Analysts Briefing for the financial year ended 31 December 2014

Transcription

1 Analysts Briefing for the financial year ended 31 December 2014

2 Disclosure Statement The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase any securities ( Securities ) of Icon Offshore Berhad ( ICON ) in Malaysia, the United States or any other jurisdiction. This presentation should not, nor should anything contained in it, form the basis of, or be relied upon in any connection with any contract or commitment whatsoever. This presentation is confidential and is intended only for the exclusive use of the recipients thereof and may not be reproduced (in whole or in part), retransmitted, summarized or distributed by them to any other persons without ICON's prior written permission This presentation contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are based on certain assumptions and expectations of future events. The future events referred to in these forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond ICON's control, which may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding ICON's present and future business strategies and the environment in which ICON operates and are not a guarantee of future performance. Any reference to past performance should not be taken as an indication of future performance. ICON makes no representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. You are cautioned not to place undue reliance on these forward looking statements, which are based on current view of Icon's management on future events. This presentation has been prepared by ICON. No representation, warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. Certain data in this presentation was obtained from various external data sources, and ICON has not verified such data with independent sources. None of ICON or any of its directors, officers, employees, agents or advisers, or any of their respective affiliates, advisers or representatives, undertake to update, revise or re-affirm the presentation including any forward-looking statements, whether as a result of new information, future events or otherwise and none of them shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and any liability therefore (including liability for any direct or indirect consequential loss or damage) is hereby expressly disclaimed and none of them accept any responsibility for any loss or damages howsoever arising, whether directly or indirectly from any use, reliance or distribution of the presentation, its contents or otherwise arising in connection with the prospectus. 1

3 Table of contents ICON at a glance Industry Outlook FY2014 Operations Review FY2014 Financial Overview Key Investment Highlights Business Strategies Appendices 2

4 ICON at a glance Largest pure-play OSV provider in Malaysia (1) in terms of vessels operating in Malaysia OSV market 32 vessels in the current fleet as at 1 March 2015, with 6 vessels currently under construction and due for delivery in 2015 and Focus on shallow water but selectively moving into deep waters through fleet expansion, diversification and fleet renewal programme Malaysian-focused operations given with extensive international experience Fleet as at March 2015 AHT/AHTS 24 SSV 4 One of the youngest and largest fleets in SEA OSV industry Healthy order book of long-term contracts providing earnings visibility Profitable since its incorporation and is backed by sustainable margins High barriers of entry on the back of PETRONAS licenses and cabotage rules Average fleet age of approximately 4.3 years as at 1 March 2015, which is lower than the industry average in Malaysia and in the world of 9.3 and 18.2 years respectively Total orderbook of about RM760.2 mil (as at 31 Dec 2014), which approximately 53% will provide future revenue up to FY2016 ICON has an average success rate of 35% in tendering activities ICON s adjusted EBITDA margin FY2014 was 57.9% which is higher than peer (2) average of 50.1% (1) PETRONAS license holder for OSV services, with all of its OSVs being Malaysianflagged Eligible to participate in all tender calls and quotation requests issued by PETRONAS Carigali and its Production Sharing Contractors ("PSC") for the segment of activity stated in the licence Stringent Malaysian cabotage rules favour Malaysian-flagged vessels UV 1 PSV 1 AWB 2 We are the largest pure-play Offshore Supply Vessel ( OSV ) provider in Malaysia and one of the largest in Southeast Asia ( SEA ) in terms of number of vessels (1) Source: Infield Systems Limited... (2) OSV peers include Bumi Armada, Perisai Petroleum, Perdana, Alam Maritim, Jasa Merin, EZRA, Pacific Radiance, POSH Semco, Jaya, Miclyn, CH Offshore and Gulf Marine 3

5 Industry Outlook 4

6 Industry trends and leading indicators Extended weakness on crude oil prices expected Oil Prices continue to face headwinds Brent Crude Oil Prices from 30 June 2015 to 2 March 2015 driven by influx of oil supply & curbed global oil demand Divergence In Oil Demand and Supply USD/Barrel Brent Crude Oil Price In Jan 2015, Brent prices continued to dip to about US$49/bbl, as OPEC continues to battle the U.S. shale boom by resisting production cuts in order to defend their market share, signalling it is prepared to let prices decline further Goldman Sachs analysts average 2015 forecast for benchmark Brent stands at US$50.40, adding that prices would need to stay near US$40 in the first half of 2015 (1H15) to help curb shale investments It is expected that the slowdown in U.S. shale oil production would be sufficient to clear the market overhang The next OPEC meeting is scheduled for 5 June 2015 According to a recent report, U.S. shale s oil breakeven to range from US$20/bbl to US$80/ bbl Non-OPEC crude oil supply remains the driving force behind oil supply growth; particularly with U.S. shale drillers, who are pumping at the fastest pace in three decades OPEC oil production was boosted in September 2014 to 30.5 mb/d, the most since August 2013 Demand for crude is further compressed on the back of the weakening Eurozone economy and other developing countries coupled with more energy-efficient vehicles Goldman Sachs analysts opine that oil prices will need to remain lower for a longer period in order for demand to recover Lower prices in the longer term will affect CAPEX & OPEX spending by major oil players; hence, disrupting supply which will ultimately increase oil prices in the future Sources: Various news articles; Bloomberg as at 12 January 2015; Goldman Sachs Asia Economics Analyst; Malaysian OSV association forum with Petronas 5

7 Production in Malaysia to continue despite signs of weakness in O&G market Output is still low compared to past performance Petronas divesting noncore foreign assets; seeking opportunities with value growth News reports and rumours indicated that Petronas is looking to make cuts in its OPEX by between 25% and 30% as oil prices continued to tumble CAPEX spending by Petronas is expected to dip to RM44 bil this year from the expected RM55 bil in 2014 Petronas will continue to the divestment of non-core assets that offer little growth prospects, particularly in Africa Mauritania & Cameroon Divesting its non-core assets has been a strategy for Petronas for some time now Hence, leaving more room for Petronas to refocus on domestic fields and assets, which favours Malaysian oilfield services companies Additionally, oil production remains relatively low and the export to import gap continues to narrow; while the deep water project Gumusut Kakap could add a nice 135k bpd, numerous other fields such as EOR could face further decline. Petronas needs to increase its capex spending to return Malaysia to the >800k bpd days and this cannot be achieved overnight Petronas to restrategize Petronas are looking to streamline their cost and are expected to meet industry players to work on an optimal solution in the current industry Malaysia Offshore Support Vessels Owners Association (MOSVA) has officially written to Petronas in early January 2015 proposing to work together for a win-win situation Source: Various articles; CLSA Malaysia O&G Sector Outlook Oct

8 ICON s share price in tandem with volatile global Brent Crude prices (rebased to 100 on 30 June 2014) Rebased to ICON's share price performance from October 2014 to March Lock up period ended 0 1/10/2014 1/11/2014 1/12/2014 1/1/2015 1/2/2015 1/3/2015 Brent Crude Oil Price ICON Share Price On October , the International Monetary Fund (IMF) has downgraded its global growth forecast for 2014 and 2015 from 3.4% and 4.0% to 3.3% and 3.8% respectively, largely due to the stuttering recovery in the U.S., the continued fragility in the Eurozone and the slowdown in China s economy Concurrently, Malaysia s economy was dampened amid the impending implementation of Goods & Services Tax (GST) and the slump in crude oil prices Aside from the plunging oil market, Malaysia is also feeling the chill from the slowing economic growth in China, the second largest market; also adversely impacting Petronas These factors have led to the declining trend of Malaysia s O&G stocks, which are in tandem with the falling global crude oil prices and the regression of the Ringgit (RM) against the greenback On the back of global market jitters and crude oil prices falling to a five-year low close to US$50 a barrel, ICON s shares saw some heavy selling amidst the end of a six-month lock up period Source: Various articles; Malaysian Institute of Economic Research; Investing.com 7

9 FY2014 Operations Review 8

10 Operational Highlights (1/3) Overall utilisation impacted by AHT and SSV vessels Fleet Utilisation Rate 2013 FY2014 AHTS 93.3% 86.5% AHT 59.2% 41.3% SSV 95.9% 68.9% PSV 87.0% 68.7% Others 61.3% 75.9% 84.4% 78.2% Active fleet management to continue assessing sale opportunities for smaller and older vessels Successfully disposed of one (1) AHT and one (1) Utility vessel in FY2014 and will continue to pursue disposal opportunities for our AHT fleet and older vessels. Providing innovative solutions for our clients Oil majors are placing more focus on fuel consumption, pollution prevention and comfort on board. Company to continue to provide innovative solutions for our client by investing in younger and energy efficient vessels with higher technical specifications. Replacement of small and older vessels will improve overall utilisation Diversify into selective asset class to reduce dependency on AHT / AHTS Competition is expected to remain tight especially for the 5k bhp AHTS segment. Management has taken initiative to expand into other asset classes such as Accommodation Work Boat ( AWB ), Fast Crew Boat and 10k bhp AHTS segments to reduce its dependency on 5k AHTS segment During the year, Icon has added an AWB vessel (Icon Kayra) to its portfolio of OSV vessels. The Company managed to secure a long-term (5 + 2 years) contract with Brunei Shell Petroleum ( BSP ) via Joint Venture ( JV ) with its local partner In addition, the Company has delivered another AWB (Icon Valiant) in Q with the potential to secure a long-term contract. 9

11 Operational Highlights (2/3) Vessels under construction 1 Under Construction Shipyard Location Expected Completion PSV Tanjung Piai 2 Labuan, Malaysia Q FCB NB123 / (to be named) Skagen, Denmark Q AHTS SH128 / Icon Andra Guangzhou, China Q AWB SH121 / Icon Aliza Guangzhou, China Q AHTS G016 / Icon Astrid Lumut, Malaysia Q PSV SH129 / Icon Pioneer Guangzhou, China Q Vessels disposed during the year: Disposal of one AHT vessel (Omni Solaris) in March 2014 for a total consideration of USD3.8 mil Disposal of one utility vessel (Tanjung Manis) in August 2014 for a total consideration of USD3.9 mil 10

12 Operational Highlights (3/3) Excellent HSE record in line with target FY2014 FY 2013 FY 2012 Lost Time Injury (LTI) Restricted Workday Case / Medical Treatment Case First Aid Case Property Damage Near Miss Unsafe Act & Unsafe Condition (UCUX) 16,512 11,260 2,562 Recent awards and recognition: Received award from ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) - GOLD AWARD 2014 Safety Recognition for Hurt-Free Operations exceeding 100,000 manhours 4th Quarter 2013 Marine Business Partner Award by ExxonMobil Malaysia Outstanding Safety Performance Award: 1 Year without a Lost Time Injury by Maersk Oil Qatar 3 million man hours without lost time incident award by PETRONAS Carigali 19.2 million man hours without LTI 11

13 FY2014 Financial Overview 12

14 Key takeaways Review of performance for the financial year ended 31 December 2014 (FY2014) against the corresponding financial year ended 31 December 2013 (FY2013) FY2014 Revenue RM318.9 mil (FY2013 Revenue: RM334.9 mil) Average fleet utilisation 78.2% (FY2013 Average fleet utilisation: 82%) FY2014 Adjusted PAT RM90.8 mil (FY2013 Adjusted PAT: RM89.6 mil) FY2014 Adjusted PAT Margin 28.5% (FY2013 Adjusted PAT Margin: 26.8%) 13

15 Cumulative Period Analysis Quarter on Quarter Analysis Cumulative Period Analysis Quarter on Quarter Analysis Cumulative Period Analysis Quarter on Quarter Analysis Group Financial Overview Revenue (RM mil) % % FY2013 FY2014 Revenue own Revenue forerunner Others % -11.5% Q Q Revenue own Revenue forerunner Others Total revenue for the year amounted to RM319 mil, lower by 4.8% from the previous year due to reduction in forerunner charter revenue. However, contribution from our own vessels have improved by 5.4% to RM291 mil (FY2013:RM 276 mil) Quarter-on-quarter revenue have reduced due to lower utilisation. Adjusted EBITDA (RM mil) Adjusted PAT(RM mil) 57.0% 57.9% % FY2013 FY2014 Margin % 47.9% % Q Q Margin The Group s adjusted EBITDA dipped slightly in FY2014, largely due to decreased vessel rental (~94%) and lower bareboat expenses (~38%). Quarter-on-quarter reduced mainly due to increase in bunkering activities % 28.5% % FY2013 FY2014 Margin % 25.2% % Q Q Margin The Group managed to record sustained FY2014 PAT despite the marginal drop in FY2014 topline and challenging market outlook. Quarter-on-quarter showed a dip, mainly due to slightly higher depreciation and interest expenses during the quarter.

16 Business Segment Financial Overview Revenue by Vessel Type (RM mil) Revenue by Geography (RM mil) FY2013 FY % 88% AHTS AHT SSV PSV Others Revenue -FY2013 Revenue - FY2014 AHTS. Our core fleet consisting of 68% fleet total and contributed c.70% (FY2013: 63%) of total revenue, while utilisation rates stood at 87% AHT. Smaller vessels comprising of 3 units (10% of fleet total). Weaker utilisation due to lower tendering activities. SSV. Also known as small PSVs in other regions and comprising of 4 units (13% of fleet total). 2 vessel completed their contract in Q3 and tender activities ongoing for these vessels. PSV. Higher FY2013 revenue attributed to additional revenue from forerunner vessel. Others. Includes AWB and UV vessels; the addition of AWB contributed to higher FY2014 revenue. 38 Malaysia Overseas Malaysia EBITDA by Geography (RM mil) FY2013 FY2014 Overseas Malaysia Overseas 15

17 Leverage & Capitalisation Capital Structure Key Ratios as 31 December 2014 RM mil x 2.78x Total Assets Total Equity x 0.55x Total Debt (1) Cash and cash equivalents Revenue EBITDA (adj) Net Profit (adj) Financial Ratios Debt/EBITDA Net debt (2) / EBITDA Shariah compliant ratio (%) n/a n/a 23.8 (1) Total Debt = Total short term and long term borrowings (2) Net Debt = Total Debt Cash and cash equivalents FY2013A FY2014 Gearing ratio (gross) Net gearing ratio Debt Profile Analysis (RM bil) Total Assets Total Debt 0.7 FY2012A FY2013A FY2014 CAPEX Commitments (RM mil)

18 Key Investment Highlights 17

19 18 Key investment highlights ICON remains optimistic and wary of the volatile global economic conditions 1 Fast growing and largest pure-play OSV provider in Malaysia and one of the largest in SEA 7 Dynamic and experienced management team with proven execution track record 2 ICON is profitable since its incorporation and is backed by sustainable margins 6 Excellent HSE track record 3 Young and versatile Fleet resulting in sustained utilisation rates 5 Established relationship with high quality customers and shipyards 4 Embarking on talent management initiative and extensive trainings for cadet and crew

20 FY2014(F) 1 Fast growing and largest pure-play OSV provider in Malaysia and one of the largest in SEA ICON s fleet growth since inception ICON grown from 2 to 31 (1) vessels at a CAGR of 35.6% in 9 years With further expected growth of 7 vessels over next 2 years (1) 38 (1) New vessels to be delivered with latest technology such as DP2 systems and higher BHP engines FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A FY2011A FY2012A FY2013A FY2014 FY2015F 1Q2016F ICON s revenue growth through fleet expansion and renewal UV SSV AHT AHTS PSV AWB FCB TOTAL Quantity % of fleet 3% 13% 10% 68% 3% 3% - 100% Avg. Age With 7 vessels under construction (includes Icon Valiant delivered in 1Q15), our fleet is expected to grow from 31 vessels to 38 vessels as at end FY2016, representing a CAGR of 10.7% over a 2 year period New deliveries also helps ICON to maintain a young fleet; average fleet as at end FY2014 stood at 4.4 years. In the market (2), the average fleet age are 9.3 and 18.2 in Malaysia and worldwide, respectively. Source: (1) Assuming no disposals. (2) Company and Infield Systems Limited. 19

21 2 ICON is profitable since its incorporation and is backed by sustainable margins No. of operational vessels Revenue and utilisation rate (in RM mil) year average utilisation rate= 81.8% Adjusted profit after tax and margin (in RM mil) 4-year average adjusted profit after tax margin = 24.3% % 81% 82% 79% 44.5 (20%) 64.8 (22%) (27%) (28%) FY2011A (pro-forma) FY2012A (pro-forma) FY2013A (audited) FY2014 FY2011A (pro-forma) FY2012A (pro-forma) FY2013A (audited) Revenue Adjusted EBITDA and margin (in RM mil) FY2014A 4-year average adjusted EBITDA margin = 58.1% Commentary Adjusted profit after tax ICON has seen sustainable adjusted PAT growth over the years with a FY2011 to FY2014 adjusted profit after tax CAGR of 26.9% Adjusted PAT margins increased by 1.7% from 26.8% in FY2013 to 28.5% in FY (60%) (57%) (57%) (58%) ICON s FY2014 adjusted PAT margin of 28.5% is 8.4% higher than Malaysian OSV peers average PAT margin of 20.1% FY2011A (pro-forma) FY2012A (pro-forma) FY2013A (audited) FY2014 Adjusted EBITDA 20 20

22 3 Young and versatile fleet resulting in sustained utilisation rates of vessel Average age of AHT/AHTS fleet as at FYE 31 December 2014 Average age of PSV/SSV fleet as at FYE 31 December ICON Malaysia Southeast Asia Global ICON Malaysia Southeast Asia Global Overall utilisation rates of vessels 2013 FY2014 AHTS 93.3% 86.5% AHT 59.2% 41.3% SSV 95.9% 68.9% PSV 87.0% 68.7% Others 61.3% 75.9% 84.4% 78.2% ICON will continue to focus on its utilisation rates. Core AHTS fleet are maintaining >80% utilisation rates due to existing long term contracts. 2 SSV contracts were completed in Q3, 2014 resulting in lower utilisation. Tender activities are on-going for these vessels. PSV lower utilisation attributed to the lower number of tendering activities. 21

23 3 Young and versatile fleet resulting in sustained utilisation rates for vessels... (cont d) Business Development New Charter Contracts 25 Feb 2015 Received Letter of Award from PETRONAS for the provision of the spot charter of marine vessels (Umbrella Contract) ICON was awarded six (6) out of eight (8) packages offered by PETRONAS under the Umbrella Contract; ICON to provide marine vessels in the categories of Anchor Handling Tug / Supply Vessel 60 MT, Straight Supply Vessel, Platform Supply Vessel, Utility Vessel, Workboat, and Work barge on call-out basis 10 Dec 2014 Secured contract from EQ Petroleum Production Malaysia for the provision of one (1) unit SSV and a contract extension by an established oil major for the provision of one (1) UV and one (1) AHTS 21 Oct 2014 Secured contract from Talisman Malaysia for the provision of one (1) 100MT AHTS for a period of 2+1 years with a total contract value of RM63.5 million 20 Aug 2014 Secured contract with Brunei Shell Petroleum for the provision of one (1) AWB for a period of 5+2 years. This is ICON s first foray into Brunei through its local partner Contracts with reputable oil majors limits credit risks PETRONAS Carigali 22

24 4 ICON embarking on talent management initiative and extensive training for cadets and crew Icon Maritime Training Centre ( IMTC ) Talent Management IMTC aims to enhance the skills of crew working on offshore vessels through a continuous learning process (e.g. deck operations for all levels from Ratings to Master) The main goal of IMTC is to narrow the gap in skills between conventional and O&G offshore mariners by developing competency modules and providing training when necessary for mariners to operate effectively and safely during offshore operations ICON s IMTC syllabuses are closely connected to our HSE Management System and industrial driven best practises As at March 2015, IMTC had so far trained 144 Icon s internal crews. Approval by Jabatan Pembangunan Kemahiran (JPK) as a Certified Training Centre is in progress. Other modules being developed include, amongst others: engine operations superintendent training simulator training Awarded HR Asia Best Companies To Work For In Asia 2014 High performance culture through alignment of KPIs with corporate vision and mission Staff retention and recognition of achievements through ESOS scheme. Staff Leadership Program for potential managers to support the business and put in place succession plans. 23

25 5 Established relationship with high quality customers and shipyards Key customer relationships Key shipyard relationships PETRONAS Guangzhou, China Lumut, Perak P. Klang Johor, Pasir Gudang Miri Sibu Sandakan, Sabah Labuan, Malaysia Singapore ICON has established good rapport across both customers and suppliers, attracting new customers while retaining existing ones, and receiving favourable pricing and access to shipyards 24

26 6 Excellent HSE track record Integrated framework of procedures to continuously improve HSE performance Management and employee training Promotion of safety culture Inspection, safety and incident analysis Group meetings HSE management system Safety Awareness Coaches Incident investigation Health controls Emergency preparedness Protective equipment ExxonMobil Exploration and Production Malaysia Inc (EMEPMI)- Gold Award Safety Recognition for Hurt-Free Operations exceeding 100,000 manhours (2014) Environmental protection As we expand our business, we seek to deliver exceptional customer experience in terms of operational performance that includes maintaining the highest HSE standards 25

27 7 Dynamic and experienced management team with proven track record Dr. Jamal bin Gordon Duclos Chief Executive Officer & Non-Independent Executive Director Co-founder & former Managing Director of ICON Fleet (formerly known as Omni Petromaritime Sdn Bhd) group of companies Former Managing Director of Sisma Enterprise Sdn. Bhd. (a Malaysian provider of transformers, power utilities and OSVs) President of Malaysia OSV Owners Association (MOSVA) Over 18 years of experience in the OSV industry Captain Hassan bin Ali Chief Corporate Officer & Deputy Chief Executive Officer Former Chief Executive Officer of ICON Ship (formerly known as Tanjung Kapal Services Sdn. Bhd.) Holds a Master of Foreign Going Certificate of Competency (Class 1); MSc. Degree in Transport, University of Wales College of Cardiff Over 39 years of experience in the shipping industry working with MISC Berhad (Malaysia International Shipping Corporation Berhad (now known as MISC Berhad), PETRONAS Carigali Malaysian Maritime Academy, Orient Overseas Container Line (Malaysia) Sdn. Bhd. and Gugusan Maritime Sdn. Bhd. Rahman bin Yusof Chief Operations Officer Holds a 1st Class Chief Engineer s Certificate of Competency of unlimited capacity (Steamship & Motorship, dual certification) Incorporated Engineer (IEng) with the board of Marine Engineers in United Kingdom Over 33 years of experience in the shipping industry working with Petronas Tankers Sdn. Bhd., MISC Berhad and Sabah Shipyard Sdn. Bhd. Hands-on experience having been involved in ship building projects in France, Japan and South Korea (new building of LNG carriers) Experience in Japan & Korea includes dry-docking Zaleha binti Abdul Hamid Chief Financial Officer A fellow member of the Association of Chartered Certified Accountants (ACCA) and Malaysian Institute of Accountants (MIA) Over 17 years of experience in audit and finance functions with PricewaterhouseCoopers (Malaysia), Commerce Takaful Berhad (now known as CIMB Aviva Takaful Berhad), Pantai Management Resources Sdn. Bhd. and Ekuinas 26

28 Business Strategies 27

29 Business Strategies Riding out current volatile oil prices with focus on long term sustainable growth and competitiveness 1 Earnings visibility Order book growth and active fleet management 5 2 Operational excellence Safety and People Operational & financial discipline Sustained margins and liquidity 4 Strategic expansion Joint Ventures or M&As 3 Future growth through fleet expansion & renewal Shipbuilding and opportunistic acquisitions 28

30 1 Earnings visibility a) Grow and replenish order book through competitive bidding locally and overseas Order Book Summary as at 31-Dec 2014 Situation today Strategy forward Order Book RM'm >2017 Total Firm Charter Option Charter Spot Charter Contract Value Charter Contract Success Rate as at 31-Dec 2014 Tenders Submitted YTD 2014 Successful Unsuccessful Total Success Rate Awaiting Results AHTS % 8 AHT % 3 SSV % 3 PSV % 1 AWB % 1 Total % 16 *During the year, Icon has added an AWB vessel (Icon Kayra) to its portfolio of OSV vessels Contracts with reputable oil majors limits credit risks PETRONAS Carigali Large order book with several tenders still awaiting results Total order book stood at RM760.2 mil, of which RM522.0 mil (68.7%) are firm and RM216.2 mil (28.4%) are extension options. Approximately 53% of current order book will provide future revenue up to FY tenders and awards are awaiting results with contract value of over RM234.2 million. Competitive bidding to grow order book and enhance utilisation We have an average success rate of 35% in our tendering activities. Management expects to be more competitive in future tenders to increase the success rate, thus resulting in an improved order book and fleet utilisation. More marketing activities for overseas charters Management will also increase overseas marketing activities of our vessels in the region and the Middle East. 29

31 2 Operational and financial discipline a) Sustained margins through efficiency by enhancing processes and operating culture 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Median = 44% 27% Leader in operational efficiency 61% Malaysia 30% 39% ALAM PERDANA BUMI A DAYANG ICON POSH PACIFIC R EZION Malaysia Cash GP Margin 1 67% EBITDA Margin 2 41% Singapore 7% Singapore 77% Streamline Procurement Processes Optimise Hiring and Training of Crew... with improvement opportunities Generate costs savings through costs synergy initiatives (e.g. bulk purchases & price agreements) Streamline practices for ship repairs, maintenance and equipment type Train and develop cadets to reduce costs over the long term Invest in offshore crew training through IMTC to improve overall crew quality Enhance hiring process by recruiting better quality crews 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Median = 52% 33% 53% 37% 30% ALAM PERDANA BUMI A DAYANG ICON POSH PACIFIC R EZION 67% 45% 62% 91% Enhance Capability and Usage of IT Upgrading & investing in IT software & systems such as BASSnet system to drive productivity growth and enhance crew planning. Notes: 1 Excludes depreciation 2 adjusted EBITDA YTD Dec 2014 Source: Quarterly Report Ended 31 December

32 2 Operational and financial discipline (cont d) b) Healthy balance sheet to capitalise on opportunities ahead Summary of Key Financials FY2012 FY2013 FY2014 RM'000 RM'000 RM'000 Working Capital Current assets 227, , ,692 Current liabilities 174, ,636 24,804¹ Net working capital ratio Receivables turnover Receivables turnover period (days) Gearing Total borrowings 1,033,009 1,103, ,940 less:rcps-i 224, ,600 - Other borrowings 808, , ,940 Cash 53,952 47,303 74,818 Equity 265, ,364 1,080,606 Net gearing ratio Notes: 1 Excludes Deferred Tax Liabilities Strong balance sheet for fund raising activities Net gearing has improved to 0.55x as a result of our IPO. On-going discussion with our bankers are taking place to raise funds for: (i) (ii) financing of our vessels under construction; and make available an additional war chest to increase debt capacity to support future fleet growth / expansion. Management is of the view that the company can maintain a gearing capacity at a comfortable level of up to 1.2x for fleet expansion purposes, when supported by fresh contract awards. Improved cash flows to ensure sustainable operations The company will continue to maintain its collection days at no more than 100 days and plans to have sufficient cash reserves to cover 12 months of operations. Credit risks are mitigated through the employment of vessels with reputable clients. 31

33 3 Revenue growth through fleet expansion and renewal (cont d) b) Capitalise on strong balance sheet for future growth through additional ship building and/or off-the-shelf acquisitions Gearing Borrowings Current gearing Highest gearing Current debt Higest debt Opportunistic acquisitions from declining vessel prices The group s current net gearing ratio stands at approximately 0.55x and is able to gear up further to a comfortable level of 1.2x This translates to potential additional capex of RM628 million. An ROA of 10% on this amount of investment would provide an additional PAT contribution of RM63 million per annum. Vessel prices (especially small to medium sized vessels) continue to be on a declining trend and may face further test should oil prices continue to fall. Source : Clarkson Research Services Limited 32

34 4 Strategic expansion Joint ventures or M&As to create opportunities in other markets Geographical presence of ICON Revenue breakdown by geography Geographical presence and worldwide experience Egypt India Malaysia (88%) Overseas (12%) Iraq Qatar Myanmar Thailand Vietnam Brunei Further geographical diversification Expanded footprint into Brunei while securing new long-term charter contracts: During the year, the company successfully chartered our vessel Icon Kayra to Brunei Shell Petroleum, thus improving our diversification in terms of both client and geographic exposure. Management will continue to pursue other opportunities to expand our geographical exposure and client base, especially in Indonesia. Saudi Arabia U.A.E Malaysia Indonesia : Previous experience and potential future dealings Australia ICON Vessel(s) currently deployed ICON Experience 33

35 5 Operational excellence a) Maintaining high HSE standards 4 5 Safety Awareness Coach Commitment to uphold our HSE track record and maintain our zero Total Recordable Incident Case Frequency ( TRICF ) Drug & Alcohol Policy Commitment to maintain a safe, healthy and conducive environment for all personnel ExxonMobil Exploration and Production Malaysia Inc (EMEPMI)- Gold Award Safety Recognition for Hurt-Free Operations exceeding 100,000 manhours (2014) 3 million man hours without lost time incident award by PETRONAS Carigali (2014) 4 th Quarter 2013 Marine Business Partner Award by ExxonMobil Malaysia (2014) Outstanding Safety Performance without lost workday cases from Maersk Oil (2013 and 2014) Health, Safety and Environment Policy 1 Commitment to provide safe and healthy working conditions on its vessels and premises 3 Stop Work Policy Best HSE Performance award by PETRONAS Carigali (2012) Safety Management System Policy 2 Commitment to pursue the goal of no harm to people, properties and environment Excellent HSE Performance award by PetroVietnam Technical Services Corp (2011) Commitment to maintain safe and reliable operation of ships and environmental protection ICON has achieved ~19.2 million man hours with zero lost time injury 34

36 THANK YOU 35

37 Appendices 36

38 Formation of ICON & Key Milestones TKS (1) founded by Tanjung Offshore Berhad and began operations by acting as agent and 3 rd party charterer TKS took delivery of its first two vessels, 1 AHTS and 1 UV OMNI (2) acquired its first vessel, an AHT ICON Ship vessel was awarded Best HSE Performance by PETRONAS Carigali 2012 Strategic Consolidation between TKS & OMNI (3) and launch of ICON. TKS was subsequently renamed as ICON Ship Management Sdn. Bhd. and OMNI (2) was subsequently renamed as ICON Fleet Sdn. Bhd. ICON took delivery of 5 new AHTS vessels and 1 new PSV, the first Malaysian constructed diesel electric and Malaysian-flagged PSV 2013 Apr 2014 ICON entered into a jointventure arrangement with an affiliate of Odfjell Eiendom AS ICON listed on the Main Market of Bursa Malaysia Jun 2014 Aug 2014 On 20 August 2014, ICON entered into a joint-venture arrangement to penetrate into Brunei market Building a leading Malaysian OSV player with international experience ICON has grown from 2 to 31 vessels at a CAGR of 35.6% in 9 years Source: Company. (1) Tanjung Kapal Services Sdn. Bhd. (2) Omni Power Sdn. Bhd. (3) Omni Petromaritime Sdn. Bhd. 37

39 Playing within the offshore O&G value chain ICON s capability OSV deployment opportunities within upstream Exploration & Appraisal Field Development Operation & Maintenance Decommissioning OSVs used to support drilling units by performing positioning duties, towing them into place, handling anchors and performing supply runs Appraisal wells commissioned to assess the potential of any discovery made during the exploration phase Flow rates assessed OSVs deployed to support installation vessels and the towing and positioning of drilling rigs Pre-FEED & FEED studies Detailed engineering Fabrication & procurement Offshore construction, installation & commissioning OSVs primarily used for the transport of personnel, provisions, fuel, equipment, spares and other supplies Enhanced oil recovery Brownfield development and injection wells Working over of existing wells OSVs are equipped to provide support for oil and gas operators in the process of decommissioning The decommissioning of end-of-field infrastructure Re-use / recycle / dispose AHTS AHT PSV FCB AV AHTS AHT PSV FCB AV Barges Tugs AWB AHTS PSV FCB AV Barges Tugs AWB AHTS AHT AV Upstream Midstream Downstream Oil & gas industry structure Seismic data Exploration geology & prospecting technology Field development study and plan Security certification Management systems for engineering & project; and wellreservoir-facility Maritime services Gas in pipes Exploration Field Development Production Transportation Refining Distribution Consumer Drilling rigs and ships Platform, well, surface and subsea equipment Platforms and production vessels Supply ships and supply bases Oil & LNG on ships Drilling equipment and systems Pipes Source: Infield Systems Limited and Company. Note: AV refers to accommodation vessels and FEED refers to front-end engineering and design. 38

40 Computation of adjusted EBITDA and adjusted Profit After Taxation Computation of Adjusted PAT Computation of PAT to EBITDA and Adjusted EBITDA Quarter Ended Cumulative Quarter Ended Profit After Taxation Quarter Ended Cumulative Quarter Ended Profit After Taxation Gain on disposal of OSV/non-OSV (0.047) (0.47) (4.67) (1.36) Taxation (3.69) (112.20) (2.95) (96.05) Other expenses : Profit before taxation Amortisation of intangible assets Finance costs Impairment of assets Depreciation Admin Expenses: Amortisation of intangibles assets IPO Expenses (0.77) Share of profit from JV (0.046) - (0.036) - Transaction cost written off EBITDA RCPS-i profit rate Gain on disposal of OSV/ non-osv (0.047) (0.47) (4.67) (1.36) Tax effect relating to : - Impairment of asset Amortisation of intangible assets (1.13) (1.21) (2.94) (4.84) IPO related expenses (0.77) Disposal of non-osv Adjusted EBITDA Transfer of vessels to Labuan subsidiaries - (111.38) - (111.38) Adjusted PAT