EX-99.2 3 dex992.htm EARNINGS PRESENTATION Earnings Presentation
Earnings Presentation
Second Quarter and Half Year 2011
August 10, 2011
12:00 noon UK time

2
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10-Aug-11
Forward-looking statements
Certain
statements
made
in
this
announcement
may
include
“forward-looking
statements”
within
the
meaning
of
Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934.  These statements
may
be
identified
by
the
use
of
words
like
“anticipate,”
“believe,”
“estimate,”
“expect,”
“intend,”
“may,”
“plan,”
“forecast”, “project,”
“will,”
“should,”
“seek,”
and similar expressions. These statements include, but are not limited
to, statements as to the approximate value of the contract awards and the scope and location of our work
thereunder, statements as to the date of commencement and completion of operations of contracts, expectations
as to the Group’s performance in 2011, statements as to worldwide activity levels and order momentum,
statements contained in the "Outlook" section, including the anticipated activity levels in the Conventional and
SURF markets in West Africa, the anticipation that SURF contracts in Australia will come to market and the timing
of the offshore installation phase of such projects, the expected pricing environment in the North Sea, activity
levels in the Gulf of Mexico, the Group’s ability to benefit from the improving market and the Group’s ability to
capture growth opportunities, anticipated opportunities in Brazil, challenges with respect to the availability of
engineering and project resources in the industry and the Group’s position and ability to face this challenge and the
Group’s ability to deliver profitable growth, statements as to the expected accounting treatment for the Sonamet
investment, statements as to the expected date of operational delivery of Seven Borealis, expectations regarding
our
backlog
and
the
progress
of
the
integration
of
Subsea
7
S.A.
and
Subsea
7
Inc..
The
forward-looking
statements reflect our current views and assumptions and are subject to risks and uncertainties. The following
factors, and others which are discussed in our public filings and submissions with the U.S. Securities and Exchange
Commission, are among those that may cause actual and future results and trends to differ materially from our
forward-looking statements: actions by regulatory authorities or other third parties; unanticipated costs and
difficulties related to the integration of Subsea 7 S.A. and Subsea 7 Inc. and our ability to achieve benefits
therefrom; unanticipated delays, costs and difficulties related to the combination transaction, including satisfaction
of closing conditions; our ability to recover costs on significant projects; the general economic conditions and
competition in the markets and businesses in which we operate; our relationship with significant clients; the
outcome of legal and administrative proceedings or governmental enquiries; uncertainties inherent in operating
internationally; the timely delivery of ships on order and the timely completion of ship conversion programmes; the
impact
of
laws
and
regulations;
and
operating
hazards,
including
spills
and
environmental
damage.
Many
of
these
factors are beyond our ability to control or predict.  Given these factors, you should not place undue reliance on the
forward-looking statements.

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10-Aug-11
Highlights
•
Strong financial performance for the quarter reflects increased activity levels,
improved
utilisation
and
strong
operational
performance
on
large
projects
in
their offshore phase
–
Improvement in the North Sea, although impacted by margin pressure
on contracts awarded in 2010 and executed during the quarter.
Improved vessel utilisation and good operational performance
–
Strong
performance
in
West
Africa,
with
number
of
major
projects
in
offshore installation phase and good operational performance
–
Asia Pacific activity low, as expected; good contribution from
SapuraAcergy JV
–
Solid performance in Brazil reflecting good utilisation on vessels and   
P-55 on track
–
Good contribution from joint ventures: Sapura Acergy, SHL and NKT
Flexibles

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10-Aug-11
Key priorities
•
We remain focused on key markets with long-term, strong and sustainable
growth characteristics; where we can differentiate ourselves, markets where
we can achieve profitable growth
Our key priorities:
Safety & operational excellence
•
Strong
order
momentum,
with
a
number
of
notable
contract
awards,
including:
–
Guara Lula, offshore Brazil
–
Broad range of small and large projects in the North Sea
–
Contracts exceeding $500 million announced post quarter end, including Gorgon,
offshore Australia
•
Strong order intake resulting in backlog as at June 30, 2011 of $7.9 billion
Technology
Ongoing fleet enhancement
Business acquisition - maintaining discipline in our tendering processes:
Synergy and cost reduction - Optimise costs without impeding our ability to
grow profitably

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10-Aug-11
Key priorities: Ongoing fleet enhancement
BP 3-year LoF –
US GoM
STL 5-year LoF –
North Sea
Delivered H1 2011
Expected delivery H1 2012
Returned to owner post charter
Divested
*Oleg Strashnov
delivered to the Seaway Heavy Lifting joint venture

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10-Aug-11
Income statement highlights
Half Year
Ended
Three Months
Ended
Seven Months
Ended
Six Months
Ended
In $ millions, except Adjusted EBITDA margin, share
and per share data
Jun.30.11
Unaudited
May.31.10
Unaudited
Jun.30.11
Unaudited
Jun.30.11
Unaudited
Revenue from continuing operations
1,335
581
2,627
2,411
Net operating income from continuing operations
210
94
304
291
Income before taxes from continuing operations
190
95
260
171
Taxation
(64)
(32)
(88)
(55)
Net income from continuing operations
126
63
171
163
Net income –
total operations
126
67
171
163
Adjusted
EBITDA
–
continuing
operations
307
121
497
472
Adjusted
EBITDA
margin
–
continuing
operations
23.0%
20.9%
18.9%
19.6%
Per share data (diluted)
Earnings
per
share
-
continuing
operations
$0.32
$0.25
$0.48
$0.45
Earnings
per
share
–
total
operations
$0.32
$0.28
$0.48
$0.45
Weighted average number of Common Shares and
Common Share equivalents outstanding
386.2m
206.6m
355.4m
380.5m

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10-Aug-11
Operational performance –
Q2 2011
$523m
$45m
$614m
$155m
$17m
$151m
$41m
$11m

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10-Aug-11
Income
statement
overview
–
Q2
2011
•
Administrative
expenses
of
$97
million,
included
$15
million
of
integration
costs
•
All joint ventures performed well
•
Investment income of $4 million reflected interest received on cash balances
•
Other gains and losses were losses of $14 million due to currency fluctuations
•
Finance costs of $10 million reflected interest on convertible loan notes and
interest expense/fees associated with $1 billion loan and guarantee facility
•
Tax charge for the quarter was $64 million representing an effective rate of tax
of c.34% reflects geographical profit mix
•
Diluted EPS was $0.32 based on weighted average share count across the
period of 386.2m shares (all convertible loan notes are dilutive)

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10-Aug-11
Cash
flow
and
balance
sheet
overview
–
H1
2011
•
Cash generation from operating activities of $95 million, partially offset by
higher net working capital balances in line with increased activity; expected
to reverse in ordinary course of business
•
Net cashflows from investing activities of $32 million reflects:
•
Capex in line with expectations: Seven Havila; Seven Borealis; Antares
•
Partial repayment of $300 million 2.80% convertible loan notes due 2011
•
Share buyback of c.2.5 million shares
•
Purchase price allocation (PPA) work ongoing; expected to be finalised by
year-end
•
Provisional goodwill of $2.4 billion arising from the combination
•
Closing cash and cash equivalents of $598 million
•
Sonamet remains held as an asset held for sale

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10-Aug-11
2011 –
financial assumptions
Current assumptions:
•
Administrative
expenses:
c.$75
million
per
quarter
for
remainder
of
2011,
excluding integration costs but synergies starting to materialise
•
Integration costs: $26 million expensed in H1 ’11 ($16 million expensed in
Q4 ’10) -
c.$25 million per quarter for remainder of 2011
•
Full-year Depreciation & Amortisation (D&A) of c.$350 million:
–
c.$260
million
–
2010
legacy
companies
combined
run-rate
–
c.$50 million PPA
–
c.$10
million
–
December
‘stub’
month
–
c.$25
million
–
Full-year
effect
of
additions
to
the
fleet,
capitalisation
of
dry-docks
and FX
•
Effective rate of tax of 35%
•
Issued share count of 351.8 million shares, including c.13 million shares held
in treasury and employee benefit trusts

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10-Aug-11
Market overview and outlook
•
High levels of tendering activities continue to underpin strong order book
momentum
•
Conventional in West Africa: a number of major contracts expected to come
to market award late 2011 and early 2012. Well positioned
•
SURF:
–
North Sea: record levels of tendering and increasing activity; improved utilisation
and improving pricing environment especially for projects offshore 2012+
–
West Africa: a number of major contracts expected to come to market award late
2011 and early 2012; with offshore operations beyond 2012
–
Gulf of Mexico: timing of improvements uncertain; activity levels unlikely to build
in 2012
–
Asia Pacific: beginning to see awards; further significant gas-driven SURF contracts
in Australia expected to come to market award in 2011 and 2012; offshore 2013+
–
Brazil:
more
opportunities
ahead
–
traditional
deepwater
and
pre-salt;
well
placed
to
capture
some
of
these
opportunities
•
Expectations unchanged; comfortable with the outlook for the current
financial year

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10-Aug-11
Summary
•
Approaching the future with confidence
•
Opportunities in nearly all our markets with increasing activity; albeit at
different pace in different geographical areas
•
Market fundamentals are very good
•
Well positioned to deliver profitable growth
–
Strong balance sheet
–
Very healthy backlog
–
Proven ability to deliver projects in a reliable and cost effective way

11-May-11
11-May-11
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Appendix

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10-Aug-11
SapuraAcergy JV
Brazil
AFGoM
Major project progression
Continuing projects >$100m between 5% and 95% complete as at June 30, 2011
excl. long-term ship charters and Life-of-Field day-rate contracts.
NSMC
0%
20%
40%
60%
80%
100%
Block 18 GEL (Angola)
Siri Caisson (North Sea)
Laggan Tormore (North Sea)
Jasmine (North Sea)
Andrew Bundle (North Sea)
Skarv GSI (North Sea)
Deep Panuke (Canada)
P55 Export (Brazil)
Gumusut (Malaysia)
CLOV (Angola)
EGP3B (Nigeria)
Oso Re (Nigeria)
PazFlor (Angola)
Block 31 (Angola)

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10-Aug-11
Backlog
In $ millions as at:
Jun.30.11
Mar.31.11
Jun.30.10
May.31.10
Subsea 7 S.A.
(1)
7,883
6,668
-
-
Acergy S.A.
-
-
-
2,251
Subsea 7 Inc
-
-
2,758
-
(1)
Backlog refers to expected future revenue under signed contracts, which are determined as likely to be performed,
but excludes amounts related to discontinued operations as of Jun.30.11 $nil, Mar.31.11 $nil, May.31.10: $15m
Conventional
8%
Other
6%
Backlog by Award Date
Backlog by Execution Date
Backlog by Service Capability
Backlog by Segment
APME
1%

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10-Aug-11
Segmental analysis:
Three months ended
Jun.30.11
Unaudited
In $ millions
NSMC
AFGoM
APME
Brazil
CORP
Total –
Continuing
operations
Revenue
523.4
613.6
40.9
154.9
2.6
1,335.4
Net operating
(loss)/income
45.1
150.9
10.5
17.3
(13.9)
209.9
   Investment income
3.5
   Other losses
(13.8)
   Finance costs
(9.9)
Net income before taxation from continuing operations
189.7
 
 
 
 
 
 
Three Months ended
May.31.10
Unaudited
In $ millions
NSMC
AFGoM
APME
Brazil
CORP
Total -
Continuing
operations
Revenue
121.1
316.5
81.3
60.3
1.7
580.9
Net operating
(loss)/income
(5.0)
77.9
41.3
3.5
(24.0)
93.7
    Investment income
1.7
    Other gains
4.7
    Finance costs
(5.3)
Net income before taxation from continuing operations
94.8

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10-Aug-11
Segmental analysis:
Seven months ended
Jun.30.11
Unaudited
In $ millions
NSMC
AFGoM
APME
Brazil
CORP
Total –
Continuing
operations
Revenue
831.2
1,338.7
104.8
345.5
6.9
2,627.1
Net operating
(loss)/income
37.6
268.9
12.3
21.1
(35.7)
304.2
   Investment income
9.0
   Other losses
(31.1)
   Finance costs
(22.4)
Net income before taxation from continuing operations
259.7
 
 
 
 
 
 
Six Months ended
May.31.10
Unaudited
In $ millions
NSMC
AFGoM
APME
Brazil
CORP
Total -
Continuing
operations
Revenue
211.7
658.7
168.7
115.2
2.4
1,156.7
Net operating
(loss)/income
(6.4)
165.2
62.0
8.6
(34.9)
194.5
    Investment income
4.1
    Other losses
(14.9)
    Finance costs
(12.9)
Net income before taxation from continuing operations
170.8

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10-Aug-11
Adjusted EBITDA
•
The Group calculates adjusted earnings before interest, income taxation, depreciation and amortisation
(‘Adjusted EBITDA’) from continuing operations as net income from continuing operations plus finance costs,
other gains and losses, taxation, depreciation and amortisation and adjusted to exclude investment income and
impairment charges. Adjusted EBITDA margin from continuing operations is defined as Adjusted EBITDA divided
by revenue from continuing operations. Adjusted EBITDA for discontinued operations is calculated as per the
methodology
outlined
above.
Adjusted
EBITDA
for
total
operations
is
the
total
of
continuing
operations
and
discontinued operations.
•
Adjusted EBITDA is a non-IFRS measure that represents EBITDA before additional specific items that are
considered to hinder comparison of the Group’s performance either year-on-year or with other businesses. The
additional specific items excluded from Adjusted EBITDA are other gains and losses and impairment of property,
plant and equipment and intangibles. These items are excluded from Adjusted EBITDA because they are
individually or collectively material items that are not considered representative of the performance of the
businesses during the periods presented. Other gains and losses principally relate to disposals of property, plant
and equipment and net foreign exchange gains or losses. Impairments of property, plant and equipment
represent the excess of the assets’
carrying amount over the amount that is expected to be recovered from their
use in the future.
•
The Adjusted EBITDA measures and Adjusted EBITDA margins have not been prepared in accordance with
International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board
as
adopted
for
use
in
the
European
Union.
These
measures
exclude
items
that
can
have
a
significant
effect
on
the Group’s profit or loss and therefore should not be considered as an alternative to, or more meaningful than,
net income (as determined in accordance with IFRS) as a measure of the Group’s operating results or cash flows
from operations (as determined in accordance with IFRS) as a measure of the Group’s liquidity.
•
Management believes that Adjusted EBITDA and Adjusted EBITDA margin from continuing operations are
important indicators of the operational strength and the performance of the business. These non-IFRS measures
provide management with a meaningful comparison amongst its various territories, as they eliminate the effects
of financing and depreciation. Management believes that the presentation of Adjusted EBITDA from continuing
operations is also useful as it is similar to measures used by companies within Subsea 7’s peer group and
therefore believes it to be a helpful calculation for those evaluating companies within Subsea 7’s industry.
Adjusted EBITDA margin from continuing operations may also be a useful ratio to compare performance to its
competitors and is widely used by shareholders and analysts following the Group’s performance.
Notwithstanding the foregoing, Adjusted EBITDA and Adjusted EBITDA margin from continuing operations as
presented
by
the
Group
may
not
be
comparable
to
similarly
titled
measures
reported
by
other
companies.

19
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10-Aug-11
Reconciliation of net operating income to Adjusted EBITDA
Half Year
Seven Months Ended
Jun.30.11
Half Year
Six Months Ended
May.31.10
In $ millions (except percentages)
Continuing
Discontinued
Total
operations
Continuing
Discontinued
Total
operations
Net operating income
304.2
-
304.2
194.5
13.2
207.7
Depreciation and amortisation
176.1
-
176.1
58.3
-
58.3
(Reversal of impairments) / impairments
16.3
-
16.3
3.8
-
3.8
Adjusted EBITDA
496.6
-
496.6
256.6
13.2
269.8
Revenue 
2,627.1
-
2,627.1
1,156.7
37.3
1,194.0
Adjusted EBITDA %
18.9%
-
18.9%
22.2%
35.4%
22.6%
Three Months Ended
Jun.30.11
Three Months Ended
May.31.10
In $ millions (except percentages)
Continuing
Discontinued
Total
operations
Continuing
Discontinued
Total
operations
Net operating income
209.9
-
209.9
93.7
6.5
100.2
Depreciation and amortisation
84.9
-
84.9
27.7
-
27.7
(Reversal of impairments) / impairments
12.3
-
12.3
-
-
-
Adjusted EBITDA
307.1
-
307.1
121.4
6.5
127.9
Revenue 
1,335.4
-
1,335.4
580.9
2.0
582.9
Adjusted EBITDA %
23.0%
-
23.0%
20.9%
325.0%
21.9%

20
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10-Aug-11
Reconciliation of net income to Adjusted EBITDA
Three Months Ended
Jun.30.11
Three Months Ended
May.31.10
In $ millions (except percentages)
Continuing
Discontinued
Total
operations
Continuing
Discontinued
Total
operations
Net income
126.1
-
126.1
62.8
4.5
67.3
Depreciation and amortisation 
84.9
-
84.9
27.7
-
27.7
Impairments
12.3
-
12.3
-
-
-
Investment income
(3.5)
-
(3.5)
(1.7)
-
(1.7)
Other gains and losses
13.8
-
13.8
(4.7)
0.1
(4.6)
Finance costs
9.9
-
9.9
5.3
-
5.3
Taxation
63.6
-
63.6
32.1
1.9
33.9
Adjusted EBITDA
307.1
-
307.1
121.4
6.5
127.9
Revenue 
1,335.4
-
1,335.4
580.9
2.0
582.9
Adjusted EBITDA %
23.0%
-
23.0%
20.9%
325.0%
21.9%
Half Year
Seven Months Ended
Jun.30.11
Half Year
Six Months Ended
May.31.10
In $ millions (except percentages)
Continuing
Discontinued
Total
operations
Continuing
Discontinued
Total
operations
Net income
171.3
-
171.3
115.4
9.5
124.9
Depreciation and amortisation 
176.1
-
176.1
58.3
-
58.3
Impairments
16.3
-
16.3
3.8
-
3.8
Investment income
(9.0)
-
(9.0)
(4.1)
-
(4.1)
Other gains and losses
31.1
-
31.1
14.9
0.1
15.00
Finance costs
22.4
-
22.4
12.9
-
12.9
Taxation
88.4
-
88.4
55.4
3.6
59.0
Adjusted EBITDA
496.6
-
496.6
256.6
13.2
269.8
Revenue 
2,627.1
-
2,627.1
1,156.7
37.3
1,194.0
Adjusted EBITDA %
18.9%
-
18.9%
22.2%
35.4%
22.6%

10.01.11
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