Post on 24-May-2018
Capital Market Day 2012
• Recent News
• The sale of the Drilling Equipment unit
• Value Creation
• Strategy 2016
• The Organization
• The Development in China
• Summary
Agenda
The TTS Drillship Crane Package Crane Supply for STX Sigma Drillship
Typical Order Value: 120-140 MNOK
Breakthrough Deal for TTS Offshore Crane
• TTS Offshore Handling Equipment to supply the total crane package for the Sigma Drillship-vessel
• State of the art subsea crane with active heave compensation (GPOKac 5000-165-51,5)
• Pipehandling crane with gripper (1250 TM) handling all drilltubes from vessel
• Vessel to be built by South Korean STX Offshore & Shipbuilding, world’s fourth largest shipbuilder
• The Sigma drillship is designed for efficient drilling operations in Gulf of Mexico, offshore Brazil, offshore west Africa and South East Asia
• Drilling depths of 12,190 meters• Water depths up to 3,660 meters
• Cranes ordered by STX:• 1 x GPOKac 5000-165-51,5• 3 x GPOKc 5000-100-45• 1 x Pipehandling crane 1250 TM• 1 x Riser yoke swl 35 ton
Entering a new growth-segment
TTS Investment in Sigma DrillingEntering a new crane segment and increasing earn-out potential
• 5 MUSD investment (approx. 28 MNOK) in Sigma Drilling AS in connection with entity partly owned by Sigma
• TTS to deliver the offshore cranes to the vessel and Cameron International Corp. delivers the drilling equipment
• With the sale of its drilling equipment unit earlier this year, TTS established an earn-out agreement with Cameron based on revenue of drilling equipment to early June 2015
• Investment brings TTS into a new growing market segment
• Increased earn-out potential of the sale of the drilling equipment unit
Sigma Drilling AS
TTS Group ASATTS after the sale of Drilling Equipment
0
500
1 000
1 500
2 000
2 500
3 000
3 500
00 01 02 03 04 05 06 07 08 09 10 11
Offshore HandlingEquipment
Marine
Port & Logistics
MNOK
Sale of the Drilling Equipment Unit
• April 2012: - TTS Group ASA signed the agreement to sell the drilling equipment business to
Cameron for USD 270 million on a cash free/debt free basis- USD 15 million deferred payment over 2 years- Turnover based earn-out model for a three-year period
• June 2012:- Closing of transaction. Total gain from the sale was MNOK 420
• Q3 2012:- Paid MNOK 500 to the shareholders in form of extraordinary dividends and
payback of share capital
• 2013 – 2015: - Additional dividend capacity in 2013- All paid earn-out and deferred payment will be allotted to the shareholders
TTS in Brief
• Global ship equipment company with more than 40 years experience
• 25 units in 13 countries and a workforce of around 1,100
• Is one of the top three suppliers in our specialized market segments
• Headquarter in Bergen , Norway, listed on Oslo Stock Exchange
• Long history of organic growth and acquisition
• 30 acquisitions and establishments since 1996
Long history of growth
TTS in 2000
TTS in 2010
Strong Financial PerformanceHistorical key figures 2000-2012 in MNOK for TTS Group
* NGAAP, from 2004- IFRS**Without Drilling equipment
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A Story of Acquisition-Driven GrowthTTS Group turnover (NOKM)
Acquisitions
Mongstad Engineering
Listed on the OSE in 1995
Norlift
Aktro
Hamworthy KSEHydralift Marine
100% of JV in Shanghai
LMG Cranes
Liftec Oy
NavCiv Engineering
Kocks GmbH
ICD Project
Sense EDM
Sense MUD
Sense DrillFab
Sense EDM, Singapore
Wellquip Holdings
TTS Brazil
NMF GmbH
Keyon
Marine Engineering
100% of JV in Korea
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
DivestmentsTTS Group turnover (NOKM)
Divestments
TTS Construction
Listed on the OSE in 1995
Aktro
Sense MUDSense EDM
Sense DrillFabSense Singapore
TTS Brazil
Intercontrol AS
Controlteam AS
TTS Keyon
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New CompaniesTTS Group turnover (NOKM)
New companies
JV in Shanghai
Listed on the OSE in 1995
Office in Pusan, Korea
TTS BoHai Machinery
TTS Inc., Miami
TTS Marine, Italy
TTS Vietnam
TTS Keyon Marine, China
Jiangnan TTS, China
TTS Marine Equipment, China
TTS Singapore
TTS Greece
TTS Mexico
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Marine Engineering
100% of JV in Korea
TTS Keyon
TTS Automation AS
Combined Growth TTS GroupTTS Group turnover (NOKM)
Acquisition Divestment New company
Mongstad Engineering
JV in Shanghai
TTS Construction
Listed on the OSE in 1995
Norlift
Aktro
Hamworthy KSEHydralift Marine
Aktro
Office in Pusan, Korea
100% of JV in Shanghai
LMG Cranes
Liftec OyTTS BoHai Machinery
TTS Inc., Miami
NavCiv Engineering
Kocks GmbH
TTS Marine, Italy
TTS Vietnam
ICD Project
Sense EDM
Sense MUD
Sense DrillFab
Sense EDM, Singapore
TTS Keyon Marine, China
Wellquip Holdings
Jiangnan TTS, China
TTS Marine Equipment, China
TTS Singapore
TTS Greece
TTS Mexico
TTS Brazil
NMF GmbH
Sense MUDSense EDM
Sense DrillFabSense Singapore
TTS Brazil
Intercontrol AS
Controlteam AS
Closed company
Keyon
Acquisition of NMF
• The acquisition of NMF was completed on August 20th
• The integration of NMF started immediately thereafter and will be finalized by 4th quarter 2012
• Expected turnover in 2012 is approximately MEUR 90. EV/Sales 0,20
• The product range of NMF is complementary to TTS’ existing product range
• Market access to China, with potential on aftermarket, and lower production costs
• Significant synergies: sales and marketing, service and manufacturing. Expect to increase EBITDA margin 2-4%
Promising synergies for fast-growing Chinese market
Neuenfelder Maschinenfabrik Gmbh (NMF)NMF is the world leader in the segment of heavy lift cranes.
Crane segment Size Cranes
delivered
Cranes in
operation
Market
shareBoat and supply cranes 1.0t - 7.2t 1,200 cranes 743 cranes
< 5%
Bulker cranes 30t - 35t 184 cranes 141 cranes < 5%
Container cranes 20t - 60t 1,260 cranes 928 cranes~ 25%
Multipurpose cranes 20t - 120t 616 cranes 462 cranes< 10%
Heavy lift cranes 150t - 400t 455 cranes 326 cranes> 60%
Super heavy lift cranes* 700t - 1,000t 28 cranes 23 cranes> 90%
Total 3,743 cranes 2,623 cranes
* Will be offered as offshore oil and gas cranes, or for the installation of wind turbine
foundations with dynamic positioning system and deep sea capacities in the future.
ExecutionThe key to success
The 5 – 15 – 80 Rule:
•5% strategy•15% position•80% execution
Strategy
Position
Execution
€ 1 Billion Company in 2016Leading shipping and offshore equipment/ service company with economies of scale
Strategy
� Leading position in China provides market access (NMF)
� Focus on attractive specialized ships segments
� Grow offshore handling in expanding Far-East markets
Leverage strong position in China and Far-East
1
� Financial flexibility
� M&A track record
� Opportunities in distressed markets
M&A2
� COO
� Centralized standardization, product development and procurement
� Decentralized organization and decision making
Synergies and operational excellence
5
� Marine (volume and high end)
� Offshore handling
� P&L
Focus on profitability in
challenging segments3
� End user focus
� Mission critical products
� 4 hubs for global reach (80%)
Global service offering4
Corporate ManagementFlat organization
CEOJohannes D. Neteland
FinanceArild Apelthun
OperationsIvar K. Hanson
Human ResourcesNina Aadland
CommunicationsMiao Reinlund
DeckEquipment
Port &Logistics
OffshoreHandling
CargoAccess
Service
Business units
TTS NMFTTS JV
New Management Position
Ivar K. Hanson appointed COO:
• Joined TTS in 1994
• Former Executive Vice President for Marine
Division
• Solid trac- record with TTS Group
Chief Operating Officer (COO)
TTS Group China Venture
• Long history of successful business in China - Early mover, valuable experiences and strong position
• Unique relations with state owned companies- Long term commitment, new high-level meetings in Q3-Q4
• Joint Ventures with two leading Chinese state owned corporations :1. China State Shipbuilding Corporation (CSSC in 1998)
- China’s largest shipbuilding company- TTS HuaHai in Shanghai (1998)- Jiangnan TTS Marine Equipment Co. in Nantong (2007)- Hatch Covers and Winches (introduced in 2011)
2. Dalian Shipbuilding Industry Corporation (DSIC in 2005)- TTS Bohai in Dalian- Cargo Cranes, Offshore Cranes (and previously drilling equipment)
• World’s biggest market for Marine equipment
• All marine equipment products for the Chinese market are included in the two joint ventures
• Through the JVs TTS has gained a significant market share within its important and fast-growing niches in China
• TTS is building a strong service-presence in the Chinese market in close cooperation with its JV-partners
Strong Development for TTS in China
TTS Group Locations in China
TTS Bohai Machinery
TTS Marine Equipment
JiangNan TTS Marine Equipment
TTS Hua Hai
TTS Marine Shanghai
Hainan
Heilongjiang
Jinlin
Liaoning
Hebei
Shandong
Jiangxi
AnhuiHubei
Hunan
GuangdongGuangxi
Shanghai
Henan
Shanxi
Inner Mongolia
Shanxi
Ningxia
Gansu
Qinghai
Sichuan
Guizhou
Yunnan
Tibet
Xinjiang
Jiangsu
Zhejiang
Beijing
Tianjin
Fujian
Locations of Shipyards in China
Solid Structure for Growth
• Three solid revenue streams from TTS Group’s JVs in China:1. Royalty2. 50/50 profit split3. 100% after market outside China
• Expected turnover of close to NOK 1,5 billion in 2012
• Market share of 40-60% in Hatch Covers and Cranes
• The most important and focused market for the company- In 10 years, China is expected to be the largest market for offshore
equipment in the world
Uniquely positioned to serve the fast-growing Chine se offshore market where TTS’ unique relations is a key success f actor. (i.e. NMF)
• Joint Ventures are recognized in the financial statements according to the equity method. TTS Group includes only its share (50%) of profit after tax in financial reports
• Turnover in Joint Ventures in 2011 exceeded NOK 1 billion
• Increased turnover also in Q3 2012
• A weak market for bulkers lead to lower order intake and some cancellations in the quarter
• Still solid order backlog
TTS Joint Venture Operations in China
Numbers are on a 100% basis and in MNOK.
TTS Bohai’s deliveries:
•BOP handling crane•BOP skids•Pipe handling crane•Derrick
Total order value of around 2,5 MUSD
Significant potential for expanding the deliveries:
- Rig Cranes- NMF cranes- Winches- Doors- and more
TTS Group ASARig market in China with great potential
Prospector’s jack-up rig in Dalian
Focusing on the Far-East
• China is the gateway• Establishment of TTS Far-East Cooperation• Increasing demand from South Korea,
Singapore and China
• Growth Strategy for Far-East Market:1. Expanding the product portfolio
- Drillship Cranes, Offshore Rig, Offshore vessels
2. Expanding other offshore products
Capitalize on existing infrastructure to develop products and capture market opportunites in the Far-East markets
Summary
• Sale of Energy completed. The sale strengthened TTS financial position significantly
• Acquisition of NMF improved TTS position in the marine crane market and complements TTS product offering. Significant synergy potential is expected to lift margins
• Dividends and repayment of MNOK 500 declared in 2012, additional capacity for 2013
• Short term - market uncertainties
• TTS has reiterated it long term growth strategy through generic growth and acquisitions. Capacity for growth after dividend payments
Capital Market Day 2012
• Market Segmentation
• Marine Market
• Offshore Market
• Port & Logistics Market
• TTS Markets (Geo)
• Summary
The Promising Market
Marine MarketRoRo equipmentHatch CoversSide DoorsCruise and Mega YachtsWinchesDeck EquipmentCranesDavits
• Generally good operation is resulting in high margins, 10-11% EBITDA
• Activity and earnings in Joint Ventures in China remain high and looks promising for 2012
• Lower activity relating to standard products due to several postponed projects
• Low activity and difficult market for Services
• Low order intake in the quarter, but increasing trend of enquiries
• Acquisition of NMF expands TTS product offering and position in the Marine crane market
Marine – Status of OperationsRoRo equipment, Hatch Covers, Side Doors, Cruise and Mega Yachts.Winches and Deck Equipment, Cranes and Davits for ships
Marine Focus: PCTC,Yacht, Eco Friendly VesselsMarine Market Development by Main Segments vs. Competitive power
Market growth 2012-2015 HighLow
TT
S M
arin
e c
ompe
titiv
e po
wer
Weak
StrongMarket size equipment 2012
(annual new sales)
TTS Market Attractiveness Matrix
Marine: MTO• Bulk• Tank• Container
Offshore •Subsea constr.•Drillships & Rigs•OSV, PSV•FPSO
500’’- 1000’’
1.000’’- 2.000’’
2.000’’- 4.000’’
ETO: Engineer to Order
MTO: Make to Order
Marine: ETO•Car carriers•Heavy Load•LNG•Yacht•Cruise•Multi P
World Fleet Outlook
• Container Decreasing market in all segments• LNG Tankers Positive development in South Korea and Japan• Tanker Market on low level, but slightly positive outlook• Bulk Carrier In general low level, acceptable Chinese market, only few projects in
South Korea• Car Carrier Currently high activity in market due to low shipbu ilding prices,
demand expected to exceed supply in 2013-2014, more fuel-efficient Post-Panamax designs are introduced
• Short Sea RoRo Continued low activities expected• Deep sea RoRo Will maintain low level, but large projects• RoPax Expected to increase after several years of low demand• Reefer Has not developed, strong competition from container,
conversions more likely than NB• Multipurpose Few but interesting and substantial projects; heavy lift with growth
potential • Cruise Slow increase towards normal levels• Offshore Currently high activities, risk for lower oil price will reduce
activities. PSV has dropped, more complex, but fewe r projects• Navy New focus area, currently uncertain market• Yachts Booming market• Heavy Lift Market is slow, few contracts out but is expected to improve in 2013
Market Development by Ship Types
Estimated total market share/ value for Marine Products is 12 000 MNOK
Others – 12%
Total TTS – 50%
Annual Sales in MNOK
Seohae
Ravenstein – 7%
Kyoritsu Kikai
Others
Total TTS
TTS JV
TTS JV
TTS JV
OthersN
aval
impi
anti
Mac
or
Cargotec
Others
Total TTS
Rolls Royce
Pusnes
Hatlapa
Kawasaki
Towimor
Others
Total TTS
Seohae
Cargotec
Others
Lieb
herr
Total TTS
Others – 12%
Total TTS
Mitsubishi
IHI
Liebherr
Marine Segments
Post Panamax
• In 2015, the new, wider Panama Canal will open which will tolerate vessels with 34-36 meter width (compared to today’s 32m)
• New vessel size with increased capacity and efficiency have generated increased demand from ship owners and ship builders
• TTS well positioned for this fast-growing market
• Close and long-term relations with our customers, combined with our leading technology provides excellent platform to capitalize on the Post Panamax segment
• Stern Ramp technology and internal ramps of TTS Cargo Access approved and delivered
• TTS Cargo Access actively working together with customers to constantly improve cargo efficiency and capacity
Opens for new designs of Pure Car and Truck Carriers
Summary Marine
1.Challenging Market for new-building
2.Attractive segments in specialized ships
3.Positive Forecast for Bulk and Heavy Lift, ultimo 2 013
4.Service market showing signs of improvement
• Low activity and backlog at the start of the year still affects earnings. However backlog has increased markedly over the last 6 months
• Turnover still below break-even, resulting in a negative EBITDA in the quarter
• While investment activity in North Europe remains at a relatively low level for port business, there are still opportunities in this market
• Two new contracts were reported in August of 50 MNOK
Port and Logistics - Status of Operations
Port & Logistics SegmentsContainer Port development - Trends
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
-
20 000 000
40 000 000
60 000 000
80 000 000
100 000 000
120 000 000
140 000 000
160 000 000
180 000 000
200 000 000
in F
ull T
EU
Containerisation since 1995
FULL TEU growth
P&L Focus: Linkspans and ShipliftsPort & Logistics Market Development by Main Segments vs. Competitive power
Market size (annual new sales)
300 – 500 MNOK
500-1000 MNOK
Market growth 2012-2015 HighLow
TT
S p
ositi
on/e
xper
ienc
e
Weak
Strong
1000-1500 MNOK
Shipyards
Heavy Industry
Ports
Port & Logistics SegmentsEstimated total market value for Port & Logistics: 1 870 MNOK
860 (46%) 650 (35%)
TTS
Cargotec
Others
Ports
TTS
Others
Shipyard
IMG
360 (19%)
TTS
Industry
Annual Sales in MNOK
Bladt Industries
Ravenstein – 7%TEAM
Novatec
Ravenstein
TII Group (Kamag
Scheurle Rolls Royce
TII Group
Shipyard
Locals
Others
Seacom
Kress GIA
Horizontal Transportation Eq. Market in Container ports: 3 000 MNOK
Annual Sales in MNOK
666 MNOK (22%) 1 240 MNOK (40%) 840 MNOK (28%) 300 MNOK (10%)
Translifter+
Cassettes
Trailers
TerminalTractors
Straddle
Carriers
Auto
Shuttle
AGV
Others
Cargotec
Terex
Others
TTS
Liberr
CIMC
Houcon
Terberg
Cargotec
Others
Car
gote
c T
erex
(G
ottw
ald)
Port & Logistics Segments
Summary Port and Logistics
1.Ship repair market is in development – a potential f or TTS in segments for ship handling solutions
2.Port market showing signs of improvement
3.Long-term forecasts for the Port segments are posit ive with a growth in box movement between 5-6%
Offshore Handling Equipment
• TTS continues focus on the offshore market after the sale of drilling equipment
• Improved order intake in the quarter relates to offshore cranes
• Higher activity compared to 2011 explains the improved earnings
• Sold rest of the stocked offshore cranes in the quarter
• Well positioned to take advantage of active offshore market
Drillship and rig-cranes, AHC Cranes, winch segments
Offshore Handling Equipment
• The offshore yards and rig/ drillship owners welcomes a new player in the supply of offshore handling equipment
• TTS infrastructure in Europe and China provide unique position for effective supply of offshore handling equipment
• TTS NMF GmbH facility for supply in Europe
• TTS Marine Shanghai Co Ltd. facility for supply in China
• Opportunities in the development of the offshore market in China and the Far-East where TTS is uniquely positioned
Opportunities
Offshore Handling MarketMain Driver – oil price forecast expected to stabilize around USD 95
Source: IHS Fairplay, TTS analysis
Offshore Market Drivers
Source: IHS Fairplay, TTS analysis
Global rig fleet development
0%
25%
50%
75%
100%
400
600
800
jan 2002 jan 2004 jan 2006 jan 2008 jan 2010 jan 2012
Utilization (%)# of units
Total Supply Contracted Working Contracted utilization (rhs)
Offshore Market Drivers
Source: IHS Fairplay, TTS analysis
Rig Day Rates
0
100
200
300
400
500
600
700
jan.02 jan.03 jan.04 jan.05 jan.06 jan.07 jan.08 jan.09 jan.10 jan.11 jan.12
USD'/day
UDW Midwater UK Premium jackup USGoM jackup
Offshore Handling SegmentsEstimated total market value for Offshore Handling is 4 000 - 5 000 MNOK
Offshore & Subsea systems market and competitive si tuation
3) A-frames, module handling systems and ROV LARS
4) Products offered by TTS SESources: Clarksons, Pareto, TTS analysis
1) Offshore AHC cranes and general offshore cranes. Not platform /rig cranes
2) AHT winches and subsea winches page 74
Annual sales (MNOK):
MacGregor
ODIM
1000
Lifting & HandlingOffshore cranes
Other
TTSHuisman
MacGregor
Hatlapa
ODIM
National Oilwell Varco
Rolls Royce Marine
Offshore winches
Other
ODIM
Huisman
TTS
MacGregor
National Oilwell Varco
2 700
Other
1200
TTS
National Oilwell Varco
Huisman
100 %
0%
10 %
60 %
50 %
40 %
90 %
80 %
30 %
20 %
70 %
TT
SO
ther
Offshore Access
45
MacGregor
Shipyard
TT
S O
ffsh
ore
Co
mp
eti
tiv
e P
ow
er
Market Growth 2012 - 2015
TTS Offshore Market Attractiveness Matrix
osv
100 - 500 mNOK
500 - 1000 mNOK
RIG
LOW
STRONG
HIGH
WEAK
1000 - 2000 mNOK
Market size offshore
equipment 2012
(annual new sales)
WELL
FPSO
DRILLSHIPS
AHTS Make to Order
Engineer to Order
Offshore Focus: Drillships, Rigs and OSVsMarket Development by Main Segments v.s Competitive power
Summary Offshore Market
1.Drillship and Rig Markets are hot and provide oppor tunities for TTS Rig Cranes
2.Increased demand for subsea construction vessel – po ssibilities for AHC Cranes
Other marketsIn addition to China, TTS is building extensive local activites in Brazil, Singaporeand South Korea
Enhancing the Global Presence
The Market - Summary
Marine•Market prospects for complex ships are positive, pessimistic prospects for container and tank while the bulk and heavy lift sector shows signs of improvement ultimo 2013
Offshore Handling•Market prospects for OSVs are generally positive with opportunities in the rig/ drillship segments for offshore handling equipment
Port and Logistics•Market prospects for ship-lifts are positive while the market for port equipment shows minute signs of improvement on short term, long term – the trends are promising
Service•Challenging market that holds great potential, especially with development of four hubs for TTS’ global reach. Establish and develop long-term customer relations to end-user with strong product development of mission critical equipment. Improvements and important synergy effects already in place
Ivar K. HansonCOO
Capital Market Day 2012
TTS Group ASA
Streamlining Operations
Product Development
Service and After Market
TTS Group OperationsTopics
• Streamlining Operations
• Product Development
• Service and After Market
Creating an Operations Platform for GrowthEstablishing ‘’The TTS Model’’
DeckEquipment
Port &Logistics
OffshoreHandling
CargoAccess
Service TTS NMFTTS JV
Sales
Service
Sourcing
Production
Continuous Cost ImprovementCentralized procurement at core of new organization
• Approx 50 MNOK reduction per year based on order intake volume
• Across all product groups in TTS
• Estimates for 2013, full effect in 2014
5 - 10%
ReducedPurchase Cost
Production Efficiency with New Organization
Finland:TTS-Liftec
Germany:TTS-NMF
Germany:TTS-Service(Bremerhaven)
China:TMS(Shanghai)
China:TTS-MarineEquipment (Dalian)
Excluded are JV‘s, Sub‘s and their products.
Korea:TTS-MarineEquipment
Maximize utilization, optimization based on core competencies
Establish an Engineering Footprint for GrowthCreating a Basis for Growth in High Value Segments
• Engineering Gdansk, Poland: Offsh/PCTC 30 Engineers, Cost: NOK 120/hour• Engineering Hai Phong, Vietnam: PCTC 14 Engineers Cost NOK 20 /hour• Engineering Shanghai, China: Offshore 10 Engineers Cost: NOK 55 /hour
TTS Group ASATopics
ProductDevelopmentPort & Logistics
Ship LiftsMarine
Side Loading SystemsOffshore
Rig CranesOffshore Winches
Ship Lifts and Shipyard Solutions
Ship Handling SolutionsHeavy Load Transfer
Productivity ToolsImproving Customer Productivity
Ship LiftsHandling solutions in the low-end market 300t-3000t
Side Loading Systems
Side Loading systemsHandles both pallets and cars
Performance UpgradeIncreases load capacity and reduces port turnaround
Reefer ship project
Potential for Additional Offshore Products
Cranes for rigs and drillships
Revitalize TTS efforts on Anchor Handling Winches
Key competencies available to the end-customer
Service-Driven Operations
DeckEquipment
Port &Logistics
OffshoreHandling
CargoAccess
Service
Ivar K. Hanson
Cheif Operating Officer
TTS NMFTTS JV
Service and After Market
After Market for Far-East
• TTS secured 100% after market from JV-partner for service outside of China
• Optimization and efficiency through integration of European and Far-East operations
• Through customer-driven development secure a strong position in the Far-East Offshore Market
• Increase ability to serve the customer on the spot and in a timely manner so as to increase our competitive edge.
• Independent entities with technical and design knowledge for all TTS products
• The Hub Advantages:- Customer accounts (sales)- Service capability on all TTS products- Stock of critical parts- Workshop- Technical knowledge (design)
TTS Group Hub StrategyStrategic Objectives and Actions
Service Hub Development:
Hub Development Areas:
•Bremerhaven•Singapore•Dubai•Fort Lauderdale
Services
•There is great potential to grow the Service busine ss, both in terms of market shares and volume. This will be achieved by:
- Increasing market penetration : Establish hubs in US, Singapore, Dubai and Bremerhaven. Establishing services company in Brazil
- Gearing the organization towards more pro-active sa les : Not just CRM and KAM but making our service engineers our prime sales force
- Implementing cost reduction initiatives and working “smarter”: Strategic stocking and implementation of ERP system for Marine Inc and Singapore
- Optimizing pricing : Developing and implementing a competitive pricing strategy
Customer-oriented main strategic direction
Summary
1. New Operations Platform in place for enhanced produ ction efficiency and synergies- Optimization and efficiency through integration of European and Far-East
operations
1. Increased focus on Product Development to meet new and increased demand- Increase TTS Engineering Footprint and additional offshore products
1. Hub Strategy implemented to improve customer effici ency in vessel operations- Increase global After Market Sales and Service
Capital Market day 2012
• Financial Status TTS Group ASA- Main financial key figures and development- Change in Joint Venture structure more in detail - Balance sheet Q3 2012 after repayment of capital- Capital structure
• Selected Topics- Sale of Drilling: earn out model and potential
dividends going forward- Growth strategy – from a financial perspective –
alternatives- Pension obligation
Topics
Financial Status TTS Group ASAMain financial key figures
(MNOK) YTD Q3 2012 YTD Q3 2011 Full year 2011
Revenue 1 560 1 993 2 594
EBITDA 122 93 171
EBITDA (%) 7,8 % 4,7 % 6,6 %
EBIT 82 74 144
Net result continuing buiness 36 8 38
Net result divested business including gain on sale 418 0 -15
Net result in total 454 8 23
EPS (NOK, continuing business) 0,45 0,11 0,50
EPS (NOK, total) 5,61 0,11 0,30
Net working capital -47 -94 -169
Capital Employed (*) 860 1 634 1 596
(*) Adjusted for excess cash (i.e. dividends)
• Originally set up to accommodate legislation in China
• Decision to wind down was made in 2010 and final close will be early 2013 as arrangement no longer needed. Marginal impact on EBITDA
• Effects on working capital from year end approx. 100 MNOK (MNOK 125 from Q3 last year)
• Compared to 2011, revenues excluding structure change are down 12% YTD Q3
Financial Status TTS Group ASAChanges in Joint Venture structure affects revenue
• Consolidated TTS Group will remain debt free company after repayment of capital and adjusted for repayment of capital.
- Equity ratio of 38% at the end of 3rd
quarter 2012
• TTS Group aim at having a low working capital going forward and remain a “asset light” company
• Key focus is to minimize working capital to limit need for credit. Key drives are:
- Significant projects aim at being cash neutral
- Manage procurement and inventory
Financial Status TTS Group ASABalance Sheet after repayment of capital
28,7 29,0
46,6 46,5
38,0
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2012
Illustration
Equity ratio
• Working capital has moved substantially during the last quarter and year. Most of the movement in Q2 and Q3 relate to the sale of the drilling unit
• Change from year end of MNOK 148 – approx. MNOK 100 relate to change in JV structure and approx. MNOK 80 relates to acquisition of NMF
• Working capital is expected to increase gradually going forward but is still expected to be kept at a relatively modest level
Financial Status TTS Group ASANet working capital development
• In connection with the sale of the drilling unit TTS repaid 80% of its debt• TTS expects to have a new finance package finalized in Q4 mainly to
maintain financial flexibility
Financial Status TTS Group ASACurrent capital structure
MNOK Q3 12 Q2 12 Q1 12 Q4 11 Q3 11
Short term interest b. debt 45 21 577 755 793Long term int. bearing debt 29 37 313 35 96
Convertible Bond(*) 95 112 188 193 195
Total 169 170 1 078 983 1 084
Cash 565 985 567 435 492
Net interest b. debt(*) -396 -815 511 548 592
(*) Convertible loan included at nominal value(*) Negative indicates asset position
• Base for the earn out relates to 12 months revenue relating to specific products existing in the business at the time it was sold.
• A 7.5% earn out of revenue exceeding certain levels
• While the exact earn out is not possible to estimate reliably and depends on a number of factors outside TTS control, the award of equipment to drill ship improves likelihood of earn out.
• TTS current view is that the gain on the drilling business sale, after repayment of debt, should be paid to shareholders
Earn Out Relating to Sale of Drilling Unit
• TTS has a long history of successful acquisitions
• Current market conditions and development is likely to provide opportunities for further growth through acquisitions
• Over the last years TTS Group had a significant gearing following the acquisition of the drilling unit
• Sale of drilling unit results in a debt free company
• Long term TTS aim at a gearing which reflects its cyclic business, working capital fluctuation and especially need for financial flexibility.
• Current target capital structure: - Equity ratio above 30%- Net debt/EBITDA below 2
Funding Growth
• TTS has a defined contribution scheme for the majority of its Norwegian employees
• TTS to adopt IAS 19 from 1 January 2013- Liability being reflected in the balance sheet (and affect equity)- Currently obligation is estimated to be between 50 and 80 MNOK
and represents 6-10 % on the equity ratio- The change has limited impact to P&L and no cash effect
• TTS is expecting that legislation changes in progress could reduce liability in 2013
Pension Obligation