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Vard 3Q: Higher Revenues, Solid Order Book

Maritime Activity Reports, Inc.

November 10, 2014

18.5% increase in 3Q revenue, and 4.5% increase in 9M revenue from same periods in 2013.

Vard Holdings Limited (“VARD”, and together with its subsidiaries, the “Group”), designers and shipbuilders of offshore and specialized vessels, today announced its financial results for the third quarter of financial year 2014 (“3Q2014”), and nine months ended 30 September 2014 (“9M2014”).

Top-line growth, solid cash position and strong order book despite challenging operating environment and softer market outlook
VARD’s revenue for 3Q2014 increased 18.5% to NOK 2.8 billion from the corresponding period in 2013, and revenue for 9M2014 increased 4.5% to NOK 8.4 billion from the same period in 2013. EBITDA dipped for the first time in five quarters amidst higher operational expenses, and EBITDA margin for 9M2014 was 3.7%. Positive EBITDA margins are again expected in the next quarter, with further improvements in 2015. At the end of 9M2014, cash and cash equivalents stood at a solid NOK 1.7 billion, and the balance sheet remains healthy.

Globally, the oil services industry is adjusting to a decline in oil prices and expectations of lower exploration & production (“E&P”) spending by oil majors, which places cost pressure on the offshore supplier industry. VARD is well positioned to withstand a softer market in the near to medium term, with an order book of 40 vessels stretching into 2017 and valued at NOK 20.1 billion at the end of the third quarter.
New order intake for 9M2014 amounted to NOK 8.9 billion, and for 3Q2014 was NOK 714 million, reflecting seasonal factors as well as uncertainty concerning the market outlook. During the quarter, contracts for two platform supply vessels (“PSV”) were secured, and five vessels were delivered from yards in Norway, Romania and Vietnam. VARD’s order book consists only of firm contracts, many of which are for major industry players with an exposure to diverse oil and gas markets.

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