Seatrium Ltd

Good morning. Welcome to CTREM Limited first half 2023 results presentation. Today we have with us Mr Chris Ong, Chief Executive Officer and Mr Paul Tan, Acting Group Finance Director. Before we begin, a general disclaimer please. Thank you for the kind attention. We will now have our CEO, Mr Ong, please.

Good morning, everyone. Thank you for joining us at Citrum Limited's first half 2023 results webcast. Since the completion of the combination in February this year, Citrum has made notable progress in the delivery of our pipeline of projects. The continued build-up of our order book is also a testament to Citrum's ambition for sustainable growth as a premier global player, leveraging on our combined competencies and capabilities to meet our customers' needs. Through our suite of products spanning across oil and gas production facilities, floating liquefied natural gas solutions, offshore renewables and cleaner green solutions, Citrum is building future-ready capabilities by leveraging our engineering knowledge and solutions to support the industry's energy transition towards a sustainable operative environment. The group secured $4.3 billion of new orders in first half 2023, bringing our net order book to over $19 billion. with deliveries till 2030. Renewables and cleaner green solution comprise approximately 40% of this net order book. Supported by the delivery of four major projects during this period, the group recorded a revenue of $2.9 billion for first half 2023, compared to $1.1 billion during the corresponding period last year. This increase in revenue was attributed to the combination's consolidation of projects and their continued operational milestones and deliveries. Our strong operational performance has enabled the group to achieve a significantly improved EBITDA of $258 million before provisions. Even after accounting for provisions for contracts and merger expenses, the group still achieved a positive EBITDA of $27 million. We will continue to focus on our project management and executions in order to further strengthen our EBITDA performance. While the group still reported a net loss in first half 2023, key measures are being worked on to steer the group back to net profitability. This includes the streamlining of the group cost structure and completion of the ongoing capital restructuring. We will closely monitor the working capital needs of the Group and will continue to adopt a disciplined approach to cash flow as well as liquidity management. This will be further addressed in the financial performance segment of this briefing. We have had a busy start to 2023. with successive deliveries of four major projects in first half 2023 we delivered the third zero emission full battery operated ropex ferry designed and built for nolak third dual fuel new build lng powered trailing suction hopper dredger for van oort second of the two lng powered container ship for pesha hawaii fpso modification and upgrade for bw offshore Seatrum continues to demonstrate our market leadership in repair and upgrade segment, with 144 vessels serviced at our network of yards in first half 2023, compared with 96 projects in the same period last year. This includes 28 LNG carrier refits, 14 cruise ship repair upgrades, as well as conversion and major refits of offshore projects such as FSRUs and FPSOs. The Group currently has more than 25 projects under execution. I will highlight some of the key projects. Shell Whale FPU We recently completed the integration of a mega topside with Shell Wheel FPU hull in a single lift using our game-changing 30,000 tonne Goliath crane at Tuas Boulevard Yard in second quarter 2023. This project will also benefit from the synergies and experience from earlier Shell Vito FPU project. It also demonstrates how the yard's enormous lifting capacity has become a winning differentiator for Citrum's project executions. Petrobras EPC-FPSOs A series of EPC-FPSO new-build projects P78, P80, P82 and P83 are in various phases of construction for Petrobras, for Buzio's pre-slot development in offshore Brazil. These are being executed across different facilities in Singapore and Brazil, made only possible through harnessing Citrum's global network of yards. GIMI FLNG GIMI, the second of the three EPC FLNG conversions for GOLA LNG, is undergoing final phase of commissioning and testing. We've scheduled completion in third quarter 2023 for deployment in offshore Mauritania and Senegal RWE Renewable HVDC Offshore Converter Platform Fabrication is on track for RWE Renewable's 1.4 GW HVDC Offshore Converter Platform for Sophia Offshore Wind Farm in UK North Sea Sophia is slated to be one of the largest wind farm in the world when completed. Doe Wind 5, Tenet's offshore HVDC converter station for Doe Wind 5 offshore wind farm is on track for sale away in third quarter 2023 for the next phase of works prior to installation in the German sector of the North Sea. Two WTIVs for the US market Citrum is constructing two wind turbine installation vessels for Dominion Energy and MERS supply service to service the US market. We expect continued strong execution with successive project deliveries and good progression on these existing projects. In fact, we have 11 more major projects scheduled for completion by the end of this year. The new orders of $4.3 billion secured in first half 2023 include a landmark win from Tenet to construct three 2GW HVDC offshore converter platforms. This will be the biggest and the most powerful of their kind in the industry to serve Tenet's three offshore wind farm projects off the coast of Netherlands. A $500 million contract for two offshore wind farm substations for Empire Offshore Wind for installation in the east coast of the U.S. to power more than 1 million homes in New York and support U.S. energy transition goals An EPCI contract win from Chevron for its LNG fleet modification Innovation and technology are enablers of our industry's commitment towards decarbonisation and a sustainable operating environment. On this front, Citrum continues to advance our technologies and new product development through strategic collaboration and partnerships. In a tie-up with Technology Centre for Offshore and Marine Singapore, the Citrum TECOM Ocean Lab has been established to advance the design and operational performance of smart ocean system and infrastructure. This also saw a master research collaboration agreement signed on 27 April 2023. Citrum and ABS have collaborated to advance pioneering digital transformation with smart yard initiatives. In fact, Citrum Mobile Wearable Personal Device Monitoring System has received product design assessment approval from ABS in April 2023. Our wholly owned subsidiary LNG Marine has entered into a joint development project with partners GTT, Total Energies and Brewer Veritas to develop a 150,000 cubic meter liquid hydrogen carrier concept design. This is to pave the way for safe and efficient transport of hydrogen at sea for maritime decarbonisation. In the area of sustainability, the group's effort to put sustainability in the forefront of our business are outlined by our collective affirmation of commitment to ESG. We have in place a dedicated Corporate Social Responsibility Committee established to support the board and the management on ESG matters. Honing in on our execution centres, the drive for sustainable yard operation has resulted in the adoption of renewable energy sources to power Citrum's yards in Singapore, the Philippines, China and Brazil. We have also gained traction in this area from a financing perspective. The group has secured green trade finance facilities for bankers guarantee worth $1.1 billion to finance our sustainability efforts. We will continue on our sustainability journey in order not only to do well for our stakeholders, but also to do good for the community and environment. In the face of our rapidly evolving industry, we continue to take steps to position Citrum at the centre of global energy transition to a low-carbon economy. Amid the ongoing energy transition and heightened concerns for energy security, the industry outlook for oil and gas, offshore renewables and other green solutions continues to improve and strengthen. In particular, the prospects for offshore wind-related orders will continue to be driven by Europe and the US needs to meet the capacity targets by 2040. These targets are likely to be accelerated due to the above-mentioned increasing momentum of energy transition and governmental goals of net zero emissions. Writing on these prospects, Citrum is working on multiple tender opportunities and endeavours. To strategically convert this into firm, quality contracts, we anticipate operational and financial performance to continue to improve in tandem. Since the kick-off of our Citrum brand launch in March, The group continues on our drive to engage all our stakeholders on our new corporate identity and brand promise. As I've covered during the first quarter 2023 business update, Citrum's post-merger implementation plan are being executed, including a focus on unlocking synergies to create long-term value for the future. We are on track on our transformation journey. with oversight through a dedicated board committee and transformation team. The organisation's capital structure and strategy reviews are also both underway and are expected to be completed by end 2023. Let me now pass the discussion to Paul Tan, our Group Finance Director, who will share more details on our first half 2023 financial performance. Thank you.

Thank you, Chris, and good morning to all. Before I take you through the Group's financial performance, I would like to highlight that the financial results reflect the completion of the combination with Kepa Offshore and Marine, now known as Citrim Offshore and Marine, on 28 February 2023. For the first half of 2023, The group achieved a positive EBITDA of $27 million. However, if we stripped out the provision for contracts and merger expenses, EBITDA will be $258 million. Both this compared favourably with the negative EBITDA of $19 million for the first half of 2022. The group's revenue was $2.9 billion, representing a significant 164% increase year-on-year. This was due to the consolidation of projects following the completion of the combination, strong operational execution, achievement of production milestones, as well as initial contribution from new projects. Free cash flow free cash outflow was $173 million compared to free cash inflow of $297 million in the corresponding period in 2022. Higher receivables, purchases of inventories and materials for contracts resulted in the cash outflow. There were four projects deliveries compared to seven projects deliveries in the first half of 2022. Net gearing was 0.17 times on 30 June compared to 0.26 times on 31 December 2022. The decrease was due to higher equity because of shares issued for the acquisition of Citrum Offshore & Marine. Net loss was higher year-on-year at $264 million compared to $143 million. in the first half of 2022. Due to the provision for contracts and merger expenses, higher net finance costs and tax expenses. Excluding the provision for contracts and merger expenses, net was an improved $33 million. Net asset value per share was $0.12 and net tangible assets per share was $0.06. This is because of the goodwill on acquisition of Citrum of Schwanbury. To date, the group has secured new contracts of $4.3 billion, primarily from Cleaner Green Solutions. Our net order book remains robust at $19.7 billion. with deliveries extending into 2030. For the first half of 2023, the group revenue increased to $2.9 billion compared to $1.1 billion in the same period last year. However, losses were higher because of provision for contracts and merger expenses. The group result was also impacted by the higher depreciation and amortization of intangibles of $200 million in the half year compared to $96 million in the first half of 2022. Consequently, the Group registered a higher net loss of $264 million. The Group expects to continue to report a net loss for the full financial year 2023. Shareholder's funds increased significantly from $3.8 billion at the end of last year to $8.2 billion at the end of June 2023. This is attributable to new shares issued to Capital Corp as consideration for the acquisition of Citium of Schwanbury. The Group's net debt increased to $1.4 billion on 30 June 2023 as borrowing increase to execute the order book. Despite the higher net debt, net gearing ratio improves to 0.17 times. This is due to the higher equity base. On 30 June 2023, we recorded a negative net working capital of $1.45 billion. However, if we take into consideration balances such as advances, prepayment and contract liabilities that are not expected to realize in the next 12 months, the group's negative working capital lowered to $532 million. The negative working capital was due to reclassification of loans to short-term as they become due in the next 12 months. We plan to refinance the loan of the group with longer term arrangements. We are in discussion with banks on refinancing the loans. We continue to adopt a disciplined approach to cash flow and liquidity management. Barring unforeseen developments, we believe we have sufficient debt head rooms and with existing facilities, and with existing facilities and continued support of our bankers and bondholders. We will be able to execute our secured orders and meet our liquidity needs. This slide shows our free cash flow which I have explained earlier. Gross debt on 30th June was $3.7 billion and cash and cash equivalent was $2.3 billion. We have just announced the utilization of $200 million of our 2021 rights issue proceeds. The balance from the rights issue now is approximately $400 million. The group will continue to be prudent in its fund management and will manage towards the right mix of borrowings. I will now hand over the webcast to Chris for the question and answer session. Thank you.