Disclaimer This presentation should be read in conjunction with Vard - PowerPoint PPT Presentation

Disclaimer This presentation should be read in conjunction with Vard Holdings Limited’s results for the period ended 31 December 2015 in the SGXNet announcement. Financial figures are presented according to SFRS. This presentation may contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. As these statements and financial information reflect our current views concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. You are cautioned not to place undue reliance on these forward looking statements, which are based on the Company’s current view of future events. 29.02.2016 | Page 2

4Q & FY 2015 Results Presentation Vard Holdings Limited 29 February 2016

4Q 2015 key messages  Revenue of NOK 3 320 million, down from NOK 4 500 million in 4Q 2014  EBITDA (before restructuring cost) of NOK 35 million, down from NOK 120 million in 4Q 2014  EBITDA margin (EBITDA before restructuring cost to total operating revenues) of 1.1% (4Q 2014: 2.7%)  Order intake of NOK 955 million; one new vessel contract secured  29 vessels in the order book as at 31 December 2015, of which 18 are VARD designs  Capacity utilization on the decrease due to declining order book; restructuring and cost improvement programs ongoing  New business plan and strategy developed to Hull 830 – OSCV for Solstad during towage to Vard Brattvaag reduce dependency on offshore oil and gas business during the downturn; strong support from major shareholder FINCANTIERI through long-term business opportunities and synergies 29.02.2016 | Page 4

4Q 2015 Business update 29.02.2016 | Page 5

Vessel deliveries New contracts One vessel delivered in 4Q 2015 One new contract secured 4Q 2015 MMA Plover One offshore vessel from Vard Vung Tau (Vietnam) to MMA Offshore for an undisclosed international client Design: VARD 1 08 | Platform Supply Vessel Design: VARD | Delivery: 4Q 2017 Contract value: Undisclosed 29.02.2016 | Page 6

Order book development New order intake during the period (NOK million) Order book value at the end of the period (NOK million) 19 356 16000 20000 15 vessels 17 743 17 031 27 vessels 16 675 14000 15 096 28 vessels 12000 15000 16 vessels 16 vessels 10000 10 230 8000 10000 6000 6 vessels 3 594 4000 5000 4Q 2015: 955 million 9M 2015: 2 639 million 2000 0 0 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 As at 31 December 2015, the Group had 29 vessels in the order book, 18 of which will be of VARD’s own design. Note: Includes firm orders only. Includes variation orders, repair and conversion, and equipment sales 29.02.2016 | Page 7

Order book status Order book as of 31 December 2015 (# of vessels) Type Norway/Romania Brazil Vietnam Total 1 AHTS Under construction Delivered PSV 2018 1 1 OSCV Other AHTS PSV 1 2017 10 10 OSCV 5 2 Other 2 AHTS 1 1 PSV 4 1 2016 18 18 OSCV 5 1 Other 2 3 AHTS 1 PSV 2 3 2015 12 12 OSCV 3 Other 2 1 0 2 4 6 8 10 12 14 16 18 20 29.02.2016 | Page 8

Order book by region and vessel type By region By vessel type Order book Deliveries Order intake Order book Order book Deliveries Order intake Order book Region 30 Sep 2015 4Q 2015 4Q 2015 31 Dec 2015 Vessel type 30 Sep 2015 4Q 2015 4Q 2015 31 Dec 2015 AHTS 3 - - 3 Norway / Romania 18 - 1 19 PSV 7 1 - 6 Brazil 10 - - 8 OSCV 12 - 1 13 Vietnam 3 1 - 2 Other 9 - - 7 Total 31 1 1 29 Total 31 1 1 29 Note: Contracts for two Other vessels for delivery from Brazil terminated in 4Q 2015 and excluded from order book 29.02.2016 | Page 9

Market  Oil prices and OSV fleet utilization at 10-year lows   Global Exploration and Production (E&P) spending Shipowners requesting delivery postponements dropped by ~25% in 2015, and further tightening expected going forward  Elevated counterparty risk  OSV utilization for high-end vessel segments down from historic average of 95% to 75%; oversupply  Banks aiming to reduce offshore exposure situation expected to continue short to medium term due to large orderbook still to be delivered  OSCVs not operating in spot market – utilization drop expected when more vessels come off  In short term, new project opportunities for VARD contracts during 2016-2017 primarily in niche markets and non-core segments  Medium term recovery expected to be driven by 2016-2017 shake-out in OSV segment, with older  Base load utilization of Romanian yards to be vessels being withdrawn from active supply secured by construction of sections of cruise ship  OSCV newbuilding demand driven by IMR market hulls for FINCANTIERI and need for purpose built vessels Source: Cardo Partners 29.02.2016 | Page 10

Operations – Norway  Installation of topside equipment and outfitting in progress on several large and complex OSCV projects – including yard no. 830 (OSCV for Solstad) – largest offshore vessel ever built by VARD  Cost reduction and efficiency improvement programs continue  Temporary layoffs used to buffer effects of periods of lower capacity utilization at all yards  Headcount reduction from 1 797 to 1 657 employees 1 in Norwegian entities during FY 2015 (- 8%)  Aukra yard has started work on first projects in Hull 830 – OSCV for Solstad at Vard Brattvaag aquaculture sector  Vard Electro benefiting from synergies with FINCANTIERI – increasing business volume for cruise and naval projects 1) Net headcount reduction including natural attrition, early retirement and permanent layoffs. Does not include temporary layoffs. 29.02.2016 | Page 11

Operations – Romania  Four hulls delivered from Romania to Norwegian yards during 4Q 2015  Lower yard utilization resulting from declining order book; restructuring and cost reduction programs continue  Headcount reduction from 6 398 to 4 665 employees 1 in Romanian subsidiaries during FY 2015 (- 27%)  Contract received to enlarge FINCANTIERI-owned barge in Tulcea, to enable launching of larger hulls  Technical discussions ongoing for construction of large outfitted sections for cruise ships for Cruise ship hull section under construction at Vard Tulcea, Romania FINCANTIERI 1) Net headcount reduction including natural attrition, early retirement and permanent layoffs. 29.02.2016 | Page 12

Operations – Vietnam  One PSV delivered to MMA Offshore during 4Q 2015, and a second one since the end of the quarter  Work continues on second PSV with contract terminated in early 2015; modifications undertaken to increase market attractiveness  One vessel – OSCV for Farstad – remaining in order book MMA Plover during firefighting tests at Vard Vung Tau 29.02.2016 | Page 13

Operations – Brazil Vard Niterói  Remaining two projects nearing completion – delivery expected in 2Q 2016 Vard Promar  First vessel (LPG carrier for Transpetro) built entirely at Vard Promar delivered in January 2016  Contracts for two LPG carriers for Transpetro terminated in 4Q 2015; cancellation is being disputed by VARD but limited financial impact due Barbosa Lima Sobrinho | 7,000 m 3 Fully Pressurized LPG Carrier for Transpetro to the vessels being in early stages of construction  Legal proceedings against Transpetro initiated to recover cost related to LPG carrier project  Positive development in productivity in critical areas at Vard Promar; recent project progress in line with forecasts – but execution risks remain 29.02.2016 | Page 14

4Q 2015 Key financials 29.02.2016 | Page 15

Revenues, EBITDA and net income Revenues (NOK million) EBITDA (NOK million) 429 12 923 500 14 000 11 143 120 2.7% 12 000 300 4 500 10 000 3 320 309 100 8 000 6 000 (100) -356 8 423 4 000 7 823 35 (300) 1.1% 2 000 -321 0 (500) FY 2014 FY 2015 9M 2014 4Q 2014 9M 2015 4Q 2015 Profit (loss) attributable to equity holders of the Company (NOK million) Profit (loss) for the period (NOK million) 50 600 200 20 30 349 0 400 154 (200) 200 195 (400) 0 -1 122 (600) (200) -520 (800) (400) (1 000) -83 (600) (1 200) -170 -603 (800) (1 400) -1 292 Includes net foreign 9M 2014 4Q 2014 9M 2015 4Q 2015 9M 2014 4Q 2014 9M 2015 4Q 2015 exchange loss of NOK 474 million, of which NOK 380 million are unrealized 29.02.2016 | Page 16