ANALYST BRIEFING - Malaysia Marine and Heavy Engineering · Technip MHB Hull Engineering Planning...

“Transformation for Success”

4th Quarter 2012 Financial Results & Updates 21st February 2013

ANALYST BRIEFING

Disclaimer 2

This Presentation is not intended to form the basis of any investment decision with respect

to Malaysia Marine and Heavy Engineering Holdings Berhad (MHB). Neither this

presentation nor anything contained herein shall form the basis of, or be relied upon in

connection with, any contract or commitment whatsoever. No representation or warranty,

express or implied, is or will be made by MHB in relation to, and no responsibility or liability

is or will be accepted by MHB as to the accuracy and completeness of, the Information

made available, and any liability therefore is expressly disclaimed.

This Presentation may contain “forward-looking statements”. Forward-looking statements

by their nature involve known and unknown risks, uncertainties and other factors that are in

many cases beyond MHB’s control. Although MHB believes that the expectations of its

management as reflected by such forward-looking statements are reasonable based on

information currently available to it, no assurances can be given that such expectations will

prove to have been correct. Accordingly, you are cautioned not to place undue reliance on

such forward-looking statements. In any event, these statements speak only as of their

dates, and MHB undertakes no obligation to update or revise any of them, whether as a

result of new information, future events or otherwise.

This Presentation and its contents are strictly confidential and must not be copied,

reproduced, distributed, summarized, disclosed referred or passed on to others at any time

without the prior written consent of MHB. Except for the yard facilities in the photographs,

none of the vessels/structures belong to MHB.

Analyst Briefing – 4th Quarter 2012

2012 Key Highlights

Operational

• Acquisition/integration of MMHE East Yard

• OBU/MBU. Business unit-centric focussed

Financials

• Net profit -28% YoY to RM242m

Projects

• Superlift of Gumusut-Kakap FPS

• Sailed away/delivered

• Telok-A Topside, Jacket

• Tapis-Q Topside, Jacket

• Kinabalu NAG Topside

• Floating Storage Unit (FSU) Lekas

• New contracts

• F14/F29

• Damar Platform

• Kinabalu HUC

• Novation of Kebabangan

• LoA on TLP Malikai Deepwater Project

3

Success Completion And Load-Out Of The Kinabalu NAG Topside In May 2012


4


Topic

1 Operational Review

2 4Q2012 Financial Updates

3 TLP Malikai Deepwater Project

4 Transformation Of MHB

5 Q&A

Final Stages Of Commissioning, Planning For Loadout

Gumusut-Kakap FPS 5

78% Completed With 1st Heavy Lift Accomplished Safely

FPSO Cendor 6

18,000 MT Tapis-R Deck Is 65% Completed

Tapis Enhanced Oil Recovery (EOR) Project 7

Overall Project Is 82% Completed, Telok-B Topside Shown Below

Telok Gas Development (TeA & TeB Topsides) 8

MHB’s 17th Turret Project, 86% Completed As At Dec 2012

OSX-3 FPSO External Turret 9

Project Attained 4.6 Million Manhours, 64% Completed

Kebabangan Northern Hub Development 10

New Contracts. Picture Shown Below Is The F14/F29 Topsides, Substructure And Process Module Project

F14/F29 & Damar Platform Project 11

12


Topic





5 Q&A

Financial Updates

Income Statement, QoQ

Revenue +2% to RM857.0m

• OBU, marginally lower revenue as Gumusut

Kakap FPS nears completion while Tapis-Q

Topside was loaded out

• MBU undertaken more ship repairs in 4Q12

Operating profit up 2.8x to RM77.3m

• OBU rebounded with no provisions in 4Q12

• MBU results normalised in 4Q12 as 3Q12

benefited from reversal of a provision

Pretax profit up 5.9x to RM60.2m

• JCE, final cost for project closed-out at

Turkmenistan Block 1 Phase 1

Net profit of RM100.4m

• 4Q12 tax assessed reflects impact from

utilisation of ITA which reduces tax liability

• Earnings per share of 6.3 sen in 4Q12

13

Income Statement RM m 4Q 2012 3Q 2012

Revenue

Offshore

Marine

857.0

757.7

99.3

841.8

765.9

76.0

Operating Profit

Offshore

Marine

77.3

52.8

16.8

27.7

-1.8

24.8

Share Of Loss Of JCE

-17.1

-17.5

Profit Before Taxation 60.2 10.2

Taxation

MI

41.0

-0.8

-1.9

-0.3

Net Profit 100.4 8.1

EPS Per Share 6.3 sen 0.5 sen


Financial Updates

Income Statement, YoY

Revenue +9% to RM3.3bn

• OBU, contribution from Tapis EOR, Telok

Gas, Kinabalu HUC and Kebabangan

• MBU, higher number of LNG vessels with

higher value of work performed, FSU Lekas

Operating profit -18% to RM242.8m

• OBU, provision for FPSO Cendor and lower

overall margins at certain projects

• MBU, improvement with higher revenue and

2011 was partly due to one-off provision

Pretax profit -40% to RM217.7m

• JCE is predominantly attributable to the

results of MMHE-TPGM, project closed out

Net profit -28% to RM242.0m

• Tax is due to impact from utilisation of ITA

Dividend of 10.0 sen

14

Income Statement RM m 12mth Dec12 12mth Dec11

Revenue

Offshore

Marine

3,329.8

2,981.3

348.5

3,060.3

2,797.6

262.1

Operating Profit

Offshore

Marine

242.8

163.2

68.7

294.6

260.5

8.9

Share Of (Loss)/Profit

Of JCE

-25.1

70.3

Profit Before Taxation 217.7 364.9

Taxation

MI

25.5

-1.2

-30.5

-0.2

Net Profit 242.0 334.2

EPS Per Share 15.1 sen 20.9 sen


Financial Updates

Balance Sheet

Total assets +8% YTD

• Fixed assets reflect acquisition of yard, now

known as MMHE East Yard, and ongoing

YO Programme

• Progress billings from ongoing projects

contributed to receivables especially at OBU

• Cash of RM890.3m

• Utilised RM393m for acquisition of Pasir

Gudang fabrication yard from Sime Darby

Engineering Sdn Bhd

• At OBU for newer projects, timing

differences between cost incurred by MHB

against progress billing to clients. Hence

more working capital required

• To evaluate further on requirements of

current/new projects and cashflow profile

NTA per share of RM1.53

15

Balance Sheet RM m Dec 2012 Dec 2011

Fixed Assets

Inventories

1,801.9

11.6

1,217.3

25.6

Receivables

Cash

2,113.4

890.3

1,131.3

2,085.6

Others 0.1 2.7

Total Assets 4,817.3 4,462.5

Shareholders’ Funds 2,506.1 2,420.6

Payables

Others

2,281.7

29.5

1,926.5

115.4

Total 4,817.3 4,462.5

NTA Per Share RM1.53 RM1.51


Financial Updates

Order Intake & Backlog 16

FPSO Cendor

Kebabangan

Telok Gas Tapis EOR

Others

Gumusut Kakap

F14/F29

Kinabalu Damar

Backlog RM million

Dec 2012

RM1,772.2m

Order Intake RM million

5,827

3,727

2,180 2,937

1,772

1,430

1,270

919

Mar09 Mar10 Mar11 Dec11 Dec12

Backlog RM million

TLP Malikai (Above) / (Below)

Turkmenistan Block 1 Phase 1

Backlog (Above) / Order Intake (Below)

TLP Malikai Deepwater Project reflects MHB’s 50% share

2,004

2,934

1,701

Mar09 Mar10 Mar11 Dec11 Dec12

238 191


Corporate Updates

Shareholding Information 17

Foreign Investors 4.37%

Other Malaysian Shareholders

9.62%

EPF 4.89%

PNB & PNB Unit Trust

Funds 6.12%

Technip SA 8.50%

Foreign Investors 4.57%

Other Malaysian Shareholders

10.49%

EPF 4.55%

PNB & PNB Unit Trust

Funds 5.39%

Technip SA 8.50%

As At

Sep 2012

As At

Dec 2012

1-Year Share Price RM


4.0

4.5

5.0

5.5

6.0

6.5

Listing

Sector

Bursa Malaysia Main Market

Trading/Services

52-week market cap range (RM bn)

6.6 9.0

PETRONAS Conditional Take-Over Of MISC

Announcement

• PETRONAS made a conditional take-over

offer for the remaining 1,666,333,303 shares

in MISC which it does not hold for a cash

offer price of RM5.30 per share

• Offer is conditional on receiving

acceptances resulting in PETRONAS

holding 90% or more of MISC

Rationale

• “The Offer represents a significant step by

PETRONAS to take MISC private and obtain

full control of the Company that will provide

PETRONAS with greater flexibility in

deciding MISC’s strategic direction.”

On MHB

• No intention of making a separate take-over

offer for the shares in MHB

18

MISC’s LNG Vessel And Tanker At MMHE West Yard


19

Topic





5 Q&A


Letter of Award To Technip MMHE (Malikai) Joint Venture / TMMJV

TLP Malikai Deepwater Project 20

Key Areas Information

Project

Description

TLP Malikai Deepwater Project

comprises 2 structures. Malikai topside is

permanently manned and is designed to

process 60,000 barrels per day of oil and

50 million standard cubic feet per day

(mmscfd) of gas. 12,000MT Malikai hull

would be fastened and attached to the

seafloor at water depth of about 500

metres approximately 110 kilometres off

the shore of Sabah, Malaysia

Contract Value USD775m

Contract Type Lump-sum and cost-plus

Client Sabah Shell Petroleum Company Ltd

Work Scope

Detailed engineering for TLP’s hull by

Technip MHB Hull Engineering Sdn Bhd

while construction, fabrication and

commissioning activities to be led by

MHB with technical input from Technip’s

affiliate

Structures Malikai Topside

Malikai TLP Hull

Total Weight 26,000MT

Complete By 3Q2015

PDMS Image Of TLP Malikai


Proposed Set-Up For TLP Malikai Deepwater Project

Joint-Venture For Success

Joint Venture

• Clear responsibility and work scope

• Leverage on strengths of all partners

• Capitalise on MHB’s yard facilities

• Adopt best international practices

• Enhance local input and expertise

• Risk management and distribution

• Catapult Technip MHB Hull Engineering to

the forefront

MHB

• To continue participation in Malaysia’s deep

water projects

• To reciprocate trust that client has in MHB

• To support another frontier development

domestically

21

Project Management

Topside

Detailed

Engineering

Procurement &

Subcontracting

Fabrication

&

Construction

Hull

Detailed

Engineering

Construction

Management

Technip MMHE (Malikai) JV

MMHE

Technip

Technip MHB Hull Engineering


Improving Project Execution

Initiatives Underway

TLP Malikai Deepwater Project

• First TLP structure

• Shorter time-line

• Tighter budget

Improving execution

• Close collaboration with Technip

• Strengthened OBU team

• Initiatives identified. Preparation for

implementation

22

Improving Project Execution

Organization

Experienced PMT team

Continuity in project team members

Steering Committee

Engineering

Engineering team able to verify FEED

and Detailed Design

Technip MHB Hull Engineering

Planning

Synchronize project schedule with yard

capacity and productivity

Implement dynamic production

planning

Construction

Enhance supervisor capability

Enhance construction process to

improve productivity


23


Topic





5 Q&A

Important Milestones Achieved

Yard Optimisation Programme

MMHE West Yard

• 132 KV power supply

• Infrastructure work at Idemitsu Land

• 55,000MT skid-track and bulkhead

• 40T Luffing crane

MMHE East Yard 25,000MT bulkhead

24

147 213

107 77 168

335

548 655

732

900

Mar09 12-mth

Mar10 12-mth

Mar11 12-mth

Dec11 9-mth

Dec12 12mth

YO Capital Expenditure RM million

3,000

1,000

500

Annual YO Capex

Cumulative YO Capex

1

2

3

1

2

3

4

4


Moving Forward

Transformation Initiative Roadmap

2012

• Smooth integration of MMHE East

• Standardized process/procedures

• Launched selected improvement initiatives

• Communications/leadership engagement

2013

• Embedding more high performing processes

• Implementing yard-wide operational

improvement initiatives

• Cultivating culture of recognition and

consequence management

2014

• High performing organisation of choice for

clients

25

2012

Putting The House

In Order

2013

Deliver On Time

& At Cost

2014

Increase

Win Rate

Strengthen core

business units and

operations

Recognition and

consequence

management

High performing

organisation for

our clients

Smooth integration

Standardization of process

Launch operational improvement initiatives

Monitor and track initiatives yard-wide

High performing professional culture

Introduction and upholding practises under CoBE

Communications

Leadership development


“Transformation for Success”

MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD

Level 31, Menara Dayabumi, Jalan Sultan Hishamuddin

50050, Kuala Lumpur, Malaysia

Investor Relations Contacts

Telephone: +60 (3) 2275 3876

Wan Mashitah Bte Wan Abdullah Sani

Chief Financial Officer

Email: [email protected]

Chang Kong Meng

Investor Relations Manager

Email: [email protected]

Website: http://www.mhb.com.my/

http://www.mmhe.com.my/

Thank You

Merci

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