Seatrium Ltd

Ladies and gentlemen, good evening and welcome to SEMCorp Marine full year 2021 results presentation webcast. I'm Man Yuan from SEMCorp Marine Investor Relations and Corporate Communications. Thank you for taking time to join us this Friday evening. May I remind all that some of the statements made on the call today could be forward-looking in nature. A detailed disclaimer in this regard has been included in the press release. On the call today, we have Mr Wong Wing Sun, President and CEO of Semcorp Marine. He is joined by Mr William Goh, Director, Group Finance of Semcorp Marine. Without further delay, I would like to invite Mr Wong to address the meeting. Mr Wong, please. Thank you, Man Yuen.

Good evening, everyone. Thank you for joining us at SEMCorp Marine full year 2021 results webcast. The fact that you are here at this webcast with management of SEMCorp Marine, I hope it means you are well and safe against the COVID-19 virus. Because of the pandemic, I believe you would agree with me that the past two years have been among the most challenging years in the recent memory. The COVID-19 pandemic persisted and we continue to face serious challenges in 2021. no one and no organisation was unaffected. Likewise, Semcon Marine encountered execution challenges associated with the pandemic during the year. We have shared previously how our projects under execution faced shortages of skilled workers and supply chain constraints, which resulted in significant cost overruns. Despite these operational challenges, we completed four key projects and successfully delivered them to our customers. While we managed to reduce our second half losses compared to the first half, our financial results for the full year reflected the continuing impact of the pandemic, which accounted for the significantly higher provisions for the manpower and other costs to complete our projects. While this pandemic has been challenging, It has given us the impetus to find solutions, new way to approach issues and take concrete steps to address each evolving challenge. We took active measures, work in even tighter cooperation with our customers and focus a new rhythm to manage the pandemic and our operations. The labour shortage situation also stabilised during the fourth quarter to enable smoother execution of projects. Samcot Marine remains committed to completing the remaining projects for our customers even as we actively work on replenishing our order book. You have seen the top and bottom line and the provisions of $839 million for the year. William Goh, our Growth Finance Director, will provide more details on our financial performance shortly. He will also share our cash flow situation and liquidity management. However, allow me to just say a few words on the rights issue. In June last year, we issued an announcement on our $1.5 billion rights issue aimed at addressing our immediate funding needs. The rights issue was successfully completed in September 2021. On behalf of SEMCorp Marine Management and Board, I would like to convey our appreciation to all our shareholders for their support. Firstly, for the rights issue resolution at the EGM and then the subscription and the access applications. Thank you. The enhanced liquidity position through the recapitalization has enabled the group to meet its ongoing operational funding requirements and fulfill its assisting commitments. A strengthened balance sheet will support our ongoing strategic expansion into the high growth renewables and clean energy segments. I shall elaborate on this shortly. Importantly, it means greater financial agility for SEMCODE Marine to seize opportunities and to respond to evolving market dynamics, to bid competitively for high-value and large-scale projects. We continue to keep our sights on our long-term strategic goals and pursuit. Let me now turn to a discussion of our operations. Despite extreme operational challenges encountered, SEMCOM Marine managed to complete a number of projects successfully in FY 2021 till today, including four key projects, namely fabrication of six production topside, including wellheads and risers, and four bridges for deployment to total energies Tyra Redevelopment Field. Construction and integration of Vito Regional Production Facility, RPF, top sites and living quarters with its four column floating production unit, FPU HAL, for Shell Offshore Inc. for deployment to the Gulf of Mexico in the United States. This landmark project achieved a first for the group. A mega-block integration of WITO's RPF's topside and living quarters with the four-column FPU hull in a single lift with a pair of state-of-the-art Goliath cranes with a 30,000 tonnes combined lifting capacity at SEMCOM Marine's Tuas Boulevard Yard. and EPC Engineering Procurement and Construction New Build at PSO, the Johan Casper complete with hull and living quarters to Equinor slated for the deployment at the Johan Casper Field in the Barents Sea, Norway. And fabrication of 15 wind turbine jacket foundations for Yandino Formosa II offshore wind farm. Five Jackets Foundation have since sealed away with the remaining awaiting clients' availability. Samcock Marine also completed major conversions for several offshore gas facilities. This includes a FSRU conversion for the 125 cubic Kamo LNGT Powership Africa for Kamo and FSU conversion of the Gaslok Singapore for Gaslok LNG. During the year, the group also delivered on some 90 projects requiring repair, damage repair, upgrade, refit, maintenance, as well as decontamination involving APSO, FSO, FSRU, FSU, LNG plant and carrier, cruise ship, naval ship, heavy lift carrier, ballast water management system and scrubber. For the ongoing project execution, With the progressive completion of this project, the group has freed up resources to focus on the remaining projects and to take on new projects. In September 2021, the group marked the commencement of the construction of the offshore converter platform for the Sofia offshore wind farm with a strike steel ceremony at ICIA in Indonesia. In August 2021, the group delivered the offshore substation and reactive compensation station topside to AllStat. Following the successful installation of the facility at Honsi II offshore wind farm in October 2021, offshore hookup and commissioning of the topside had commenced in November 2021. At the end of the year, The group has a total of 16 projects under execution, with 12 scheduled for completion in 2022 and the remaining will progressively be completed from 2023 to 2025. For other notable projects, SEMCorp Marine through LMG Marine has secured a contract to design the world's first green ammonia field tanker. The group is also working with its partners on a conceptual design of an ABS approved ammonia bunkering vessel. Semco Marine is currently also constructing a 12,000 cubic LNG bunkering vessel. The group is jointly developing hydrogen as a marine field with its partner and collaborating with two other partners to explore the feasibility of developing a groundbreaking sustainable ocean data center. Now I would like to go to the Net Order Book and new contracts. The Group Net Order Book currently stands at $1.3 billion. This consists of $1.1 billion of projects under execution with a total original contract sum of $6.1 billion and $0.2 billion of ongoing repairs and upgrade projects. Approximately 43% of the group's net order bulk are for renewables and other cleaner and greener solutions sectors. The group is cognizant that new orders' wins is critical to support its future performance and remain focused on clinching new contracts to replenish its order book. The improving industrial outlook and the back of the rising oil price provide impetus for oil and gas companies to review plans for the resumption of deferred activities, final investment decisions, and capital expenditure. There are also improved prospects and opportunities associated with the global transition towards cleaner energy and sustainable solutions. The Group continues to actively attend to emerging tender opportunities in the renewable energy and gas solution segment. The group is also actively pursuing multiple projects covering FPSOs, FSOs and FPUs with tenders in progress. The group has commenced work on the FIT contract awarded by Altera in September 2021 for the development of an FPSO facility for the Dorado FPSO project. The group remains hopeful in securing the EPC contract for the project. Negotiations are in progress with the Brazilian Navy on the construction of the Antarctic Support Vessel , which is part of the Brazilian Navy Research Vessel project, with contract award expected in the first half of 2022. To date, the group's repair and upgrade business has secured advance orders for the repair and upgrade of 13 LNG carriers and refit of 3 cruise vessels. The group is also working on active enquiries of FPSO and FSO upgrading projects. Samcot Marine has also secured green technology retrofit solutions. 10 projects relating to the installation of ballast water management system and scrubber, and identified opportunities in the sustainable repair and upgrading, such as air lubrication system and ammonia-based fuel solutions. Many of the projects the group is working on is expected to contribute to the decarbonization in the maritime industry. Some of Semcorp Marine's past projects have won international accolades. They include Ultramarine, a technologically advanced ice-class polar expedition cruise vessel, has won the Best Medium Cruise Ship Award at the Workboat World Awards 2021. and MF Hydra, the world's first zero-emission liquid hydrogen-powered ropex ferry, has similarly won an award at the Work Boat Awards 2021 for the Best Medium Ropex Award. It has also been conferred the prestigious Ship of the Year Award by Ship Rivian, a 50-year-old Nordic Marine Time Magazine publication house. Both vessels were designed by the group subsidiary LMG Marine and are recognized for their environmentally sustainable design features. Let me now address the non-binding MOU the group has entered into with Keppel Corporation Limited in June 2021 to explore the potential combination of SAMCorp Marine and KOM Keppel Offshore Marine. We would like to update that the due diligence process is ongoing. The Group continues to work diligently towards a definitive agreement in the first quarter of 2022. In closing, allow me to reiterate, the Group will need to complete and deliver a total of 12 existing projects in FY2022 and provisions for cost to complete these projects have been already been made in the prior year. The Group is also on track to conclude negotiations on project completion terms with its customer. Bearing any unforeseen event, this should contribute positively to the Group's result in the first half of 2022. The industry outlook for the oil and gas, renewables and other green solutions continues to improve. It is important for the Group to convert its order pipeline into firm contracts on a timely basis in FY2022. Taking these factors into account, the Group expects its financial performance in FY22 to be significantly better than FY2021. Now let me pass the discussion to William Goh, our Group Finance Director, who will share more details on our FY 2021 financial performance. Thank you. William, please.

Thank you, Mr Wong. Let us go through quickly the numbers. So for Group Revenue for the year, Group Revenue is $1.862 billion. which is an increase of 23% from the previous year net loss before provisions was $332 million which is a reduction of 24% from prior year factoring of course the provisions of $839 million on the post tax basis for this year net loss for this year is $1.171 billion There has been no cancellation of any existing projects during the year and as at the end of 31st December 2021 Net Order Book stands at $1.3 billion Just to give a bit more colour on the 839 provisions that we made for the entire year The provisions for costs to be incurred especially for completing the projects the additional labour and other costs comes up to be $696 million. We also cater for a couple of our yards reinstatement costs, a total of $75 million. Asset impairment loss and project stock write-down of $68 million. In total, all three come to $839 million. Going to the traditional metrics, we'll turn over first on the second half performance turnover is $1.018 billion for second half 2021 this compared with $604 million in second half of 2020 and improvement of 69% EBITDA is a negative 416 compared to a negative 308 an increase of 35% the loss before tax is $527 million compared with $450 million loss last year, an increase of 17%. Net loss for the second half of the year comes in at $523 million compared with $319 million last year, an increase of 34%. These numbers take into consideration the significant provisions that we made this year. If we were to exclude these provisions, the key numbers would show for gross loss in second half of the year at $137 million, compared to last year's second half of $262 million, it is an improvement of 48%. At the EBITDA level, the second half this year is $49 million loss compared to $146 million loss last year and improvement of 66%. At the net loss level, second half this year is $156 million compared with last year of $246 million loss and improvement of 37%. Let us see the equivalent numbers on a full year's basis. Turnover for the full year is $1.86 billion compared with $1.51 billion last year and improvement of 23%. At the net loss level is $1.171 billion compared to $583 billion. There is a significant increase there. Again, as we exclude these material provisions, for the whole year, the gross loss is $289 million. compared with $456 million last year, it is an improvement of 37%. EBITDA is a negative 101 compared with last year of 218, an improvement of 54%. At the net loss level for the entire year, net loss is $332 million compared with $439 million last year, an improvement of 24%. Looking at our capital structure and our key metrics on the liquidity side, shareholders' funds post our rights issue stands at $4 billion compared with $3.67 billion last year, an increase of 9%. At the net debt level, net debt at the end of FY21 stands at $1.97 billion compared with $2.78 billion last year, a reduction of 29%. Net working capital is a positive of $493 million compared with a negative net working capital of $259 million last year. The net gearing ratio basis at the end of this year stands at 0.49 times, a significant reduction from last year's 0.75 times arising largely from the rights issue. Let's move on to the other numbers in the next slide. In terms of cash flow, the cash flow used in operating activities this year is a negative 589. This is a reduction of 21% compared to the $750 million last year. Net cash used in investing activities, mainly CAPEX, is $44 million this year compared with $88 million last year. a reduction of 50%, again reflecting the prudent application of our limited resources to CAPEX where we have suspended all new CAPEX and focus only on maintenance CAPEX to ensure safety and operability of our YAT facilities. In terms of net cash flow for financing activities mainly for net proceeds from the rights issue offset by net repayment of borrowings it comes in this year at $964 million compared with $1.2 billion last year So net increase in cash for FY21 comes in at an increase of $331 million compared with last year's increase of $387 million net cash balance at the end of the year stands at $1.1 billion compared with $772 million last year an increase of 43% moving on to the business side of things in terms of the revenue by segments as you can see the largest segment is from the floater segment mainly production floater solution which contributes 34% or $643 million. This is an increase of 24% from last year's $517 million. The second largest segment is offshore platforms and this is mainly the renewable energy offshore wind substation platforms and modules. This comes in at $574 million, an increase of 85% compared to the $310 million last year. The third largest segment is our Repairs and Upgrades segment, $396 million this year, a slight reduction from the $425 million last year. The other segment is from our Advanced Drilling Rig Solutions of 9% of our total revenue, $160 million, relatively flat compared to last year's $156 million. Moving on to a bit more understanding of each of these key segments. Looking offshore platform, as you mentioned, it includes our renewable solution mainly for offshore wind. The increase of 85% is largely contributed by three key projects. Firstly, the Orsted Horn C2 Offshore Wind Farm, the Reactive Compensation Station top sites, the Yandeno Formosa II Offshore Wind Farm projects, and thirdly the RWE Renewables Sofia Offshore Wind Farm. These are the three key projects that contributed largely to the revenue. Moving on to the next segment, Repairs and Upgrades. The revenue from Repairs and Upgrades declined slightly by 7% compared to the corresponding period last year. The number of vessels was slightly reduced and the overall lower value per vessel was experienced as well This is very much reflected by the increase in COVID-19 restrictions where many of our customers' vessels could not come in because once they come in they end up having to go through a lot of the COVID-19 measures for the right safety reasons and because of that they may be compelled to consider other locations Moving on to the floaters, which is largely production floaters, FPSOs and FPUs. Floaters revenue, as mentioned earlier, rose by 24% to $643 million for FY 2021. The key projects that contributed to this revenue is the Johan Casberg New Build FPSO, the Shell Vito New Build FPU, as well as ongoing projects like the Karish New Build FPSO, The second shell FPU, the shell wheel The P71 new build FPSO, which was also repurposed by the end customer And also Shapuji FPSO conversion For rig building site, it's basically our advanced drilling solution for Transocean The two Transocean drill ships that contributed to a similar revenue for both years of about $160 million Let's move on to the next slide. This is the last segment, a specialized shipbuilding segment where we focus on green solutions, green vessels. slight decline or significant decline rather in terms of revenue for the year as the project under execution reaches most of their final completion stages whereby revenue recognition is reduced the key projects under execution firstly the three units of fully battery operated ropex or row-on-row passenger ferries as well as a 12 000 cubic meters LNG bunker vessels ZOOMING BACK UP TO THE OVERALL ORDER BOOK THE NET ORDER BOOK ENDS THE YEAR AT $1.3 BILLION WITHIN THIS $1.1 BILLION COMPRISED OF PROJECTS UNDER EXECUTION AND $0.2 BILLION COMPRISED OF ONGOING REPAIRS AND UPGRADES PROJECTS AS CEO HAS MENTIONED EARLIER AMONG THE KEY PROJECTS SECURED THIS YEAR INCLUDE THE SOFIA high voltage direct current electrical system offshore substations the B71 FPSO as well as a Pluto train for LNG overall we will guide that the orders visibility has continued to improve and we are focus on converting a few of our active pipeline development projects into contract awards in the course of this year. In terms of the project delivery for our 16 projects under execution, as you can see for 2022, we have a total of 12 projects to be delivered. Just to mention that of these 12 projects, as of now in February, 3 have already been completed. The Formosa 2 project, the Tyre Wellhead project as well as the Johan Carlsberg project, these 3 have been completed and we work on the other 9 in the course of this year. The remaining projects, 2 in 2023 and 1 each in 2024 and 2025. That is all we have for today's details on the financial performance. Thank you.