USD 15.2m prepayment – Outstanding amount after repayments in May’17 will be USD 122m – Next 5 semi-annual installments will be reduced by 31% each – Commercial bank guarantee to be extended by three years Farstad loan facility – Obtained lenders credit approvals for the changes in the bareboat charters – Commercial bank guarantee to be extended with another 4 years from 2018 Revolving bank facilities of USD 117.3m remains available for drawdown

14 First Quarter 2017

May 17

Financing of newbuilding program

15

Contractual obligations and financing (USDm) Comments

• Contractual obligations related to GasChem Orca with expected delivery in June/July 2017

Gas carrier Already paid 32.4 Remaining payments in 2017 48.6 Total contractual obligations 81.0 Total remaining payments 48.6 Secured bank financing 67.5 Estimated surplus cash 18.9

First Quarter 2017

May 17

Strong liquidity position

16 First Quarter 2017

96 117 264 213 51

Cash Available drawing facilities Total available liquidity Bonds in AMSC Total available cash

Cash and securities available for sale per Q1’17 (USD million)

• Restricted cash of USD 20 million has been released in Q2’17

Comments

May 17

Outlook

New investments – Available liquidity of USD 264 million and book equity ratio of 35% gives substantial investment capacity – Low asset values should make 2017 an attractive timing for new investments – Increased activity and improved deal pipeline – Expanding deal origination team 2017 earnings – Reduced earnings from Lewek Connector – Positive impact from vessels delivered in 2016/2017 and potential new investments Dividends – Expect to continue to pay attractive and increasing dividends

17 First Quarter 2017

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