MODEC, Inc. 2017 Financial Results Analysts Presentation

February 7, 2018

Highlight Financial Results

2

FY2014 : New Awards

3

Awarded 2 large FPSOs (EPCI + Charter) The 13th and 14th FPSO/FSO which

MODEC will provide in Brazil and it’s 6th and 7th in the pre-salt*

FPSO Carioca MV30 Petrobras Mero Pilot FPSO Client Petrobras

Contract EPCI＋Time Charter (21 years) Field Sépia Field(Brazil)

Water Depth 2,200m Oil Production 180,000 bpd,

Gas Production 212 mmscfd Storage Capacity 1,400,000 bbls

Client Petrobras Contract EPCI＋Time Charter (22 years)

Field Mero Field (Brazil) Water Depth 2,100m

Oil Production 180,000 bpd, Gas Production 424 mmscfd

Storage Capacity 1,400,000 bbls

*FPSO in the pre-salt owned by MODEC group FPSO Cidade de Angra dos Reis MV22 FPSO Cidade de São Paulo MV23 FPSO Cidade de Mangaratiba MV24 FPSO Cidade de Itaguaí MV26 FPSO Cidade de Caraguatatuba MV27

FY2017 : Highlights

4

New orders reached the highest level of 700.9 billion JPY

Awarded 2 charter contracts from Petrobras

New Orders Revenue

Revenue 191 billion JPY

Billion JPY

518.4

395.7

188.7

92.7

700.9

0

400

800

2013 2014 2015 2016 2017

254.4

378.5

295.5

229.9

191.1

0

200

400

2013 2014 2015 2016 2017

Billion JPY

FY2017 : Highlights

5

Operating Profit Ordinary Profit

Targets of the Mid-term Business Plan 2017 (Profit attributable to owners of parent & ROE 10%) were achieved for the second year in a row.

Proposed annual dividends of ¥50.00 per share including special dividend of ¥10.00 per share in accordance with the solid performance of this year.

3.7

8.5

5.0

18.0

11.4

0

5

10

15

20

2013 2014 2015 2016 2017

Billion JPY

15.8 18.3

12.8

29.4

24.3

0

10

20

30

2013 2014 2015 2016 2017

Billion JPY

Profit Attributable to Owners of Parent

Billion JPY

4.9 5.4 5.8

21.0 19.4

0

5

10

15

20

25

2013 2014 2015 2016 2017

Dividends per Share

30.00 32.50

35.00

37.50

50.00

10

20

30

40

50

2013 2014 2015 2016 2017

Yen

ROE

7.9 6.5

5.9

18.7

15.0

0

50

100

150

5.0

10.0

15.0

20.0

2013 2014 2015 2016 2017

Equity% Billion JPY

FY2017：EPC(I)

6

Stampede TLP FSO Ailsa

FPSO Cidade de Campos dos Goytacazes MV29

FPSO Carioca MV30

Petrobras Mero Pilot FPSO

Client Hess Maersk

Petrobras Petrobras Petrobras

Contract EPCM EPC EPCI + Time Charter （20 yrs）

EPCI + Time Charter ( 21 yrs )

EPCI + Time Charter ( 22 yrs )

Delivery (Planned)

May, 2017 2018 1H 2018 2Q 2021 2021

Field Stampede Culzean Tartaruga Verde & Tartaruga Mestiça

Sépia Mero

Location GOM

UK Brazil Brazil Brazil

Water Depth 1,020m 90 m 765 m 2,200 m 2,100 m

Storage/ Production

80,000 bpd 40 mmscfd

350,000 bbls 25,000 bopd inlet

1,600,000 bbls 150,000 bopd 176 mmscfd

1,400,000 bbls 180,000 bopd 212 mmscfd

1,400,000 bbls 180,000 bopd 424 mmscfd

Progress

Order received in October 2017

Order received in December 2017

EPC(I) / Charter / O&M Period

7

As of February 2018 EPC(I) period Time Charter fixed period Time Charter option period O&M period

Owned by MODEC group companies (%) Affiliates accounted for by the equity method Consolidated subsidiary

22y

21y

20y

10y

20y

20y

20y

20y

15y

12y

9y

9y

20y

8y

7y

10y

5y

7y+

15y

5y

17.5y

7.5y

7.5y

5y

5y

7y+

15y

15y

5y

1 Culzean FSO (EPC) Maersk

2 Stampede TLP (EPCM) Hess

3 (1) 20.1 Petrobras Mero Pilot FPSO Petrobras

4 (2) 20.1 FPSO Carioca MV30 Petrobras

5 (3) 20.1 FPSO Cidade de Campos dos Goytacazes MV29 Petrobras

1 20.1 FPSO Prof. John Evans Atta Mills Tullow

2 20.1 FPSO Cidade de Caraguatatuba MV27 Petrobras

3 20.1 FPSO Cidade de Itaguai MV26 Petrobras

4 29.4 FPSO Cidade de Mangaratiba MV24 Petrobras

5 34.0 FPSO Cidade de Sao Paulo MV23 Petrobras

6 42.5 FPSO Cidade de Angra dos Reis MV22 Petrobras

7 50.0 FPSO Cidade de Santos MV20 Petrobras

8 45.0 FPSO Cidade de Niteroi MV18 Petrobras

9 65.0 FSO Rang Dong MV17 JVPC

10 40.6 FSO Cidade de Macae MV15 Petrobras

11 40.6 FPSO Cidade do Rio de Janeiro MV14 Petrobras

12 42.0 FSO Rong Doi MV12 KNOC

13 50.0 FPSO Baobab Ivoirien MV10 CNR

14 60.0 FPSO MODEC Venture 11 Santos

- 40.0 FPSO Stybarrow Venture MV16 available

1 FPSO Raroa OMV

2 FPSO Kwame Nkrumah MV21 Tullow

3 FPSO Pyrenees Venture BHPB

4 FPSO Fluminense Shell

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

FY2018 : Outlook

8

Revenue Operating Profit Profit Attributable to Owners of Parent Ordinary Profit

8.5

5.0

18.0

11.4 10.0

0

5

10

15

20

2014 2015 2016 2017 2018

Billion JPY

18.3

12.8

29.4

24.3

20.0

0

10

20

30

40

2014 2015 2016 2017 2018

Billion JPY

378.5

295.5

229.9

191.1

220.0

0

200

400

2014 2015 2016 2017 2018

Billion JPY

Assumed exchange rate for FY2018: 110 yen/USD MV29 to start charter in 2018 1H FSO Alisa to be delivered in 2018 2H

Billion JPY

5.4 5.8

21.0 19.4

14.0

0

5

10

15

20

25

2014 2015 2016 2017 2018

FSO Ailsa FPSO Cidade de Campos dos Goytacazes MV29

Highlight Financial Results

9

Profit & Loss

10

2016 2017 Variance Million JPY

Revenue 229,987 191,182 (38,805)Gross Profit 31,544 24,804 (6,740)

Selling, General and Administrative Ecpenses 13,526 13,356 (170)Operating Income 18,018 11,448 (6,570)

Other Income (A) 14,736 15,770 1,034Other Expenses (B) 3,346 2,895 (451)

Total Other Income/Expenses (C=A-B) 11,390 12,875 1,485

(Equity in Earnings of Affiliates andUnconsolidated Subsidiaries included in C)

9,618 9,686 68

(Exchange gain/loss and Gain/loss onrevaluation of derivatives included in C)

(1,410) (1,415) (5)

Ordinary Profit 29,409 24,322 (5,087)Extraordinary Profit - 741 741Extraordinary Loss 1,632 0 (1,632)

Income before Income Taxes and Non-controlling Interests

27,776 25,064 (2,712)

Profit Attributable to Owners of Parent 21,012 19,454 (1,558)Exchange Rate (USD) ¥116.49 ¥113.00 (¥3.49)

Revenue and gross profit decreased due to a decline in the number of EPCI projects

Operating profit decreased by 6.5 billion yen due to decreased gross profit

Profit due to liquidation of SPCs

New Orders / Revenue / Order Backlogs

11

518.4

395.7

188.7

92.7

700.9

254.4

378.5

295.5 229.9

191.1

896.6

987.9

761.6

648.9

1,144.4

551.2

703.8 636.1

494.7

569.4

0

400

800

1,200

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Billion JPY

New Orders Order Backlogs Revenue

Order backlogs for MODEC Group’s share in the “Lease, Charter and O&M services” of the affiliates accounted for by the equity method

Mero Sépia

FSO Ailsa MV29

Stampede MV27

MV25 MV26 MV24 OSX-3

EPC(I) period

2013 2014 2015 2016 2017 2018

Coral South

Operating Income/ Equity in Earnings of Affiliates

12

Operating Profit (as if consolidating affiliates basis) Equity in Earnings of Affiliates

53 56

69

83 86

0

50

100

2013 2014 2015 2016 2017

Million USD

3.7

8.5

5.0

18.0

11.4

16.6

24.3

27.4

40.3

35.6

16.6

28.6 29.7

39.1

29.3

0

10

20

30

40

2013 2014 2015 2016 2017

Billion JPY

MV24

MV26

MV27 MV25

A A + B A + B + C

A : Consolidated Operating Profit B : Operating Profit (equity method portion) C : Influence of Deferred/Realized Profits

Ordinary Profit

13

15.8

18.3

12.8

29.4

24.3

17.3

24.7

20.5

31.5

21.7

0

10

20

30

40

2013 2014 2015 2016 2017

Billion JPY

Influence of Deferred/Realized Profits Ordinary Profit (as if consolidating affiliates basis

-3.0

-7.6 -8.2 -7.9

-2.2

3.0 3.3

5.8

9.0 8.5

11.9

16.2

18.5 17.4

11.1

(10)

(5)

0

5

10

15

20

2013 2014 2015 2016 2017

Deferred Realized Balance

Billion JPY

A A + B + C

A : Consolidated Ordinary Profit B : Ordinary Profit (equity method portion) C : Influence of Deferred/Realized Profits

Balance Sheet

14

2016 2017 Variance Million JPY

Accounts Receivable - trade 95,544 98,188 2,644

Short-term Loans Receivable 55,012 46,282 -8,730

Total Current Assets 218,042 198,035 -20,007

Property and Equipment 14,161 6,863 -7,298

Intangible Assets 7,420 7,446 26

Investments and Other Assets 93,624 108,819 15,195

Total Fixed Assets 115,206 123,129 7,923

Total Assets 333,249 321,165 -12,084

2016 2017 Variance

Accounts Payable - trade 96,738 80,335 -16,403

Short-term Loans Payable 7,812 14,467 6,655

Total Current Liabilities 142,536 128,581 -13,955

Long-term Loans Payable 42,478 31,586 -10,892

Total Long-term Liabilities 56,102 44,197 -11,905

Total Liabilities 198,639 172,778 -25,861

Total Shareholders Equity 118,200 135,468 17,268

Total Accumulated Other Comprehensive Income 4,849 1,032 -3,817

Minority Interests in Consolidated Subsidiaries 11,560 11,885 325

Total Net Assets 134,609 148,387 13,778

Total Liabilities, Net Assets 333,249 321,165 -12,084

Short-tem loans receivable decreased due to collection of loans receivable from SPCs

Transfer to long term lease receivable from fixed asset due to extended lease term of owned FSO

Investments and other assets increased due to investment in MV25 and MV27 in addition to the recognition of equity in earnings of affiliates and unconsolidated subsidiaries

Accounts payable decreased in line with EPC(I) progress

Foreign currency translation adjustments decreased due to yen appreciation

Long-term loans payable decreased due to scheduled repayment

Total current assets decreased mainly due to investment in MV25 and MV27.

Key Financial Indicators

15

Interest-Bearing Debt EBITDA

ROE ROA Equity Ratio

2.7 1.9 1.7

6.1 5.9

1.0

3.0

5.0

7.0

2013 2014 2015 2016 2017

%

7.9 6.5 5.9

18.7

15.0

4.0

8.0

12.0

16.0

20.0

2013 2014 2015 2016 2017

%

115.3

222.7 202.8

166.1 161.6

3.6

5.1 4.3

2.9 3.0

2.0

3.5

5.0

6.5

0

100

200

300

2013 2014 2015 2016 2017

Total interest-bearing debt（after adjustment*） Total interest-bearing debt/EBITDA

X times Billion JPY

31.9

43.9 47.1

57.8 53.3

6.7 7.7

7.0 8.2

7.2

2.0

4.0

6.0

8.0

10.0

12.0

0

20

40

60

2013 2014 2015 2016 2017

EBITDA（after adjustment*） EBITDA Instant Coverage Ratio

X times Billion JPY

32.8 27.8 28.7

36.9 42.5

0

50

100

150

20.0

30.0

40.0

50.0

2013 2014 2015 2016 2017

Equity% Billion JPY

*Adjustment: Adding MODEC group’s share in affiliates accounted for by the equity method

16 16