Nekkar — Investor Presentation 2015

Nov 12, 2015

Q3 Results 2015 Oslo, 12 November 2015 Björn Andersson, CEO Henrik Solberg-Johansen, CFO

Agenda

• 3 rd quarter headlines

• 3 rd quarter consolidated accounts
• Segment info
• Shareholder structure
• Strategy and market outlook
• Summary

3 rd quarter 2015 – headlines

• Turnover Q3 MNOK 805 up from MNOK 549 in Q3 last year
• EBITDA Q3 MNOK 36 before negative effect from Offshore MNOK -48, including write down of inventories MNOK 20
• Additional strong cost reducing measures taken in Offshore
• Underlying market segments are positive, but offshore segment expected to remain weak

Turnover and EBITDA development

Note: - EBITDA Q4 2014 of MNOK 36 is excl. positive pension effect of MNOK 101, of total EBITDA MNOK 137 - EBITDA Q2 2015 of MNOK 34 is excl. one off THH adjustment effects of MNOK 104, of total EBITDA MNOK 138 - EBITDA Q3 2015 of MNOK 8 is excl. one off Offshore inventory write down of MNOK 20, of total EBITDA MNOK-12

Order intake and order backlog

Order intake per quarter 2013-2015 including 100 % of JV

Book to bill = Order intake / Revenues

(From Q1 2015 THH is consolidated into Group)

Agenda

• 3 rd quarter headlines
• 3 rd quarter consolidated accounts
• Segment info
• Shareholder structure
• Strategy and market outlook
• Summary

Profit and loss statement

	3rd quarter		3rd quarter - YTD		Full year
MNOK	2015	2014	2015	2014	2014	2013
Turnover	805	549	2 209	1 720	2 454	2 693
EBITDA	-12	2	126	-37	105	-130
Operating profit	-22	-8	8 7	-66	6 1	-164
Net financial items	5	2 6	-8	8	-38	-37
Profit/loss before tax	-16	1 8	7 8	-58	2 3	-201
Net result continued business	-25	1 1	5 6	-71	-22	-227
Net result incl discontinued business	-25	1 1	5 6	-71	1 8	-204
of which attributable to equity holders	-29	-	4 4	-	-
of which attributable to non-controlling interest	4	-	1 2	-	-

Balance Sheet

MNOK	30.09.2015	30.09.2014	31.12.2014
Non-current assets Current assets TOTAL ASSETS	1 196 1 999 3 195	897 1 175 2 073	927 1 484 2 411
Equity Gross interest bearing liabilities Other liabilities and provisions TOTAL EQUITY AND LIABILITIES	966 479 1 750 3 195	476 361 1 236 2 073	610 385 1 416 2 411
Net interest bearing debt / Covenants:  Net interest bearing debt decreased to MNOK 130.  Total cash is MNOK 349 as per 30.9.2015, of which MNOK 317 is in 50/50 owned companies	Equity, of which: Equity holders Non-controlling	30.09.2015 747	30.09.2014 477	31.12.2014 610
 Unutilized credit facilities MNOK 104  Group equity ratio including subordinated convertible debt is 33.2 % at the end of Q3 2015  Covenants at Q3 2015 are met	interest Total	220 967	0 477	0 610

Cash flow / Working capital / Interest bearing debt

Cash flow MNOK	YTD 2015	YTD 2014	Year 2014
Net cash flow from operations	94	-226	-150
Net cash flow from investments	-155	41	27
Net cash flow from financial activities	272	132	101
Net change in cash	212	-53	-21
Cash and bank deposits at the start of the period	131	156	156
Effect of exchange rate changes in bank/cash	7	-15	-4
Cash and bank deposits at the end of the period	349	88	131

Q3/15	Q2/15	Q1/15	Q4/14	Q3/14	Q2/14	Q1/14
	417	314	297	273	295	187
0	0	0	1	1	1	103
	95	95	95	95	95	95
	512	409	393	369	391	385
	331	52	131	88	88	117
130	181	357	262	281	303	268
		384 95 479 349

* Convertible loan included at nominal value

(**) Negative indicates net asset position

TTS Group - Turnover and EBITDA Q3 2015

RoRo / Cruise / Navy

Cargo handling solutions for car carriers, cruise ships and specialized vessels as well as port handling equipment.

		Q3		Q3 YTD
MNOK	2015	2014	2015	2014	2014
Turnover	146	154	465	442	599
EBITDA	18,2	21,4	49,5	51,9	77,3
Order backlog	735	866	735	866	854

• Strong position in the PCTC-market
• Cruise and Navy prospects develop
• Proven solutions, and repeat orders from key customers within the PCTC market gives basis for expected high activity

Container / Bulk / Tank

Cargo handling solutions for container ships, tankers and bulk carriers; including winches, cranes and hatch covers.

		Q3		Q3 YTD
MNOK	2015	2014	2015	2014	2014
Turnover	292	92	675	317	422
EBITDA	5,5	-0,9	118,2	2,7	-4,8
Order backlog *)	2 111	1 443	2 111	1 443	1 687

(*) Order backlog includes 50% of backlog from JV companies in China

• Market development in China in line with current upward cycle
• The outlook in South-Korea is strongly affected by severe price pressure
• In general long term positive trend on newbuilding, but seasonal dry cargo freight rates are falling, and saturation of mega container ship market may soon develop

Offshore

Cranes for offshore vessels and offshore installations.

		Q3		Q3 YTD	Full Year
MNOK	2015	2014	2015	2014	2014
Turnover	99	111	269	363	572
EBITDA	-48,1	-26,4	-79,9	-82,5	-50,0
Order backlog	268	440	268	440	254

• Turnover year to date is significantly reduced compared to 2014
• Initial cost reduction measures and improved project control taken in 1Q and 2Q, followed by additional strong cost reduction measures in 3Q and 4Q to adjust activities and capacity to the current offshore market
• Write down of inventory by MNOK 20

Multipurpose / General Cargo

Heavy lift cranes, mooring winches, hatch covers and side loading systems for multipurpose vessels and cargo ships.

		Q3		Q3 YTD
MNOK	2015	2014	2015	2014	2014
Turnover	78	28	209	91	138
EBITDA	-3,9	-6,1	-6,8	-30,8	-32,0
Order backlog	606	443	606	443	562

• Improved turnover and EBITDA compared to Q3/14
• Market activity in the segment is expected to improve in 2016

Shipyard Solutions

Production lines and systems for cargo handling to shipyards, focusing on transfer systems for docking and launching.

		Q3		Q3 YTD
MNOK	2015	2014	2015	2014	2014
Turnover	44	59	137	139	192
EBITDA	0,5	7,1	5,0	5,4	32,5
Order backlog	229	310	229	310	271

• Small delays of project deliveries but expected to pick up
• Reduced activity in the period, the operational margins are acceptable
• Reappraisal of the market situation for TTS Liftec
• Successfully completed the acquisition of Syncrolift ship-lift product range from Rolls Royce Marine.
• TTS with a strong position in the ship lift market

Services

Complete services within maintenance, including spare parts, interval agreements and life time service.

		Q3		Q3 YTD	Full Year
MNOK	2015	2014	2015	2014	2014
Turnover	146	105	444	368	530
EBITDA	21,3	13,1	54,4	32,4	96,4

• Turnover increased significantly compared to Q3 2014
• Market demand in the segment and historical installed base provides platform for increased turnover, and improvement to the overall profit margin
• Scrapping is on a high level

Shareholder structure at Nov 10th 2015:

Rasmussengruppen AS	13.29%
Skeie Technology AS	10.31%
Lesk AS	6.13%
Stisk AS	6.13%
Skeie Capital Investment AS	4.85%
Barrus Capital AS	4.00%
Skagen Vekst	3.53%
Skandinaviska Enskilda	3.26%
Tamafe Holding AS	2.49%
Odin Maritime	2.49%
10 largest shareholders	56.48%
Other	43.52%
Total	100,00%

Skeie Technology AS, Skeie Capital Investment AS and members of the Skeie family hold in total 32,0 %.

Agenda

• 3rd quarter headlines
• 3rd quarter consolidated accounts
• Segment info
• Shareholder structure
• Strategy and market outlook
• Summary

Overall vision for TTS Group and Our Long term goal with 6 BNOK in 2020

Vision	The global supplier of handling systems to the maritime and offshore industry with the strongest focus on end user satisfaction
Values that drive us	System & Reliability & Health Technology Customer Safety & competence satisfaction The Environment
Strategy	A preferred global supplier means:  Be on the makers list and get market share > 30 % in each market segment where we are positioned  Product technology among the top 3 in each segment where we compete  Customer oriented solution that support the life cycle of the vessel from new design to recycling. Wider product offerings to support package sales and reduce sales costs  Profitability on par with industry average

TTS currently addressing NOK 28 bn of the global market

TTS is already on the vessel – ambition to increase value per contract

Restructuring from product to ship-type focus

Current TTS product portfolio (3Q2015 YTD turn over and EBITDA) Product expansion opportunities

Key advantages of the ship type focus

• Key account 20% of ship owners owns 80% of the global fleet
• One face to the market
• More value per sale, packaged deliveries
• Broader service offering per ship type -> Leading to TTS as total service provider

Product platform to support life time services -> TTS a total Service provider

Operational Excellence & Synergies

In 2014 MNOK 130 were released in operation & sourcing costs In 2015 we will eliminate another MNOK 100

Reinforce the Corporate Management team

EVP: Executive Vice President, SVP: Senior Vice President

Last update: 1 November 2015

Agenda

• 3 rd quarter headlines
• 3 rd quarter consolidated accounts
• Segment info
• Shareholder structure
• Strategy and market outlook
• Summary

Summary

• Positive quarter results prior to negative offshore results
• Improvement processes on track
• Positive view on significant market segments
• Offshore market under heavy pressure
• ●Process started to renew credit facilities in 3rd quarter, continuing in 4th quarter
• Process initiated in February to explore strategic opportunities ongoing