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Prosafe SE

Investor Presentation • Nov 3, 2016

3718_rns_2016-11-03_63ac3047-95b3-4d2f-b258-2e5a2d6559dc.pdf

Investor Presentation

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3 November 2016

Q3 2016 results

Disclaimer

All statements in this presentation other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "may", "will", "should", "would be", "expect" or "anticipate" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation as anticipated, believed or expected. Prosafe does not intend, and does not assume any obligation to update any industry information or forward-looking statements set forth in this presentation to reflect subsequent events or circumstances.

Agenda

Quarter highlights

  • Work the plan
  • Financial results
  • Operations review
  • Strategy and Outlook
  • Summary

Quarter highlights

  • Working the plan
  • • Completed comprehensive financial restructuring and secured runway through 2020
    • •Significantly improved debt structure and cash flow
    • •Limited covenants and significantly improved room to manoeuvre
  • • Phase1 re-organization and cuts in cost and capex ongoing till end 2016
    • •Phase 2 being planned
  • • Continues fleet renewal and rightsizing
    • •Safe Britannia, Safe Hibernia and Jasminia sold for scrap
  • Five Prosafe vessels operational in the North Sea in Q3
  • Solid underlying performance and on track towards targets defined

Agenda

  • Quarter Highlights
  • Work the plan
  • Financial results
  • Operations review
  • Strategy and Outlook

  • Summary

    1. Work the plan: Refinancing
  • -A billion dollar runway through 2020
  • Improved cash flow 2017-2020 of more than USD 1 billion from
  • • Reduction of debt/new build investment USD 530 million
  • •Reduction of amortisation of USD 470 million
  • • Interest saving from swap restructuring of approx. USD 23m
  • Book equity from 26% to 40%
  • Significant operating head-roomachieved from relaxed covenants

2. Work the Plan: Reorganization

  • From matrix to simple line organization
  • Fewer departments
  • Slimmer management team
  • Phase 1 complete at start of 2017
  • •Total headcount reduction 35-40%
  • • From ca 800 to ca 500, of which ca 115 onshore as of Q1 2017
  • Phase 2 being planned

3. Work the Plan: Cost and capex cut targets

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1) Will to some extent be affected by activity level

2) Excluding new-builds and conversions, updated from Q2 presentation

4. Work the Plan: Rightsizing by scrapping

(1) Includes Safe Eurus newbuild.

5. Work the Plan: Indicative Operating Model -Three divisions

Agenda

  • Quarter Highlights
  • Work the plan
  • Financial results
  • Operations review
  • Strategy and Outlook
  • Summary

Income statement

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1

Specification of non-recurring cost items

refinancing and reorganization

  • Non-recurring cost items of MUSD 18 expensed (P&L effect) in the quarter
  • • Britannia/Hibernia/Jasminia (have been sold for scrap/recycling): MUSD 2.6
  • •Financial restructuring: MUSD 8.7
  • •Resizing of organization: MUSD 6.7
  • Costs related to the share issue
  • •Quarter cost (taken direct to equity): MUSD 4.3

Balance sheet

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Covenants - large headroom

  • Liquidity minimum MUSD 65
  • •Q3: MUSD 183.4
  • Interest coverage ratio (adjusted EBITDA : Net interest expense over previous 12 month period) minimum 1.0
  • •Q3: 4.7

Agenda

  • Quarter Highlights
  • Work the plan
  • Financial results
  • Operations review
  • Strategy and Outlook
  • Summary

Operations overview

Key comments

In operation:

  • •Safe Boreas, Repsol, Montrose A, UKCS
  • •Safe Concordia, Petrobras, P48, Brazil
  • •Safe Scandinavia (TSV), Statoil, Oseberg Ost, NCS
  • •Safe Zephyrus, Det Norske, Ivar Aasen, NCS
  • Mobilising:
  • •Safe Notos; mobilisation in Brazil
  • Lay-up/yard:
  • •Safe Caledonia; stacked, Scapa Flow, UK
  • Regalia; stacked, Scapa Flow, UK
  • •Safe Bristolia; stacked, Norway
  • •Safe Astoria; cold stack, in Batam, Indonesia
  • •Safe Lancia; cold stack in Port Isobel, USA
  • •Safe Regency; lay-up, Curaçao
  • •Safe Eurus; COSCO, Qidong, China

Contract portfolio

18

Firm order-book as of end of Q3 2016

Agenda

  • Quarter Highlights
  • Work the plan
  • Financial results
  • Operations review
  • Strategy and Outlook
  • Summary

Semi accommodation market expected to rebalance by 2020

Scrapping, non-delivery and consolidation likely to positively impact market balance

  • Safe Scandinavia is a Tender Support Vessel (TSV) and has been taken out of accommodation supply in 2016
  • Prosafe has scrapped 3 vessels in 2016
  • More scrapping anticipated
  • Some new vessels scheduled for delivery in 2019 (Prosafe, Axis, OOS)
  • Certain assets not assumed entering the market at all – or before market is strong

Dayrateaverages and indications

- Bottoming out of market softness – with anticipated recovery from 2018 onwards…

  • North Sea recent awards indicate a significant dayrate reductionthrough 2016 and 2017
  • Other regions less affected
  • Recovery indicators from 2018 onwards
  • Leading broker present dayrate indications;

North Sea older non DP semi-submersible\$80,000 - \$140,000 pdprNorth Sea DP semi-submersible\$140,000 - \$200,000 pdprGlobal DP semi-submersible\$70,000 - \$140,000 pdpr

Note on Dayrates: They are just an indication as dayrates will fluctuate depending on the prevailing conditions and specific requirements.

22Source: Clarksons Platou Offshore Limited: Offshore Accommodation Quarterly Q2 2016

Longer Term Indicators of Market Recovery from 2018

Shorter Term Market Update

Taking the lead in consolidation, renewal and scrapping

EBITDA and capex guidance

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-

Agenda

  • Quarter Highlights
  • Working the plan
  • Financial results
  • Operations review
  • Strategy and Outlook

Summary

Summary

  • Solid underlying performance
  • On track re cost- and capex cuts
  • •Phase 2 being planned
  • Consolidation required
  • Scrapping and fleet rightsizing ongoing
  • Market anticipated to rebalance towards 2020
  • Market activity anticipated to improve and demand to gradually pick up from 2018 driven by a mix of demanddrivers
  • Working to strengthen competitive position and continue to take the lead in the high end accommodation segment

Appendices

Operating revenues

(
U
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D
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m
o
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3
1
6		 Q
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7
4.
7

Q3 Debt overview

Prosafe SE - total bank credit facilities MUSD 1383

  • •Long term portion of MUSD 1366 and short term portion of MUSD 17
  • •MUSD 1300 facility: fully drawn; outstanding MUSD 1245
  • • MUSD 288 facility: tranche drawn related to Safe Notos; outstanding MUSD 138
  • •MUSD 144 tranche undrawn and available for Safe Eurus

PRPL - total sellers' credits: MUSD 59.3

  • • Safe Zephyrus and Safe Notos seller credits
  • •Short term portion MUSD 36.0 (Safe Zephyrus MUSD 30, Safe Notos MUSD 6)
  • •Long term portion MUSD 23.3 (Safe Notos)
  • Unamortised refinancing cost (deducted from gross interest bearing debt): MUSD 16

Significantly improved debt profile

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