Norwegian Car Carriers ASA
Presentation by Engebret Dahm, Deputy CEO
DnB NOR Markets Oil, Offshore & Shipping Conference 2011
Oslo, 3 March 2011
Established July 2010 through a business combination of
Dyvi Shipping AS and Eidsiva Rederi ASA
Summary NOCC
• NOCC formed July 2010 through a business combination
between Dyvi Shipping AS and Eidsiva Rederi ASA
– 60 years combined experience in the car carrier business
– Long standing relations as tonnage supplier to the large car
carrier operators
– 15 vessels ‐ 11 PCTCs – 3 PCTC/RoRos and 1 RoRo vessel.
1 PCTC sold for delivery Q111.
• Pure play– geared for growth
– Take advantage of low market to grow the fleet
– Focus on the mid to large size (4,000 ‐7,000 CEU) PCTC
segments
– Solid financial platform (fully financed)
– Shareholder friendly with an aim to have an open shareholder
structure
NOCC fleet profile
Name Type Built Capacity Share of Contract Charterer
Pure Car & Truck Carrier
ownership maturity
CEU 04/01/2011
Dyvi Atlantic
1) OWNED / PARTLY OWNED VESSELS
Dyvi Atlantic PCTC 2009 6 754 50,0 % April 2014 Höegh
NOCC Kattegat PCTC 2004 5 379 100,0 % Oct. 2011 Grimaldi
NOCC Pamplona PCTC 2000 4 287 100,0 % Oct. 2011 K‐Line
Dyvi Puebla PCTC 1999 4 287 100,0 % Dec. 2011 K‐Line
Pure Car & Truck Carrier/Roll On Roll Off
#
NOCC Caribbean PCTC 1988 4 804 100,0 % OPEN F.EAST MID MARCH 2011
Vibeke
Hyundai No 203 PCTC 1988 5 065 51,0 % Aug 2011 Sallaum
Hyundai No 206 PCTC 1987 5 387 100,0 % July 2012 Eukor
Morning Mermaid PCTC 1987 5 387 100,0 % Nov. 2012 Eukor
Hyundai No 202 PCTC 1987 3 895 59,5 % SOLD DELIVERY FEB 2011
Virana PCTC / RoRo 1979 3 500 50,0 % July 2012 CMA‐CGM(Delmas)
Vinni PCTC / RoRo 1994 2 300 51,0 % Nov. 2011 WWL Roll On Roll Off
Vibeke PCTC / RoRo 1996 2 300 51,0 % Sept. 2011 WWL
Helena
Helena RoRo 1991 3 225 lm 100,0 % July 2016 Holmen
2) BAREBOAT CHARTERED VESSELS
Dyvi Baltic* PCTC 1989 4 049 34,5 % March 2012 CCNI / Abu Mehri
Dyvi Adriatic PCTC 1988 4 049 56,0 % March 2012 Sallaum
*not consolidated
# renamed from Cypress Pass 3
NOCC fleet profile 31 Dec. 2010
2/3 of gross fleet value* in modern “state of the art” PCTCs
*=incl. charter value /NOCC’s shares
Shifting NOCC’s vessel portfolio to modern PCTCs
Gross value of NOCC’s share of modern PCTCs (built 1999‐>)
increased from $ 60 mill. 30 June 2010 to $ 141 mill. 31 Dec. 2010
4
Main events 2nd half 2010
• PCTC charter market recovery well under way
– Fixing open vessels on gradually higher TC‐rates
– Improving second hand values although broker estimates are flat
– Quoted newbuilding prices flat during last 6 months
– Benefit from market recovery only when the existing charters are renewed
• Continuing to invest in modern PCTCs
Gross investments 2nd half 2010 (NOCC’s share) of NOK 450 mill. –
effectively 2 vessels
– Purchase of «NOCC Kattegat» (2004 built / 5,379 ceu)
– Increased ownership from 18.5% to 50%* in ”Dyvi Atlantic” (2009 built/6,754 ceu)
– Increased ownership from 72.6% to 100% in”Dyvi Puebla” (1999 built/4,300 ceu) and
”NOCC Pamplona” (2000 built/4,300 ceu)
* Share increased by 1,5% to 50% in January 2011.
Main events 2nd half 2010
• Sale of 2 old Ro‐Ro vessels and 1 small car carriers
– Sale of the Ro‐Ro vessels «Tor Belgia» (1978 built) and «Tor Bellona» (1980
built) in Q2‐2010
– Sale of «Hyundai 202» (1987 built/3,895 ceu) in Dec. 2010. Net profit of about
NOKm 11.6 on a consolidated basis. Delivery to new owner early March 2011.
The sister vessel «Hyundai 201» was sold in Q1‐2010.
• Termination of long term charter for «Dyvi Baltic» and «Dyvi Adriatic»
– Amicable termination of the time charters for the 2 vessels against receiving a
satisfactory termination compensation.
– «One‐time» net profit effect in Q4‐2010
– Both vessels fixed for the remaining firm bareboat charter period (March 2012).
Options (7 x 1 years) to extend the bareboat charter give additional upside
potential.
Main events 2nd half 2010 and early 2011
• Improved financial flexibility
– July 2010: NOKm 200 equity issue
– September 2010: New NOKm 200 unsecured bond loan with expiry
September 2015 – of which NOKm 58 used to partly refinance two old
bond loans
– February 2011 : NOKm 125 equity issue.
Proceeds intended to be used for investments in modern car carriers
– No major refinancing need during next few years
NOCC – Profit & loss Q4 2010
Number of «one‐offs» bring NOCC «back in black» in Q4 10
NOK mill. Q4 2010 Q4 2009 YTD 2010 2009
Total operating revenue 134 68 335 299
Total operating expenses incl. admin. (96) (45) (246) (177)
EBITDA 38 23 88 121
Depreciation (33) (25) (101) (109)
Impairment loss 0 (39) 0 (51)
EBIT 4 (41) (13) (39)
Net financial (4) (5) (29) (25)
Gain on exchange 1 (0) (2) 6
Affiliated companies 8 (14) 8 (36)
Taxes 0 (2) (0) 13
NET PROFIT CONTINUING OPERATIONS 9 (62) (36) (81)
Discontinued operations (1) 0 (22) 0
NET PROFIT BEFORE MINORITIES 8 (62) (58) (81)
NET PROFIT TO EQUITY HOLDERS 4 (43) (56) (60)
# of shares (mill.) 99,3 22,2 99,3 22,2
Q4‐2010 –Profit and loss account
Effect of «one‐offs»
«One‐off» effects on EBITDA
– Termination compensation for
« Dyvi Adriatic. Net effect=
+NOK 18.4 mill.*
«One‐off» effects on Net Profit
(before minorities)
– «Mark to market» value
adjustment of interest rate
swaps. Effect = +NOK 9.9 mill.
– Net foreign exchange gain of
+NOK 1.3 mill.
– Termination compensation for
«Dyvi Adriatic» and «Dyvi
Baltic». Net effect = +NOK
10.5 mill. *
* Compared with non-cancellation of time charters
NOCC – Balance sheet 31 December 2010
Stronger liquidity situation and improved financial flexibility
NOK mill. 31.12.2010 31.12.2009 NOK mill. 31.12.2010 31.12.2009
Deferred taxes 32 54 Total equity to shareholders 411 169
Vessels 1188 706 Minority interests 90 94
Associated companies 65 0 TOTAL EQUITY INCL. MINORITIES 501 263
Other long term assets 6 3 Secured debt on vessels* 637 305
TOTAL FIXED ASSETS 1292 763 Bond loan 221 100
Account receivables / Total long‐term liabiliities 857 405
26 11
other current assets
Current portion of long term debt 119 113
Bankdeposits 304 82
Other current liabilities 143 75
TOTAL CURRENT ASSETS 329 93
Total current liabilities 262 188
TOTAL ASSETS 1621 856 TOTAL LIABILITIES 1120 594
TOTAL EQUITY AND LIABILITIES 1621 856
Equity share 30,9 % 30,7 %
Net asset value as of 31 December 2010*
NAV per share of NOK 4.11 (at NOK/USD of 5.86)
* NAV is adjusted for
the acquisition of an
additional 1,5% in
“Dyvi Atlantic”
4 January 2011
put/call
put/call
put/call
• SURPLUS VALUE VESSELS : Difference between broker value estimates and book value for consolidated owned/partly owned vessels
• OTHER ADJUSTEMENTS: Includes estimated value of charter impact, surplus value minority vessels and BB‐vessels
• MARKET VALUE MINORITIES: Book value minority interests plus minorities share of ”surplus vessel value”
• TAX ADJUSTMENTS : Deferred tax asset
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Development in net asset value
Date # of shares NOK/USD NAV NAV NAV/share NAV/share
(thansand) exchange rate in NOKm in USDm in NOK in USD
put/call
put/call
30.06.2010 98,811 6,497 403 62 4,1 0,62
put/call
30.09.2010 98,811 5,838 373 64 3,8 0,64
31.12.2010 99,299 5,856 408 70 4,1 0,70
31.12.2010 (after
private placem. 133,082 5,856 526 90 4,0 0,68
Feb. '11)
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Outlook 2011 – important issues
Expect gradually improving results during 2011
• Renewal of charters at higher freight rates‐
positioned for a stronger market from 2nd half 2011
– High contract coverage– limited earnings upside in 1st half 2011
– Take benefit of an expected stronger market in 2nd half 2011
# OF VESSELS CHARTER RENEWAL
Q111 Q211 Q311 Q411
1 0 1 5
• Extensive docking program 2011 ‐ preparing fleet for a stronger market
– 2 vessels* docked in January 2011 – costs below budget/no surprises
– Additional 6 consolidated vessels** will go through regular drydockings in
remaining 2011.
– Off‐hire will have negative result impact in 2011
REGULAR DRY DOCKINGS
# OF VESSELS
2011 2012
7+1 1
* 1 consolidated vessel (Dyvi Adriatic) and 1 non consolidated vessel (Dyvi Baltic)
** In addition 1 vessel will go through a guarantee docking (no repair costs) and 1 vessel will go through 2nd half of
drydocking without off‐hire
Outlook 2011 – important issues (cont.)
• Consolidation of «Dyvi Atlantic»
– Following increase in ownership to 50%, the shipowning company Dyvi
PCTC I DIS will be fully consolidated from Q1‐2011
– Est. 2011 net profit of about NOKm 30 (100% basis)
• Fleet expansion
– Focus on growing fleet through purchase of modern 2nd hand vessels (4,000‐
7,000 ceu)
– Contracting of newbuildings of large PCTCs may be considered depending on
pricing, payment terms and employment opportunities
NOCC – Contract coverage
Well positioned for en expected stronger PCTC market end 2011
Contract coverage consolidated vessels* Weighted average contract earnings
(bss. # calendar days) consolidated vessels*
put/call
put/call
put/call
15 *Includes «Dyvi Atlantic», but not «Dyvi Baltic»
High utilization and increasing charter rates
Continued strengthening market balance
TC‐earnings per day – 12 months charter
• More or less all efficient car carriers are
out trading by end 2010
• High fleet utilisation of in 2nd half 2010
and early 2011 despite high deliveries
of newbuildings
Gradual improvement in charter rates
• Relatively high activity in the charter
market for car carriers
• TC‐earnings continue to strengthen,
but still below “historical” levels
Source : R.S Platou Shipbrokers
16
Strong growth in global car sales in 2010 and early 2011
• Growth in global car sales driven by Asia, Middle East and Eastern Europe
• Stronger car sales in the US during Q410 and early 2011
• Weak car sales in Western Europe following cancellation of incentive
schemes, but seem to bottom out in early 2011
2010 car sales growth : Growth driven by emerging markets / Asia
Source : RS Platou Research
17
Car sales mature markets
US car sales is gaining momentum – will it surprise on the upside in 2011‐2012?
Morgan Stanley :
“We still see a V‐shaped recovery...Sales have been running below a long term
replacement trend levels for 25 months which we view as unsustainable”
Annualised/seasonally adjusted US car sales per month Actual historical / forecasted US car sales
Mill. cars Actual Forecast
2008 2009 2010 2011 2012
Actual 13,2 10,4 11,6
JD Power 12,8
Morgen Stanley 14,0 15,0
February 2011: 13.45 mill.
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Growth in emerging markets fueling the car carrier market
Exports from Japan and Korea
• Growth in total exports from Japan and Korea was +32% in 2010 and +14%* in Q410
• Export growth from Japan and Korea to emerging markets was +62% and +26%* in
Q410
Car exports from Japan and Korea: Growing exports to emerging markets
Western Rest of the world
Europe+North
America+Oceania
* Y-o-y growth figures
19
Growth in emerging markets fueling the car carrier market
Other trades and cargo types
• Increased exports of second hand cars from especially Europe to Africa
• Increased “high & heavy” cargo volume
• Increasing exports from China, India as well as Thailand ‐ to a large degree to
emerging markets – India (about 65%) and China (about 85%)
Car exports from China and India
* Annualized 2010 figures:
For India based on Jan.‐June figures.
For China based on Jan‐Nov, figures 20
Expect «manageble» fleet growth
Slower scrapping activity Lower orderbook /low fleet growth from 2012
• 11 vessels scrapped in 2H10 bringing • Orderbook reduced to 95 vessels by yearend
total scrapping in 2010 to 47 vessels 2010 constituting 18% of current fleet
(6,0% of fleet capacity) capacity
• Some scrapping activity expected to • 2 new orders in 2H10 – total 4 orders in 2010
continue
Number of Capacity
vessels (CEU)
Present fleet 598 3 226 995
1H 2011 40 234 150
2H 2011 26 161 950
1H 2012 18 121 200
2H 2012 10 62 100
1H 2013 1 6 500
Orderbook 95 585 900
% of existing fleet 16 % 18 %
• Expected fleet growth 2011: 7‐9% y‐o‐y
Source : RS Platou Research /Hesnes Shipping AS
depending on “slippage” and scrapping
21
The car carrier market
Summary
• Strong growth in car sales in emerging markets/Asia leading to
increasing shipment volumes of new cars
• Increased shipments of “high & heavy” and used cars
• Recovery in US car sales underway –US car sales may surprise
on the upside in 2011
• Demand growth in 2011 expected to exceed supply growth
despite high deliveries of newbuildings. Expect strengthening of
market balance through 2011.
• Low fleet growth in 2012 paves the way for a strong recovery in
freight earnings and vessel values in 2012
22
Enclosures
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NOCC – Consolidated profit & loss for Q4 and YTD 31 December 2010
(NOK thousands) Q4 2010 Q4 2009 YTD 2010 2009
OPERATING REVENUES
Charter hire 133 402 67 814 332 979 297 451
Other operating revenues 639 0 1 739 1 299
TOTAL OPERATING REVENUES 134 041 67 814 334 718 298 750
OPERATING EXPENSES
Operating expenses vessels 85 047 39 670 205 861 146 586
BB hyre 3 337 0 7 330 0
Admin.cost vessels (528) 0 2 574 0
Other operating expenses/admin. costs 8 353 5 125 30 623 30 734
TOTAL OPERATING EXPENSES 96 209 44 795 246 388 177 320
EBITDA 37 832 23 019 88 330 121 430
Ordinary depreciation 33 446 24 769 101 256 109 181
Impairment loss 0 39 375 0 51 275
OPERATING RESULT (EBIT) 4 386 (41 125) (12 926) (39 026)
FINANCIAL INCOME AND EXPENSES
Other financial income 9 875 102 14 500 2 466
Net gain/loss on exchange 1 313 (19) (2 469) 5 834
Interest and other financial expenses (14 049) (4 702) (43 111) (27 364)
NET FINANCIAL ITEMS (2 861) (4 619) (31 080) (19 064)
Income/(loss) investements affiliated companies 7 959 (691) 8 063 (8 707)
Write downs of affiliated investments 0 (13 233) 0 (27 233)
RESULT BEFORE TAX 9 484 (59 668) (35 943) (94 030)
Taxes 0 (2 144) (80) 12 798
NET PROFIT (LOSS) FROM CONTINUING OPERATIONS 9 484 (61 812) (36 023) (81 232)
NET PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (1 091) 0 (22 416) 0
NET PROFIT (LOSS) 8 393 (61 812) (58 439) (81 232)
NET PROFIT/(LOSS) ATTRIBUTABLE TO:
MINORITIES 4 311 (19 218) (2 415) (20 957)
EQUITY HOLDERS OF THE COMPANY 4 082 (42 594) (56 024) (60 275)
NOCC – Balance sheet 31 December 2010
(NOK thousands) 31.12.2010 31.12.2009 (NOK thousands) 31.12.2010 31.12.2009
ASSETS EQUITY
Share capital 297 813 110 750
FIXED ASSETS
Share premium reserve 72 122 41 869
Intangible assets (deferred taxes) 32 017 53 514
Other paid‐in capital 1 707 245
Other equity 39 374 15 954
Real estate, equipment, cars, etc 1 045 1 117
Total equity to shareholders 411 016 168 818
Vessels 1 187 954 706 414
Total long‐term operating assets 1 188 999 707 531
Minority interests 90 407 93 802
Investements in associated companies 65 118 0
TOTAL EQUITY INCL MINORITIES 501 423 262 620
Investments in other companies 10 337
Pension funds 2 538 1 922
LONG TERM LIABILITIES
Other long‐term receivables 2 893 89
Secured debt on vessels 627 931 304 206
Total financial fixed assets 70 559 2 348
Bond loan 220 500 100 000
Other long‐term debt 8 738 1 189
TOTAL FIXED ASSETS 1 291 575 763 393
Total long‐term liabilities 857 169 405 395
CURRENT ASSETS
CURRENT LIABILITIES
Accounts receivables and other current assets 25 826 9 335
Current Portion of long term debt 119 406 113 427
Bankdeposits 303 664 82 215
Other current liabilities 43 798 61 557
Total current assets 329 490 91 550
Provisions 37 056 1 663
Derivates and financial instruments 28 766 10 695
Non‐current assets classified as held for sale 0 1 500
II. Other current debt 33 447 1 086
Total current liabilities 262 473 188 428
TOTAL ASSETS 1 621 065 856 443
Total liabilities 1 119 642 593 823
EQUITY AND LIABILITIES 1 621 065 856 443
Enclosure
Average earnings consolidated vessels
2011 2012 2013
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
AVERAGE GROSS TC EARNINGS
Large size PCTC Partly owned $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975 $ 34 975
(1)
Mid sized PCTC 100% owned $ 12 285 $ 12 490 $ 12 490 $ 11 873 $ 10 750 $ 10 750 $ 10 750 $ 10 750 $ 0 $ 0 $ 0 $ 0
Partly owned/BB‐chartered (2) $ 10 118 $ 11 450 $ 11 557 $ 12 000 $ 12 000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
(3)
PCTC/RoRo and RoRo 100% owned/partly owned $ 14 231 $ 14 231 $ 12 927 $ 14 718 $ 15 603 $ 15 603 $ 16 417 $ 16 540 $ 16 540 $ 16 540 $ 16 673 $ 16 673
AVERAGE TOTAL CONSOLIDATED FLEET $ 14 247 $ 14 771 $ 14 461 $ 15 718 $ 16 798 $ 17 536 $ 19 634 $ 22 021 $ 25 758 $ 25 758 $ 25 824 $ 25 824
FIXED CONTRACT (CALENDAR) DAYS
Large size PCTC Partly owned 90 90 92 92 91 91 92 92 90 90 92 92
(1)
Mid sized PCTC 100% owned 510 455 460 315 182 182 123 61 0 0 0 0
Partly owned/BB‐chartered (2) 208 182 154 92 70 0 0 0 0 0 0 0
PCTC/RoRo and RoRo 100% owned/partly owned (3) 360 364 348 218 182 182 99 92 90 91 92 92
TOTAL CONSOLIDATED FLEET 1 168 1 092 1 054 717 525 455 314 245 180 182 184 184
SPOT DAYS (CALENDAR) DAYS
Large size PCTC Partly owned 0 0 0 0 0 0 0 0 0 0 0 0
Mid sized PCTC 100% owned (1) 30 91 92 237 364 364 429 491 540 546 552 552
Partly owned/BB‐chartered (2) 0 0 30 92 112 182 184 184 180 182 184 184
PCTC/RoRo and RoRo Partly owned (3) 0 0 20 150 182 182 177 184 180 182 184 184
TOTAL CONSOLIDATED FLEET 30 91 142 479 658 728 790 859 900 910 920 920
CONTRACT COVERAGE TOTAL CONSOLIDATED FLEET 97 % 92 % 88 % 60 % 44 % 38 % 28 % 22 % 17 % 17 % 17 % 17 %
1) «NOCC Kattegat», «NOCC Pamplona», «Dyvi Puebla», «Cypress Pass», «Hyundai No 206» and «Morning Mermaid»
2) «Hyundai No 203» and «Dyvi Adriatic» («Hyundai No 202» up to February 2011)
3) «Virana (up to July 2012), «Vinni», «Vibeke» and «Helena»
Enclosure : Value of NOCC fleet and outstanding loans as of 31 December 2010
All figures in 1,000 Type Share of Share of Market value Book value in NOK Outstanding loan Maturity loans
ownership ownership (excl. Charter) 31/12/2010 31/12/2010
31/12/2010 04/01/2011 31/12/2010
1. CORPORATE NOCC (100%)
Bond loan 2006/2011 NOK 13 500 February 2011
Bond loan 2007/2013 NOK 28 500 May 2013
Bond loan 2010/2015 NOK 192 000 September 2015
Credit facility 1) $ 0 June 2011
2. CONSOLIDATED SHIPOWNING COMPANIES
NOCC Kattegat PCTC 100,0 % 100,0 % $ 40 750 NOK 221 332 $ 27 819 2) September 2016 2)
NOCC Pamplona PCTC 100,0 % 100,0 % $ 32 500 NOK 186 802 $ 24 387 March 2015
Dyvi Puebla PCTC 100,0 % 100,0 % $ 31 500 NOK 180 028 $ 24 387 March 2015
1) The overdraft
facility remain NOCC Caribbean PCTC 100,0 % 100,0 % $ 12 000 NOK 63 754 $ 7 190 September 2012
2) Includes an Hyundai No 203 PCTC 51,0 % 51,0 % $ 12 000 NOK 60 132 $ 3 750 July 2012
unsecured loan
of USDm 4,0 Hyundai No 206 PCTC 100,0 % 100,0 % $ 11 000 NOK 58 997 $ 5 000 May 2012
with maturity Morning Mermaid PCTC 100,0 % 100,0 % $ 11 000 NOK 63 073 $ 5 375 January 2013
September 2013
Hyundai No 202 PCTC 59,5 % 59,5 % $ 7 497 NOK 32 628 $ 1 025 September 2011
Virana PCTC / RoRo 50,0 % 50,0 % $ 7 250 NOK 39 881 $ 1 350 September 2011
Vinni PCTC / RoRo 51,0 % 51,0 % $ 12 625 NOK 91 940 $ 8 425 November 2011
Vibeke PCTC / RoRo 51,0 % 51,0 % $ 13 625 NOK 84 924 $ 8 425 November 2011
Helena RoRo put/call
100,0 % 100,0 % $ 15 508 NOK 104 464 $ 12 369 July 2016
TOTAL CONSOLIDATED SHIPOWNING COMPANIES put/call $ 207 255 $ 1 187 954 $ 129 502
3. BAREBOAT CHARTERING COMPANIES CONSOLIDATED
put/call
Dyvi Adriatic PCTC 56,0 % 56,0 % NOK 0 N.a. N.a.
TOTAL CONSOLIDATED "VESSELS" NOK 1 187 954
4. NON‐CONSOLIDATED SHIPOWNING COMPANIES / BAREBOAT CHARTERING COMPANIES
Dyvi Atlantic PCTC 48,50 % 50,0 % $ 69 000 NOK 66 752 $ 52 188 July 2017
Dyvi Baltic PCTC 34,0 % 34,0 % ‐NOK 1 634 N.a. N.a.
INVESTMENT IN ASSOCIATED COMPANIES NOK 65 118 $ 52 188
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