earnings presentation fourth quarter 2015siemoffshore.com/admin/public/dwsdownload.aspx?file... ·...

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

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.

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


Other vessels # 15


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


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%


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%


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


Long term contract with Subsidiary


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.


within the Siem

Offshore Group

At minimum 25%




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.


within the Siem Offshore

Group

At minimum 25%




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


Joides Resolution SPV 100 %


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

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