Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping — Investor Presentation (September 2006)
37 slides from Great Eastern Shipping's investor presentation, September 2006
Slide 1: The Great Eastern Shipping Co. Ltd.
The Great Eastern Shipping Co. Ltd. September 2006 1
Slide 2: Forward Looking Statements
Forward Looking Statements Except for historical information, the statements made in this presentation constitute forward looking statements. These include statements regarding the intent, belief or current expectations of GE Shipping and its management regarding the Company’s operations, strategic
Slide 3: Business Focus
Business Focus ØServicing the “energy sector” Ø“Oil” key to economy development ØAid in “finding” oil ØHelp in transporting “more” oil Aim to service the “upstream” and “downstream” segments of the energy chain 3
Slide 4: Business Philosophy
Business Philosophy Strive to deliver through the cycle Ø Risk Management is core Ø Identifying risk and depicting through a matrix Ø Assessing the impact of risk Ø Limiting risk through informed decisions How do we do this? ØPlan for rather than forecast the future ØAvert unforeseen hits instead of
Slide 5: Performance over last 5 years
Performance over last 5 years….. Earnings Cash Earnings Dividend Financial Year Tonnage per share per share per share (Apr-Mar) (Mn dwt) (USD) (USD) (USD) 2000-01 1.37 0.15 0.32 0.06 2001-02 1.28 0.18 0.38 0.08 2002-03 1.32 0.23 0.42 0.08 2003-04 2.47 0.56 0.80 0.14 2004-05 3.02 0.94 1.28 0.20 2005-
Slide 6: Delivering through the years
Delivering through the years .. 380 400 371 50 43.8 350 45 36.5 40 300 34.8 36.21 282 35 250 30 Rs. per share 200 25 % 167 19.5 153 150 15.96 17.48 139 20 115 15 100 79 62 84 10 50 67 53 67 50 5 0 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Q1 2006-07 - BV NAV ROE% 6
Slide 7: Performance over five years - Shipping
Performance over five years - Shipping USD Mn 600 700 598 613 500 600 500 500 400 456 374 400 Capital Employed Revenue, PBIT 300 284 295 300 274 210 220 200 168 179 166 200 144 100 83 51 50 100 43 0 0 FY01 FY02 FY03 FY04 FY 05 FY 06 Revenue PBIT Capital Employed 7
Slide 8: Performance over five years - Offshore
Performance over five years - Offshore USD Mn 90 200 80 78 78 180 180 70 70 160 60 139 140 52 118 50 120 50 47 Capital Employed Revenue, PBIT 100 40 69 80 29 29 80 30 60 25 60 19 20 15 15 40 10 20 0 0 FY01 FY 02 FY03 FY04 FY 05 FY 06 Revenue PBIT Capital Employed 8
Slide 9: Tanker Secondhand Prices Index
Tanker Secondhand Prices Index 20 0 90 110 130 150 170 190 210 230 20 1-03 0 20 1-05 0 20 1-07 0 20 1-09 0 20 1-11 0 20 2-01 0 20 2-03 0 20 2-05 0 20 2-07 0 20 2-09 0 20 2-11 0 20 3-01 0 20 3-03 0 20 3-05 0 20 3-07 0 20 3-09 0 20 3-11 0 20 4-01 0 20 4-03 0 20 4-05 0 20 4-07 0 20 4-09 0 Tanker Second
Slide 10: Business Profile
Business Profile Ø Shipping Ø Transportation of bulk commodities ØCrude, Petroleum products, LPG, Dry bulk commodities Ø Offshore oil field services Ø Offer support to offshore oil field Exploration and Production activities through a wide asset spectrum ØExploratory rigs, OSVs,Construction Barge,Ha
Slide 11: Financials (as on April 1, 2005 - Appointed Date)
Financials (as on April 1,2005 - “Appointed Date”) USD Mn. G E Shpg. G E Shpg. Great Status Quo Residual Offshore Ltd. Balance Sheet Share Capital 44 35 9 Reserves 457 363 94 Debt 475 423 52 Ratios Net Gearing 0.48 0.50 0.39 ROCE 20.5% 20.7% 19.3% NAV/ Share (USD) 6.5 6.9* 4.6* BV/ Share (USD) 2.6 2
Slide 12: Shipping Fleet
Shipping Fleet Ø 39 ships aggregating 2.77 Mn dwt Ø 30 Tankers (double hull about 43%) Ø 13 Crude oil carriers Ø 15 Product carriers Ø 2 LPG carriers Tanker comprise 86% of tonnage Ø 9 Dry bulk carriers: Ø 1 Panamax Ø 5 Handymax Ø 3 Handysize Dry bulk carrier comprise 14% of tonnage Ø Av. Age of fle
Slide 13: Offshore Fleet
Offshore Fleet Ø 35 Offshore vessels servicing offshore oil fields Ø 2 Exploratory drilling rigs Ø 21 Offshore Support Vessels ( of which 8 cater to deep water) Ø 1 Construction Barge Ø 11 Harbour tugs Ø Current Committed Capex of around USD 220 Mn Ø 4 AHTSVs of which 3 to be delivered in FY 2006-07
Slide 14: Market Performance
Market Performance 14
Slide 15: Shipping Markets in Q1 FY07
Shipping Markets in Q1 FY07 ØTanker freight rates saw a steady rise ØRecovery of refineries post seasonal shut-down ØIncrease demand for gasoline and jet fuel ØChange in trade pattern resulting in increased turn around time ØDry bulk freight rates scaled upward ØRise in minor bulk trades ØHigh deman
Slide 16: Offshore Markets in Q1 FY07
Offshore Markets in Q1 FY07 ØContinuing high oil & gas prices spurred operators to increase E&P efforts ØDemand for offshore rigs triggered new building orders ØMarine support services witnessed significant surge ØLonger term contracts opened newer markets ØDevelopment drilling activity on a rise ØA
Slide 17: Company Performance Shipping
Company Performance Shipping Ø During the quarter revenue days were lower by around 4.5% Ø Degrowth in Tonnage by 6.21% Ø Moderate spot freight rates in tankers and dry bulk freight rates declined by 31.44% compared to corresponding quarter Shipping Operating profit was “flat” 17
Slide 18: Company Performance Offshore
Company Performance Offshore Ø Increase in OSV fleet Ø Continued higher yield on offshore assets Ø The rig “Kedarnath” now on charter underwent major repairs during corresponding quarter last fiscal 100% growth in PAT 18
Slide 19: Financial Comparison
Financial Comparison (in USD mn.) Quarter on Quarter Q1 Q1 FY 2006-07 FY 2005-06 % Change (Reviewed) (Reviewed) Total Income 146 176 17.04% EBIDTA 90 108 16.6% Interest 7 6 16.6% Depreciation 19 18 5.5% PBT 64 85 24.7% PAT* 61 81 24.6% 19 * includes prior period adjustments
Slide 20: Business Restructuring – status update
Business Restructuring – status update As on Record Date: 1 Share of GOL for every 5 Shares of GES 4 Shares of GES Ø On August 9,2006 the BOD unanimously decided to apply to the Hon’ble Bombay High Court seeking extension of time Ø Hon’ble Bombay High Court granted a three months extension expiring
Slide 21: Demerger Process (tentative) Timeline
Demerger Process (tentative) Timeline 30 days around around notice 21 days 15 days GES will Relist GOL New Effective Record with reduced listing with Date Date equity of equity of Rs 152 Cr Rs 38 Cr Trading to be suspended 5 days prior 21
Slide 22: Expansion through subsidiaries - Greatship (India) Ltd
Expansion through subsidiaries Greatship (India) Ltd ØParticipating in the promising offshore oil field services business ØThrough wholly owned subsidiaries ØBuilding a modern fleet through a mix of new building and secondhand acquisitions Global alliance to enable increase in operating tonnage 22
Slide 23: Greatship (India) Ltd Fleet
Greatship (India) Ltd Fleet Ø Currently one modern Platform Supply Vessel (PSV) operating in North Sea Ø On order : Current Committed Capex of around USD 365 Mn Ø 4, modern PSVs Ø2 Secondhand PSVs to be delivered in H2 FY 2006-07 and Q2 FY 2007-08 respectively Ø2 New Building PSVs to be delivered du
Slide 24: Long Term Operating Strategy
Long Term Operating Strategy Ø Owning and operating wide asset spectrum providing earnings stability Ø Continuous fleet evaluation through S&P activities Ø Benchmarking with global standards Ø Derisking n through diverse asset base n long term employment Aim to be profitable through the cycle 24
Slide 25: In the years to come
In the years to come …. Ø Grow at the “right” price Ø Lower break evens enabling sustenance through downturns with strong upside potential Ø Build capacity through “operating” leverage 25
Slide 26: Market Outlook
Market Outlook 26
Slide 27: Tanker trade fundamentals
Tanker trade fundamentals Ø So far, markets in 2006 have been a surprise Ø Strong economic forecast in most OECD countries creates increase in energy use Ø No easy way to slow down the growth momentum in energy use Ø China sourcing long haul crude However, freight rates could correct: Ø Projected fl
Slide 28: Dry bulk trade fundamentals
Dry bulk trade fundamentals Ø China is hub for Global steel production Ø Strong steel imports into US – long haul Ø Strong imports of cement into US from far east;pure additional demand Ø Weaker iron ore exports from India resulting in longer haul for China However, freight rates could correct: Ø Se
Slide 29: Iron Ore Imports by China
Iron Ore Imports by China Million Tons 2003 2004 2005 2006 35 30 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec China’s iron ore imports - 32.8 mt in August, a rise of 33% over July and massive rise of 42% yoy 29
Slide 30: China dominating Steel production
China dominating Steel production China will continue to produce steel due to the imbalance in production and demand elsewhere 30
Slide 31: Market Outlook - Shipping
Market Outlook - Shipping Ø Tanker freight rates are expected to remain healthy, average TCY of H2 CY2006 will be greater than H1 CY2006 Ø Growing demand for steel and energy to continue Ø Dry bulk sector is expected to be strong driven by China Ø Asset prices expected to remain firm 31
Slide 32: Offshore business fundamentals
Offshore business fundamentals Ø Accelerated investments planned for energy security Ø Emergency preparedness remains crucial Ø NELP pushing work commitments, thereby driving demand for assets Ø 80% of acreage with potential (sedimentary basin) remain unexplored 32
Slide 33: Increasing E&P Activity in India
Increasing E&P Activity in India Onshore Offshore Total Deepwater Shallow water NELP I 1 7 16 24 NELP II 7 8 8 23 NELP III 8 8 7 23 NELP IV 10 11 - 21 NELP V 12 6 2 20 NELP VI 25 24 6 55 Total 63 64 39 166 165 Global Oil Majors participated in NELP VI 33
Slide 34: Industry Characteristics - Offshore
Industry Characteristics– Offshore Ø Offshore oil field operations is an “orchestration” Ø Symphony of many players with diverse capabilities Ø Need a Supporting cast as well Ø Activity hub amidst vast expanse of sea in harsh operating environment Ø Rigs & Production platforms are expensive assets -
Slide 35: Market Outlook - Offshore
Market Outlook - Offshore Ø Oil service sector underwent severe depression Ø Between early 1982 & 1992 global Rig count fell close to 50% Ø Last new equipment arrived in 1982- 1984, thereafter new rigs were highly specialised Ø Low oil prices created massive consolidation in the industry with rig ow
Slide 36: Outlook - Company
Outlook - Company Ø Shipping Ø Firm freight rates in case of spot market Ø Tonnage growth Ø Offshore Ø OSV fleet to increase with newbuilding deliveries Ø Day rates on an upward trend for vessels on spot 36
Slide 37: Committed to value creation
Committed to value creation Visit us at: www.greatship.com 37
The Great Eastern Shipping — Investor Presentation (September 2006) on 6ix