otto marine limited - listed...

Click to edit Master text stylesSecond level

OTTO MARINE LIMITEDBuilding upon strong fundamentals

Third levelFourth level

Fifth l lFifth level

OTTO MARINE LIMITEDDisclaimer

This presentation and the associated slides contain confidential information about Otto Marine Limited (the “Company”) and its subsidiariesand associates (together with the Company, the “Group”).

By accepting such information, the recipient agrees to keep permanently confidential all information contained herein and that it will use suchinformation only for the purpose it has disclosed to the Company for participating in this presentation and not for other purposes and will notdivulge any such information to any other party without the express consent of the Company. Any reproduction of such information, in wholeor in part, is prohibited without the permission of the Company.

This presentation includes only summary information and does not purport to be comprehensive. The information contained in thispresentation has not been subject to independent verification. No promise, guarantee, representation, warranty or undertaking, express orimplied is made as to and no reliance should be placed on the fairness accuracy reliability completeness or correctness of the informationimplied, is made as to, and no reliance should be placed on, the fairness, accuracy, reliability, completeness or correctness of the informationor opinions contained herein. Neither the Company, any other company within the Group or its advisors, nor any of their directors, officers oremployees or any representatives of such persons, shall have any responsibility or liability whatsoever (in negligence or otherwise) for anyloss arising from any use of the information or any other information or material discussed.

This presentation contains forward-looking statements relating to the business, financial performance and results of the Company. Thesestatements are based on current beliefs, expectations or assumptions and are subject to unknown risks and uncertainties that could cause, p p jactual results, performance or events to differ materially from those described in such statements. These risks, uncertainties and other factorsinclude, but are not limited to, economic conditions globally, the impact of competition, political and economic developments in countries inwhich the Group operates and regulatory developments in those countries and internationally, foreign exchange rates, oil and gas prices andthe completion of ongoing transactions. Many of these factors are beyond the Company's ability to control or predict. Although the Companybelieves that its expectations and the information in this presentation were based upon reasonable assumptions at the time when they weremade, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this presentation.

Nothing in this presentation constitutes and shall not in any circumstances be construed as an invitation or an offer to purchase or thesolicitation of an offer to purchase any securities issued by the Company or any advice or recommendation with respect to such securitiesand no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

2

OTTO MARINE LIMITEDAgenda

• Overview of Otto Marine• Overview of Otto Marine

• Investment Merits

• Business Segments

• Financial Highlights

• Industry Outlook Growth Strategies

3

• Industry Outlook, Growth Strategies

Click to edit Master text stylesSecond level1 Overview of Otto Marine

Third levelFourth level

Fifth l l

1. Overview of Otto Marine

Fifth level

4

OTTO MARINE LIMITEDOverview

• Offshore Marine Group – engaged in Shipbuilding / Repair & Conversion, Chartering /Leasing and Specialised Servicesg p

• Headquartered in Singapore – commercial, procurement, and treasury support to ouroverseas operations (Indonesia, China, UAE, etc)

• Shipyard in Batam Indonesia – strong management and engineering team capable of• Shipyard in Batam Indonesia – strong management and engineering team capable ofdelivering complex and deep water offshore vessels

• Strategic direction – provider of specialised offshore vessels and services in nichetechnical segments (i.e. seismic, subsea, offshore construction, etc)g ( , , , )

• Customers – primarily specialised offshore service providers in niche segments, andfleet operators in the oil and gas industry

5

OTTO MARINE LIMITEDShare Statistics

Share price (Closing on 8 Nov 2011) S$0.135

Market capitalization S$255 2 millionMarket capitalization S$255.2 million

52 week high / low S$0.37 / S$0.129

P/B 0.62

Net Gearing 1.66

Number of shares 1,890,429,000

Major shareholders Yaw Chee Siew (63.64%)Major shareholders Yaw Chee Siew (63.64%)Lee Kok Wah (5.28%)Standard Chartered (4.30%)

6

( )

OTTO MARINE LIMITED

2 Investment Merits2. Investment Merits

OTTO MARINE LIMITEDInvestment Merits

• Shipbuilding net order book of S$81.3m/US$62.5m (at 30 September 2011)

delivered 40 OSVs in the last 5 years– delivered 40 OSVs in the last 5 years

• Chartering revenue to provide steady cash flow– OSVs chartered on medium to long term basis

• Specialised services– service and vessel provider in strategic niche segments which command highermargin (i.e. seismic, subsea vessels for well intervention, ROV, IMR, etc), seismicbacklog contracts worth US$40.1m as at 30 September 2011

• Customer base

– ABCmaritime, Esnaad, Falcon Energy Group Limited, Mosvold Supply, MarineABCmaritime, Esnaad, Falcon Energy Group Limited, Mosvold Supply, MarineSubsea AS, Norshore Shipping, Robert Knutzen Shipholdings

• Strong engineering and experienced management team

average of more than 30 years experience in offshore vessels building

8

– average of more than 30 years experience in offshore vessels building

*(US$1.00 = S$1.3015)


Customer base includes:

9


F L R R i Th i L K k W h Y Ch Si d

10

Front L to R: Reggie Thein (Director), Lee Kok Wah (President & Group CEO), Yaw Chee Siew (Executive Chairman) and Heng Hock Cheng @ Heng Heyok Chiang (Director)

Back L to R: William Alastair Morrison (Director), Craig Foster Pickett (Director) and Ng Chee Keong (Director)

OTTO MARINE LIMITED

3 Business Segments3. Business Segments

OTTO MARINE LIMITEDBusiness Segments

Shipbuilding / Ship Repair and Conversion

Ship Chartering• Two-pronged approach –

Strategic Partnerships and100% d fl t

SpecialisedServices• Service and vessel provider in

• Construction of complex, high-spec & environment friendlyOSVs (e.g. AHTS, PSV,offshore construction vessel)

• Repair / conversion of wide

100% owned fleet• Mainly deployed by customers

in Singapore, Indonesia,Australia, West Africa andother South East Asiacountries

Service and vessel provider instrategic niche segmentswhich command higher marginsuch as seismic and subseavessels

• Seismic operator R fl t G h i lRepair / conversion of wide

range of vessels (e.g. OSVs,ocean-going tug)

• Sophisticated vessels for NorthSea operations that meet theABS or DNV classO 64 h hi d i B

countries• Vessels are on medium to long

term time and bareboatcharters

– Reflect Geophysical *Orient Explorer *Reflect Aries *Pacific Titan

• Subsea vessel provider, with ROV capabilities

• Owns 64 ha shipyard in Batam• Selective outsourcing to

China shipyards• Build-to-order

p– Surf Subsea Inc

* Surf Challenger

12

OTTO MARINE LIMITED

1313

OTTO MARINE LIMITED

Focus on high specifications and higher value vessels

Target European / North Sea market that

Global customer base:

- Norshore ASrequire ABS or

DNV class vessels

- ABCMaritime- Mosvold Supply

AS

Ship designs from renowned

N iSelective

outsourcingNorwegian design houses- Marin Teknikk

AS

outsourcing- Allows focus on

sophisticated vessels in Batam

shipyard

14

- Vik-Sandvikshipyard

OTTO MARINE LIMITED

Strategically Located Shipyard

SingaporeHeadquartersHeadquarters Strategic advantage due to Singapore’s position as

a regional marine and offshore industry hub

− Access to marine and offshore support

− Access to expertise

− Close proximity to SEA shipbuilding hub

− Ready supply of qualified Indonesian workers

Batam, IndonesiaOwn and operate PT. Batamec - 64 hectare shipyard in Batam

Major South-East Asian shipbuilding hub

− Access to large pool of workers in Indonesia

− Only 1 hour away from Singapore by ferry

15We are able to access marine expertise in Singapore and utilise

a ready supply of workers in Indonesia

OTTO MARINE LIMITED

Shipbuilding: Complex Offshore Support Vessel

Small to medium AHTS(< 14,000 bhp)

Large AHTS(> 14,000 bhp) Offshore construction vessel

Supply & anchor handling role Supports Jack-Ups & standard depth Semisubmersibles

Drilling Unit for field support and construction duties

Work barge with 300 d ti Platform supply vessel Other vessels300 pax accommodation pp y

To support accommodation i t

Transportation of cargo to ff h il ig d l tf

Utility vessels Work maintenance boats

16

requirements offshore oil rigs and platforms Work maintenance boats Others

We have a specialised focus on North Sea class offshore support vessels

OTTO MARINE LIMITED

One of the largest yards in Batam

Land area of 64 hectares

Waterfront of 650 metersWaterfront of 650 meters

1 dry dock

2 slipways (under construction)

Syncrolift

17

OTTO MARINE LIMITED

The Syncrolift® : Increasing Efficiency of Yard

• Large lifting system, which raises and lowers vessels in and out of the water for

What is itlowers vessels in and out of the water for dry-docking ashore

What it does

• Allows construction and repair of up to 16* vessels at one time

The

• Waterfront efficiency is multiplied • Much faster than using a drydock or

traditional vessel launchThe Advantage

traditional vessel launch

18*using 10,800 bhp vessels as a benchmark

OTTO MARINE LIMITED

Shipbuilding: Strong Engineering Capabilities

Right mix of personnel and tools needed for sophisticated vessels

Led by highly qualified senior engineers I h d i t I t t i ft D t il d i iIn-house design team

+

Investments in software Detailed engineering

=+ = Team of naval architects

and engineers

3D design software, TRIBON®

Precise virtual model

Key benefits

Minimises errors resulting in a more efficient shipbuilding process

Greater accuracy in shipbuilding

Productivity and cost efficiency

19

y y

We utilise our strong engineering capabilities to provide turnkey solutions for our customers

OTTO MARINE LIMITEDCompetitive Market Share

BatamecBatamec Shipyard -Ranked 8th in Asia AHT/AHTS newbuildsnewbuilds

20Source: quoted from DnB NOR initiation report dated 1 February 2010

OTTO MARINE LIMITED

Globally Recognised Sophisticated Yard

•Efficient operational capabilities and technical expertise elevates Otto’sposition as a sophisticated shipbuilder.

21Source: http://www.standard-club.com/docs/MikeMeade.pdf

OTTO MARINE LIMITED

2222

OTTO MARINE LIMITED

Expansion of Chartering Operations (As at 30 September 2011)

Two forms of chartering100% Owned charter fleet (100% ownership)

Expected own charter fleet(No. of vessels)

29 operational; 4x 10k bhp AHTS, 4x 6k bhp AHTS, 1x 7k bhp AHTS, 1x 8k bhp AHTS, 2x 61m maintenance, 1x 75m, 5x 40m AHTS, 1x 300men accommodation work barge, 5tug, 5 barge

5 joining in 2011/2012

10 15 25 30 34

5 joining in 2011/2012; 3x 28k bhp AHTS, 1x 8k bhp AHTS, 1x 300men accommodation work barge

Strategic partnerships (up to 49% equity interest) Expected JV charter fleet

08 09 10 11E 12F

Strategic partnerships (up to 49% equity interest)

6 operational; 2x 300men accommodation work barges; 4x 5k bhp AHTS

1 under construction;

1 6 7 6 7

08 09 10 11E 12F

Expected JV charter fleet(No. of vessels)

1x 75m 08 09 10 11E 12F

23We expect to grow our chartering income rapidly, on the back of

the growth in our charter fleet size

OTTO MARINE LIMITEDStrategic Partnerships

Otto Marine Strategic Partner

49% 51%

Otto books income from associates3 2 Strategic partner associates3

12 Strategic partner

manages & operates vessel

100%

Otto sells vessel to JV Company at

market price

JV Company

Our partners

1

Key benefits

Leverage on partner’s expertise and global

Vessel

1. ABCmaritime AG

2. Hoe Leong Corporation

3. Go Marine Australia

Leverage on partner’s expertise and global networks

No direct competition with our shipbuilding customers

24

4. Surf Subsea Inc. Passive, consistent & recurring income

Our strategic partnerships are structured to be a “win-win” situation

OTTO MARINE LIMITED

Investor Relations Contact : Kamal Samuel | Tel: 6438 2990 | Email: [email protected] 2525

OTTO MARINE LIMITEDSpecialised Services

Service and vessel provider in strategic niche segments hi h d hi h i h i i d b which command higher margin such as seismic and subsea

vessels

I. Seismic operator – Reflect Geophysical (81.8% owned) * Orient Explorer * Reflect Aries * Pacific Titan* Pacific Titan

II. Subsea operator - Surf Subsea Inc (19.2% owned) *Surf Challenger

Offshore Service that provides better margin and enhance our performance

Surf Challenger

26

OTTO MARINE LIMITED

4 Financial Highlights4. Financial Highlights

OTTO MARINE LIMITEDResults Summary: 9M2011

Revenue 58% S$206.3m

Gross Profit / Loss

58%

S$10 1m LossGross Profit / Loss

O ti l E

S$10.1m Loss

S$25 0Operational Expenses S$25.0m16%

PATMI S$51.1m Loss

28

OTTO MARINE LIMITEDHistorical Performance

Revenue(SGD millions)

206.3

(SGD illi )

PATMI(SGD millions)

(51 1)(51.1)

29

OTTO MARINE LIMITED

Segmental Performance 9M2011 vs. 9M2010

S$’million 9M2011 9M2010 Change %Shipbuilding, ship repair and conversion (1) 110.8 416.3 (73.4)

Ship Chartering 21.1 11.4 85.4

Leasing 17.6 15.6 12.6

Geophysical (2) 45.0 43.3 4.0

Subsea Services 11.8 - N.M.

Total Revenue 206.3 486.6 (57.6)

Gross Profit/ (Loss) (10.1) 96.8 N.M.

Gross Profit/(Loss) Margin (%) (4.9) 19.9 -

Profit/(Loss) Before Tax (56.5) 51.1 N.M.

Net Profit/(Loss) (att to Share Holders) (51 1) 49 9 N MNet Profit/(Loss) (att. to Share Holders) (51.1) 49.9 N.M.

Net Profit/(Loss) Margin (%) (24.8) 10.3 -

Earnings Loss Per Share (SGD cents) (2.71) 2.68 N.M.

30

OTTO MARINE LIMITED

Segmental Performance 3Q2011 vs. 3Q2010

S$’million 3Q2011 3Q2010 Change %

Shipbuilding, ship repair and conversion 16.8 50.0 (66.3)

Ship Chartering 8.8 4.0 117.9

Leasing 5.7 6.8 (16.6)

Geophysical 14.8 19.5 (23.8)

Subsea Services 5.2 - N.M.

Total Revenue 51.3 80.3 (36.1)

Gross Profit/ (Loss) (0.7) 7.2 N.M.

Gross Profit/(Loss) Margin (%) (1.4) 9.0 -

Profit/(Loss) Before Tax (20.3) 8.6 N.M.

Net Profit/(Loss) (att. to Share Holders) (19.8) 8.7 N.M.Net Profit/(Loss) (att. to Share Holders) (19.8) 8.7 N.M.

Net Profit/(Loss) Margin (%) (38.6) 10.8 -

31

OTTO MARINE LIMITEDConsolidated Balance Sheet

S$’million 30 Sep 2011 31 Dec 2010

Current assets 859.5 857.8

Non-current assets 721.2 679.5

T l 1 580 7 1 537 3Total assets 1,580.7 1,537.3

Current liabilities 728.6 708.9

Non-current liabilities 442.1 358.5. .

Total liabilities 1,170.7 1,067.5

Net Asset Value Per Share (SGD cents) 21.69 24.85

Net Gearing Ratio # 1.66 1.04

32Note: # Total borrowings less cash and bank balances over equity

OTTO MARINE LIMITED

Consolidated CashflowStatement

S$’million 9M2011 9M2010

Net cash used in operating activities (142.7) (180.4)

Net cash used in investing activities (6.8) (110.8)

N h f fi i i i i 55 4 209 4Net cash from financing activities 55.4 209.4

Net decrease in cash and cash equivalent (94.1) (81.8)

Cash and cash equivalent at beginning of 149 8 227 2Cas a d cas equ vale t at beg g o period 149.8 227.2

Effects of exchange rate changes on the balance of cash held in foreign currencies 0.8 (15.6)balance of cash held in foreign currencies

Cash and cash equivalent at end of period 56.5 129.8

33

OTTO MARINE LIMITEDRevenue Breakdown

Revenue (S$’mil)

34

OTTO MARINE LIMITED

Gross Profit Breakdown

Gross Profit & Margin

35Gross Profit (S$’m) Gross Profit Margin

OTTO MARINE LIMITED

Revenue and Gross Profit by Business Segments

Shipbuilding, Ship Repair and Conversion

(SGD illi )Revenue decreased 73.4% to S$110.8 million

while gross profit decreased from S$69.3million to gross loss of S$22.5 million:

•Due to less progress of work achieved with sales

(SGD millions)

p gcontract for which revenue is recognised based on

the % completion method

•The loss was mainly due to the reversal of profits recognised for the terminated sale contracts for the

two vesselst o esse s

•The profit on the vessel sold in September 2011 has not been recognised as conditions precedent have

not been completely fulfilled

36

OTTO MARINE LIMITED


Ship Chartering

(SGD illi )(SGD millions)

Revenue surged 43% to S$38.7 million and gross profit improved from S$21.0 million to

S$22.2 million in 9M2011:•Due to enlarged fleet sizeg

37

OTTO MARINE LIMITED


Specialised Services

(SGD illi )

Reflect Geophysical registered revenue of S$45 0 million up 4% but incurred a S$12 3

(SGD millions)

S$45.0 million, up 4% but incurred a S$12.3 million gross loss in 9M2011

• Due to lower utilisation of seismic vessels

S b b i t ib t d S$11 8 illi iSubsea business contributed S$11.8 million in revenue and S$2.5 million in gross profit in

9M2011

38

OTTO MARINE LIMITEDNet Profit & Profit Margin

Net Profit (att.to shh.) and Net Profit Margin(SGD illi )

9M2011 vs. 9M2010 Net Profit & Net Profit Margin

Net Profit decreased from S$49.9 million in 9M2010 to a net loss of S$51.1 million in 9M2011 & Net Profit Margin

(SGD millions)

$ gdecreased from 10.3% to (24.4)% due to:

• Decrease in revenue in 9M2011 due to less progress workachieved with sales contract

• Decreased profitability due to the reversal of profit recognised for the terminated sales contract for two vessels

• Reduction in gross profit from geophysical segment due to lower utilisation of seismic vessels

• Higher finance cost due to larger chartering fleet

39

OTTO MARINE LIMITED

5 Industry Outlook5. Industry Outlook Growth Strategies

OTTO MARINE LIMITEDIndustry Outlook

Soaring oil prices will excite O&G spending which will increase demand for OSV and PSVdemand for OSV and PSV

8% growth previously, now expected 12% - 15%

CAPEX spending

Graph A Graph B

41Source: Graph A: DnB NOR initiation report dated 1 February 2010

Graph B: http://www.dockwise4.com/annual2009/?id=14

OTTO MARINE LIMITEDIndustry Outlook

Otto Marine will stand to benefit from the recovery in the industry as players move towards deeper water

CAPEX development (includes next to drilling activities, also engineering, geosciences and support services) Deepwater CAPEX by region

Graph A

Graph B

42Source: Graph A: http://www.dockwise4.com/annual2009/?id=14

Graph B: http://www.epmag.com/Magazine/2010/5/item58177.php

Potential demand for new builds!

OTTO MARINE LIMITEDGrowth Strategies

• Focus on the demand for offshore vessels for deep water operations which isexpected to improve gradually as the oil majors have increased their spendingexpected to improve gradually as the oil majors have increased their spendingand looking more towards deep-water drilling projects

• Ride on our strength as a premium builder to attract the top OSV operators

• Accelerate growth of chartering business to compliment cyclical nature ofshipbuilding business:

• Expand our presence in the oil and gas market in Australia through Gop p g gMarine.

• Expand into the African market through Global Workboats.

St th i li d i t b l i t k f• Strengthen our specialised services segment by leveraging on our network ofglobal players in the deep water and subsea activities

43

OTTO MARINE LIMITEDTackling Issues

Immediate Concern 1 – 2 cancelled vessels (Hull No. 7048 and Hull No. 7049)

• Management is evaluating various options on hand to deal with the cancelledvessels

• May either sell these vessels at market value or aim at amalgamating them in theGroup’s fleet to charter them out

• These very sophisticated vessels are sister vessels to ‘Deep Sea 1’ that recentlyattained the coveted maritime class certification from DNV

• Already a number of enquiries for these vessels

• World market for this size AHTS has improved in the past months as evidenced bythe rise in the charter rates in the North Seathe rise in the charter rates in the North Sea

44

OTTO MARINE LIMITEDTackling Issues

Immediate Concern 2 – Streamline Reflect Geophysical’s Operations

• Intensify marketing efforts to improve utilisation of the vessels

• Target projects which are physically proximate to minimise mobilisation time so as

to maximise full production revenue

• Change cost structure for vessels from fixed to variable

• Seek synergy within the Group to manage the vessels as compared to

outsourcing

45

OTTO MARINE LIMITED

6. Thank YouQ & A

otto marine limited - listed...

Documents