otto marine limited corporate presentation 28 april 2014otto marine limited corporate presentation...

Otto Marine LimitedCorporate Presentation28 April 2014

This presentation and the associated slides contain confidential information about Otto Marine Limited (the “Company”) and itssubsidiaries and 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 willuse such information only for the purpose it has disclosed to the Company for participating in this presentation and not for otherpurposes and will not divulge any such information to any other party without the express consent of the Company. Any reproductionof such information, in whole or 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 or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, reliability, completeness or correctnessof the information or opinions contained herein. Neither the Company, any other company within the Group or its advisors, nor any oftheir directors, officers or employees or any representatives of such persons, shall have any responsibility or liability whatsoever (innegligence or otherwise) for any loss 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.These statements are based on current beliefs, expectations or assumptions and are subject to unknown risks and uncertainties thatcould cause actual results, performance or events to differ materially from those described in such statements. These risks,uncertainties and other factors include, but are not limited to, economic conditions globally, the impact of competition, political andeconomic developments in countries in which the Group operates and regulatory developments in those countries and internationally,foreign exchange rates, oil and gas prices and the completion of ongoing transactions. Many of these factors are beyond theCompany's ability to control or predict. Although the Company believes that its expectations and the information in this presentationwere based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will beachieved 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 suchsecurities and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitmentwhatsoever.

Disclaimer

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Table of Contents

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Business Overview

Future Plans

Summary

Financials

Market Outlook

Business Overview

4

5

Attractive Industry • Demand for OSVs will continue to grow as global offshore E&P capital expenditure

increases. This is supported by the increase in demand for our deepwater fleet, and increasing day rates and utilization.

Growth Company• We are one of the leading marine services company in the region with a shipyard,

and a diversified fleet of 65 vessels (ranges from ultra large AHTS to crew transfer vessels) as at 31 Dec 2013.

Good Client Base• Chartering business has good working relationships with oil majors and reputable

exploration and production companies.• Shipyard business with established client base and has delivered more than 70

vessels since 2005.

Strong Management Team• Management with >150 years of cumulative industry experience.• Strengthened chartering and shipyard team with several reputable industry

veterans in 2013.

Otto Marine – One of the Leading Marine Services Company in the Region

Overview of Key Developments

6

1Q2013• Secured order to build

two 5,150 HP AHTS for US$27.8 mil

• Mok Kim Whang and Lum Kin Wah joined shipyard division

2Q2013• Sold 2 Multi-purpose

Field Support and ROV Support Vessel for US$100mil

3Q2013• Entered into sale and

leaseback agreement for two 24,000 HP AHTS for US$170mil

• Appointment of Garrick Stanley as ED & Group CEO

• Acquired 49% in GO Marine Services Sdn Bhd(formally known as ExproSynergy)

• Sold 2 vessels for US$30mil

4Q2013• PT GO Marine

International obtained shipping licence in Indonesia

• Secured order to build two 3000 hp harbour tugs for US$9mil

• Sold 7 vessels for US$10mil

1Q2014• Announced new charter

contracts worth US$105mil

• Promotion of Michael See as Group ED & Appointment of Denville Wee as CFO

• Delivered drilling vessel Norshore Atlantic

2Q2014• Expanding subsea

installation, maintenance and repair business by acquiring 2 vessels for subsea business. The 2 vessels are expected to be delivered in 2Q 2014.

Overview

• Headquartered in Singapore, and listed on the SGX since 2008

• Operates a fleet of 65 vessels, and has served customers around the world. Pre‐qualified with global E&P majors through subsidiary, GO Marine

• Owns one of the largest shipyards (64 hectares) in Batam, Indonesia, that has a track record of building complex offshore vessels

7

Global Operations

Asia• Singapore• Indonesia • Malaysia • China• Fujairah

Australia

Houston

Large and Diversified Fleet

24,000 bhp Anchor Handling Tug Supply Vessels

5,000 dwt Platform Supply Vessels

Multi‐purpose Field Support Vessels

61m Work Maintenance Vessels



Snapshot of Otto Marine

Overview Global Operations

Large and Diversified Fleet

75m 140 men Work Maintenance Vessel


Mr Garrick Stanley, Group Chief Executive Officer

• Over 15 years' experience as a Master Mariner

• Founded the Go Marine Group and was the Managing Director since 2007.

• Appointed as Group Chief Executive Officer in Aug 2013.

8

Key Management ‐ Corporate

Mr Michael See, Group Executive Director

• Joined the Group since 2007, and has more than 20 years of experience in the financial and accounting management, structure and project finance, investor relation, corporate services, human resources and general management of public listed companies in Singapore and overseas.

Mr Denville Wee , Chief Financial Officer

• Over 20 years of experience in financial and accounting management. Prior to joining the Group in Feb 2014, Denville was the CFO of V.Ships Asia Group and I.M. SkaugenMarine Services Pte Ltd.

Ian Del Rosso

Chief Executive Officer ‐ GO Marine

More than 28 years' experience in the offshore oil and gas industry in Australia, during this period of time Ian has worked in companies such as Swire Pacific Offshore Perth, Tidewater, Offshore Marine Services, Total Marine

9

Key Management – Chartering and Shipyard

Captain Michael Sean Kelly

Managing Director ‐ Africa

• More than 35 years in the maritime industry, and rising to the position of Master Mariner.

Mr Morten Andersen

General Manager, Go Asia

• Over 10 years of management experience and was the Deputy Managing Director of SolstadOffshore Asia Pacific Ltd prior to joining GO Marine.

Mok Kim Whang

President ‐ Shipyard

• More than 45 years’ experience in the marine industry with the last 23 years heading shipyards in Asean region

Lum Kin Wah

Senior Executive Vice President ‐ Shipyard

• Over 35 years of experience in the marine industry in various roles ranging from apprentice to General Manager and Director in companies including a subsidiary of Keppel Shipyard, Keppel Philippines and PT Pan‐United Shipyard, Indonesia.

Chartering Business Shipyard Business

10

Our Fleet

A comprehensive fleet of 65 vessels under 3 operating structures

Vessel Type Otto Fleet GO Fleet Otto and GO Fleet

Total Own Charter SP Own Charter SP Own Charter SP

Tug 4 1 5 5

Barge 2 1 2 1 3

AHT 1 1 2 2 2 4

AHTS 6 2 5 4 5 10 7 5 22

PSV 2 2 2

MFSV 2 2 2

WMV 1 1 2 1 1 2 4

Seismic 1 1 1

Subsea 1 1 1*

LCT 1 1 1 1 2

Offshore support vessel 1 1 1

Crew Transfer Vessel (CTV) 15 15 15

Line Boat 2 2 2

Self Propelled Barge (SPB) 1 1 1

Total 16 3 5 7 32 2 23 35 7 65

*2 additional subsea vessels are expected to join our fleet in May.

11

Diversified Fleet to Support the Entire O&G Project Life Cycle

Exploration Development Production Decommissioning

• Seismic duties

• Towing, positioning, mooring rigs

• Transporting personnel and supplies

• Drilling support duties

• Towing, positioning, mooring rigs and production systems


• Installation of infrastructures

• Subsea installation, maintenance and repair

• Platform facility support


• Infrastructure maintenance

• Additional accommodation and crane capacity


• Construction support duties

• Demobilisation of infrastructures and platforms



Offshore Support Vessels Provided by Otto Group

• AHT• AHTS• PSV• MPSV

• Tugs and Barges• AHT• AHTS• PSV• MFSV• WMV• Subsea

• AHT• AHTS• PSV• MFSV• WMV• Subsea

• Tugs and Barges• AHT• AHTS• PSV• MFSV• WMV• Subsea

We have a wide variety of vessels to support the needs of O&G majors

Otto Marine

Ship CharteringShipbuilding, Repair & Conversion and Fabrication

Specialised Services

‐ Subsea

Business Segments

12

Focused on chartering a fleet of 65 wholly owned and chartered in vessels

Fleet type:• AHTS• AHT• PSV• MPSV• WMV• Tug• Barges

Focused on operating one of the largest shipyard in Batam, Indonesia

Services:• Ship repair and conversion• Offshore structure fabrication• Building of new vessels for the

Indonesian Cabotage market

Focused on sub‐sea and offshore construction works

Services:• Service and vessel

provider in strategic niche segments such as ROV supply and subsea vessels through associate company, SURF Subsea.

• Operations in Gulf of Mexico.

Investee Co. 19.2%

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Owner and operator of offshore support vessels providingservices such as:

• Rig moving;

• Vessel management;

• Vessel chartering;

• Marine consultancy;

• Crewing services; and

• Support to offshore exploration, construction andproduction.

GO Marine – Leading OSV operator in Australasian market

Key strengths:

• Pre‐qualified with E&P majors;

• Experienced team of Master Mariners and ChiefEngineers leading the technical operations;

• Young, diversified and high quality OSV fleet providinggreater efficiency & capability; and

• Excellent HSQE practise and has never been rejected fora charter contract due to non‐compliance.

• Management system compliant with ISO 9001:2008,IS014001 and ISO18001 designed to encompass safetyin operations.

Specialised Services provided to global O&G companies: Key Strengths:

Blue Chip Customer Base

Achieved pre‐qualified status with global exploration and production majors

14

Mexico

North Sea

Africa

Australia

Indonesia

VietnamIndiaMiddle East

Malaysia

Sakhalin

Our Global OSV Footprint

One of the leading regional marine services company with a global reach

15

Overview of Shipyard:

• One of the largest shipyards in Batam with comprehensive"one‐stop" facilities for shipbuilding, modular fabrication,ship repair and conversion.

• Current Focus:

‐ Ramp up operations for ship repair, conversions andfabrication jobs

‐ Support Otto Group’s fleet expansion, renewal andupgrading program.

‐ Secure and execution vessel orders for the IndonesianCabotage market.

PT Batamec – One of the Largest Shipyards in Batam

Key strengths:

• Strong technical team capable of building advanced ultralarge AHTS, and drilling vessels

• Good infrastructure and facilities:

‐ 650m waterfront and land area of 64 hectares

‐ 1 dry dock and 2‐purpose built slipways

‐ Syncrolift ® that berth up to 16 vessels

• Track record for delivering > 70 vessels serving theoffshore oil and gas industry since 2005

• Strategically located to tap on Indonesian cabotagemarket

Overview of Shipyard: Key strengths:

Shipbuilding Customer Base

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AHTS ‐ 5,000 ‐10,800 BHP

Accommodation Work Barge‐ 300 men

PSV‐MT 6009 Mk.II 75m

Ultra Large AHTS‐ 24,000 BHP

Multi Purpose Subsea Ops Drilling Vessel115m MPSV Drilling vessel

Completed and delivered more than 70 vessels serving the offshore oil and gas industry since 2005

Work Maintenance Vessels‐ 75m 140 men WMV

Track Record of Building Complex OSVs

Recent deliveries:

Targeted deliveries:

17

No. Vessel Name Vessel Type Capacity Delivery

1. Norshore Atlantic Drilling and Intervention Offshore Construction vessel

Lifting 700 tonnesOperate up to 3000m

Feb 2014

2. Go Pegasus AHTS 24,000 bhp Oct 2013

3. Go Phoenix AHTS 24,000 bhp Aug 2013

4. Otto Explorer 3 Platform Supply Vessel 79m Feb 2013

5. SOC Endeavour Work Maintenance Vessel 75m, 140 men May 2012

6. Beluga 2 AHTS 7,268 bhp May 2012

7. Loch Roag Multi‐purpose field support vessel

79m Mar 2012

8. Otto 5 300 men accommodation barge

300 men Feb 2012

9. Redfish 4 AHTS 8,000 bhp Jan 2012

Delivery Track Record

No. Vessel Name Vessel Type Capacity Delivery

1. Deep Sea 4 AHTS 24,000 bhp 2Q2014

2. TBA – PTK1 AHTS 5,150 bhp 4Q2014

3. TBA – PTK2 AHTS 5,150 bhp 4Q2014

4. TBA – PTK3 Tugboat 3,000 bhp 4Q2014

6. TBA – PTK4 Tugboat 3,000 bhp 4Q2014

18

Surf Subsea ‐ Focused on Providing state‐of‐the‐art deepwater solutions

Key strengths:

• Headquartered near Houston, SURF is committed toproviding top‐notch subsea services to its customers.

• Their team has worked on some of the largest offshoredevelopments in the U.S. Gulf of Mexico, Mexico, Asia,Australia, India, and the North Sea.

• The team’s in‐depth knowledge and understanding of theindustry is backed by years of education and fieldexperience in all forms of Deepwater Construction andIMR Operations.

Background Key strengths:

• IMR – Deepwater IMR functions

• ROV Support ‐ Provide specialized ROV support for field orproject

• Intervention Services ‐ Capability to provide a range ofintervention services such acid stimulations and chemicalinjections

Services

Vessels under Subsea Business

Multi Purpose PSV

• Vessel is expected to be deployed in international/Australian waters when it is delivered in May.

Subsea Support Vessel

• Vessel is currently deployed in Gulf of Mexico

IMR and Survey vessel

• Vessel is expected to be deployed in North Sea/Gulf of Mexico when it is delivered in May.

Market Outlook

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E&P Spending Expected to Increase over next 2 years

• Deepwater drilling is expected to continue as long as Brent oil price stays above US$80/bbl.

• E&P spending has stayed at elevated levels as Brent is expected to continue to trend higher over the next 2 years.

Brent has stayed above US$100/bbl for almost 10 quarters

Brent expected to trend higher over the next 2 years

• Based on Macquarie’s estimate, there are 139 deepwater discoveries that are under developed or currently under development. These discoveries could contain an estimate of 77 billion barrel of oil equivalent of resources, and required US$658 billion of expenditures to develop.

21

Source: Company data, Wood Mackenzie, Macquarie Research, September 2013

Deepwater Resources Development and Expenditure

2013-2020 Deepwater Resources Development (boe) 2013-2020 Deepwater Expenditure (US$bil)

22

Source: Douglas Westwood

Major Trends Driving Future Activity

Oil and gas supply growth is expected to come from offshore production

• Orders for OSV newbuilds have been declining over the past few years since its peak in 06/07 and new deliveries are going to drop from 2013 onwards which will be beneficial for OSV owners.

• Booming E&P activities, is expected to help absorb the excess supply built over the past few years. Coupled with the rising OSV demand, the improving supply‐demand dynamics is expected to drive up the charter rates.

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AHTS Trends

AHTS to rig ratio

No. of AHTS Ordered ASEAN Average Spot Rates for AHTS

• Overall PSV‐to‐rig ratios has been stable over the last few years and the rates for PSVs have been increasing since 2010.

• Similar to the AHTS market, the improving demand‐supply dynamic of PSV is expected to a positive impact on the PSV rates.

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PSV Trends

PSV to rig ratio

No. of PSV Ordered ASEAN average spot rates for PSV

Financials

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Profit & LossFY2013US$ ‘000

FY2012US$ ‘000

Change %

Comments

Revenue 511,995 374,400 36.8 Revenue recognition milestones achieved for shipbuilding in FY2013.

Gross Profit 46,474 8,448 450.1

Other Income 92,670 22,774 306.9 Primarily due to gain on deconsolidation of subsidiary

Selling and admin expenses (90,403) (85,759) 5.4

Other expenses (4,967) (32,425) (84.7) Impairment loss on PPE, available for sale investment and goodwill in 2012.

Share of loss of associates & joint venture

(4,122) (2,246) 83.5

Finance Costs (24,237) (22,292) 8.7 Increased interest incurred on additional loan facilities drawn down on enlarged fleet

Profit (Loss) before tax 15,415 (111,500) n.m.

Taxation 492 (2,200) n.m.

Profit (loss) for the year 15,907 (113,700) n.m.

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Profit & Loss Summary

Balance Sheet31 Dec 2013US$ ‘000

31 Dec 2012US$ ‘000

Property, plant and equipment 521,425 394,786

Goodwill 38,314 38,314

Inventories 127,963 404,437

Gross amount due from customers on contract work 85,015 76,899

Cash and bank balances and fixed deposits 96,195 60,196

Gross amount due to customers on contract work 16,395 1,119

Borrowings from financial institutions 330,411 402,817

Finance lease payables 166,058 58,708

Trade payables 320,773 321,296

Total Equity 303,970 222,877

Net Gearing Ratio 1.47 2.25

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Balance Sheet Summary

Cash Flow StatementFY2013US$ ‘000

FY2012US$ ‘000

Net cash from / (used in) operating activities 114,895 62,129

Net cash from / (used in) investing activities (42,801) (24,399)

Net cash from / (used in) financing activities (71,552) (60,667)

Net increase / (decrease) in cash and cash equivalent 542 (22,937)

Cash and cash equivalent at beginning of year 46,820 69,251

Effects of exchange rate changes on the balance of cash held in foreign currencies

672 506

Cash and cash equivalent at end of year 48,034 46,820

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Cash Flow Summary

330.0 277.3

350.4

104.6 55.4

222.8

11.4

12.2

28.3

241.8 276.3

265.8 2.8

45.8 68.4

42.7

23.3

0

100

200

300

400

500

600

FY08 FY09 FY10 FY11 FY12 FY13

Specialised Services Ship Chartering & Leasing Shipbuilding, Repair, Conversion and FabricationUS$’m

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Revenue By Segment

80.3

44.4 41.8

‐27.7 ‐25.8

11.8

6.7

7.922.2

43.8 49.5 31.5

‐0.2

2.5

‐12.2 ‐15.2

3.1

‐60

‐40

‐20

0

20

40

60

80

100


Specialised Services Ship Chartering & Leasing Shipbuilding, Repair, Conversion and FabricationUS$’m

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Gross Profit By Segment

40.1 36.0 29.8

‐52.2

‐103.1

14.1

12.4% 12.2%

6.5%

‐13.5%

‐30.4%

3.1%

‐35.0%

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

‐120

‐100

‐80

‐60

‐40

‐20

0

20

40

60


Net Profit Attributable to Shareholders Net Profit Margin

US$’m

31

Profitability Trend

Future Plans

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• Renew, expand and upgrade existing fleet to maintain a young and technologically advanced fleet to access different markets

• Continue to support global E&P majors with projects in Austrasia, countries with cabotage laws, and emerging markets. Aim to create a long term foothold in these markets as they expand

Strategic Focus

33

Ship Chartering

Shipbuilding, Repair & Conversion and Fabrication

Specialized Services

• Focus on expand ship repair and conversion , and modular fabrication orders from the oil and gas industry

• Secure and select newbuild orders

• Support Otto’s fleet renewal, expansion and upgrading program

• Support Surf Subsea to expand fleet and service offerings

Fleet Transformation Strategy

• Otto intends to renew, expand and upgrade existing fleet to ride on the increasing demand forOSVs to achieve best in class performance by:

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• Fuel efficient

• State of the art equipment and latest technology in the deep water sector

•Vessels which will be in demand for the next decade and beyond

Add new technologically advanced OSVs

• Increase bottom‐line returns to the Group

•Reduce exposure to market fluctuations

Selective replacement of

chartered in OSVs

•Company policy to maintain a young and technologically advanced fleet under 10 years of age

Replace older vessels with advance OSV

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Current Newbuilds

238 Men Workboats

PX 121 PSV

• PX121 4,000 DWT PSV

• 4 vessels are expected to be delivered between 2015 and 2016

• 88 meters 238 men work maintenance vessel

• 4 vessels are expected to be delivered between 2015 and 2016.

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Africa

Australasian

Malaysia and

Indonesia

Focus on Australasian, Cabotage and Emerging Markets

Australasian Market• Maintain market position in

Australasian market by continuing to expand its fleet size and services offerings to support the global E&P majors.

Cabotage Markets• Otto Marine has set up a 49%

JV in Indonesia to own and charter vessels, and acquired a 49% stake in Malaysian company which holds a valuable vessel charter licence to trade with an international state owned oil and gas conglomerate.

Emerging Markets• Angola and Nigeria are the top 2 oil producers in

Africa, producing about 4 mbd.

• Deepwater production accounts for more than 75% of production in Angola and 33% in Nigeria.

• Angola and Nigeria is expected to account for 24% of global deepwater spending and 12% of global deepwater resource development from 2013-2020.

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Summary

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Summary

Otto Marine has repositioned as a Marine Services company with a shipyardprimarily focused on supporting the global oil and gas industry

Young, diversified and high quality OSV fleet with excellent HSQE track recordcapable of providing a wide range of services

Experienced management team focused establishing long term relationships anddelivering results for clients

Renew, expand and upgrade existing fleet to support its chartering business inthe deepwater and subsea markets around the world

THANK YOU

otto marine limited corporate presentation 28 april 2014otto marine limited corporate presentation...

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