Presentation of the results of the OT Logistics Capital Group in March 2017

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Alicia Merritt
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1 Presentation of the results of the OT Logistics Capital Group in March 217

2 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 2

3 Financial results The most important information in 216 Further optimisation activities In 216 revenues came to PLN million, net profit achieved PLN 1 million. Positive cash flow + PLN 57.7 million Gross sales profitability in % Market Increase in the area of handling of argo, the coal and steel market remains under pressure Management optimisation - the first results already visible, further positive effects expected in subsequent quarters 3

Expansion in Poland, the effects of the implementation of the new s The Group took over Sealand Logistics,

and greater scale of operation in the container shipping sector The Group completed the takeover of the

4 Expansion in Poland, the effects of the implementation of the new s The Group took over Sealand Logistics, one of the leaders in the container shipping market in Poland Expected results: Development of expertise and greater scale of operation in the container shipping sector The Group completed the takeover of the railway STK S.A. Group (1% STK S.A. including subsidiaries) Expected results: Strengthening of the position in the rail transport market The company took over 8% of shares in Kolej Bałtycka Expected results: Strengthening expertise in the area of railway transport service, strengthening of the position in Western Europe 4

5 Expansion in the countries of the North-South Corridor C. Hartwig Adria, established in Croatia in 216. It handles land and sea transport, forwarding, storage and customs intermediary services Expected results: Expansion in the Balkans EUR 8.52 million offered for 3% shares EUR 14 million for new investments within 3 years Expected results: strengthening the position in the Balkans in the area of transshipment of cereals, steel, products for the car industry; increasing the scale of operation EUR 2.5 million offered for 51% shares EUR 3.45 million for modernisation Expected results: making use of the transshipment potential of the Port in Bar, synergy effects in the local market 5

6 Optimisation activities within the Group in 216 Change of principles of management of the Capital Group Consolidation of operating activities, searching synergies Creation of the Central Sales Department, focusing on main product sectors (i.e. metallurgical products, agro, general cargo). Implementation of the MBO model of management (Management by Objectives) Appointment of the Steering Committee for Investments in the Port of Gdańsk Creation of the Centre of Shared Services for the standardisation and consolidation of support services for the Companies belonging to the Group Centre of Shared Services for the Companies belonging to the Capital Group CSS activities in two main areas: invoicing and accounting (IA) and HR and Treasury At the end of Companies from the Group were services by the CSS (6 in the area of IA and 7 in the area of HR) Further activities for the development of CSS in 217, including the takeover of the biggest entities A one-off increase of costs of general management due to: overlapping costs of remuneration(company and CSS) costs of external service providers related to the support of migration processes to CSS the costs of redundancy pays for employees of the companies subject to centralisation 6

7 Further optimisation and plan of development of the Centre of Shared Services for the Capital Group Expected positive effects of the implementation of CSS May 217 reduction of employment in the area of accounting and HR by 25%, further 2% by the end of expected drop of operational costs in the area of finance and accounting by at least 25% and further 2% in 218 Q1/Q2 218 return of investment in CSS having accounted for the expenses (costs of software, costs of redundancy pays in the migrated companies, migration of processes) 7

8 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 8

9 Revenues in 216, broken down by sectors of operation Transport 29% of revenue OT Logistics S.A., Deutsche Binnenreederei, Żegluga Bydgoska Current hydroengineering contracts were concluded, pending the launch of further investments in the revitalisation of waterways Forwarding 58% of revenue OTL S.A., C. Hartwig Gdynia, Rentrans International Spedition, Rentrans Cargo, Sealand Logistics An increase of the share of forwarding in revenues, competition and downward customers pressure reflected in lower margins Ports 1% of revenue OT Port Gdynia, OT Port Świnoujście Reduction of revenues due to the market situation, still an increase of EBITDA and the net result thanks to the optimisation and adaptation of cargoes; considerable increase of agro commodities GK OTL: Income structure [%] 12% 3% 3% 3% 1% 29% Transport Spedycja Usługi Portowe 55% 58% Pozostałe 9

10 Financial results 216 GK OTL: Revenue 8-5.3% Results affected mainly by the downturn in the coal and steel market and the completion of hydro-engineering works in the area the of upstream Oder river and in Germany ,3 712,1 Decreased GDP dynamics in Poland, expected new investments in infrastructure Drop of the traffic of bulk products in Germany The EBITDA result increased by 6.5% YoY, EBITDA profitability at 1.1% vs. 9% the year before GK OTL: The result of EBITDA GK OTL: Net result % 2, -35.6% ,9 72,3 1, 15,6 1, - 1

11 The result of the transport sector in 216 Transport sector: Revenues (external entities) Transport sector: Margins [%] % 15% 1% Brutto EBITDA Netto ,5 26,7 5% 13,7% 13,% 7,1% 12,1% 11,6% 4,6% % Transport sector: The result of EBITDA Transport sector: Net result % % ,6 29, ,5 11,8 11

12 The result of the forwarding sector in 216 Forwarding sector: Revenues (external entities) Forwarding sector: Margins [%] % 1% Brutto EBITDA Netto ,5 414,1 5% % 5,5% 7,% 1,8% 3,2% 1,% 2,8% Forwarding sector: The result of EBITDA Forwarding sector: Net result % % ,3 14, ,7 12,9 12

13 Financial results of the port sector 216 Port sector: Revenues (external entities) Port sector: Margins [%] % 25% 2% Brutto EBITDA Netto 6 15% 4 2 9,2 7,8 1% 5% 15,3% 16,% 12,2% 19,2% 7,2% % 1,8% Port sector: The result of EBITDA Port sector: Net result % % ,8 29,5 5 11, 2,8 13

14 The volume of transshipments in the Group s harbours in Poland in 216 Transshipments in the Group s harbours [thousand tonnes] 8, 6, 4, 2, -9.6% +32.8% 4 66, , , , Positive trends in the market, transshipment in the biggest Polish ports increased by 4.7%. Transshipment of coal, ore and bulk products are decreasing, agro transshipments increased by over 17% Upward trend of the volume of transshipments in the harbour OT Port Gdynia is maintained, +33% with respect to 215 6% more agro commodities were transshipped in the harbour of Gdynia compared to the year before, OT Port Świnoujście Transshipments OT Port Świnoujście [thousands tonnes] OT Port Gdynia The continued unfavourable situation in the market of coal and steel contributed to the decrease of transshipments in the harbour OT Port Świnoujście Transshipments OT Port Gdynia [thousands tonnes] , ,1 942,9 91,1 939,2 714,1 1 13,9 946, ,2 835,7 81, 813,7 693,4 659, 612,4 52,2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 14

15 The impact of revaluation of real estate value on the EBITDA result The EBITDA result, having account of the revaluation of the value of real estate EBITDA wycena nieruchomości EBITDA bez wyceny nieruchomości ,9 14,6 +6.4% +28.% 72,3 18,7 53,3 53,6 +.5% Revaluation of the value of real estates by 28% YoY had a positive impact on the EBITDA result The EBITDA result, having no account of the revaluation of the value of real estate increased by.5% 1 15

16 Increasing investments of the Group Expenses incurred in connection with takeovers and investments in 216 contributed to increase the indebtedness of the Group In February 217 the Company took out a loan to redeem bond of the series B and C. The value of indebtedness did not change. OT Logistics has a mandate letter with the banking consortium, which established financing up to PLN 365 million and EUR 2 million It is expected that debt ratios will remain at the levels of (debt/ebitda) not higher than 4. Net Debt/EBITDA Debt ratio [%] 4 3,25 3, , 65, ,71 1,25 2, OT Logistics bonds with maturity date obligacje w PLN 1, 1, ,4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Series B Series C Series D Series E Series F Redemption date 17 February February November August February 22 Interest rate Value Currency WIBOR 6M + 4 pp. 3 PLN permanent 4 EUR WIBOR 6M pp. 1 PLN permanent 1 PLN WIBOR 6M + margin PLN 16

17 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 17

18 What can shape the results of the Group in subsequent quarters? External factors Economic situation in the coal, steel and cereals market Government investments in the revitalisation of waterways in Poland End of maintenance shutdowns in customers facilities Seasonal variations supplies of energy fuels, end of harvest time Internal factors The influence of optimisation Taking advantage of synergies resulting from acquisitions Strengthening the competencies of the Commercial Department, termination of the implementation of CSS IA and HR Implementation of IT systems supporting management Construction of the Port in Gdańsk 18

19 Government plans - a support for the sector in which we operate Expected benefits from the planned and executed investments with the use of public funds supported with the funds from the European Union Poland acceding the AGN Convention in European Agreement on Main Inland Waterways of International Importance will enable it to obtain additional funds for modernisation of waterways PLN 17 billion - announced government investments in the programme of development of highways and expressways in Poland by 223 PLN 67.5 billion - planned investments in the development of national infrastructure by 23 PLN 31.5 billion - the cost of investment in modernisation of the middle and lower section of the Vistula from Warsaw to Gdańsk PLN billion - the value of the investment in activating the Oder Waterway PLN 3 billion - Joint Polish and German project of dredging the Oder River and the associated hydro technical structures PLN 8 million - The investment involving a canal across the Vistula Spit PLN 61 million - planned investment of the Gdynia Sea Harbour in the reconstruction and development of port infrastructure between 215 and 217 PLN 4 billion - the programme of improvement of railway access to the Baltic Sea PLN 6 billion - Investments within the government development plan for inland waterways over the next 15 years 19

20 An increase of demand of transport in Poland - Long-term forecasts Demand of rail transport [billion tkm] Demand of road transport [billion tkm] CAGR 1.8% CAGR 2.4% Demand of inland water transport [billion tkm] Demand of sea transport [billion tkm] 1,4 1,7 CAGR 6.1% 2, 3, CAGR 2.2% Source: MIR Strategy of development of transportation until 22, including a 23 perspective 2

21 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 21

22 Summary The Group is executing a new strategy of growth which is to strengthen its position in the TSL sector in Poland and Europe The Group generates high cash flows from operation activities (PLN million) which confirms a positive direction of development The group considerably increased transshipments in the harbour of Gdynia (+33% YoY), especially with respect to agro commodities (+6% YoY) The Group increases the scale of operation in the forwarding market thanks to the acquisition of Sealand Logistics, STK and Kolej Bałtycka The results of the Group are affected by an unfavourable situation in the market of steel and coal Further optimisation activities will support the results of the Group in subsequent quarters 22

23 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 23

24 New strategy of development - where are we heading Capital Group OT Logistics in 221 Leader of transportation and logistics services in Central and Eastern Europe with an annual revenue of EUR 1 billion. 24

25 Where are we heading within the next 5 years 1 2 Becoming number 1 in the handling of agricultural products within the Baltic Sea basin (excluding Russia) and the Adriatic Sea basin Market share in the market of agro transshipments in Polish harbours at 5% Doubling transshipments in Rijeka harbour 3 Developing port terminals 4 Developing inland and railway transportation by changing the service profile 5 Forwarding - becoming one of Poland's top 1 forwarders 5% share in container maritime forwarding The presence on the TFL (transport, forwarding, logistics) market in the countries of the North-South corridor 6 Building the position of Central European railway-forwarding operator through an organic growth and creating strategic alliances 25

26 Financial results 216 by quarters GK OTL: Revenue , 184,4 176,3 183,6 171,8 174,9 198,2 189,1 1 Q1 Q2 Q3 Q4 GK OTL: The result of EBITDA GK OTL: Net result 4, 15, 2, - 28,8 24,8 17,6 17,3 12,2 13,3 13,4 12,9 Q1 Q1 Q3 Q4 1, 5, - - 5, 8,9 6,1 6,4 3, 1,4,8 -,2 -,8 Q1 Q1 Q3 Q4 26

27 Quarterly results of the transport sector in 216 Transport sector: Revenues (external entities) ,7 55,1 49,7 44,3 57,9 58,3 59,9 54,4 Q1 Q2 Q3 Q4 Transport sector: The result of EBITDA Transport sector: Net result , 1, 8,4 8,1 8,5 8, 6,8 6,5 Q1 Q2 Q3 Q ,3 5,5 4, 4,6 4,5 2,5 2,2 2,6 Q1 Q2 Q3 Q4 27

28 Quarterly results of the forwarding sector in 216 Forwarding sector: Revenues (external entities) ,7 11,6 13,7 18,5 1,9 99,8 99,1 Q1 Q2 Q3 Q4 114,3 Forwarding sector: The result of EBITDA Forwarding sector: Net result ,9 5,2 4,2 2,8 2,5 2,2,8 -,4 5 1,6 3,3 6, 2,4,7 2,1 1,6 -,1-5 Q1 Q2 Q3 Q4-5 Q1 Q2 Q3 Q4 28

29 Quarterly results of the port sector in 216 Port sector: Revenues (external entities) , ,1 22,3 21,6 19,1 15,7 17, 13,4 Q1 Q2 Q3 Q4 Port sector: The result of EBITDA Port sector: Net result , 1 5 7,6 7,9 7,6 5,3 2,8 3,1 3,1 Q1 Q2 Q3 Q ,2 3,1 2,9 1,3 5,5-1, -,5 -,7 Q1 Q2 Q3 Q4 29

Q&A Contact OT Logistics Monika Sadowska +48 694 448 781 monika.sadowska@otlogistics.

30 Q&A Contact OT Logistics Monika Sadowska NBS Communications Maciej Szczepaniak

31 OT LOGISTICS in short 31

Management Board of OT Logistics S.A. Between 22-215 Chairman of the Supervisory Board of OT Logistics S.A. Experience in the area of finance and management gained in international corporations.

32 Management Board of OT Logistics S.A. Between Chairman of the Supervisory Board of OT Logistics S.A. Experience in the area of finance and management gained in international corporations. Graduate of the Université Paris-Dauphine (PhD in economic sciences) In OT Logistics he is in charge of planning and coordination of the activities of the Company and planning strategic development of the Group. Zbigniew Nowik, PhD President of the Management Board Broad skills and expertise in the area of development and increasing the value of enterprises, restructuring, acquisition, financing companies and managing an international team, gained i.e. in companies listed on the stock exchange In OT he supervises the Development and Finance Division Piotr Ambrozowicz, PhD Vice-President of the Management Board He has broad professional experience gained while working in audit, advisory and IT companies both in the Polish market and abroad, i.e. in New Zealand and USA. Between he worked as external auditor in KPMG. He is a lecturer within the MBA programme at the WSB in Szczecin In charge of the Finance Division in OT Logistics S.A. Ireneusz Miski Vice-President of the Management Board, CFO

33 THANK YOU FOR YOUR ATTENTION

Presentation of the results of the OT Logistics Capital Group following the I quarter of May 2016

Presentation of the results of the OT Logistics Capital Group following the I quarter of 216 13 May 216 AGENDA KEY EVENTS FINANCIAL AND OPERATIONAL RESULTS PLANS FOR THE FUTURE SUMMARY APPENDICES 2 The