Subsea 7 S.A.

Welcome, everyone. With me on the call today are John Evans, our CEO, and Mark Foley, our CFO. The results press release is available to download on our website, along with the presentation slides that we'll be referring to during today's call. May I remind you that this call includes forward-looking statements that reflect our current views and are subject to risks, uncertainties, and assumptions. Similar wording is also included in our press release. I'll now turn the call over to John.

Thank you, Catherine, and good introductory remarks before passing over to Mark to cover the financial results. Turning to slide three, 2022 was a year of strong momentum for Subsea 7. The increase in tendering activity that we'd experienced a year ago translated into the highest level of water intake we've seen since 2013 at over $7 billion. This resulted in a backlog of $9 billion, up 25% year on year. We have good visibility on revenue in 2023 and improved visibility on 2024 and 2025. As the year unfolded and vessel availability became tighter, new awards began to reflect improved pricing. This underpins our confidence that EBITDA margins will return to a through cycle range of 15% to 20% over the long term. During the year, we made good progress in our strategies for both the subsea and wind businesses, which I'll recap later. Turn to slide four for an update on our progress on our largest projects in the fourth quarter. In Turkey, the Fast Track Sakarya project has reached 89% progress, up from 73% in Q3. Seven Arctic, Seven Oceanic, and Seven Pegasus were active throughout the quarter, and the project is nearing completion in Q1 2023. Sangamar reached 72% completion as SEM Vega and SEM Sisters continued pipeway in Senegal. In Brazil, we began operations for Bacalhau at the Uruguay school base and the South Pacific commenced offshore operations. Procurement continued for Meru 3. Also in sub-scene conventional, our major vessels in the Gulf of Mexico, and they worked on the high wind tap and floating wind project in Norway. In renewables, we had installed 93 foundations and more than 50% of cables for the Sea Green project by the end of December. This has increased to 105 foundations installed as of today, allowing us to demobilize our marshland yard in Scotland. We remain on track to complete the work in the first half of this year. Finally, we continued offshore activities on Dogger Bank A and B with the seaway strational and reached 33% completion. The vessel left the field for the winter season in early December as planned and will return this year to continue the offshore phase. Turning to slide 5, 2022 saw the highest order intake since 2013 and a book-to-bill ratio of 1.4. The recovery in the market is illustrated on slide six, where you can see the momentum in our order intake and backlog. With an industry downturn followed immediately by the disruption of the COVID pandemic, the last cyclical downturn was prolonged, but the recovery is now well underway. On slide seven, we break down the backlog by year of execution. Our visibility on the year ahead is at a similar level to prior years. was the visibility for year two and year three has improved markedly as vessel availability tightened and clients began booking capacity well in advance to secure their project timelines. Turning to slide eight, you can see our historical group margins. We have seen a strong improvement in the margins on the projects awarded during 2022 that sit in our backlog today. These projects will be executed in the coming three years and will gradually drive margins back to the through cycle range of 15% to 20%. And now I'll pass over to Mark to run through the financial results in more detail.

Thank you, John, and good afternoon, everyone. I'll begin the financial performance review with some details of group and business unit performance in the year before returning to the group cash flow guidance for 2023, and some comments on shareholder returns. Slide nine summarizes the full year performance of the group. As John has already discussed, we delivered strong order intake and backlog growth driven by both new awards of $5.3 billion and by variation orders and escalations, which together represented $1.8 billion, or 26% of order intake. Group revenue increased moderately to $5.1 billion as we continue to execute large projects in subsea and fixed offshore wind. Adjusted EBITDA of $559 million was up 7% compared with the prior year, and the margin increased 49 basis points to 10.9% from 10.4%, reflecting steady progress on major projects. A high effective tax rate due to a shift in operational profitability towards higher tax jurisdictions and the impact of irrecoverable withholding taxes negatively impacted net income, which was flat year on year at $36 million. I will now discuss the drivers for the group performance in the next few slides. Slide 10 presents the key metrics for subsea and conventional. Order intake was $6.2 billion, equating to a book-to-bill of 1.6 times, and resulting in a backlog growth of 37% to $8.1 billion. Key contracts included Yggdrasil, part of the Aker BP Awards in December in Norway, Buzios 8 in Brazil, Cipra and Shenandoah in the Gulf of Mexico, Gas to Power in Guyana, and Clubs 3 in Angola. Revenue was $3.9 billion, up 6% year-on-year, reflecting good progress on the Fast Track Sakaria project, Sangamah, Bacalao, as well as our other large EPCI projects. Adjusted EBITDA was $532 million, with a margin of 13.6%, up slightly from the prior year. This reflects a continued solid operational performance on projects when it reduced margins during the downturn. Selected renewables performance metrics are shown in slide 11. Order intake was around $800 million, taking the backlog to $800 million. Seaway 7 has been awarded preferred supplier status on several projects, and these should rebuild the backlog over the coming months. Revenue was $1.1 billion, down 11% year-on-year, mainly reflecting activity on the Sea Green project. Adjusted EBITDA was $5 million, flat year-on-year, resulting in a break-even adjusted EBITDA margin. This week, performance reflected challenges on the now-completed Formosa 2 project, and the cableway scope of Holland's exclusive. However, the adjusted EBITDA margin improved in the fourth quarter to 12.9%. On slide 12, we revisit our cost histogram that shows our costs segmented into four categories. 2019 and 2020 reflect the impact of the industry downturn, followed by the COVID-19 pandemic and associated global economic slowdown. Since then, costs have trended upwards in line with the industry recovery. Direct project costs are a function of the volume, mix, and phasing of our activities and the pricing environment for procurement. In 2020, despite high inflation in the global economy, our procurement costs remained stable at $2.9 billion, reflecting the phasing of major projects and the back-to-back contracts with our suppliers that lock in prices at the time of initial contract award. Our people costs increased to approximately $1.2 billion in 2022 as we expanded our engineering and project teams to address the continued increase in industry activity. Vessel and other costs increased to approximately $500 million. We ended the year with 36 vessels with the addition of chartered vessels including IRM and a heavy transportation vessel. Slide 13 shows the cash flow waterfall for the year. Net cash generated from operating activities was $486 million, including a modest $27 million favourable movement in working capital. The working capital outcome was better into 2023, as well as management's further efforts to optimize cash. Cash conversion, measuring the conversions that EBITDA into adjusted operating cash, was 1.1 times. Net cash used in investing activities was $220 million, mainly attributable to purchases of property, plant, and equipment, including vessel dry docks and upgrades. This fell below a prior guidance of $420 to $440 million, as stage gate payments in relation to the construction of Seaway Alpha Lift and Seaway Ventus were deferred into 2023. Free cash flow in the period was $255 million. Net cash used in financing activities. This included $111 million of lease liability payments, mainly related to chartered vessels. Return to shareholders of $78 million in the form of the regular dividend of $32 million and $46 million partial completion of our $70 million share repurchase program. The remaining $24 million will be returned to shareholders payment in 2023. At the end of the year, cash and cash equivalents was $646 million and net cash was $33 million, which included lease liabilities of $257 million. The group's liquidity included $1 billion of committed undrawn borrowing facilities at year end. Slide 14 shows our guidance for the full year and I'll make some comments regarding shareholder returns. Revenue and adjusted EBITDA are expected to be higher than 2022, while net operating income is expected to be in line with last year. Net finance cost is expected to be between 45 and 55 million dollars. This reflects the elevated including the new build wind vessels, the SLB joint venture, and working capital commitments, which is amplified by the notable spike in borrowing reference rates over the last 12 months. Capital expenditure is expected to fall within the range of $625 to $650 million. As I mentioned on the prior slide, this is higher than the prior 2023 capital expenditure guidance, due to deferral of some payments relating to Seaway Alpha Lift and Seaway Ventus. There is no change in our current view of the capital expenditure required for these two vessels. Lastly, the board shares management's confidence on the outlook for the group and, as such, will propose a four-nought per share dividend at the AGM on the 18th of April, including yield based on yesterday's closing share price of £135 or a 4.5% dividend yield based on the 12 months volume weighted average share price of £90. I will now pass you back to John.