Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping — Investor Presentation (November 2005)
40 slides from Great Eastern Shipping's investor presentation, November 2005
Slide 1: The Great Eastern Shipping Co. Ltd.
The Great Eastern Shipping Co. Ltd. 1
Slide 2: Forward looking information
Forward looking information This presentation contains certain forward looking information through statements, which are based on management’s current expectations and observations. The company does not guarantee the accuracy of these assumptions. There are a number of risks and uncertainties which
Slide 3: Business Profile
Business Profile Shipping Offshore Oil Field Services Capital Employed* Rs. 2614 cr Capital Employed* Rs. 608 cr Revenue* Rs. 1678 cr Revenue* Rs. 348 cr EBIT* Rs. 746 cr EBIT* Rs. 130 cr Wet Bulk Dry Bulk Oil Field Services Port and Terminal Services Crude Exploratory Drilling Product Offshore supp
Slide 4: Shipping Fleet
Shipping Fleet 31 Tankers: 13 Crude oil carriers 16 Product carriers 2 LPG carriers 10 Dry bulk carriers: 1 Panamax 4 Handymax 5 Handysize Av. Age of fleet 12.3 years On order: 5 MR Product carriers aggregating 0.22 mn dwt to be delivered through CY 2007 Contracted to sell a 37092 dwt dry bulk carri
Slide 5: Offshore Fleet
Offshore Fleet 2 Exploratory drilling rigs 18 Offshore Support Vessels ( of which 6 can cater to deep water fields) 1 Construction Barge 11 Harbour tugs On order: 6 OSVs 4 Anchor Handling Tug Supply Vessels 2 Platform Supply Vessel to be delivered through CY 2006 32 Offshore vessels catering to dive
Slide 6: Financials
FINANCIALS 6
Slide 7: Performance over last 5 years
Performance over last 5 years….. Financial Year Tonnage Earnings per Dividend per (Apr-Mar) (Mn dwt) share (Rs.) share (Rs.) 2000-01 1.37 8.00 2.75 2001-02 1.28 8.80 4.00 2002-03 1.32 11.40 4.00 2003-04 2.47 24.30 6.50 2004-05 3.02 42.34 9.00 H1 2005-06 2.96 27.89* 4.00 (Interim) * Not Annualized 7
Slide 8: Delivering through the years
Delivering through the years .. 300 282 50 43.8 45 250 40 34.8 35 200 30 Rs. per share 150 25 % 139 19.5 17.48 115 20 15.96 100 84 79 15 67 67 62 50 53 10 50 5 0 0 2000-01 2001-02 2002-03 2003-04 2004-05 - BV NAV ROE% 8
Slide 9: H1 Financial Comparison
H1 Financial Comparison Rs. crores H1 FY06 H1 FY05 % increase Income 1072.08 900.26 19% Other Income 42.17 16.29 159% Operating Profit 557.47 461.21 21% Gain on sale of ships 207.32 (1.72) EBIDTA 764.79 459.49 66% Interest 53.17 39.51 35% Depreciation 155.70 142.99 9% PBT 555.92 276.99 101% Net Prof
Slide 10: Performance Determinants
Performance Determinants Shipping business n Increased tonnage/ revenue days n Product time charter renewals at higher rates n Gain on sale of ships n High bunker cost n Lower spot averages Offshore business n Improved contribution of OSVs and construction barge n Refurbishment and repair cost of ri
Slide 11: Performance over five years - Shipping
Performance over five years -Shipping Rs. crores 1800 3000 1678 2614 1600 2500 1400 1994 1200 2000 1014 1000 Capital Employed Revenue, PBIT 851 1384 1402 1500 800 772 1279 747 699 600 1000 382 400 235 240 210 500 200 0 0 FY01 FY02 FY03 FY04 FY 05 Revenue PBIT Capital Employed 11
Slide 12: Developments over five years
Developments over five years Increased focus on tankers Modernised tonnage Enhanced operational reach 12
Slide 13: Performance over five years - Offshore
Performance over five years -Offshore Rs. crores 400 700 350 348 608 600 322 515 300 500 250 249 243 216 400 378 Capital Employed Revenue, PBIT 335 200 282 300 150 132 130 91 200 100 71 72 50 100 0 0 FY01 FY 02 FY03 FY04 FY 05 Revenue PBIT Capital Employed 13
Slide 14: Developments over five years
Developments over five years Fleet rejuvenation/ reorientation n Inducted technologically advanced, modern vessels Increased exposure to international markets Diversified client profile 14
Slide 15: Business Restructuring - Demerger
Business Restructuring - Demerger 15
Slide 16: Demerger of offshore oil field services
Demerger of offshore oil field services On September 15, 2005 the BOD approved the Scheme of Arrangement to demerge the offshore oil field services business into a separate new Company- ‘Great Offshore Limited’ w.e.f. April 1, 2005 Rationale n Provide each business greater opportunities to realise t
Slide 17: Balance Sheet
Balance Sheet (as on April 1, 2005) Rs. crores G E Shpg. G E Shpg. Great Status Quo Residual Offshore Ltd. Share Capital 190 152 38 Reserves 1999 1590 409 Debt 2080 1853 227 Capital 4269 3595 673 Employed 17
Slide 18: Profit and Loss Break Up
Profit and Loss Break Up (for the year ended March 31, 2005) Rs. crores G E Shpg. G E Shpg. Great Status Quo Residual Offshore Ltd. Revenues 2119 1771 348 EBIT 874 744 130 PBT 791 670 121 18
Slide 19: Financial Snapshot
Financial Snapshot (as on April 1, 2005) G E Shpg. G E Shpg. Great Status Quo Residual Offshore Ltd. Net Gearing 0.48 0.50 0.39 ROCE 20.5% 20.7% 19.3% NAV/Share (Rs.) 283 304* 200* BV/Share (Rs.) 115 114* 117* * Basis revised share capital 19
Slide 20: Demerger Process
Demerger Process Post clearance from stock exchanges application made to Hon’ble High Court of Bombay On October 7, 2005 - Hon’ble High Court passed an order to convene separate meetings of equity shareholders & secured creditors (incl. debenture holders) of the Co. In the court convened shareholder
Slide 21: Indicative Time Line Post Court Convened Meeting
Indicative Time Line Post Court Convened Meeting No. Activity Indicative Time 1. Filed Chairman’s Report Nov 23, ‘05 2. Filed petition in the High Court Nov 25, ‘05 3. Final High Court Orders (Expected) 3rd week of Jan ’06 4. File High Court Orders with Authorities (EFFECTIVE 3rd week of Feb ’06 DAT
Slide 22: Offshore Oil Field Services
Offshore Oil Field Services 22
Slide 23: India's Increasing Thrust on E&P
India’s Increasing Thrust on E&P Onshore Offshore Total Deep Shallow water water NELP I 1 7 16 24 NELP II 7 8 8 23 NELP III 8 8 7 23 NELP IV 10 11 - 21 Total 26 34 31 91 Under NELP V, 20 blocks (12 onshore and 8 offshore) are offered. Award process is underway 23
Slide 24: Globally Investment in Exploration lags Production
Globally Investment in Exploration lags Production 20 10 18 9 16 8 14 7 12 6 Exploration spending (USD Production (Bn BOE) Bn) 10 5 8 4 6 3 4 2 2 1 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sustained Rise in Oil & Gas Prices to increase Exploration Outlay 24
Slide 25: Key Messages
Key Messages Energy security top on agenda for India Reserve replacement from new fields has fallen, partly because of reduced investment Deepwater to contribute largely in offshore production growth n Tripling of deepwater oil & gas production projected by 2010 n Deepwater share of offshore oil & g
Slide 26: Shipping
Shipping 26
Slide 27: Economic growth and oil demand
Economic growth and oil demand Rate of economic growth 10% Strong Economic growth in Developing Countries (DCs like India, China): faster 9% 8% 7% 2003 2004 - 20 yr av. than World with increasing share in global GDP 2005 2006 6% 5% Export led growth 4% 3% 2% Oil demand growth 1% 9% 0% 8% OECD DCs Ch
Slide 28: Strong Asian oil demand
Strong Asian oil demand Oil demand, barrels per capita per year 30 Share in world oil consumption (%): 25.5 25 USA: 25.7% China: 8.1% Japan: 6.5% 20 Germany: 3.2% India: 3.0% 15 11 10 4.5 5 1.5 0.8 0 India China Brazil UK USA Source: OPEC 28
Slide 29: Oil Market Scenario
Oil Market Scenario Oil demand is expected to remain strong on the back of global economic growth Oil supply situation to remain tight constrained by Non OPEC contribution Oil price expected to remain high Pressure on OPEC to maintain production at high levels 29
Slide 30: OPEC Production vs VLCC Freight Rates
VLCC Freight Rates 100000 120000 140000 160000 20000 40000 60000 80000 0 Q1'99 Q2'99 Q3'99 Q4'99 Q1'00 Q2'00 Q3'00 Q4'00 Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 VLCC Freight Rates USD/ Day Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 OPEC Production Mbd Q3'05 20 25 30 35 OPEC
Slide 31: Weighing the Market
Weighing the Market Bulls •Continued strong economic & oil demand growth •Spare capacity mainly MEG OPEC •Relatively low inventories •Geopolitical developments •Possible supply disruptions in Russia, Venezuela and Nigeria •Increased scrapping Bears • Global economic slowdown • Inventory recovery • M
Slide 32: Tanker market Outlook
Tanker market Outlook Net tanker supply is expected to grow at around 6% p.a. in next two years Expected scrapping at around 6 Mn dwt in 2006 much below the 5 year average of around 13 Mn dwt Overall average earnings lower than 2005 levels Tanker freight rates expected to be higher than historical a
Slide 33: Dry bulk market Scenario
Dry bulk market Scenario Expected growth in dry bulk demand about 110Mn tonnes Expected delivery of dry bulk fleet in 2006 around 25Mn dwt n Translating into 170 Mn tonnes of cargo Higher supply compared to demand likely to put downward pressure on dry bulk freight rates 33
Slide 34: Robust Iron Ore Demand
Robust Iron Ore Demand Strong Chinese demand Low Chinese inventories Increasing Spot markets No idle capacity among iron ore miners 34
Slide 35: Wild Card in Dry Bulk Trade
Wild Card in Dry Bulk Trade Scrapping n Between 1998-2002 average scrapping around 8 Mn dwt n From 2003 onwards scrapping is below 1 Mn dwt p.a. More than 10% of dry bulk fleet is above 25 years; more than 3% is above 30 years of age May trigger upturn in freight rates after a couple of years 35
Slide 36: In the Long Run ....
In the Long Run .... 36
Slide 37: Long Term Operating Strategy
Long Term Operating Strategy Aim to be profitable through the cycle Derisking through w diverse asset base w long term employment Continuous fleet evaluation through S&P activities 37
Slide 38: Challenges Ahead
Challenges Ahead … Modernise and grow tonnage w At “economical” prices w Build additional capacity through operating tonnage Gauging opportunities in other related business 38
Slide 39: Investment Positives
Investment Positives Unlocking shareholder value through demerger High free float Focused on the energy sector Global operations through diverse asset base Valuation Metrics as on Sept. 30, 2005: n EV/EBIDTA of 6.1 (Peer group average 2005 E 6.3) n Price to BV of 1.4 n Over 33% discount to NAV As on
Slide 40: Committed to value creation
Committed to value creation www.greatship.com 40
The Great Eastern Shipping — Investor Presentation (November 2005) on 6ix