MODEC, Inc.

2017 Half-Year Financial Results

Analysts Presentation

August 4, 2017

Highlight Market Review

& Outlook

Financial

Results

MODEC, Inc.

2017 Half-Year Financial Results

2

2017 Half-Year : Highlight

3

EPC(I) of FPSO/FSO progressed on track

Operating profit, ordinary profit, and profit attributable to owners of parent exceeded the results of the same

period last year

Interim dividend 20 yen per share, annual dividend 40 yen per share (planned);

Dividends to increase in 13 consecutive years

107.2

161.9 156.7

104.0 101.7

147.1

216.5

138.8

125.9

254.4

378.5

295.5

229.9

0

100

200

300

400

2013 2014 2015 2016 2017

1H 2HBillion JPY

Revenue Operating Profit Ordinary Profit

2.6 3.1

(2.1)

2.3 2.7

9.8

5.8

2.6

6.0

8.2

5.7

1.0 (0.2)

4.4

6.3 1.0

5.3

7.2

15.6

5.9

12.4

10.1

23.3

(0.8)

4.3 6.0

16.6

3.7

8.5

5.0

18.0

15.8

18.3

12.8

29.4

4.9 5.4 5.8

21.0

(5)

0

5

10

15

20

25

30

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

1H 2HBillion JPY

Profit Attributable to Owners of Parent

2017 Half-Year : Highlight

4

Charter extended

Firm 5 years

+ 16 one-year options

(January 2017~)

SOFEC awarded

Turret Mooring System

Supply Contract

Charter extended

Firm 7.5 years

+ 3 one-year options

(November 2017~)

Charter completed in

June 2017

FSO Rang Dong MV17

ENI Coral South FLNG internal turret

FPSO Baobab Ivoirien MV10

FPSO Song Doc Pride MV19

Client CNR

Field Baobab

(Côte d'Ivoire)

Charter 2005~

Client TechnipFMC/JGC

Field Coral South

(Mozambique)

Contract EPC

Delivery 2020 2H

Client JVPC

Field Rang Dong

(Vietnam)

Charter 2008~

Client PVEP

Field Song Doc

(Vietnam)

Charter 2008~2017

2017 Half-Year : EPC(I) (as of end-June 2017)

5

Delivered in June 2017

Delivery planned for 2018 1H Delivery planned for 2017 2H

Stampede TLP FPSO Cidade de Campos dos Goytacazes MV29

FSO Ailsa

Client Petrobras

Contract EPCI + Charter (20 yrs)

Field Tartaruga Verde & Tartaruga

Mestiça (Brazil)

Water depth 765 m

Production 150,000 bpd, 176 mmscfd

Storage 1,600,000 bbls

Client Maersk Oil

Contract EPC

Field Culzean (UK)

Water depth 90 m

Production 25,000 bpd inlet

Storage 350,000 bbls

Client Hess

Contract EPCM

Field Stampede (US GOM)

Water depth 1,067 m

Production 80,000 bpd, 40 mmscfd

20y

20y

10y

20y

20y

20y

15y

12y

9y

9y

6.5y

20y

8y

7y

10y

5y

7y+

15y

17.5y

7.5y

15y

10y

5y

1 Culzean FSO (EPC) Maersk

2 Stampede TLP (EPCM) Hess

3 1 29.4 FPSO Cidade de Campos dos Goytacazes

MV29 Petrobras

2 20.1 FPSO Cidade de Caraguatatuba MV27 Petrobras

3 20.1 FPSO Prof. John Evans Atta Mills Tullow

4 20.1 FPSO Cidade de Itaguai MV26 Petrobras

5 29.4 FPSO Cidade de Mangaratiba MV24 Petrobras

6 34.0 FPSO Cidade de Sao Paulo MV23 Petrobras

7 42.5 FPSO Cidade de Angra dos Reis MV22 Petrobras

8 50.0 FPSO Cidade de Santos MV20 Petrobras

9 45.0 FPSO Cidade de Niteroi MV18 Petrobras

10 65.0 FSO Rang Dong MV17 JVPC

11 50.0 FPSO Song Doc Pride MV19 PVEP

12 40.6 FSO Cidade de Macae MV15 Petrobras

13 40.6 FPSO Cidade do Rio de Janeiro MV14 Petrobras

14 42.0 FSO Rong Doi MV12 KNOC

15 50.0 FPSO Baobab Ivoirien MV10 CNR

16 60.0 FPSO MODEC Venture 11 Santos

(17) 40.0 FPSO Stybarrow Venture MV16 available

1 FPSO Raroa OMV

2 FPSO Kwame Nkrumah MV21 Tullow

3 FPSO Pyrenees Venture BHPB

4 FPSO Fluminense Shell

EPC(I) / Charter / O&M Period

6

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

As of August 2017

EPC(I) period

Time Charter fixed period

Time Charter option period

O&M period

Owned by MODEC group companies (%)

Affiliates accounted for by the equity method

Consolidated subsidiary

R&D

FSRWP™ Floating Storage Regasification Water-Desalination &

Power-Generation

FSR-Power™ （Power only）

FSR-Water™ （Water only）

FSRWP™

7

8

Highlight Market Review

& Outlook

Financial

Results

MODEC, Inc.

2017 Half-Year Financial Results

Market Review

Oil Supply & Consumption

Breakeven Improvement

9

Oil Demand & Price

■

■

■

■

■

■

Seismic

Well Services and

Commodities

Drilling Contractors

Subsea

EPCI

Maintenance and

Operations

-2

-1

0

1

2

3

4

5

70

75

80

85

90

95

100

105

Q1

201

2

Q1

201

3

Q1

201

4

Q1

201

5

Q1

201

6

Q1

201

7

Q1

201

8

Million bpd

Source: Short -Term Energy Outlook (EIA)

Consumption

(left axis)

Supply

(left axis)

Million bpd

Implied

stock change

(right axis)

Forecast

0

50

100

150

200

250

300

0

20

40

60

80

100

120

199

0

200

0

201

0

202

0

203

0

204

0

Million bpd

Source: World Energy Outlook 2016 (IEA)

Oil demand

Oil price

USD/ bbl

Source: Rystad Energy Research and Analysis

80

45

0

10

20

30

40

50

60

70

80

■ Breakeven improvement of a “best-in-class” non-sanctioned offshore development

USD/ bbl

Downsizing and simplification

Improved design and reduced contingencies

High grading and efficiency gains

Currency gains

Unit prices

2014 2016

FPSO Awards & Oil Price

FPSO Awards (2014~2017 1H)

10

2014 2015 2016 2017 1H

Africa Asia Latin

America Brazil Europe

Middle

East

Source: Prepared by MODEC based on 2017 Q3 FPS Outlook Report (EMA), EIA

Oil prices stabilized at $50/bbl level;

Order intake is in recovery mode

0

50

100

Repsol

Ca Rong Do

ExxonMobil

Liza

Octanex

Ophir

BW

Dussafu

Vestigo

Anjung Kecil

ENI

OCTP

Total

Kaombo

Husky

Madura BD

Premier

Catcher

Petrobras

Tartaruga

Verde

Petroleum

Iran

South Pars

PetroChina

Salawati

Island

Total

Kaombo

YFP

Aje

Petrobras

Libra EWT

QGEP

Atlanta

JX Nippon

Layang

ENI

East Hub

Perenco

Yombo

USD/ bbl

WTI

Large Mid

Small

>10~50K

bpd

>50~100K

bpd

>100K

bpd

Extra

Small

~10K

bpd

Main Prospective Projects (as of August 2017)

Ghana

FPSO (Charter)

Indonesia

FPSO (Charter)

India

FPSO (Charter)

Brazil

FPSO (Charter)

FPSO (Charter)

FPSO (Charter)

Africa

Latin America

Asia & Pacific

North America &

Gulf of Mexico

11

FY2017 : Outlook

Revenue Operating Profit Profit Attributable to Owners of Parent

Ordinary Profit

3.7

8.5

5.0

18.0

15.0

0

5

10

15

20Billion JPY

15.8

18.3

12.8

29.4

25.0

0

10

20

30

40Billion JPY

254.4

378.5

295.5

229.9

190.0

0

200

400

Billion JPY

Assumed exchange rate for FY2017: 105 yen/USD

2017 2H

MV29 to start charter service

MV25’s deferred profit to be recognized

12

Billion JPY

4.9 5.4 5.8

21.0

18.0

0

5

10

15

20

25

FPSO Prof. John Evans

Atta Mills

(MV25)

FPSO Cidade de

Campos dos

Goytacazes MV29

13

Highlight Market Review

& Outlook

Financial

Results

MODEC, Inc.

2017 Half-Year Financial Results

Profit & Loss

14

2016 1H 2017 1H Variance Million JPY

Revenue 104,031 101,719 (2,312)

Gross Profit 7,758 9,565 1,807

Selling, General and Administrative Expenses 5,413 6,822 1,409

Operating Profit 2,344 2,743 399

Other Income (A) 9,266 7,301 (1,965)

Other Expenses (B) 5,542 1,798 (3,744)

Total Other Income/Expenses (C=A-B) 3,724 5,503 1,779

(Equity in Earnings of Affiliates and

Unconsolidated Subsidiaries included in C)3,773 3,647 (126)

(Exchange gain/loss and Gain/loss on

revaluation of derivatives included in C)(1,785) (804) 981

Ordinary Profit 6,069 8,246 2,177

Extraordinary Profit - 736 736

Extraordinary Loss - - -

Income before Income Taxes and Non-

controlling Interests6,069 8,983 2,914

Profit Attributable to Owners of Parent 4,405 6,326 1,921

Exchange Rate (USD) ¥102.96 ¥111.96 (¥9.00)

Gross profit increased by 1.8 billion

yen year-on-year mainly due to profit

improvement in O&M business

Foreign exchange loss decreased due

to less fluctuations in foreign exchange

compared to the same period last year

Recorded extraordinary profit in

relation to liquidation and share sales

of affiliated companies

Secured operating profit despite the

recognition of unrealized profit slipping

into 2017 2H

518.4

395.7

188.7

92.7 84.6

254.4

378.5

295.5

229.9

101.7

896.6

987.9

761.6

648.9 619.5

551.2

703.8

636.1

494.7 465.7

0

500

1,000

2013 2014 2015 2016 20171H

2013 2014 2015 2016 20171H

2013 2014 2015 2016 20171H

2013 2014 2015 2016 20171H

Billion JPY

New Orders / Revenue / Order Backlogs

New Orders Order Backlogs Revenue

15

FSO Ailsa

MV29

Stampede

MV27

MV25

MV26

MV24

EPC(I) period

2013 2014 2015 2016 2017 2018

Coral South

OSX-3

Order backlogs for MODEC

Group’s share in the “Lease,

Charter and O&M services” of

the affiliates accounted for by

the equity method

Ordinary Profit

15.8

18.3

12.8

29.4

8.2

17.3

24.7

20.5

31.5

11.6

0

10

20

30

40

2013 2014 2015 2016 2017 1H

Billion JPY

Influence of Deferred/Realized Profits Ordinary Profit (as if consolidating affiliates basis)

16

-3.0

-7.6 -8.2 -7.9

-1.7

3.0 3.3

5.8

9.0

0.2

11.9

16.2

18.5 17.4

18.9

(10)

(5)

0

5

10

15

20

2013 2014 2015 2016 2017 1H

Deferred Realized Balance

Billion JPY

A

A + B + C

A : Consolidated Ordinary Profit

B : Ordinary Profit (equity method portion)

C : Influence of Deferred/Realized Profits

Balance Sheet

17

2016 2017 1H Variance Million JPY

Accounts Receivable - trade 95,544 101,921 6,377

Short-term Loans Receivable 55,012 68,836 13,824

Total Current Assets 218,042 231,355 13,313

Property and Equipment 14,161 12,294 -1,867

Intangible Assets 7,420 7,109 -311

Investments and Other Assets 93,624 94,809 1,185

Total Fixed Assets 115,206 114,213 -993

Total Assets 333,249 345,569 12,320

2016 2017 1H Variance

Accounts Payable - trade 96,738 93,768 -2,970

Short-term Loans Payable 7,812 33,153 25,341

Total Current Liabilities 142,536 164,652 22,116

Long-term Loans Payable 42,478 33,422 -9,056

Total Long-term Liabilities 56,102 48,467 -7,635

Total Liabilities 198,639 213,119 14,480

Total Shareholders Equity 118,200 123,469 5,269

Total Accumulated Other Comprehensive Income 4,849 -2,363 -7,212

Minority Interests in Consolidated Subsidiaries 11,560 11,344 -216

Total Net Assets 134,609 132,449 -2,160

Total Liabilities, Net Assets 333,249 345,569 12,320

Construction loans to SPCs increased

Asset value decreased in JPY due to

depreciation of US dollars

Investments and other assets increased due

to capital injection to MV27

Short-term loans payable increased in

response to the construction loans to SPCs

Long-term loans payable decreased due to

scheduled loan repayments

Foreign currency translation adjustments

decreased due to depreciation of US dollars

Key Financial Indicators

18

Interest-Bearing Debt EBITDA

ROE ROA Equity Ratio

2.7 1.9 1.7

6.1

3.7

1.0

3.0

5.0

7.0

2013 2014 2015 2016 20171H

%

7.9 6.5 5.9

18.7

10.4

4.0

8.0

12.0

16.0

20.0

2013 2014 2015 2016 20171H

%

115.3

222.7 202.8

166.1 157.6

3.6

5.1

4.3

2.9

3.6

0.0

2.0

4.0

6.0

0

100

200

300

2013 2014 2015 2016 2017 1H

Total interest-bearing debt (after adjustment*)

Total interest-bearing debt/EBITDAX times Billion JPY

31.9

43.9 47.1

57.8

21.6 6.7

7.7

7.0

8.2

6.3

2.0

4.0

6.0

8.0

10.0

12.0

0

20

40

60

2013 2014 2015 2016 2017 1H

EBITDA (after adjustment*)

EBITDA Interest Coverage RatioX times Billion JPY

32.8

27.8 28.7

36.9 35.0

0

50

100

150

20.0

30.0

40.0

50.0

2013 2014 2015 2016 20171H

Equity% Billion JPY

*Adjustment: Adding MODEC group’s share in affiliates accounted for by the equity method