Seatrium Ltd

Good morning, members of the media, ladies and gentlemen. Thank you all for dialing in. I'm Man Yuan, Head of Investor Relations and Corporate Communications. I will be facilitating this morning's session. Once again, welcome to today's media and analyst briefing by Sembcorp Marine in relation to the group's full year 2022 financial results. We have filed the results with the Singapore Stock Exchange last evening. This morning's briefing is chaired by our President and CEO, Mr Wong Wing San. He is joined by Mr William Goh, Group Finance Director of Sembcorp Marine. Today's discussion will contain forward-looking statements. I would like to draw your attention to the disclaimer statement in our announcements. Without further delay, I would like to pass the session to Mr Wong. Mr Wong, please.

Thank you, Man Yuen. Good morning, everyone. Thank you for joining us at Sembcorp Marine full year 2022 results webcast. We had a busy and productive year in 2022 with the execution of a total of 21 projects of which 12 key projects were completed and delivered to date according to schedule agreed to with our customers. The progressive completion of these projects enable us to free up resources for redeployment to other assisting projects, including our newly-worn new build and conversion solutions. During the year, the group secure contract wins, including repairs and upgrade orders totaling more than $7 billion. William will elaborate further on the new order wins. The group's operational and financial performance improved significantly in full year 2022. I am pleased to report that the EBITDA for second half 2022 turned positive at $12 million. with full year EBITDA of negative S$7,000,000, a 99% improvement against the prior year. Well, let me now turn to the proposed combination with capital O&M. The ordinary resolution for the proposed combination with capital O&M was approved and passed with strong support of 95.28% from our shareholders at the EGM Health on 16 February 2023. On behalf of the Company's Board of Directors, we would like to express our appreciation to our shareholders for supporting the sole resolutions table at the EGM. Thank you. The proposed combination will create a premier global player with deep engineering heritage to offer offshore renewables, new energy and cleaner solutions in O&M sector. The enlarged group is envisaged to unlock synergies from the integration of two established industrial players with anticipated long-term value creation for our stakeholders. It will also strengthen Singapore's leading position as a marine time and an offshore and marine hub. The enlarged group will have the reach, scale and operating platform to capitalize on the global energy transition at the same time to realize economies of scale and be strategically positioned to seize opportunities in the improving industry landscape. As a single organization, the collective workforce of 23,000 will benefit from expanded opportunities for carrier development and growth in the areas of offshore renewables, new energy and cleaner O&M solutions. With a combined net order bulk of $18 billion and over 40 projects, our people will gainfully engage to complete the projects from now to 2026. This year marks the 60th anniversary of Semkot Marine. Over these six decades, the company has taken strategic steps to evolve and transform. from its humble beginning in ship repairs. The company is today internationally recognized as an innovative solutions provider in the offshore, marine and renewable energy sectors. The group invested and developed a state-of-the-art integrated yard at Tuas South Boulevard A major milestone in the company's growth and expansion strategy. The group also diversified its suite of engineering solutions beyond traditional oil and gas to renewable and new energy. with the delivery of its first design, engineering procurement, project management and construction of a platform jacket, substructure and topside, the Dungeon Offshore Wind Farm project for cement. The group has since completed and delivered several other projects for the offshore renewable markets with multiple projects under execution. The transformation strategy, particularly in the last decade, has created an organization with future-ready capabilities and know-how, technological bench strength, and a broad suite of products and solutions. Having vetted the longest down cycle in the O&M industry from 2015 and the unprecedented COVID-19 pandemic, and navigated the energy transition to offshore renewables, the group has emerged more resilient. Together with the current board and management, we have built the company to its current stature and positioned it at the center of the global shift towards a low carbon economy. Today, having successfully delivered all our key projects, built up a sizeable net order book of more than S$7 billion, and our strategic yard capabilities and technological technology benched rank, the group is well positioned for the new board to steward the enlarged group to greater heights. Let me pause here. and pass the session to William, who will do a financial review and discussion of Sembcorp Marine FY 2022 performance. Thank you. William, please.

Thank you, Mr Wong. Once again, a very good morning to everyone for taking time to join us for this morning's results briefing. I'll go through first the key financial highlights for FY 2022. In terms of the top line for revenue, We recorded revenue of $1.95 billion for FY2022 and that is about 5% higher than the previous year From the bottom line standpoint, we have cut our FY22 net loss to $261 million which is a 78% reduction from the prior year As what Mr Wong mentioned earlier, our EBITDA has turned positive for the second half of the year to a positive 12% so that our end FY22 EBITDA is a negative 7 million a 99% improvement from the previous year and overall financial performance is basically underpinned by the successive completions of 12 key projects during the year and this has enabled us to effectively redeploy our resources to the other projects especially those that we have secured recently and just for mention again as I said in the past no projects has been cancelled throughout this entire process let me move on now to the key numbers you see the table there they turn over as I mentioned earlier EBITDA as well and the net loss are the key numbers like to flag up to you and as mentioned earlier the operation financial performance improved significantly through the progressive resolution of COVID-19 challenges enabling the smooth completion of our projects moving on straight away to the next slide in terms of cash flow we're happy to share that net cash generated for operating activities is a very huge improvement from the prior so FY22 operating cash flows generated is 1.039 billion dollars this compared to a negative 589 for the previous year for investing activities mainly capex you will see that is a relatively low 26 million and this again is the result of our ongoing optimization of our maintenance CAPEX as we have shared previously before all new CAPEX are basically put on hold as we ride through this downturn and also embrace the combination with CAPA offshore and marine nevertheless all CAPEX they are necessary to ensure operability as well as safety continues to be executed as required In terms of net cash from financial activities, basically some repayment as well as payment of lease liabilities. So a small 21 million negative. The previous year 964 positive is a result of the price issue. Overall net increase in cash for FY22 is a positive 992 million and we end the year with cash and cash equivalent at $2.1 billion. Let's move on to the next slide. So these are key numbers in terms of the capital and gearing. Shareholder's funds are $3.8 billion. Net debt less the cash is $998 million. The net working capital is negative $301 million and this is basically due to the reclassification of some of our term loans from our long term to our current borrowings because they mature in the course of FY2023. Just to highlight that in terms of net gearing ratio as we have shared recently, it has improved significantly to 0.26 times from 0.49 times last year. Let's move on to the next slide on some of the other aspects of revenue. So this is a breakdown of the various key segments focusing on the table on the right. Floaters is the largest segment with a revenue of $900 million and improvement of 40% from the previous year. The next largest segment is Repairs and Upgrades. of $506 million and a 28% improvement from the previous year. Followed by offshore platform, rigs, specialized shipbuildings and others. You see the various percentage contribution to revenue. I will now move on to each of the segment to give us added color. So I shared floaters revenue increased by 40% year on year. and the projects included here are basically the production solutions the FPSO as well as the FPU or floating production units and we have a combination of both new build as well as conversion solutions Just to highlight those projects that were delivered in the course of the year FY22, the Equinor Johan Carlsberg New Belt FPSO, the Technic Energy Courage New Belt FPSO, the P71 New Belt FPSO to Petrobras and also the Shabuji FPSO conversion. We do have two ongoing projects in the course of 2023 execution. The first is a shell wheel and that's a new built FPU. And of course, our most recent P82 project with Petrobras and other new built FPSOs. Repairs continue to improve in the course of the year. As you may recall, repairs were significantly impacted at the beginning of last year FY22 and also previous year because of COVID-related challenges. But looking at the key numbers here, revenue rose 28% year-on-year from $396 to $506 million. the number of vessels naturally increased in terms of number of vessel service to 221 vessels in the prior year it was 144 vessels of the 221 vessels service 25 were LNG carriers and this is also the largest segment among the various segments within repairs and upgrade and this includes LNG re-liquifaction retrofits as well as BWMS or ballast water management systems. We for now continue to have further upgrades for a third FSRU as well for Carmel and that's one of the key upgrade projects. We do have others in the course of the year as well. Let us move on to the next segment which is on the offshore platform side just to share offshore platforms basically are those fixed platforms whether it's for production solutions or for offshore wind farms revenue here declined 51% year on year basically as more projects were completed in the course of the year therefore compared to previous year revenue was lower I just mentioned again that the projects include fixed production platforms offshore wind farm platforms as well as some of the top sites for gas solutions We have a list of all the projects that were delivered in the course of the year. Four of them, the Horn C2 offshore wind farm, Yandino Formosa offshore wind farm. We have one for Total Energy's fixed production platform for the tidal redevelopment projects, as well as for the Gala Batch 2 wellhead platforms for production as well. For FY 2023, for this segment, the key projects under execution, you have the RWE Renewables for the Sophia offshore wind farm, and we also have the gas top sites for a major energy company in Australia and finally for Bechtel the Pluto Train 2 gas projects A quick mention for RIGS which by the way includes the WTIV or the wind turbine installation basis. Revenues increased slightly to 8% but basically these are the tail end completion of our two drill ship projects, the Transocean Deepwater Atlas as well as Transocean Deepwater Titan. As you know these two drill ships are the most modern and Highest technical specs for the industry and they are used for drilling in the 20k BOP required environment, especially in the Gulf of Mexico. With the delivery of these two drill ships for FY23, the project under execution for now will be the MERS WTIV for this particular segment. Specialized Shipbuilding we basically completed all three of the ropex row on row of fully battery operated ferries and what's ongoing is the final testing and commissioning for the LNG bunker vessel which we target to deliver within the next one to two months We thought it would be helpful to give an overall snapshot summary of the net order book. So looking at the key bullets on the right, the net order book is $6.75 billion as we shared in our press release. They comprise two separate buckets. The first are the major projects of $6.31 billion of projects under execution. The original contract value for these projects is north of $7 billion. Besides the $6.31 billion of major projects, we also have $0.44 billion of ongoing repairs and upgrade projects. To combine the two numbers together, we have the $6.75 billion net order book. As you can see, compared to previous year, it's a very significant improvement in terms of the orders that's being secured. And of this, the In terms of greener solutions, we also have a higher 37% or $2.5 billion that relates to these greener solutions. We have also shared that notwithstanding the higher order book, we continue to see improved visibilities insofar as further orders are concerned. Let's move on to delivery schedule. So, just a very quick recap. In FY22, we delivered short projects. There will be a further two to be delivered in FY23, and a further seven from 24 to 2026. I think that's all for the results, and we'll have time for Q&A now. Thank you.