Bibby Offshore Holdings Limited: Full Year 2016 Results

Transcription

1 23 March 2017 Bibby Offshore Holdings Limited: Full Year 2016 Results Bibby Offshore Holdings Limited ( Bibby Offshore or the Group or BOHL ), a leading provider of subsea installation, inspection, repair and maintenance ( IRM ) services to the offshore oil and gas industry, announces today unaudited results for the fourth quarter and year ended 31 December Key Highlights Quarter Year End Figures in millions, unless otherwise stated Q Q YE 2016 YE 2015 Revenue Operating profit / (loss) before one-off items (7.4) (0.5) (33.9) 21.7 One-off items (16.8) (1.7) (17.1) (2.1) Operating profit / (loss) (24.2) (2.2) (51.0) 19.6 EBITDA before exceptional items (2.9) 3.1 (18.4) 36.2 EBITDA (17.6) 1.5 (33.5) 34.1 EBITDA margin (%) - 3% - 14% Note: EBITDA is defined as net profit for the period plus finance costs, income taxes, depreciation and amortisation Howard Woodcock, Chief Executive of Bibby Offshore, commented: 2016 was another challenging year for Bibby Offshore and the sector as a whole. Whilst Q4 operating levels were in line with our expectations, the Group has continued to experience difficult trading conditions, with financial results further impacted by the non-payment for work carried out for Emas Chiyoda Subsea in Trinidad. Aside from this, we ended 2016 with a much lower cost base and a more efficient and diversified business. Good progress has been made in diversifying our revenue through the development of a new market in North America and also from air diving, decommissioning and also flex lay using the Bibby Polaris carousel. In the early part of 2017 we have seen the anticipated upturn in tendering activity. Bibby Offshore is well placed to compete for this work, as a direct result of the way we have proactively managed both the business and its cost base. The quality of service delivery we are able to provide our clients is unparalleled amongst our peers. To position ourselves ahead of the build-up of the Summer campaign, the Group has agreed with the Bibby Line Group that they will provide a 10 million facility, a clear practical demonstration of support from our parent company. We do not expect to draw down on this facility during 2017; however the Board of Bibby Offshore considered it a prudent step to demonstrate our financial standing to clients. The Group is confident that it will be able to meet all its financial obligations in 2017 and that it is well placed to capitalise on any upturn in the market environment. 1

2 Key Highlights Cash flow from operations for the year of (37.4) million (2015: 21.5 million) and the cash position at year end was 36.8 million One off items of 17.1 million impacted the results in the quarter To position the company for Summer tendering BOHL has sought and obtained approval to an additional 10 million liquidity line from BLG Dive Support Vessel ( DSV ) utilisation was 87% in Q4 and 77% for the year (2015: 92%), with overall fleet utilisation of 71% during 2016 (2015: 74%), reflecting the late start to the 2016 peak season and improved vessel availability Improved vessel reliability as a result of planned maintenance leading to extremely high availability Traction in diversifying revenue base through air diving, decommissioning, renewables and flex lay work Presence in North American market now well established with utilisation of 70% in 2016 Extremely positive client feedback, maintaining our leading position when benchmarked to peers Further reductions in cost base totalling 15.1 million achieved through long-term sustainable business changes; lower vessel running costs, supply chain savings, managing capacity and management and personnel reorganisation Recent Developments Previously anticipated increase in tendering activity has materialised in early 2017 Extension of the Bibby Topaz charter to the end of 2019 on more favourable terms, reflecting the current market environment and based on a more mutual sharing of risk and reward with owner Bibby Sapphire and Bibby Polaris dry dock maintenance programmes executed safely and under budget In the process of finalising a three year Framework Agreement with a major North Sea operator for diving, air diving and construction support services; which is projected to generate in excess of 60 million in revenue over the life of the agreement Framework agreements also secured with two major oil companies operating in the North Sea for ROVSV support and diving, air diving and construction support services, respectively Additional contract wins secured post period end including with Shell, James Fisher, Dong, EnQuest, BP in the UK and Shell in the US Successful implementation of new enterprise resource planning system providing improved efficiency and more cost effective solutions Conference call details The financial results will be available on the investor relations section of the Company s website, from 8am (GMT) on 23 March The Company will also be holding a conference call and webcast for analysts and bondholders on the day of announcement at 3pm (GMT). ENQUIRIES Bell Pottinger +44 (0) Lorna Cobbett / Henry Lerwill / Joanna Davidson 2

3 ABOUT BIBBY OFFSHORE Bibby Offshore is a leading provider of subsea installation and IRM services to the offshore oil and gas industry. The company offers an integrated service portfolio to a diversified client and contract base; including project management, engineering, procurement and subsea intervention services to construct, maintain and extend the life of subsea oil field. It is headquartered in Aberdeen with regional offices in Newcastle, Norway, Singapore and Houston, USA. Bibby Offshore is part of Bibby Line Group, a diverse and forward-looking family business delivering personal, responsive and flexible customer solutions for over 200 years. Bibby Line Group is a 1.4 billion business, operating in more than 20 countries, employing over 4,500 people in industries including retail, offshore, financial services, distribution, shipping, marine based businesses, plant hire and woodland burials. To find out more about Bibby Line Group, visit Special note regarding forward looking statements This announcement contains both historical and forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events and generally may be identified by the use of forward-looking words such as anticipate, expect, suggests, plan, believe, intend, estimates, targets, projects, should, could, would, may, will, forecast, or other similar words. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Risks that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things: expenditures by the oil and gas industries, the demand for energy and the prices of oil, gas and refined products; delays or cancellations of projects in our backlog; our ability to win new contracts; inaccurate estimates of the cost of performing services when pricing contracts; reliance on a small number of key clients or contracts; the concentration of our business in one region and the disproportionate exposure to regional supply and demand factors; general economic conditions and their impact on operating performance and results of operations if our ability or our clients ability to raise capital is affected; damage to our business reputation and safety record; environmental and operational risks beyond our control; our dependence on and ability to attract and retain skilled personnel, independent experts, technical and operational service providers and key members of management; our ability to maintain our competitive position; actions of third parties; our dependence on independent sub-contractors and our limited control over them; our need for additional capital to maintain and acquire competitive assets in anticipation of business growth; the unexpected lengths of time for which our vessels may be taken out of service; equipment or mechanical failures; changes in licensing and other regulatory requirements in the countries in which we do business; potential liabilities and increased compliance costs associated with operating within strict environmental regimes; our international operations and compliance with multiple regulatory regimes; risks inherent in the operation of our vessels; our inability to keep pace with technological developments in our industry; the availability of diving gas; adverse weather conditions; and disruptions in fuel supplies. Should one of these known or unknown risks materialize, or should our underlying assumptions prove incorrect, our future results could be adversely affected, causing these results to differ materially from those expressed in our forward-looking statements. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. The forward-looking statements included in this release are made only as of the date of this release. We cannot assure you that projected results or events will be achieved. We do not intend, and do not assume any obligation to update any industry information or forward looking information set forth in this release to reflect subsequent events or circumstances. 3

4 OPERATIONAL AND FINANCIAL REVIEW Quarter Year End Figures in millions, unless otherwise stated Q Q YE 2016 YE 2015 Project results (2.5) 5.9 (12.1) 50.9 Net operating asset costs (1.0) (0.6) (6.1) (7.1) One-off items (15.0) (0.7) (14.7) (0.7) Gross profit (18.5) 4.6 (32.9) 43.1 Project margin - 13% - 21% Vessel utilisation 75% 67% 71% 74% Note: Utilisation is measured on the number of vessel working days divided by the days available, which excludes maintenance periods. Results from operations Although 2016 was another challenging year for Bibby Offshore and the market as a whole, the Group made significant progress in further reducing costs and maintained good utilisation. Across the fleet, Bibby Offshore achieved DSV utilisation of 77%, with overall fleet utilisation of 71% for the year. Whilst as a percentage, DSV utilisation was down on 2015, vessel availability was greater in Utilisation in 2016 was also affected by the peak season starting later than anticipated. In the North Sea, the Group executed 111 days of air diving work in 2016 for clients including Enquest, Dong, BP and ConocoPhillips. Decommissioning projects accounted for 18% of 2016 revenue with projects undertaken for Conoco Phillips, CNR and Shell. In the renewables sector, the Group completed two wind farm projects and a tidal project in There is clear scope to further grow this area of the business in 2017 and tenders are currently in progress for three large projects in this market. Bibby Offshore has also made strong progress in diversifying its revenue base through developing a new market in the USA. In our core market of the North Sea, utilisation in Q4 was as anticipated for the time of year at 75%. During Q4 the Bibby Topaz completed the BP ETAP project and also executed work for ConocoPhillips and Dong. The flex lay carousel on the Bibby Polaris and the Olympic Ares were utilised for a scope of work on Engie s Cygnus field. The Bibby Polaris completed IRM work for Maersk and Total, whilst the Olympic Ares undertook a scope of IRM work for Shell on the Corrib field. Tendering levels remain high with work so far won for execution in 2017 with Shell, ConocoPhillips, James Fisher, Dong, EnQuest. In addition to diversifying the Group s offering to clients, Bibby Offshore has successfully expanded its geographic reach. Its North American business is now well established with the Bibby Sapphire achieving utilisation of 70% in During Q4 the Bibby Sapphire completed its campaign in Trinidad for BP and McDermott and carried out work for ExxonMobil in the Gulf of Mexico. The Group s North American financial results were heavily impacted as a result of not receiving payment from Emas Chiyoda Subsea for which a full provision has been made in the Group s accounts. Bibby Offshore is actively tendering for a number of projects in 2017 and plans to build a similar Summer campaign in Trinidad as undertaken in In Asia, the business secured several contracts in Q4 and has seen a slight increase in tendering activity in the early part of this year. During Q4 the Group continued to fulfil its contract to supply a work-class ROV on board the Mermaid Nusantara which enjoyed good utilisation. The end of Q1 has seen a significant improvement in utilisation with three systems being mobilised for work in Malaysia, work for one system in Vietnam and continuing support on board the Mermaid Nusantara. Many of these projects carry into Q2 with strong prospects for further work thereafter. 4

5 Throughout 2016 management have continued to focus on the cost base and to ensure the business model is optimised for the long term success of the Group. During Q4, we took further steps to ensure the business was appropriately sized in the current market following the completion of the busy summer period. In 2016 we also achieved significant savings through our supply chain, vessel running costs and streamlining the organisation which both reduced costs and improved internal efficiency. Overall, since the start of the industry wide downturn, the Group has removed over 50 million from the cost base of the business and moved a significant amount of fixed costs to variable costs. Bibby Offshore received extremely positive client feedback in 2016 with an FPAL score of 8.2 for the year. Bibby Offshore is well placed for 2017 as a result of the proactive steps taken over the last two years to manage the business and its cost base, including reducing the workforce by c. 30%, restructuring internal management, and reviewing charter arrangements. The Group has also been proactive in identifying areas of opportunity and adapting the business model where possible to position the Group for long term success. Market Outlook The market outlook across the sector remains challenging with asset overcapacity and no improvement on margins. However, tendering activities in the early part of 2017 provide some confidence around utilisation through the year, and Bibby Offshore continues to deliver an extremely high quality service for all clients, both in the UK and internationally which is a differentiator at the time of tender awards. Whilst visibility remains very short term we are receiving and responding to more enquiries for longer term framework agreements. We have been successful in winning three of these agreements in 2017 which provide an effective conduit for clients to award work to the Group. The extension of the Topaz charter to the end of 2019 provides an indication of Bibby Offshore s confidence in maintaining market share under more flexible charter terms. The Group has a further opportunity to reduce charter costs in August 2017 as the firm period of the Olympic Ares charter comes up for renewal and are considering a number of options including replacing the vessel, renegotiating terms and identifying alternative solutions. Whilst we have seen early signs of an upturn in tendering activity, we remain conservative in our expectations for improvement in market conditions in 2017 and have ensured the Group is positioned to manage another challenging year. We have retained the flexibility within the business to capitalise on new opportunities and any improvement in market conditions. Post Period End Post period end, the Group extended its charter of the Bibby Topaz on improved terms to reflect the current market conditions. The new charter arrangement until end of 2019 reduces the fixed cost base and provides a more mutual sharing of risk and reward with the owner. This commitment together with investment in our recently delivered ERP system demonstrates our positioning for the longer term. The Bibby Line Group ( BLG ), who remains a supportive and long term shareholder, has approved a 10 million additional liquidity line, which is expected to be in place within the next few weeks. BOHL and BLG are engaging with the RCF lenders to amend the existing RCF documentation. We do not anticipate the need to drawdown this additional liquidity during 2017 if the Group converts its existing order pipeline in line with its current forecasts but it is considered a prudent measure to put in place should order intake increase rapidly. Finally, the Group also announces that Fraser Moonie, currently Chief Operating Officer, will relocate to Houston this month to run the Group s North American operations, where we see significant opportunity for further growth. The role of COO will not be directly replaced under the new simplified management structure with all business units reporting directly to the CEO. 5

6 Financial Results Quarter Year End Figures in millions, unless otherwise stated Q Q YE 2016 YE 2015 Revenue Direct costs recurring (47.6) (39.2) (172.9) (196.9) Direct costs one-off (15.0) (0.7) (14.7) (0.7) Gross profit (18.5) 4.6 (32.9) 43.1 Administrative costs - recurring (3.9) (5.8) (15.7) (22.1) Administrative costs one-off (1.8) (1.0) (2.4) (1.4) Operating profit / (loss) (24.2) (2.2) (51.0) 19.6 Profit / (loss) on sale of tangible fixed - (0.1) - (0.1) assets Interest (2.7) (3.7) (13.8) (14.6) Profit / (loss) before tax (26.9) (6.0) (64.8) 4.9 Tax 2.0 (0.1) 7.4 (5.0) Profit / (loss) after tax (24.9) (6.1) (57.4) (0.1) EBITDA - recurring (3.0) 3.1 (18.4) 36.2 EBITDA (17.6) 1.5 (33.5) 34.1 EBITDA Margin - 3% - 14% EBITDAR - recurring EBITDAR (3.1) EBITDAR Margin - 23% 5% 28% Gross debt Cash and cash equivalents Net Debt Net Leverage N/M 2.7x Note: EBITDAR is defined as EBITDA plus charter costs; where EBITDA is calculated as net profit for the period plus finance costs, income taxes, depreciation and amortisation. Revenues in the year reflect the challenging conditions experienced through Q4 revenues were maintained at a similar level to the final quarter of 2015 as work awarded in the autumn and early winter was extended through to the end of the year, with work on the Ares extending into November and all other vessels into December. The one off items of 17.1m recognised in the year relate to provisions for bad debts and disputes of 9.0m (2015: 1.4m), provision for asset and contract impairments of 7.2m (2015: Nil) and redundancy costs of 0.8m (2015; 0.4m) associated with reduction in work force. Gross profit before one off items was a loss of (3.5)m in the quarter and (18.2)m in the year, reflecting the pressure on rates and margins experienced throughout the year. Overheads, before one off items were (3.9)m for the quarter and (15.7)m for the year a reduction of over 25% on the 2015 run rate. 6

7 Reconciliation of operating profit to net cashflow from operating activities before taxation Quarter Year End Figures in millions, unless otherwise stated Q Q YE 2016 YE 2015 Operating profit / (loss) (24.2) (2.2) (51.0) 19.6 Add: Depreciation & Amortisation EBITDA (17.6) 1.5 (33.5) 34.1 Currency translation (0.4) (0.2) (0.4) - Taxation (3.3) (1.5) (2.7) (11.1) (Increase)/decrease in working capital (0.8) (1.5) Net cash inflow / (outflow) from (10.6) 11.6 (37.4) 21.5 operating activities Investing activities (0.3) (0.6) (3.9) (7.2) Financing activities (8.1) (7.0) (19.1) (33.5) Increase / (decrease) in cash (19.0) 4.0 (60.4) (19.2) Closing cash balance Cashflow for the last quarter of the year was impacted by the failure of Emas Chiyoda Subsea to make payments.. Tax payments were made in the quarter in relation to overseas liabilities arising from 2015 activities. Cashflow from investing activities relates to continued development costs for our replacement ERP system which was implemented in Q Bi-annual interest payments were made to Bondholders in December For the year the total cash outflow was (60.4) million. The largest element being (37.4) million in relation to cashflow from operations where our cost reductions lagged the market downturn and margins were compressed. (19.1) million of cash was utilised on financing activities, principally in relation to Bond interest and (3.9) million was utilised on investing activities. 7

8 EXTRACTED FROM GROUP FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016 Group statement of total comprehensive income for year ended 31 December Underlying 2016 Non - Underlying 2016 Total 2015 Underlying 2015 Non- Underlying 2015 Total Group turnover: continuing operations Cost of sales (172.9) (14.7) (187.6) (196.9) (0.7) (197.6) Gross (loss)/profit (18.2) (14.7) (32.9) 43.8 (0.7) 43.1 Administrative expenses (15.7) (2.4) (18.1) (22.1) (1.4) (23.5) Operating (loss)/profit: continuing operations (33.9) (17.1) (51.0) 21.7 (2.1) 19.6 Loss on sale of tangible fixed assets (0.1) - (0.1) Finance costs (net) (13.8) - (13.8) (14.6) - (14.6) (Loss)/profit on ordinary activities before taxation (47.7) (17.1) (64.8) 7.0 (2.1) 4.9 Tax on (loss)/profit on ordinary activities (5.1) 0.1 (5.0) (Loss)/profit for the financial year (41.5) (15.9) (57.4) 1.9 (2.0) (0.1) Currency translation difference on foreign operations Total comprehensive (loss)/ income (41.3) (15.9) (57.2) 2.2 (2.0) 0.2 The full group financial statements are available at 8

9 EXTRACTED FROM GROUP FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016 Group balance sheet as at year ended 31 December Fixed assets Investments - - Tangible assets Current assets Stocks Debtors Cash and cash equivalents Creditors: amounts falling due within one year (35.1) (34.5) Net current (liabilities)/assets Total assets less current liabilities Creditors: amounts falling due after more than one year (175.9) (179.5) Provisions for liabilities (14.6) (10.4) Net assets/(liabilities) (31.8) 25.4 Capital and reserves Called up share capital Profit and loss reserve (48.8) 8.4 Shareholders (deficit)/funds (31.8) 25.4 The full group financial statements are available at 9

10 EXTRACTED FROM GROUP FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016 Group statement of changes in equity as at 31 December 2016 Called-up share capital Profit and loss account Total At 1 January Loss for the year - (0.1) (0.1) Dividends paid - (20.1) (20.1) Currency translation difference on foreign operations At 31 December Loss for the year - (57.4) (57.4) Currency translation difference on foreign operations At 31 December (48.8) (31.8) The full group financial statements are available at 10

11 EXTRACTED FROM GROUP FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016 Group cashflow statement as at 31 December Net cash (outflow)/inflow from operating activities (37.3) 21.5 Cash flows from investing activities Proceeds from sale of tangible fixed assets Purchase of tangible assets (4.2) (7.8) Interest received Net cash outflows from investing activities (3.9) (7.2) Cash flows from financing activities Dividends paid - (20.1) Repayments of finance lease agreements (5.1) (4.0) Interest paid (14.0) (14.1) Net cash outflows from financing activities (19.1) (33.5) Net decrease in cash and cash equivalents (60.3) (19.2) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Reconciliation to cash at bank and in hand: Cash at bank and in hand* Short term money market investments** * Included within cash at bank and in hand is an amount of 321k (2015: 300k) held under agency agreement with V Ships (Liverpool) Limited, (formerly Bibby Ship Management Ltd, a subsidiary of the ultimate parent company Bibby line Group Limited until March 2016). ** The Group has short term money market investments maturing in periods ranging from 1 to 3 months and attracting interest rates ranging from 0.26% to 0.65% per annum The full group financial statements are available at 11