Subsea 7 S.A. Announces Fourth Quarter and Full Year 2012 Results

Luxembourg - 14 March 2013 - Subsea 7 S.A.
(the "Group") (Oslo Børs: SUBC) announced today
results for the fourth quarter and full year which
ended on 31 December 2012. Unless otherwise stated,
the comparative period is the three and thirteen
months ended 31 December 2011 for Subsea 7 S.A. and
the results of Subsea 7 Inc. following the date of
Combination on 7 January 2011. The Group's reporting
segments are set out in Note 6 'Segment information'.

Jean Cahuzac, Chief Executive Officer, said:
2012 was another year of significant achievement for
Subsea 7. We have delivered strong financial results
in line with our expectations. We have built a record
backlog, exited non-core businesses and successfully
completed the integration process following the
Combination in January 2011. Our fleet enhancement
program is also on track with the start-up of Seven
Borealis in Angola, the ongoing construction of Seven
Waves, and the recent order of a new-build diving
support vessel for the North Sea.
Tendering activity increased through the year, in
particular in the North Sea, Africa and Brazil,
reflecting our clients' ambitious investment plans.
We remained disciplined in our bidding approach with
a focus on project risk management and profitability,
and I am pleased with the quality of our new awards
and current level of order in-take.
In the light of continued strong performance, the
strength of the balance sheet and confidence in our
business, the Board of Directors has recommended that
shareholders approve the payment of a special
dividend of $0.60 per share at the next Annual
General Meeting on 28 June 2013. The Board of
Directors has stated that it will continue to
prioritise value-adding investment opportunities and
has reaffirmed its policy of returning excess cash to
shareholders either in the form of share buy-backs or
dividends.

Outlook
Levels of tendering remain strong and we remain
positive about the medium and long-term market
prospects. As we have previously highlighted, delays
in project awards and supply chain bottlenecks will
temper the rate of progress in 2013. Nevertheless, we
expect both revenue and Adjusted EBITDA to show some
progress although higher depreciation, finance costs
and effective tax rate will negatively impact
earnings per share.
West Africa will move through a period of lower
offshore activity in 2013 as operations on SURF
contracts awarded in the second half of 2012 and
early 2013 are projected to start in 2014 and beyond.
We see increased tendering in the Gulf of Mexico
where client activity is improving. In Mexico we have
recently won our first contract, which will require
the deployment of Seven Borealis.
In the North and Norwegian Seas tendering levels
remain strong. However, much of our backlog was
awarded late in 2012 and offshore activity for recent
awards such as the Martin Linge contract will
commence in 2014. Results for the first quarter 2013
are expected to be impacted by lower vessel
utilisation due to planned vessel maintenance and dry-
docking, this compares to unusually high utilisation
in the prior year period as clients sought to
progress projects in spite of the risk of bad weather.
In Brazil, Petrobras' demand for flexible pipelay
vessels (PLSVs) remains strong. We are in discussion
for the renewal of four of our vessels as their
contracts are due to complete in 2013. In addition we
participated in the recently announced Petrobras
tender for new-build PLSVs and market award is
expected later this year. The Guará-Lula NE project
timeline remains consistent with our revised schedule
as disclosed in the fourth quarter 2011. We have
however increased the estimated full-life project
loss by approximately $52 million, in fourth quarter
2012, to reflect a commercial dispute with our client
and revised contingencies related to the timing of
equipment delivery from key subsea suppliers. Results
in the first quarter 2013 will be impacted by planned
dry-docking.
In Asia Pacific, tendering levels are slowly
improving and we expect projects to come to market
award during 2013, with associated offshore activity
commencing in 2014 and beyond.
In this growing worldwide market, the key challenges
for the industry continue to be the availability of
qualified and experienced personnel and the need to
manage an increasingly tight supply chain and assure
reliability in complex project delivery. We remain
focused on addressing these challenges and on
maintaining a strong emphasis on risk management and
project management processes. Our engineering and
project management capabilities, the size of our
fleet and our financial strength, position Subsea 7
well for long-term profitable growth.

Special Note Regarding Forward-Looking Statements
Certain statements made in this announcement may
include "forward-looking statements". These
statements may be identified by the use of words
like "anticipate", "believe", "estimate", "expect", "i
ntend", "may", "plan", "forecast", "project", "will",
"should", "seek" and similar expressions. The forward-
looking statements reflect our current views and
assumptions and are subject to risks and
uncertainties. The principal risks and uncertainties
which could impact the Company and the factors
affecting the business results are outlined in
the "Risk factors" section in the Company's Annual
Report and Consolidated Financial Statements. These
factors, and others which are discussed in our public
filings, are among those that may cause actual and
future results and tends to differ materially from
our forward-looking statements: actions by regulatory
authorities or other third parties; our ability to
recover costs on significant projects; the general
economic conditions and competition in the markets
and businesses in which we operate; our relationship
with significant clients; the outcome of legal and
administrative proceedings or governmental enquiries;
uncertainties inherent in operating internationally;
the timely delivery of ships on order and the timely
completion of ship conversion programmes; the impact
of laws and regulations; and operating hazards,
including spills and environmental damage. Many of
these factors are beyond our ability to control or
predict. Given these factors, you should not place
undue reliance on the forward-looking statements.

Interim Management Report: Financial Review

Fourth Quarter 2012
Revenue
Revenue was $1.6 billion for the quarter, an increase
of $193 million or 14% compared to Q4 2011. This
mainly reflected increased activity levels in NSC and
Brazil.
Adjusted EBITDA
Adjusted EBITDA for the quarter was $270 million, an
increase of $43 million or 19% compared to Q4 2011.
Adjusted EBITDA margin was 16.8% compared to 16.0% in
Q4 2011, mainly due to higher contributions from the
Group's share of net income of associates and joint
ventures.
Net operating income
Net operating income increased by $44 million or 32%
to $180 million, largely due to:
 strong underlying year-on-year growth in
gross
profit, offset by an approximately $52 million
increase in full-life project losses on the Guará-
Lula NE project in Brazil to reflect a commercial
dispute with the client, and revised contingencies
related to the timing of equipment delivery from key
subsea suppliers; and
 an increase of $43 million in share of net
income
from associates and joint ventures compared to Q4
2011; Seaway Heavy Lifting contributed strongly
during the quarter.
Net income
Net income of $149 million increased by $42 million
or 39% compared to Q4 2011, primarily due to:
 increased underlying profitability of the
Group; and
 net foreign exchange gains of $3 million in
the
quarter (Q4 2011: loss of $9 million).
These were partly offset by an increase of $10
million in financing costs compared to Q4 2011
following the issuance of the $700 million
convertible notes in October 2012.
The effective tax rate for the quarter was 13% (2011:
15%) after adjusting for discrete items.


Twelve months ended 31 December 2012
The comparative period ('2011') is the thirteen-month
period from 1 December 2010 to 31 December 2011.
Revenue
Revenue of $6.3 billion, increased $820 million or
15% compared to 2011, driven mainly by higher levels
of activity in NSC and further progression of the
Guará-Lula NE project in Brazil.
Adjusted EBITDA
Adjusted EBITDA of $1,139 million, an increase of
$136 million or 14% compared to 2011. The Adjusted
EBITDA margin of 18.1% was broadly consistent with
2011.
Net operating income
Net operating income increased by $168 million to
$808 million largely due to:
 an increase in gross profit of $149 million
compared to 2011, as a result of higher levels of
project and offshore activity. The gross profit
margin of 17.4% was consistent with 2011 (17.3%) as
improved margins in NSC were largely offset by a
further loss recognised on Guará-Lula NE project in
Brazil in the fourth quarter. Vessel utilisation
levels remained high at 86% (2011: 80%).
 a decrease in administrative expenses of $37
million to $373 million (2011: $410 million). The
reduction in expenses was mainly due to lower
integration and restructuring costs.
 a decrease in the Group's share of results
of
associates and joint ventures to $86 million (2011:
$104 million). The reduction was primarily due to the
disposal of the Group's interest in NKT Flexibles,
partially offset by improved contributions from
Seaway Heavy Lifting and SapuraAcergy.
Net income
Net income of $847 million increased by $396 million
or 88% compared to 2011 primarily due to:
 increased underlying profitability of the
Group;
 a $244 million gain on disposal of the
Group's
interest in NKT Flexibles; and
 other gains and losses totalling $40 million
(2011:
$7 million) primarily representing net foreign
currency exchange gains.
The effective tax rate for the period, excluding the
impact of the tax-exempt gain on disposal of NKT
Flexibles and the gain on distribution of Veripos
Inc., was 27% (2011: 28%).
Cash and cash equivalents
Cash and cash equivalents increased by $485 million
to $1.3 billion largely reflecting cash generated by
operating activities of $515 million and the issuance
of $700 million of convertible notes at a coupon of
1%, partly reduced by the dividend paid of $199
million and the execution of the share buy-back
programme of $200 million.
Earnings per share
Diluted earnings per share was $2.23. After excluding
the gain on disposal of NKT Flexibles, the adjusted
diluted earnings per share was $1.59 compared to
$1.21 in 2011, an increase of 31%.
Borrowings
Borrowings increased by $642 million to $1,535
million during 2012, mainly as a result of the
placement of $700 million of convertible notes in
October 2012.


Territory highlights

Fourth Quarter 2012
Africa, Gulf of Mexico & Mediterranean (AFGOM)
Revenue of $611 million was broadly consistent with
Q4 2011. There was significant progress on Block 31
PSVM and CLOV, both offshore Angola. The MPN
Satellite Field Development, offshore Nigeria, was
substantially completed during the quarter. Net
operating income was $97 million compared to $112
million in Q4 2011.
Asia Pacific & Middle East (APME)
Revenue was $55 million, an increase of $17 million
compared to Q4 2011. Progress continued on the ONGC
G1 project, offshore India and Gorgon, offshore
Australia. Net operating income was $18 million,
compared to a loss of $7 million in Q4 2011 which
reflected losses arising on the Montara project.
Brazil (BRAZIL)
Revenue for the fourth quarter was $241 million, an
increase of $55 million compared to Q4 2011 with the
progression of procurement, engineering and project
management on the Guará-Lula NE project. The seven
vessels on long-term service agreements to Petrobras
achieved high levels of utilisation. Net operating
loss was $29 million (Q4 2011: net operating loss $11
million), driven by an approximately $52 million
increase in full-life project losses on Guará-Lula NE
to reflect a commercial dispute with the client, and
revised contingencies related to the timing of
equipment delivery from key subsea suppliers.
North Sea & Canada (NSC)
Revenue was $699 million compared to $586 million in
Q4 2011. Work progressed during the quarter on Laggan
Tormore and West Franklin, offshore UK; Ormen Lange,
offshore Norway and Siri Caisson, offshore Denmark.
Projects substantially completed during the quarter
included Terra Nova, offshore Canada; Alta, offshore
UK and Skuld, offshore Norway. Life-of-Field
operations under the Shell, BP and Statoil Frame
Agreements performed well during the quarter. Net
operating income was $88 million (Q4 2011: $97
million).
Corporate (CORP)
Revenue for the fourth quarter was $5 million (Q4
2011: $2 million). Net operating profit was $8
million (Q4 2011: net operating loss $54 million),
with the improved results largely due to lower
integration and restructuring costs, and an increased
contribution from Seaway Heavy Lifting as a result of
high renewables activity.

Twelve months ended 31 December 2012
The comparative period ('2011') is the thirteen-month
period from 1 December 2010 to 31 December 2011.

Africa, Gulf of Mexico & Mediterranean (AFGOM)
Revenue was $2.2 billion, a decrease of $0.4 billion
or 14% on 2011, due mainly to the timing of the
offshore execution of major projects. There was
significant progress on Block 31 PSVM and CLOV,
offshore Angola. Projects substantially completed
during the year included OSO Re, MPN Satellite Field
Development and EGP3B, all offshore Nigeria. The
fabrication activities of Sonamet in Angola continued
to make a significant contribution to the Group. Net
operating income at $428 million was $62 million or
13% lower than 2011, however the associated margin of
20% improved slightly compared to 19% in 2011.
Asia Pacific & Middle East (APME)
Revenue was $278 million, an increase of $97 million
or 54% primarily driven by continuing activities on
ONGC G1, offshore India and Gorgon, offshore
Australia as well as the completion of Montara,
offshore Australia, and Lihua-4, offshore China. The
SapuraAcergy joint venture contributed $32 million to
net operating income for the period (2011: $27
million). Net operating income was $46 million (2011:
$18 million) with the increase mainly due to
increased activity levels.
Brazil (BRAZIL)
Revenue was $987 million, an increase of $300 million
or 44% reflecting procurement, engineering and
project management activities on the Guará-Lula NE
and UOTE projects. The GSNC Shallow project was
completed in 2012. The seven vessels on long-term
service agreements to Petrobras continued to operate
at high levels of utilisation. Net operating loss was
$25 million (2011: net operating income $23 million).
The operating loss in 2012 was primarily driven by an
approximately $52 million increase in full-life
project losses on Guará-Lula NE to reflect a
commercial dispute with the client, and revised
contingencies related to the timing of equipment
delivery from key subsea suppliers.
North Sea & Canada (NSC)
Revenue was $2.8 billion, an increase of $0.8 billion
or 38% largely due to high levels of activity across
the Territory. Projects such as Ormen Lange, Skuld
and Skarv, offshore Norway, and Terra Nova, offshore
Canada progressed well. Operating activities
continued on Laggan Tormore, West Franklin and Alta
projects, offshore UK. The Siri Caisson project
continued offshore Denmark. Life-of-Field operations
under the Shell, BP, Statoil and Total Frame
Agreements performed well during 2012. Net operating
income margin increased to 12.8% from 8.7% in 2011
driven by high levels of vessel utilisation and the
completion of a number of projects which had been
awarded at low margins in previous years.
Corporate (CORP)
Revenue for the period was $12 million (2011: $12
million). The net operating loss was $4 million
reduced from $69 million in 2011, largely due to
lower integration and restructuring costs. Seaway
Heavy Lifting contributed $51 million (2011: $40
million) as a result of high renewables activity.
These improvements were partly offset by the reduced
contribution from NKT Flexibles due to the disposal
of the Group's interest in the early part of 2012