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Quarterly presentation Q2 2016
DOF Subsea Group
DOF Subsea Group
DOF Subsea Group – in brief • Fleet
• One of the largest subsea vessel owners in the world
• Owns and operates a fleet of 21 vessels, plus 4 newbuilds on order
• In addition, 2 chartered-in vessels as of 30th June 2016
• Normand Reach redelivered in July 2016
• The market value of owned vessels in operation is about NOK 16 billion, with a value
adjusted age of approx. 6.0 years
• Operates 63 ROVs and 4 ROVs on order
• Global organization
• Head office in Bergen
• Regional offices in Australia, Singapore, Norway, UK, Angola, US, Canada and
Brazil
• Total of 1 590 employees
• Subsea employees: 1 590
• Of which engineers and subsea project staff: 940
3
Asia Pacific Atlantic Brazil North America
355 653 344 238
DOF Subsea Group – in brief
4
Key figures
Back-log firm
Back-log incl. options
NOK 21 billion
NOK 39 billion
Market value of fleet NOK 16 billion
Condensed figures 5 last quarters
* According to internal Management reporting
0%
5%
10%
15%
20%
25%
30%
35%
-
500
1 000
1 500
2 000
2 500
Q2 2013 Q2 2014 Q2 2015 Q2 2016
EB
ITD
A m
arg
in
NO
K m
illio
n
Q2 last four years
Operating revenue EBITDA EBITDA margin
Recent events
• Fleet
• First of 4 PLSVs, Skandi Açu, on-hire with Petrobras from 13th of August
• Redelivered Normand Reach
• Contracts
• Shell Australia awarded DOF Subsea an IMR contract in Asia Pacific for 5 years firm plus 2 x 2
years options
• Several ROV and diving contracts awarded Skandi Achiever in the North Sea and North America
region, securing utilization until end of October 2016
• Several contracts awarded in Asia Pacific, securing utilization of Skandi Hercules and Skandi
Singapore
• Petrobras has extended the RSV contract for Geograph for 18 months
• Petrobras awarded Skandi Vitoria a contract, securing utilization of the vessel until end of 2016
• Petrobras awarded Skandi Niteroi a contract for 8 months firm plus 8 months option
• Finance
• Repaid outstanding amount of DOFSUB05 at maturity in April
• Refinancing of Skandi Hercules
• Drawdown of 2nd tranche on Skandi Acu at final delivery in April 2016
5
Skandi Açu
• First of 4 PLSVs in joint venture with Technip on-hire with Petrobras
from 13th of August
6
Skandi Açu
Build 2016
Design VARD 3 05
Type Subsea / PLSV
LOA 146.0 m
Breadth 30.0 m
Draught 8.5 m
DWT 10 800t
Accommodation 120 persons
TLS tower 650t
Shell Prelude 5-year IMR contract
• Shell Australia awarded DOF Subsea a 5 year + 2 x 2 year options for fulltime
Underwater Services and Multi-Purpose Supply Vessel (MPSV) Services to the
Prelude FLNG facility, offshore Australia.
• Combination of vessel expertise, subsea operations track-record and shared safety,
environmental and local-content objectives made DOF Subsea competitive.
• Established local presence and organizational expertise - combination of Australian
and Norwegian teams
• Client opted for an integrated solution with one supplier
• Differentiated offering from DOF resulted in contract award
7
Integrated work scope:
• Vessel charter
• Project Management and Engineering
• IMR program services
• Subsea inspection/intervention services
• Survey Services
• Data Management / Reporting services
• ROV and tooling services
• Asset management
• Platform Supply services
• Non-planned maintenance
• Emergency response
Client and location:
Shell Australia is part of The Shell Group, a global
group of energy and petrochemical companies. Shell’s
world-leading FLNG technology is to be deployed at the
Prelude FLNG facility – it is the largest floating facility
ever built, it will produce, liquefy, store and transfer
LNG at sea. The facility will be located 475 kilometres
north-north east of Broome, in Western Australia.
DOF Subsea Group overview
8
2005
Established 21 216
NOK million
total assets
Modern
high-end fleet
and equipment
21
owned subsea
vessels
4
vessels
on order
1
vessels
on charter
63 ROVs,
4 ROVs
on order
First Reserve
Corporation (49%)
1 590 highly-skilled
employees
DOF Subsea
DOF Subsea Holding (100%)
DOF ASA (51%)
9
Our global footprint
ATLANTIC
NORTH AMERICA
BRAZIL ASIA PACIFIC
Macaé
Rio de Janeiro
Buenos
Aires
Houston
St John’s
Aberdeen
Bergen
Luanda
Singapore
Manila
Melbourne
Jakarta
Brunei Kuala Lumpur
Darwin
Perth
344 9
653 7
238 3
355 3
DOF Subsea timeline
10
DOF Subsea fleet evolution
-
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
0
4
8
12
16
20
24
28
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
NO
K m
illio
n
Num
ber
of opera
ted v
essels
Owned vessels Chartered vessels MV of owned fleet (r.a.)
MV of fleet
2005 - 2010
Fleet: From 11 to 21 vessels • DOF Subsea was established in 2005
• DOF Subsea was listed on the Oslo Stock Exchange in 2005, and taken private by DOF and FRC in 2008
• Established a global footprint, present in all major offshore oil & gas regions
• Built a global organization through organic growth and acquisitions
• Developed global Business Management System, and achieved global ISO certification
• JV with Technip
• Expanded the fleet by taking delivery of 10 newbuilds
2011
Fleet: 24 vessels • Feb: Delivery of
Skandi Niteroi
• May: Sale of Geosounder
• Jun: Acquisition Skandi Constructor
• Jul: Delivery of Skandi Skansen
• Sep: Delivery of Skandi Singapore
2012
Fleet: 25 vessels • Mar: Sale of OSCV
newbuild
• Mar: Signed OSCV newbuild contract
• Mar: Chartered Skandi Hawk
2013
Fleet: 26 vessels • Feb: Signed OSCV
newbuild contract
• Feb: Chartered Harvey Deep-Sea
• Mar: Sale of Geobay
• Jun: Delivery of Skandi Bergen
• Aug: Signed newbuild contracts for 4 x PLSVs
• Nov: Chartered Normand Reach
• Global ISO recertification
2014
Fleet: 28 vessels • Jan: Delivered
Skandi Bergen to new owners
• Mar: Chartered Ross Candies
• Mar: Chartered Chloe Candies
• Nov: Delivered Skandi Skolten to new owners
DOF Subsea employees
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Nu
mb
er
of e
mp
loye
es
Employees
2015
Fleet: 24 vessels • Feb: Delivered
Skandi Aker to new owners
• Mar: Delivery of Skandi Africa
• May: Acquired Skandi Hawk
• June: Sale of Skandi Arctic
• Nov: Sale of Skandi Inspector
* As per 31st March 2016
2016
Fleet: 22 vessels • Jan: Delivered
Skandi Protector to new owners
• Apr: Delivery of Skandi Açu
• July: Third party vessel Normand Reach redelivered
Modern high-end fleet
11
• Majority of the fleet delivered from 2007 and onwards
• Modern fleet with a value adjusted average fleet age of approx. 6.0 years
• High-end vessels, capable of a wide scope of worldwide operations
Skandi Africa, Ship of the Year 2015
Skandi Acu, PLSV built 2016
Business management
12
• Global business management system accredited by DNV to:
• Business Management System ISO 9001:2015
• Health and Safety System OHSAS 18001:2007
• Environmental Management System ISO 14001:2015
• Sustainability reporting according to Global Reporting Initiative G4 implemented
• Achieved Carbon Disclosure Project reporting result of 99B (report for 2014)
• IMCA International Contractor membership
• ISO recertification by DNV GL achieved during Q2 2016
2009
HSEQ key statistics
13
• Substantial HSE-improvement since 2005
• Substantial increase in activity level measured by total man-hours
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
-
2,0
4,0
6,0
8,0
10,0
12,0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Man
-ho
urs
Freq
uen
ce:
Inci
den
t /
1 0
00
00
0 m
an-h
ou
r
DOF Subsea HSEQ-statistics
LTI TR Man-hours
Q22014
Q22015
Q22016
Subsea projects 1 390 1 327 1 227
Chartering of vessels 574 634 433
Total 1 963 1 962 1 660
0
500
1 000
1 500
2 000
2 500
NO
K m
illio
n
Chartering of vessels Subsea projects
DOF Subsea – Projects • DOF Subsea has built a global
presence over the last 10 years
• DOF Subsea has developed the
project/IMR business gradually
• Increased project activity and
complexity driving growth
• IMR focused operations
• Project business going forward
• Gradually increase the
complexity of work done
• Build a larger project
back-log with focus on
IMR
• Mix between owned and
chartered-in vessels
14
* According to internal Management reporting
Operating income by segment
2013 2014 2015
Subsea projects 4 971 5 187 4 810
Chartering of vessels 1 609 2 236 2 442
Total 6 580 7 422 7 252
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
NO
K m
illio
n
Chartering of vessels Subsea projects
Contract coverage
15
• By end of June 2016, the total back-log (incl. options) was approx. NOK 39 billion
• Firm contracts count for approx. NOK 21 billion
• Options count for approx. NOK 18 billion
* Figures based on remaining back-log from beginning of July 2016
2016 2017 2018 2019 2020 2021 2022 2023
Firm 21 19 16 13 10 7 6 4
Option 18 18 18 17 16 16 15 14
-
5
10
15
20
25
30
35
40
45
NO
K b
illio
n
Financials
Condensed profit & loss (IFRS 11)
• Operating income was NOK 1 623 million in Q2 2016, down from NOK 1 865 million in Q2 2015
• EBITDA (excl. gain on sale of assets) was NOK 485 million in Q2 2016, down from NOK 514 million in Q2 2015
• EBIT (excl. gain on sale of assets) was NOK 216 million in Q2 2016, down from NOK 325 million in Q2 2015
17
Condensed balance sheet (IFRS 11)
• From year-end 2015, non-current assets have increased to NOK 15 610 million from NOK 15 417 million
• From year-end 2015, total receivables have increased to NOK 1 623 million from NOK 1 560 million
• From year-end 2015, cash and cash equivalents have decreased to NOK 1 085 million from NOK 1 464 million
• Total liabilities as per 30th June 2016 were NOK 11 988 million
• The net interest bearing debt as per 30th June 2016 was NOK 9 286 million
• The book equity was NOK 6 330 million, giving a book equity ratio of 34.6 % to total assets as per 30th June 2016
18
Quarterly performance (excl. asset sales)
19
* According to internal Management reporting
0%
5%
10%
15%
20%
25%
30%
35%
40%
-
500
1 000
1 500
2 000
2 500
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
EB
ITD
A m
arg
in
NO
K m
illio
n
Operating income EBITDA EBITDA margin
NOK million Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Operating income 1 384 1 354 1 288 1 225 1 679 1 804 1 871 1 530 1 963 1 904 2 025 1 656 1 962 1 991 1 642 1 406 1 660
EBITDA 470 489 417 329 471 595 550 502 543 552 502 458 515 553 516 456 510
EBITDA margin 34,0% 36,1% 32,4% 26,9% 28,1% 33,0% 29,4% 32,8% 27,7% 29,0% 24,8% 27,7% 26,2% 27,8% 31,4% 32,4% 30,7%
Current assets 2 962 2 704 2 612 3 077 3 319 3 119 3 470 3 247 3 252 2 998 4 223 3 414 3 414 3 674 3 752 2 900 3 010
Non-current assets 16 230 16 056 16 012 16 043 16 344 16 330 16 340 16 012 16 151 16 215 15 796 16 726 16 578 16 447 16 818 17 652 18 206
Total assets 19 192 18 760 18 624 19 120 19 663 19 450 19 810 19 258 19 403 19 213 20 019 20 140 19 992 20 121 20 570 20 552 21 216
Current liabilities 2 495 2 260 1 989 2 000 2 805 2 808 3 167 3 470 3 741 3 607 4 505 4 139 4 577 4 492 3 650 2 991 3 022
Non-current liabilities 11 735 11 439 11 534 12 051 11 862 11 474 11 427 10 126 9 701 9 668 9 402 9 924 9 009 9 988 11 228 11 482 11 864
Equity 4 963 5 061 5 102 5 069 4 996 5 167 5 216 5 662 5 962 5 938 6 112 6 077 6 405 5 641 5 692 6 078 6 330
Total equity and liablilites 19 192 18 760 18 625 19 120 19 663 19 449 19 810 19 258 19 404 19 213 20 019 20 140 19 991 20 121 20 570 20 551 21 216
Debt maturity profile
20
Bond Loan - DOFSUB07
- NOK 1 300 million
- Maturity May 2018
• The figures reflect amortization and balloon payments on outstanding debt
Debt maturity profile, 2016E – 2021E
-
500
1 000
1 500
2 000
2 500
3 000
3 500
2016E 2017E 2018E 2019E 2020E 2021E Thereafter
NO
K m
illio
n
Bond Loan Bank Debt Balloons
Risk mitigating factors
21
Risk mitigating
factors
Global presence provide access to more market opportunities
High back-log provides stable
earnings
Diversified blue-chip customers
reduce counterpart risk
Value added services provide
increased earnings potential
Modern, high-end fleet
provides safe collateral
Strong bank and investor
relationships provide access
to credit
Spare leveraging capacity on existing fleet
Sale of vessels confirms values
Weaker subsea market
Outlook
Challenging fundamentals for subsea activity
23
• Demand
• Volatile oil price
• Continued cost focus by oil companies
• Reduced offshore E&P spending
• Uncertain project timing
• Counterpart risk
• Increased focus on price, technologically
advanced and flexible vessels and
engineering capabilities
• DOF Subsea owns the world’s most
sophisticated fleet and has a global
organization
Challenging fundamentals for subsea activity
24
• Supply
• Over-supply of vessels
• Several vessels in lay-up
• Number of subsea contractors to be reduced
Weaker market
conditions
Reduced demand
Over-
supply
Challenging fundamentals for subsea activity
25
Weak subsea
market and pressure
on margins
Lower IMR activity globally
Lower rig activity and
delayed field development
Reduced E&P
spending
Volatile oil price
Number of niche
subsea players
Improved access to qualified
personnel
Over-supply of subsea vessels
DOF Subsea has mitigated the weaker fundamentals through a global footprint, a diversified
portfolio of clients, strengthened balance sheet and a back-log of NOK 39 billion
Thank you!
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