Earnings Presentation
Fourth Quarter 2015 29 February 2016
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
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There may have been changes in matters which affect Siem Offshore subsequent to the date of this presentation. Neither the
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correct as of any time subsequent to the date hereof or that the affairs of Siem Offshore has not since changed, and Siem
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2
• Fourth quarter 2015 operating revenue of USD 90.0 million and operating margin of USD 13.8 million (15%),
compared to USD 137.7 million in operating revenue and USD 59.7 million (43%) in operating margin in fourth
quarter 2014. For the full year 2015 the company had operating revenue of USD 422.4 million and operating
margin of USD 118.5 million (28%), compared to USD 491.3 million and USD 194.1 million (40%) respectively for
the full year 2014.
• Completed the sale and delivery of the Offshore Subsea Construction Vessel (“OSCV”) “Siem Daya 1” in fourth
quarter and recorded a gain of USD16.6 million.
• Agreed 145-day term contracts with options for the two Platform Supply Vessels (“PSV”) “Siem Sasha” and
“Sophie Siem” with an international oil company.
• Agreed a 9-month term contract with 2 x 6 month options for the AHTS vessel “Siem Amethyst” for operation in
Australia.
• Agreed a 4-year bareboat contract for the vessel “Siem Hanne” for operation in Canada.
• The PSV “Siem Pride” was delivered from yard and commenced a five year contract with A/S Norske Shell.
• Placed two additional AHTS vessels into lay-up in the quarter; the Company had five AHTS vessels and two large
PSVs in lay-up at year end.
• Conducted a review of vessel values, capitalized equipment and investments in subsidiaries and recorded
impairments of an aggregate USD111.6 million.
• Completed Rights Issue for USD100 million in new equity.
• Recorded aggregate backlog for the Offshore Support Vessels (“OSV”) segment and the Industrial
Segment for USD1.4 billion at the end of the fourth quarter. 3
Highlights Fourth Quarter 2015
• Agreed a letter of intent for the sale of the PSV “Siem Carrier” with delivery and financial closing agreed to take
place by end of February 2016.
• Terminated the 5-year charter party for the OSCV “Siem Marlin” due to non-performance of the charterer’s
obligations.
4
Subsequent Events
Income Statement Fourth Quarter
Fourth Quarter Twelve Months Ended
(Amounts in USD million)
2015
Unaudited
2014
Unaudited
2015
Unaudited
2014
Audited
Operating revenue 90.0 137.7 422.4 491.3
Operating expenses ( 66.7) ( 67.1) ( 265.3) ( 250.2)
Administration expenses ( 9.5) ( 10.9) ( 38.6) ( 47.0)
Operating margin [1] 13.8 59.7 118.5 194.1
Operating margin % 15 % 43 % 28 % 40 %
Depreciation and amortisation ( 25.4) ( 27.5) ( 107.0) ( 96.9)
Impairment of vessels ( 103.5) ( 29.0) ( 159.5) ( 29.0)
Impairment of intangibles ( 6.7) - ( 6.7) -
Gain/(Loss) on sale of fixed assets 16.3 0.2 16.3 18.7
Gain of sale of interest rate derivatives (CIRR) 0.1 0.1 0.4 0.4
Gain/(Loss) on currency derivative contracts [2] ( 7.0) ( 6.6) ( 30.8) ( 3.0)
Net financial items [3] 0.3 18.8 ( 21.4) ( 12.7)
Result from associated companies ( 2.2) 0.3 ( 1.6) 1.8
Profit before tax ( 114.2) 16.0 ( 191.7) 73.4
Income tax provision ( 1.8) ( 0.5) ( 4.7) ( 2.7)
Net Profit (loss) ( 116.0) 15.5 ( 196.4) 70.7
Net profit attributable to non-controlling interest ( 7.7) 2.6 ( 9.7) 12.6
Net profit attributable to shareholders ( 108.3) 13.0 ( 186.7) 58.1
Earnings per share [4] ( 0.13) 0.03 ( 0.36) 0.15
Average number of shares outstanding [5] 842 021 387 591 518 318 387 591
[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)
5
Adjusted Net Profit
Fourth Quarter Twelve Months Ended
(Amounts in USD million)
2015
Unaudited
2014
Unaudited
2015
Unaudited
2014
Audited
Net Profit (loss) ( 116.0) 15.5 ( 196.4) 70.7
Unrealized (profit) loss on currency derivatives 0.1 5.4 (2.1) 5.6
Unrealized (profit) loss on interest rate derivatives (2.0) 0.4 (2.2) 0.4
Other unrealized (profit) loss on currency positions (13.3) (22.9) (27.8) (30.6)
Adjusted Net Profit (loss) (131.3) (1.5) (228.5) 46.2
Impairment of vessels and intangibles 111.6 29.0 167.6 29.0
Adjusted Net Profit (loss) before impairments (19.7) 27.4 (60.9) 75.2
• 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.
6
OSV Segment - Comments to Fourth Quarter
• 88% utilisation of the OSCV fleet.
• Four of the vessels operated on long-term contracts during the quarter.
• One OSCV on short-term employment outside West Africa.
• One OSCV was sold during the quarter.
• 62% utilisation of the PSV fleet.
• Three PSVs are employed offshore Brazil.
• Three PSVs are employed in the North Sea region
• Three PSVs are employed offshore West Africa
• Two PSVs are on a bareboat contract.
• Two PSVs in lay-up during the quarter.
• One vessel was delivered from yard and commenced a 5-year term contract during the quarter.
• 37% utilisation of the AHTS fleet.
• One AHTS vessel is operating on a long-term contract in Brazil.
• One AHTS vessel is operating on a 9-months contract for operation in Australia.
• Three AHTS vessels are operating in the North Sea/Europe spot market.
• Five AHTS vessels are placed in lay-up.
• 68% utilisation for the fleet of smaller Brazilian flagged vessels.
• Five of the vessels operated on term contracts in Brazil during the quarter.
• Two vessels were idle at the end of the quarter.
7
8
Operating Margin - Fourth Quarter
Fourth Quarter 2015 Fourth Quarter 2014
Amounts in USD million Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
PSVs [2] 13.5 ( 8.7) 4.9 36 % 30.5 ( 12.3) 18.2 60 %
OSCVs 24.1 ( 13.1) 10.9 45 % 31.9 ( 10.9) 21.0 66 %
AHTS vessels[2] 9.8 ( 9.3) 0.5 5 % 34.7 ( 16.3) 18.5 53 %
Smaller Brazilian flagged vessels[1] 3.7 ( 2.6) 1.1 30 % 5.2 ( 9.1) ( 3.9) n.m
Intercompany eliminations, other [2] 1.8 ( 1.5) 0.3 ( 4.7) 4.7 ( 0.1)
Total OSV Segment 52.9 ( 35.2) 17.7 33 % 97.6 ( 43.9) 53.7 55 %
Submarine Power Cable activities 29.0 ( 27.4) 1.6 5 % 30.5 ( 17.8) 12.7 42 %
Scientific Core-Drilling 6.6 ( 3.1) 3.5 53 % 6.5 ( 4.2) 2.3 36 %
Siem WIS 0.7 ( 0.3) 0.4 1.8 ( 0.1) 1.7
Combat Management Systems 0.8 ( 0.8) 0.1 10 % 1.3 ( 1.2) 0.1 9 %
Other 0.0 0.1 0.1 0.0 0.0 0.0
Total Industrial Segment 37.1 ( 31.5) 5.6 15 % 40.1 ( 23.3) 16.8 42%
G&A ( 9.5) ( 9.5) 0.0 ( 10.9) ( 10.9)
Total for the Company 90.0 ( 76.2) 13.8 15 % 137.7 ( 78.1) 59.7 43 %
[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 Industrial Segment for Submarine Power Cable activities.
9
Operating Margin - Twelve Months Ended
Twelve Months Ended 2015 Twelve Months Ended 2014
Amounts in USD million Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
Operating
revenue
Operating
expenses
Operating
margin
Operating
margin %
PSVs [2] 76.5 ( 37.8) 38.7 51 % 104.4 ( 45.6) 58.8 56 %
OSCVs 111.3 ( 41.7) 69.6 63 % 104.8 ( 33.6) 71.2 68 %
AHTS vessels[2] 53.6 ( 52.2) 1.4 3 % 142.5 ( 65.0) 77.5 54 %
Smaller Brazilian flagged vessels[1] 21.3 ( 14.3) 7.1 33 % 19.4 ( 22.8) ( 3.4) n.m
Intercompany eliminations, other [2] ( 8.2) 14.0 5.8 ( 15.9) 21.0 5.1
Total OSV Segment 254.5 ( 131.9) 122.6 48 % 355.2 ( 146.0) 209.2 59 %
Submarine Power Cable activities 132.3 ( 114.9) 17.5 13 % 101.5 ( 84.4) 17.1 17 %
Scientific Core-Drilling 26.2 ( 11.9) 14.2 54 % 25.9 ( 13.0) 12.9 50 %
Siem WIS 4.8 ( 2.4) 2.4 50 % 2.6 ( 0.6) 2.0 77 %
Combat Management Systems 4.7 ( 4.9) ( 0.2) n.m 6.1 ( 6.1) 0.0 n.m
Other 0.0 0.7 0.7 n.m - - -
Total Industrial Segment 168.0 ( 133.4) 34.6 21 % 136.1 ( 104.1) 32.0 24 %
G&A ( 38.6) ( 38.6) ( 47.0) ( 47.0)
Total for the Company 422.4 ( 303.9) 118.6 28 % 491.3 ( 297.2) 194.1 40 %
[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 Industrial Segment for Submarine Power Cable activities.
• Book equity ratio of ~ 34% after
adjusting for offsetting CIRR as
asset and liability.
• Cash and cash equivalents of
approx. USD 149 million as of 31
December 2015.
• Net interest bearing debt as of 31
December 2015 of USD 974 million.
• Current cost of debt approximately
4.3% p.a., including the effect of
interest rate derivatives.
Financial Position as of 31 December 2015
10
Current Liabilities
Non-Current Liabilities
Total Equity
Other Current Assets
Cash & Cash Equivalents
Non-Current Assets
(all in USDm)
Cash and Cash Equivalents development
• Net cash flow from operations USD 147.5 million.
• Cash flow from investing activities USD (129.5) million.
• Cash flow from financing activities USD (20.4) million.
• Net change in cash USD (2.4) million, before exchange rate differences.
• Effect of exchange rate differences USD 33.5 million.
11
Scheduled Debt Maturity Profile 2016 - 2019
12
[1] Only including wholly-owned vessels under construction.
• The graph reflects committed and assumed mortgage debt for all 7 vessels(1) under construction per end of
4Q 2015.
• Balloon repayment for vessels under construction in 2016 relates to pre-delivery financing which will be
repaid with associated post delivery financing.
• Gross debt expected to peak in 2016 based on existing financing and estimated financing for vessels under
construction. No major balloon repayments before 2018.
• NOK 600 million (USD 68.1 million) of unsecured bonds with maturity in 2018.
• NOK 700 million (USD 79.5 million) of unsecured bonds with maturity in 2019.
Future Yard Instalments per end 4Q 2015
• Yard instalments for shipbuilding contracts are normally
paid with 20% during construction and 80% at delivery.
• The Company has secured mortgage debt financing for all
of its seven wholly-owned vessels currently under
construction.
• Cash balance and cash from operations to cover mismatch
between future yard instalments and committed debt
facilities.
• The AHTS vessel under construction for Secunda is not
included in the table.
13
Amounts in USD million
Future Yard Instalments
Total
(all 2016)
OSRVs 3.5
PSVs 105.1
CLV 57.5
WIV 229.9
Total 395.9
Debt facilities
Total
(all 2016)
OSRVs 4.9
PSVs (1) 104.8
CLV 53.9
WIV 224.6
Total 388.3
[1] Subject to approval by the Polish Export Credit Insurance Corporation Joint Stock Company (KUKE S.A.)
14
• Firm contract backlog for the OSV segment
of USD 1.2 bn.
• 2016 – USD 231 million.
• 2017 - USD 217 million
• 2018 onwards – USD 707 million.
• Approximately 60% backlog for vessels
covered for 2016 based on both firm and
option contracts.
• Firm contract backlog for the Industrial
Segment of USD 217 million.
• 2016 – USD 168 million.
• 2017 - USD 49 million.
Contract Backlog - Approximately USD 1.4bn of Firm Contract Backlog as of 31 December 2015.
Operating Margin, Vessels in Operation and Shipbuilding Contracts
OSV Segment
16
OSCV AHTS Vessels
Other
vessels
# 94)
# 101)
Vessels in operation
Canadian
fleet
# 53)
1) Incl. two vessels owned by a partner
2) Incl. three 51% owned
3) 50% owned
4) Including the Scientific Core Drilling Vessel “JOIDES Resolution”
# 5
Average age of 5 years
Average age of 3 years
Other vessels # 15
Average age of 7 years
PSV (3,600 – 5,100 dwt) # 132)
Installation
support vessel
# 1
OSV Segment - Currently 43 Vessels in Operation
OSV Segment - Employment for vessels in operation
17
2016 2017 2018
Vessel Type Ownership 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Siem Sasha PSV 51 %
Sophie Siem PSV 100 %
Siem Louisa PSV 100 %
Siem Hanne PSV 100 %
Siem Carrier 1) PSV 100 %
Siem Supplier PSV 100 %
Hugin Explorer PSV 100 %
Siem Atlas PSV 100%
Siem Giant PSV 100%
Siem Symphony PSV 100%
Siem Pride PSV 100%
Siem Pilot PSV 51%
Siddis Mariner 2) PSV 51%
Siem Marlin OSCV 100%
Siem N-Sea OSCV 100%
Siem Daya 2 OSCV 100%
Siem Spearfish OSCV 100%
Siem Stingray OSCV 100%
Siem Pearl 2) AHTS 100%
Siem Emerald 2) AHTS 100%
Siem Sapphire 2) AHTS 100%
Siem Aquamarine 2) AHTS 100%
Siem Ruby AHTS 100%
Siem Topaz AHTS 100%
Siem Diamond 2) AHTS 100%
Siem Amethyst AHTS 100%
Siem Garnet AHTS 0%
Siem Opal AHTS 0%
Siem Moxie 3) ISV 100%
Total order backlog in % and USD mill. 46% 135 27% 89 18% 54
1) Agreed a letter of intent for the sale of
the PSV “Siem Carrier”.
2) Siddis Mariner, Siem Peal, Siem
Emerald, Siem Sapphire, Siem
Aquamarine and Siem Diamond
currently placed into lay-up
3) The ISV Siem Moxie 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
Agreed sold
OSV Segment - Employment for vessels in operation (con’t)
2016 2017 2018
Vessel Type Ownership 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Big Orange XVIII WSV 41 %
Burin Sea AHTS 50%
Panuke Sea PSV 50%
Trinity Sea AHTS 50%
Venture Sea AHTS 50%
Scotian Sea MPSV 50%
Total order backlog in % and USD mill. 75% 26 34% 13 16% 7
Siem Carajas FSP 100%
Siem Caetes FSP 100%
Siem Maragogi OSRV 100%
Propriá FSV 100 %
Parnaiba FSV 100 %
Siem Piatã FCV 100 %
Siem Pendotiba FCV 100%
Total order backlog in % and USD mill. 57% 14 57% 14 49% 13
Contract Contract option Spot work
18
2015
1Q 2Q 3Q 4Q
2016
1Q 2Q 3Q 4Q
2017
1Q 2Q 3Q 4Q
19
OSRV, Siem Marataizes
CLV, Siem Aimery
PSV DF, ”TBN 1”
PSV DF, ”TBN 2”
PSV DF, ”TBN 3”
WIV, Siem Helix 1
WIV, Siem Helix 2
AHTS, Avalon Sea (Note 1)
Note 1) Vessel under construction in the 50% owned entity Secunda.
OSV Segment - Vessels under Construction, including Employment
Under Construction Contract Contract option Contract with subsidiary
• 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 720 million as of end fourth quarter
2015.
7 Yrs Firm + Options
7 Yrs Firm + Options
Long term contract with Subsidiary
8 Yrs Firm + Options
6.5 Yrs Firm + Options
• The North Sea spot market for AHTS vessels and PSVs continued to be soft
throughout most of fourth quarter before improving towards quarter end with
increasing rates and utilization due to harsh weather and multiple prolonged parallel
operations.
• Vessel owners continue to put vessels into lay-up. Further lay-ups are expected
despite the short-term improved market conditions experienced at year-end.
• The outlook for the OSV market is expected to remain challenging for several years.
20
OSV Segment - Market Outlook
Industrial Segment Operating Margin, Investments
22
Baltic 2 OWF Nordsee One OWF Nordsee One OWF
Project
Project phase
Vessel utilisation
Profit recognition
Awarded
Consortium EPIC contract
for the 155kV export
cable system Nordsee
One
Planning, preparation and
engineering. Project
scheduled for completion
in 1Q 2017.
Utilising the resources
within the Siem Offshore
Group
At minimum 25%
completion. No margin
will be recorded prior to
installation activities.
Dec, 2012
Installation of 86
submarine cables
providing the inner-
array grid connecting
Project in its final stage.
The take-over for the six
clusters has been
achieved and the first full
load trial completed.
PSV “Siddis Mariner”
ISV “Siem Moxie”
AHTS “Siem Garnet”
3rd Party Vessel
A positive margin was
recorded in 2014 and
2015. The remaining
margin will be recorded
upon completion of the
remaining
works in 2016.
Feb, 2013
Turnkey EPIC package
of the inner array grid
cable system for 54
wind turbine generators
Planning, preparation and
engineering. Project
scheduled for completion
in 4Q 2016.
Utilising the resources
within the Siem
Offshore Group
At minimum 25%
completion. No margin
will be recorded prior to
installation activities.
Apr, 2014 1)
[1] The project reached financial close in April 2015.
Veja Mate OWF
Turnkey EPIC package
of the inner array grid
cable system , 73
submarine composite
cables.
Planning, preparation
and engineering. The
project is on track for
completion by 2Q 2017.
Utilising the resources
within the Siem Offshore
Group
At minimum 25%
completion. No margin
will be recorded prior to
installation activities.
Apr, 2015
Industrial Segment - Siem Offshore Contractors; Submarine power cable activities by main projects
• The Managed Pressure Drilling (“MPD”) operation on Gullfaks A commenced in September
2015 and was successfully completed in November 2015.
• The Valemon operation has been suspended since beginning of November. One of Siem
WIS’s pressure control device (“PCD”) systems is currently allocated and on suspension
dayrate for the Valemon operation. Drilling on Valemon is ongoing. Utilisation of MPD will be
depended of the results from the formation integrity test planned to be performed end
February 2016.
• Siem WIS entered into an agreement with Statoil in December 2015 for the delivery of PCD
services to its Gullfaks field. The first call-off was issued early 2016 and the operation has
now started on Gullfaks.
23
Industrial Segment - Siem WIS
• In the fourth quarter the scientific core-drilling vessel “JOIDES Resolution” recorded
operating revenues of USD 6.6 million (2014: USD 6.5 million) and an operating
margin before administration expenses of USD 3.5 million (2014: USD 2.3 million).
The operating margin as a percentage of revenue was 53% (2014: 36%).
• The client, TAMRF, holds further options to extend the charter until 30 September
2023 on an annual basis.
24
2016 2017 2018
Vessel Type Ownership 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Joides Resolution SPV 100 %
Total order backlog in % and USD mill. 75% 19 0% 0 0% 0
Scientific Core Drilling Vessel
# 1
Industrial Segment - Overseas Drilling Ltd. (JOIDES Resolution)
• Built: 1978 (Major Upgrade 2009)
• Length: 143 m Beam: 21 m
• Gross tonnage: 10,282 t
• Accommodation: 130 persons
• Max endurance: 75 days
• Drilling capacity: 2,000 meters
into the seafloor in water depths
of up to 7,000 meters
Vessel Specification
• Siem Offshore Contractors experienced increased tendering activity for EPIC-based
contracts for both medium- and high-voltage power cables in the offshore windfarm
(“OWF”) market with scheduled marine installation activities in 2017, 2018 and 2019.
25
Industrial Segment - Market Outlook