Earnings Presentation Third Quarter 2014 · Earnings Presentation Third Quarter 2014 CEO – Terje...
Transcript of Earnings Presentation Third Quarter 2014 · Earnings Presentation Third Quarter 2014 CEO – Terje...
Earnings Presentation
Third Quarter 2014 CEO – Terje Sorensen
23 October 2014
Disclaimer
This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and
uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current
expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries
that are major markets for Siem Offshore (“SIOFF”) and its subsidiaries. These expectations, estimates and projections are
generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important
factors that could cause actual results to differ materially from those expectations include, among others, economic and market
conditions in the geographic areas and industries that are or will be major markets for the Siem Offshore businesses, oil prices,
market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency
exchange rates and such other factors as may be discussed from time to time. Although Siem Offshore believes that its
expectations and the information in this Presentation were based upon reasonable assumptions at the time when they were
made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this
Presentation. Siem Offshore nor any other company within the group is making any representation or warranty, expressed or
implied, as to the accuracy, reliability or completeness of the information in the Presentation, and neither Siem Offshore , any
other company within the group nor any of their directors, officers or employees will have any liability to you or any other persons
resulting from your use of the information in the Presentation. Siem Offshore undertakes no obligation to publicly update or revise
any forward-looking information or statements in the Presentation.
There may have been changes in matters which affect Siem Offshore subsequent to the date of this presentation. Neither the
issue nor delivery of this presentation shall under any circumstance create any implication that the information contained herein is
correct as of any time subsequent to the date hereof or that the affairs of Siem Offshore has not since changed, and Siem
Offshore does not intend, and does not assume any obligation, to update or correct any information included in this presentation.
The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should
consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice. This
presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive
jurisdiction of the Norwegian courts.
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• Third quarter 2014 operating revenue of USD 145.0 million and operating margin of USD
59.3 million (41%), an increase from USD 96.7 million and USD 44.1 million (46%) in third
quarter 2013.
• The fleet in operation at the end of the third quarter totalled 44 vessels, including partly
owned vessels and two vessels operated on behalf of a pool member. The comparable
number at the end of third quarter 2013 was 42 vessels.
• Debt financing of USD 350 million has been obtained for the two well-intervention vessels
(“WIV”) to be delivered in first and third quarter 2016, of which both shall commence long-
term charters upon delivery from yard.
• Siem Offshore Contractors continued the installation of submarine power cables for two of its
projects during third quarter. Project execution has generally been postponed due to delays
imposed by the clients, with a corresponding delay to the recording of revenue and
recognition of margin.
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Highlights Third Quarter 2014
Result and Finance
• The 2007-built PSV “Siem Sailor” was sold and delivered in July 2014 for a price of USD 48
million. The sale represents a gain of USD 11 million, and a net cash effect of USD 26 million
after repayment of mortgage debt.
• The Company took delivery of the offshore subsea construction vessel (“OSCV”) “Siem
Stingray” in July from the Vard shipyard in Norway. This vessel was the last OSCV in the
series of four OSCVs. All vessels have commenced long-term contracts.
• The Company entered into an agreement with Daya Materials Bhd. (“Daya”) in August 2014
for the sale of the two 2013-built OSCVs “Siem Daya 1” and “Siem Daya 2”, which are
currently chartered by Daya. Daya has been given 150 days from August 2014 to arrange for
financing of the two vessels and delivery of the vessels is scheduled to take place latest by
mid-April 2015. The en-bloc sales price is USD 282 million. The sale would generate a gain,
which will be recorded at the delivery of the vessels. The sales proceeds will be used to
repay mortgage debt, currently at USD 151 million, and for working capital.
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Highlights Third Quarter 2014
Yard delivery and sale of vessels
Comments to Third Quarter Income Statement
• 100% utilisation of the OSCV fleet.
• 6 vessels in operation at the end of the quarter.
• All vessels on long-term charters.
• One vessel was delivered from yard during the quarter.
• 98% utilisation of the PSV fleet.
• All 11 vessels on medium to long-term charters.
• Four PSVs are employed offshore West Africa, four offshore Brazil, two in the North Sea region and
one PSV is on a bareboat charter.
• One vessel was sold and delivered during the quarter.
• 90% utilisation of the AHTS fleet.
• 5 vessels operated on term contracts offshore Brazil.
• One vessel operated on a medium-term contract offshore Morocco.
• Two vessels were employed in the Arctic.
• One vessel for support for Siem Offshore Contractors.
• One vessel operated in the North Sea spot market during the quarter.
• 88% utilisation for the fleet of smaller Brazilian flagged vessels.
• 7 vessels on long-term charters and 1 vessel on medium term charter at the end of the quarter.
• 1 vessel agreed sold during the quarter.
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Operating Margin Third Quarter
3Q 2014 3Q 2013
Amounts in
USD million Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
PSVs [2] 29.8 ( 11.1) 18.7 63 % 25.4 ( 13.4) 12.0 47 %
OSCVs 30.1 ( 9.0) 21.1 70 % 10.3 ( 4.2) 6.1 59 %
AHTS vessels[2] 39.0 ( 15.5) 23.5 60 % 41.4 ( 16.1) 25.3 61 %
Smaller Brazilian flagged vessels[1] 4.7 ( 4.9) ( 0.2) (5 %) 4.9 ( 1.8) 3.1 63 %
Scientific core drilling 6.6 ( 3.2) 3.4 52 % 10.3 ( 4.5) 5.9 57 %
Cable installation [2] 39.3 ( 36.6) 2.6 7 % 1.9 ( 0.6) 1.3 68 %
CMS 1.5 ( 1.7) ( 0.1) 1.3 ( 0.9) 0.4
Siem WIS 0.2 ( 0.2) 0.0 0.6 ( 0.2) 0.4
Other 4.7 ( 2.0) 2.7 0.6 0.0 0.6
G&A ( 12.5) ( 12.5) ( 10.8) ( 10.8)
Intercompany eliminations [2] ( 11.0) 11.0 0,0 0.0
Total 145.0 ( 85.7) 59.3 41 % 96.7 ( 52.6) 44.1 46 %
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[1] Smaller Brazilian flagged vessels include Oil Spill Recovery Vessels and Fast Supply and Crew Boats
[2] The PSV and the AHTS segment includes I/C revenue from contracting work for the 100% owned subsidiary “Siem Offshore Contractors” . The
offsetting IC opex is included under the Cable Installation segment.
Income Statement Third Quarter
Third Quarter Nine Months Ended
Amounts in USD million
2014
Unaudited
2013
Unaudited
2014
Unaudited
2013
Unaudited
2013
Audited
Operating revenue 145.0 96.7 353.6 268.9 364.0
Operating expenses ( 73.2) ( 41.8) ( 183.0) ( 142.1) ( 190.6)
Administration expenses ( 12.5) ( 10.8) ( 36.2) ( 31.4) ( 50.7)
Operating margin [1] 59.3 44.1 134.4 95.4 122.7
Operating margin % 41 % 46 % 38 % 35 % 34 %
Depreciation and amortisation ( 24.6) ( 18.8) ( 69.4) ( 55.7) ( 75.8)
Gain/(Loss) on sale of fixed assets 11.9 0.0 18.6 28.4 29.8
Gain of sale of interest rate derivatives (CIRR) 0.1 0.1 0.3 0.3 0.4
Gain/(Loss) FX contracts [2] ( 6.5) 7.7 3.6 ( 5.3) ( 7.8)
Net financial items [3] ( 13.9) ( 9.3) ( 30.0) ( 36.1) ( 51.3)
Profit before tax 26.2 23.7 57.4 27.0 18.0
Income tax provision ( 0.9) ( 0.4) ( 2.2) ( 1.8) 3.6
Net Profit (loss) 25.3 23.3 55.2 25.2 21.5
Net profit attributable to non-controlling interest 6.8 0.9 10.0 ( 0.6) ( 0.5)
Net profit attributable to shareholders 18.5 22.4 45.2 25.8 22.0
Earnings per share [4] 0.05 0.06 0.12 0.07 0.06
Average number of shares outstanding [5] 387 591 387 591 387 591 389 578 389 078
[1] Operating revenue less operating expenses
[2] Revaluation of off-balance sheet currency contracts entered into in order to hedge both operating expenditures and future yard instalments in
foreign currencies.
[3] Including revaluation of non-USD currency balance sheet items and mark-to-market effects on interest rate derivatives
[4] Net profit / Average number of shares outstanding (diluted)
[5] Weighted average number of shares outstanding (diluted) ('000) 7
Adjusted Net Profit
Third Quarter Nine Months Ended
Amounts in USD million
2014
Unaudited
2013
Unaudited
2014
Unaudited
2013
Unaudited
2013
Audited
Net Profit (loss) 25.3 23.3 55.2 25.2 21.5
Unrealized (profit) loss on currency derivatives 6.0 (5.2) 0.2 13.0 12.2
Unrealized (profit) loss on interest rate derivatives (1.0) (0.4) (0.0) (6.8) (8.4)
Other unrealized (profit) loss on currency positions 0.4 0.3 (7.7) 14.8 17.2
Adjusted Net Profit (loss) 30.7 18.1 47.7 46.2 42.6
• Unrealised profit and loss from currency derivatives relates to financial instruments entered into in
order to hedge operational cash flows and future yard instalments in foreign currencies.
• Unrealised profit and loss from interest rate derivatives relates to mark-to-market valuations of
financial instruments entered into in order to manage interest rate risk.
• Other currency positions includes unrealized profit and loss from balance sheet items
denominated in foreign currencies in subsidiaries.
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Financial Position and Cash Flow
Statement of Financial Position
30.09.2014
Unaudited
30.09.2013
Unaudited
31.12.2013
Audited
Intangible assets 27.0 29.7 29.7
Vessels under construction 170.6 119.2 127.7
Vessels, equipment and capitalized project costs 1 497.0 1 382.5 1 451.4
CIRR loan deposits 36.1 45.8 41.7
Investment in associates and other long-term receivables 27.6 26.7 27.6
Debtors, prepayments and other current assets 353.9 101.3 123.4
Cash and cash equivalents 91.5 135.3 101.2
Total Assets 2 203.7 1 840.5 1 902.7
Total Equity 827.3 796.4 793.9
Borrowings falling due after 1 year 1007.2 835.4 863.1
CIRR loan 36.1 45.8 41.7
Other non-current liabilities 21.5 29.4 30.4
Borrowings falling due within 1 year 233.8 78.5 98.4
Trade creditors and other current liabilities 77.8 55.0 75.2
Total Liabilities 1 376.4 1 044.1 1 108.8
Total Equity and Liabilities 2 203.7 1 840.5 1 902.7
Amounts in USD million
• Current cost of debt approximately 4.5% p.a., including the effect of interest rate derivatives.
• Net interest bearing debt of USD 1,150 million.
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Consolidated Statements of Cash Flows
Cash flow from operations
01.01.2014 -
30.09.2014
Unaudited
01.01.2013 -
30.09.2013
Unaudited
01.01.2013 -
31.12.2013
Audited
Profit before taxes, excluding interest 89.4 49.5 49.2
Interest paid (34.1) (25.0) (32.3)
Depreciation and amortization 69.4 55.7 75.8
Effect of unreal. currency exchange forward contracts 0.2 7.3 12.2
Change in short-term receivable and payables (37.7) (29.0) (17.5)
Taxes paid in the period (4.5) (5.4) (9.8)
Loss (gain) on sale of fixed assets (18.6) (28.4) (29.8)
Other changes (8.6) 1.8 11.2
Net cash flow from operations 55.6 26.5 59.0
Cash flow from investing activities
Investments in fixed assets (432.6) (203.4) (329.4)
Proceeds from sale of fixed assets 76.1 84.1 86.0
Investment in associated companies (11.1) (15.5) (14.4)
Other investment activities 3.4 4.3 5.4
Cash flow from investing activities (364.3) (130.5) (252.4)
Cash flow from financing activities
Buy back of own shares 0.0 (8.7) (8.7)
Dividend payment (6.5) 0.0 0.0
Proceeds from bank overdraft 4.9 1.0 1.0
Contribution from non-controlling interests of consolidated subsidiaries 0.8 0.0 0.7
Proceeds from raising of new long-term borrowing 402.0 245.6 320.3
Repayment of long-term borrowing (103.2) (104.9) (128.8)
Cash flow from financing activities 298.0 132.9 184.4
Effect of exchange rate differences 1.0 (0.6) 3.2
Net change in cash (9.7) 28.3 (5.9)
Cash at bank start of period 101.2 107.1 107.1
Cash at bank end of period 91.5 135.3 101.2
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Scheduled Debt Maturity Profile 4Q 2014 - 2019
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Comments:
1. The graph reflects committed and assumed mortgage debt for all 10 vessels(1) under construction per end of 3Q 14.
2. Gross debt expected to peak in 2016 based on existing financing and estimated financing for vessels under
construction. Included debt repayment in 2015 from potential sale of Siem Daya 1 and Siem Daya 2 as announced.
3. Loan to value at low ratios for balloon instalments of mortgage debt (2015 and 2017), i.e. low refinancing risk.
4. Balloon instalment in 2015 of mortgage debt (6 AHTS vessels) can be postponed to 2018 subject to continued long-
term vessel employment.
5. NOK 600 million (USD 93.0 million) of unsecured bonds with maturity in 2018.
6. NOK 700 million (USD 108.5 million) of unsecured bonds with maturity in 2019.
[1] Only including wholly-owned vessels under construction.
Future Yard Instalments per end 3Q 2014
• The Company has secured
mortgage debt financing for
seven of the ten wholly-owned
vessels currently under
construction.
• The AHTS vessel under
construction by Secunda is not
included in the table.
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Amounts in USD million
Future Yard Instalments 2014 2015 2016 Total
OSRVs 10.0 7.2 0.0 17.2
PSVs 55.0 101.3 82.4 238.7
CLV 3.8 64.6 0.0 68.5
WIV 17.9 71.6 233.3 322.8
Total 86.7 244.7 315.7 647.1
Debt facilities 2014 2015 2016 Total
OSRVs 4.3 4.3 0.0 8.6
PSVs 37.2 55.8 0.0 93.0
CLV 0.0 65.4 0.0 65.4
WIV 8.9 35.8 224.3 269.0
Total 50.4 161.3 224.3 436.0
Comments:
1. The graph reflects; i) future yard instalments for the 10 wholly-owned vessels under construction per end of third
quarter 2014, ii) committed mortgage debt (red), iii) assumed new mortgage debt (green) and iv) financing gap to
be funded by cash from operations/or issue of bonds.
2. Yard instalments for shipbuilding contracts are normally paid with 20% during construction and 80% at delivery,
alternatively 10% during construction and 90% at delivery.
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Total financing gap in the period 3Q
2014-16 of approx. USD 80 million
Assumed new mortgage debt of
approx. USD 130 million
FRN 14/19
Future Yard Instalments and Debt Financing - From 3Q 2014 until year end 2016
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Amrumbank West OWF Baltic 2 OWF Nordsee One Nordsee One OWF
Project
Project phase
Vessel
utilisation
Profit
recognition
Awarded
Installation of 86
submarine cables
providing the inner-array
grid connecting
Installation works
commenced in 2Q 2014.
First installation
campaign completed.
PSV “Siddis Mariner”
ISV “Siem Moxie”
AHTS “Siem Garnet”
3rd Party Vessel
At minimum 25%
completion, no profit
recorded in 3Q14,
envisages the project
completion during 2Q
2015.
Mar, 2012
Consortium EPIC
contract for the 155kV
export cable system
Nordsee One
Planning, preparation and
engineering. Installation
expected in 2Q16.
Utilising the resources
within the Siem Offshore
Group
At minimum 25%
completion, no profit will
be recorded prior to
installation activities,
envisages the project
completion during 2016.
Dec, 2012
Installation of 86
submarine cables
providing the inner-array
grid connecting
Installation works
commenced in 3Q 2014.
PSV “Siddis Mariner”
ISV “Siem Moxie”
AHTS “Siem Garnet”
3rd Party Vessel
At minimum 25%
completion, no profit
recorded in 3Q14,
envisages the project
completion during 2015.
Feb, 2013
Turnkey EPIC package
of the inner array grid
cable system for 54 wind
turbine generators
Planning, preparation
and engineering
expected complete in 1Q
2015
Utilising the resources
within the Siem Offshore
Group
At minimum 25%
completion1), no profit
recorded at this early
stage, project assumed
completed in 1Q 2017
Apr, 2014
Siem Offshore Contractors - Submarine power cable activities by main projects
[1] The project is currently still subject to financial close, whereby Canada-based Northland Power Inc. has acquired a 85% share
of the project company Nordsee One GmbH from the project developer RWE Innogy GmbH on Sep. 04, 2014.
Siem WIS
• The drilling operation on Maersk Gallant for Statoil’s Romeo project is ongoing and the
managed pressure drilling (“MPD”) operation will commence shortly. The latest update
indicates mobilisation of the pressure control device (“PCD”) equipment in October 2014.
• The Gudrun project is currently estimated to commence during first quarter 2015 and the
Valemon project during third quarter 2015.
• Other potential projects are being followed up in the North Sea and the GOM which may
have an impact on the work load in 2015.
• Siem WIS is also currently involved in a client-driven project that may expand the utilisation
of its core technology.
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Vessels in Operation and Shipbuilding Contracts
Employment and Deliveries
Fleet in Operation - Currently 44 Vessels in Operation
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OSCV AHTS Vessels
Scientific Core Drilling Vessel
# 1
Other
vessels
# 9
# 101)
Vessels in operation
Canadian
fleet
# 63)
1) Incl. two vessels owned by a partner
2) Incl. two 51% owned
3) 50% owned
4) Delivered from yard end June 2014, in operation in July.
5) Delivered from Yard in July 2014.
# 6
Average age of 4 years
Average age of 2 years
Other vessels # 18
Average age of 7 years
PSV (3,600 – 5,100 dwt) # 112)
Installation
support vessel
# 1)
4)
5)
Employment – Vessels in operation
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2014 2015 2016 2017
Vessel Type Ownership 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Siem Sasha PSV 100 %
Siem Sophie PSV 100 %
Siem Louisa PSV 100 %
Siem Hanne PSV 100 %
Siem Carrier PSV 100 %
Siem Supplier PSV 100 %
Hugin Explorer PSV 100 %
Siem Atlas PSV 100%
Siem Giant PSV 100%
Siem Pilot PSV 51%
Siddis Mariner 1) PSV 51%
Siem Marlin OSCV 100%
Siem Stork OSCV 100%
Siem Daya 1 OSCV 100%
Siem Daya 2 OSCV 100%
Siem Spearfish OSCV 100%
Siem Stingray OSCV 100%
Siem Pearl AHTS 100%
Siem Emerald AHTS 100%
Siem Sapphire AHTS 100%
Siem Aquamarine AHTS 100%
Siem Ruby AHTS 100%
Siem Topaz AHTS 100%
Siem Diamond AHTS 100%
Siem Amethyst AHTS 100%
Siem Garnet 2) AHTS 0%
Siem Opal AHTS 0%
Siem Moxie 3) ISV 100%
Total order backlog in % and USD mill. 80%
79 47% 212 31% 136 21% 97
1) Employment for Siddis
Mariner includes firm time
charter for Siem Offshore
Contractors.
2) Employment for Siem
Garnet includes firm time
charter for Siem Offshore
Contractors.
3) The ISV Siem Moxie was
delivered April 2014 and
shall primarily be utilized by
the subsidiary Siem
Offshore Contractors for
cable installation projects
within the offshore wind-
farm segment.
Contract Contract option Spot work Contract with subsidiary
Employment – Vessels in operation (cont.)
2014 2015 2016 2017
Vessel Type Ownership 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Big Orange XVIII WSV 41 %
Joides Resolution SPV 100 %
Burin Sea AHTS 50%
Panuke Sea PSV 50%
Ryan Leet MPSV 50%
Trinity Sea AHTS 50%
Venture Sea AHTS 50%
Scotian Sea MPSV 50%
Total order backlog in % and USD mill. 16
80% 46% 36 1% 0 0% 0
Marati OSRV 100 %
Parnaiba FSV 100 %
Propriá FSV 100 %
Capela FSV 100 %
Siem Piatã FCV 100 %
Siem Pendotiba FCV 100%
Siem Caetes FSP 100%
Siem Carajas FSP 100%
Total order backlog in % and USD mill. 100%
6 90% 19 90% 18 88% 18
Contract Contract option Spot work
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2014
1Q 2Q 3Q 4Q
2015
1Q 2Q 3Q 4Q
2016
1Q 2Q 3Q 4Q
Vessels under Construction - 11 Vessels to be Delivered Next 3 Years, including one vessel in Secunda
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OSRV, Siem Maragogi
OSRV, Siem Marataizes
PSV DF, Siem Symphony
CLV, Siem Aimery
PSV DF, Siem Pride
PSV DF, ”TBN 1”
PSV DF, ”TBN 2”
PSV DF, ”TBN 3”
WIV, Siem Helix 1
WIV, Siem Helix 2
AHTS vessel, ”TBN” (Note 1)
Note 1) Vessel under construction in the 50% owned entity Secunda.
Employment - Vessels under construction
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2014 2015 2016 2017
Vessel Type Ownership 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Brazil, Siem Maragogi OSRV 100%
Brazil, Siem Marataizes OSRV 100%
Norway, Siem Symphony PSV 100%
Poland, Siem Aimery CLV 100%
Poland, Siem Pride PSV 100%
Poland, ”TBN 1” PSV 100%
Poland, ”TBN 2” PSV 100%
Poland, ”TBN 3” PSV 100%
Germany, Siem Helix 1 WIV 100%
Germany, Siem Helix 2 WIV 100%
Poland, ”TBN ” (Note 1) AHTS 50%
Under Construction Contract Contract option
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Comments:
• The CLV shall primarily be utilized by the subsidiary Siem Offshore Contractors for cable installation projects within the offshore
wind-farm segment.
• Total firm backlog for vessels under construction at approximately USD 928 million as of end of third quarter 2014.
Contract with subsidiary
Note 1) Vessel under construction in the 50% owned entity Secunda.
Market Outlook
Market Outlook Summary
• The North Sea spot market for the fourth quarter is expected to continue to be
volatile for AHTS vessels.
• The North Sea PSV market was fairly strong for the majority of the third quarter, but
the momentum eased off during the latter stage of the period. The PSV market is
expected to remain soft over the winter period.
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