Rickmers Bond

Issue 1 I 2013 I www.rickmers.com

RICKMERS

aroundtheglobe

The Magazine for Employees & Partners of Rickmers Group

Cover Story

Rickmers Bond The next step in corporate financing

8.875% Rickmers Corporate Bond

EUR 175 m Volume

Maritime Assets

Maritime Services

How a secondExcellence in ship hand vessel joins management the Rickmers fleet

Rickmers-Linie

New Westbound Round-The-World Service

Dear Colleagues and Partners, A lot has happened since the last edition of our magazine. A significant milestone was reached with the successful issue of our corporate bond at the end of May, proving that our transformational process of the past years is now bearing fruit. Being ready to access the capital markets required optimising many of our internal processes and structures in the past and this is also impacting how we do business today and will do in the future. You can read about many of these changes in various articles in this magazine. Being a rather financially oriented edition, you will also find facts and figures on each of our three business segments. Another important process has been the optimisation of our ship portfolio. Besides reducing the number of non-economical ships, we also invested in new vessels – for example by purchasing five new container ships of 2,200 TEU size in June this year. In this issue, you can learn more about how a second-hand vessel joins the Rickmers fleet and also why we decided to invest in this particular vessel size. Besides our head office in Hamburg, Singapore is taking an increasing role as an important hub for our business. Just recently we re-located all Singapore branch offices under one roof. In an interview in this magazine I express my views on these events. Every process is just as good as the people behind it. I am therefore proud to see how many dedicated, highly skilled and socially responsible people are working for Rickmers Group worldwide. I would like to take this opportunity to thank Karl Heinz Lützen and Gerhard Hamann for their many years of work for us and wish them all the best for their future.

Rickmers Bond At a glance In May 2013, Rickmers Holding, parent of the Rickmers Group, issued its first corporate bond in Europe. With a successful capital market debut, Rickmers raised a volume of EUR 175 m, which made the bond not only the first emission by a German shipping company in the small to medium-sized enterprises segment (SME), but also one of the largest SME bonds to date in Germany. Corporate bonds in the segment for small and medium-sized enterprises

Issues 40 30 20 10 0 Year

132

Total number of issues*

41

38 12

2010

2011

2013 *

9

WKN: A1TNA3 ISIN: DE000A1TNA39

Achieved volume:

Thereof companies of the logistics industry

Thereof participating in the Prime Standard segment of the Frank furt Stock Exchange

* as at 20 Sept. 2013; source: www.bondguide.de

Yours truly Bertram R.C. Rickmers

Rickmers aroundtheglobe

2012

5

Enjoy this comprehensive issue!

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41

Rickmers Bond Issuer: Rickmers Holding GmbH & Cie. KG

Issue 1 | 2013


Issue 1 | 2013

EUR 175 m Coupon rate p.a.: 8.875 %

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Cover Story Rickmers Bond


Dr. Ignace Van Meenen, Deputy CEO and CFO (opposite page), Ronald D. Widdows, CEO, and Prof. Dr. Mark-Ken Erdmann, Deputy CFO (from left to right)

“In the past few years, we have aligned our internal structures to be fit for the capital market.” Dr. Ignace Van Meenen

Rickmers Group

Rickmers Bond – the next step in corporate financing The Rickmers Bond is listed on the Frankfurt Stock Exchange in the market segment German Mittelstand (i.e. medium-sized companies). To meet the requirements of professional investors and the stock market, Rickmers Group has gone through an intense transformation process during the last years. The bond represents one part of this much larger process, which points to a level of corporate transparency unseen in the German shipping community and is required for the future success in the shipping industry. aroundtheglobe talked to Ronald D. Widdows, CEO of Rickmers Group, his deputy and CFO Dr. Ignace Van Meenen, Deputy CFO Prof. Dr. Mark-Ken Erdman and to Frank Bünte, Chief Treasury and Risk Officer and Head of Capital Markets, to find out more about the bond and the thoughts behind. atg Mr. Widdows, Rickmers successfully issued its first corporate bond this year. What led to this decision to issue the bond? Ronald D. Widdows Shipping companies have to find new ways to finance their businesses, since the global financial market is still under pressure. The traditional sources

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of equity and debt financing are no longer available. That is why we had to position ourselves to attract new investors and to access new sources of financing. The bond issue has brought us into a new set of relationships with many in the investment community. This will help us to expand our business. Ignace Van Meenen Access to the capital market is a vital factor for the future market position of any shipping company. In the past few years, we have aligned our internal structures to be fit for the capital market. With the bond we took the next step in corporate financing. As Rickmers continues to transform into an internationally-managed global shipping company, the capital market is a natural source for funding. atg What made you chose the bond as financial tool to access the capital market? Mark-Ken Erdmann Accessing the market with a bond was the best option in the current situation for us. First, the bond enabled us to approach international institutional investors, who are willing to cooperate with us on a long-term basis, but also private individuals, so called retail investors. Second,

Issue 1 | 2013

the bond with its fixed coupon rate has the benefit of making costs calculable which of course makes planning easier. And third, in addition to our existing financial instruments the bond helps us to optimise the structure and maturities of our liabilities. atg The coupon rate for the Rickmers Bond is 8.875 percent. How was this rate set? MKE We actually started with a coupon range, based on the overall situation, and approached the investors with this range at the beginning of our engagement. As things became more concrete and we gained a better insight, we fixed the rate in the middle of our range to reach what we viewed as an optimal combination of issue volume, investor diversity and coupon rate in the current market environment. We had to set our rate above the average rate of an SME bond, partly due to the overall difficult environment in the shipping industry and also because there was no other comparable shipping company out with a bond – so we were having to set new standards. atg The shipping industry has been under pressure for a few years now. What made the Rickmers bond attractive for investors? RDW Overall, the maritime transportation sector is a long-term growth market with cyclical volatility. There is currently a difficult market environment due to overcapacity. But the orderbook will continue to decline over the next two to three years with corresponding balancing effect between supply and demand. That will lead to a new recovery of the market. Of course we are also


affected by the crisis, but we were among the few companies that were still profitable in the past few years. This was due to a large extend to our ability to adapt quickly to the changing market environment. We are confident about our competitive position, especially with regards to our strong brand in the maritime industry, our financial strategy and access to the financial markets. Moreover, we have long-term charters with leading carriers which will ensure fixed revenues over the next few years. This together with a strong management team and high degree of transparency, make Rickmers a unique company in the industry.

“Rickmers went through a huge process which is probably beyond the capability of many others.” Ronald D. Widdows

IVM Our profitability in the past and our success for the future benefits from our diversified business model. With our three business segments – Maritime Assets, Maritime Services and Rickmers-Linie – we are less influenced by market cycles. Moreover, Rickmers foresaw the developments in the industry at a very early stage, which allowed a proactive strategy. We started to reorganize our business already in 2010/2011. atg Who are the investors of the Rickmers Bond? Frank Bünte The majority of investors are institutional investors such as insurance companies, banks and funds. But with a minimum investment of EUR 1,000 we also approached private investors who were looking to invest. →

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Rickmers Group

Background

Strategy

Frank Bünte, Chief Treasury & Risk Officer and Head of Capital Markets

atg Could you tell us a bit more about the transformation process? RDW Over the last few years we have built new capabilities and strengthened our management team. We began to position the Group to take advantage of the opportunities that will arise. As a traditional German shipowning company, we are the first ones in this sector to enter the public arena. The transparency that we now provide to investors and customers is unique and a big step for a family-held business. Not everybody in the German shipping industry will be able to benefit from capital market opportunities. Rickmers went through a huge process which is probably beyond the capability of many others. IVM The successful bond issue confirmed the value of the significant effort that our organisation has devoted to transforming the Group into a capital-market oriented company. atg What will the funds raised be used for? FB The net proceeds from the issue are to be used to finance growth and investment as well as to refinance bank liabilities. With other words: we are optimising the structure of our liabilities and at the same time setting up the company in such a way to enable us to benefit from future market recovery.

atg What are the plans for the future? RDW Overall, we are following a growth strategy in all business segments based on our expectations of a market recovery. This not only includes organic growth, but also means we’ll play an active role in market consolidation in all three business segments. We are looking to remain profitable in the longer term and expand our market positioning as ship owner and asset manager, as service provider in ship management and as liner shipping company in the heavy lift, breakbulk and project cargo sector. So we want to grow our business in established fields of competence, as well as expand our services for third parties. And I am happy to say that we already see first results: just recently we brought three 1,700 TEU container ships owned by the China Navigation Company under Rickmers’ ship management, for example; a further five 4,700 TEU container ships from Hanseatic Lloyd followed. And we expanded our fleet by purchasing five second-hand containerships of 2,200 TEU. We regard this particular size as one of few market segments with short-term upside potential. It is important to keep sight of the long-term goals – such as investing in energy-efficient newbuilds – and to use short- and mid-term opportunities, as they open up. atg Thank you for this interview, gentlemen.

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Rickmers Maritime: strong investor confidence in the Trust

Overall In the light of the on-going shipping crisis and the challenging situation in the financial markets Rickmers Group has developed a growth strategy based on the assumption that the maritime industry will recover from its current crisis.

“While the rights issue took two months from launch to completion, countless hours were spent prior to that, planning and strategising to ensure that it was a success. As a result of the funds raised, Rickmers Maritime has been placed in a position of strength. This transaction is the first step of Rickmers Maritime’s transformation back to growth.”

The Group’s three business segments, Maritime Assets, Maritime Services and Rickmers-Linie cover a broad range of services in the shipping supply chain and complement each other. Opportunities for growth are in all three business segments – either organically or through active consolidation of the market. The aim of Rickmers Group is to achieve profitable, sustainable growth. The overall strategy includes being fit for the capital markets, tapping additional sources of financing and becoming the partner of choice in all segments. Maritime Assets • Becoming the “partner of choice” to charterers, investors and financiers • Make use of current market conditions and strive for investments alongside long-term financial partners • Multiple stage approach for future financing of vessel investments • Value based asset management Maritime Services • Offering management services to third parties • Profitability enhancement measures • Managing ships similar to a company production unit and investing in people Rickmers-Linie • E xpand business in growing markets • Consider the potential to increase capacity under U.S. flag • Strengthening of own sales organisation and reducing third party supporting services • Provision of additional services and becoming the preferred partner to global project clients

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Thomas Preben Hansen CEO Rickmers Trust Management Pte. Ltd.

Rickmers Maritime in Singapore took a bold decision to launch its rights issue at a time where the market sentiment for shipping was subdued, and the economic outlook was still far from certain. Notwithstanding the cautious sentiment echoed by investors in the current economic landscape, the rights issue received overwhelming support when it was announced in March this year. Support for the transaction came from substantial unitholders, Rickmers Group and Capital Research and Management (an affiliate of The Capital Group Companies Inc.), who pledged their endorsement by way of subscribing and paying in full the required number of rights in order to maintain their current unitholding percentage levels. In addition, independent directors Mr. Lim How Teck and Mrs. Lee Suet Fern who sit on the Trust’s Board also gave the transaction their votes of full confidence. In all, the committed support for the transaction was locked in at 39.9% prior to launching the rights issue.


The subscription window was open for two weeks, during which time, the management made a series of presentations to both institutional and retail investors. Demand for the rights units was strong and applications from unitholders for ‘excess’ rights units, or rights units over and above their entitlements, amounted to approximately 641.5 million, leading to the issue being 1.5 times subscribed. The success of this rights issue against the backdrop of such a challenging global environment serves as a strong testament to the confidence our investors have in the Rickmers Maritime trust. Their unwavering support has allowed the Trust to pay down some of its outstanding bank loans and strengthened its balance sheet. RTM

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Background

In May 2013, Rickmers Maritime successfully completed a 1-for-1 non-underwritten renounceable rights issue in Singapore, raising S$101.7 million (US$ 81.5 million) through the transaction. The rights issue, which was offered at a 33% discount to the trading price at the time, was favourably received by unitholders and attracted an impressive subscription rate of 150%. In connection with the rights issue, Rickmers Maritime has also secured an extension on its value-to-loan covenant waiver until end 2014.

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“Building on and expanding our own regional sales team is a key factor in our success.”

Portrait

Carl Stefan Gläbe

Interview with Bertram R.C. Rickmers on the significance of Singapore

Contact Rickmers Asia Pte. Ltd. 8 Shenton Way #42-01 Singapore 068811 Tel.: +65 6372 6300 Rickmers Shipmanagement (Singapore) Pte. Ltd. 8 Shenton Way #42-01 Singapore 068811 Tel.: +65 6372 6300 Rickmers Trust Management Pte. Ltd. 8 Shenton Way #42-03 Singapore 068811 Tel.: +65 6506 6960 Rickmers-Linie (Singapore) Pte. Ltd. 8 Shenton Way #42-04 Singapore 068811 Tel.: +65 6372 8790

Rickmers Group

Under one roof in Singapore In May, Rickmers completed the relocation of its four offices to new business premises in Singapore. The companies Rickmers Trust Management, Rickmers Shipmanagement (Singapore), Rickmers Asia and the newlyfounded Rickmers-Linie (Singapore) are now united under one roof. With its new branch office in Singapore, Rickmers-Linie has also taken over all responsibilities from its former agent Horizon Shipping.

Among the some 50 people working there are two men new to Singapore: Carl Stefan Gläbe and Gunnar Holm. Both are employed under the umbrella of Rickmers Asia, which incorporates the holding functions of the Group in Singapore. Carl Stefan Gläbe, as Director Capital Markets Asia, is responsible for securing further access to the Asian financial markets for Rickmers. Also from Hamburg is Gunnar Holm, who now heads the Finance/Accounting/Controlling department of the newlyestablished overall organisation in Singapore (see next page). nm

aroundtheglobe Mr. Rickmers, the Rickmers Group in Singapore relocated into new offices in May this year. What brought about the decision? Bertram R.C. Rickmers As you know, global business is increasingly shifting away from the USA/Western Europe towards the Asian-Pacific region and this is opening up a significant sales market for our services. On top of this, Singapore is a favourable location for enterprises to gain access to the Asian capital market. And in the past few years this has meant that not only important investors and banks but also companies, institutions and service providers have settled here - all of them connected to each other along the maritime supply chain. As Rickmers is looking to ‘fly with the eagles’, we cannot afford not to be represented here. The provision of services to third parties is central to our growth strategy. We have seen that we need to become more visible and intensify our sales activities if we are to succeed in acquiring new clients. Building on and expanding our own regional sales team is therefore a key factor in our success - with the emphasis here on ‘own’. We’ll be needing more space than before and the newly leased office provides plenty of that. All subsidiaries headquartered in Singapore can be found under one roof. This has a wonderfully positive effect on the way people work together while at the same time providing the potential to save administrative overheads.

ATG How will the work be split in future between Hamburg and Singapore? BR Hamburg is the parent undertaking of the Rickmers Group. This is where we have our roots and this is where we have many important business contacts in the maritime cluster of northern Germany. Hamburg administers management functions across all companies and Group functions such as Risk & Treasury, Accounting & Controlling, Taxation and Legal Counsel, IT, Corporate Communications, Human Resources, and so on. As part of the realignment of the Rickmers Group we have invested considerable sums in the parent undertaking. I could mention here investment in talent and change management and in the IT infrastructure. When you look at international activities, we have always had locations worldwide. In an effort to be closer to our clients we are currently building up our Singapore site as regional headquarters. And it might well be possible that in a couple of years we’ll be opening regional headquarters in North and South America and perhaps some time later in Africa. ATG Thank you very much for your time, Mr. Rickmers.

Carl Stefan Gläbe joined Rickmers Reederei in April 2012 as Director Asset Management. In January 2013 he became Director Capital Markets Asia and moved to Singapore. Holding a law degree and a degree in ship finance management, Gläbe has been in the shipping business for over 10 years. He started out as a lawyer advising ship financing banks, ship owners and issuing houses. Thereafter he was head of shipping for an issuing house for German KG funds. During the latest shipping and world economic crisis he joined an international hedge funds group, setting up a distressed shipping fund. Since 2008 he has been advising international maritime investors and ship owners as a consultant.

Portrait

Gunnar Holm

Gunnar Holm started his career at the global audit and consulting firm PricewaterhouseCoopers, where he was the project leader responsible for auditing several multinational groups, one of them the Rickmers Group. In 2010 he ‘changed sides’ and joined the Rickmers Group finance department, playing a leading role within the transformation process of the last two years. Main achievements have been the introduction of a Fast Close process and the first Annual Report in Rickmers’ history in 2011, followed by the successful implementation of the new Group-wide integrated reporting and consolidation tool SAP FC. Furthermore, he performed the integration of Rickmers Maritime Trust figures into Rickmers Group financials in 2012 and was already responsible for accounting and financerelated support for all Singapore based Rickmers Group companies. Given his wealth of experience he was appointed Financial Director of Rickmers Asia Pte. Ltd. with effect 1 June 2013 and now heads the Finance/Accounting/ Controlling department of the newly-established shared services organisation in Singapore.

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Rickmers Group

Accounting & controlling – meeting the requirements of the capital markets The transformational process the Rickmers Group went through in the past few years has had one important goal: to make the Group ready for the capital markets. Only by securing the company finances, can new investments be made and further growth achieved. Therefore, the Group has aimed to increase transparency and efficiency in all areas, especially in the accounting and controlling department, which is indispensable for many reasons: for the daily flow of incoming and outgoing payments, the creation of financial reports, forecasts and budget calculations, for supporting the management with financial controlling and investment decisions, and much more.

Stakeholders of Rickmers financial reporting Shareholders Advisory board

Customers

Suppliers Financial reporting

Rating agencies

Financing banks Tax authorities

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Management

Investors (old + new)


Besides the need for high internal standards to increase efficiency, Rickmers additionally faces legal transparency obligations. With the issuance of its first corporate bond, traded on the Frankfurt Stock Exchange, Rickmers has had to meet disclosure obligations of Deutsche Börse AG (German stock exchange). Moreover, the German Securities Trading Act (Wertpapierhandelsgesetz) has had to be taken into account in term of insider information, trading and market manipulation.

Organisation of accounting and controlling department Ulrik Kriete Director Accounting & Controlling

Sonja Ilgert Team Assistant

Angelika Seide General Manager Accounting

Thomas Faust Manager Group Reporting

Hanno Schumacher Manager Fleet Accounting

(Angelika Seide) Group Accounting

Ilka Beermann Manager Group Controlling

Disclosure obligations of the German stock exchange for Group reporting has had a particular effect on the accounting department. While in the past only a yearly management report was created, now an annual report with deeper and broader information and half-year reports with an interim management report are required. Plus, deadlines are much tighter. The annual report has to be published no later than four months after end of the year and the half-year report two months after the period under review. “The creation of our first annual report for the year 2011 was a milestone in transparency. We now provide a detailed insight into the company and a clear structure based on the three business segments in an appealing design,” says Ulrik Kriete, director of the accounting and controlling department.

vidual year-end closings finished within a short period of time. Only when all departments pull together and we receive all the required data on time and in high quality, can we perform,” explains Kriete. “As a next step we harmonise all internationally different accounting standards to compile a Group report pursuant to German law. Furthermore, we need to eliminate all inter-company transactions which would distort the picture,” adds Thomas Faust, Manager Group Reporting. Besides SAP FC, two more existing SAP modules were extended and optimised: SAP FI for local accounting and SAP Business Warehouse, a tool for operational planning and reporting and also for extracting data from different sources to analyse individual elements of the business, e.g. financial data per vessel.

One important tool used to support the compilation of reports is the newly implemented SAP FC software, which facilitates groupwide consolidation by limiting the number of manual tasks and increasing the reproducibility of all data. “For the Group report, we have to consolidate 113 companies. Thus, a high level of coordination is required by our offices worldwide in order to have all indi-

Further obligations demanded of a publicly listed company include publishing key corporate figures and a company and bond profile to enable investors to compare different investments. A company or bond rating has to be assigned and published, together with a financial calendar. Moreover, an information event for bond investors and analysts has to be held and the public informed of any es-

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Constantin Bock Manager Business Intelligence Systems

Christoffer Feddersen Division Controller Maritime Assets

Adrienn Földesi Division Controller Maritime Services

Alexander Daniel Division Controller Rickmers-Linie

sential company events – so-called ad-hoc disclosures. Here again the accounting and controlling department has to provide information or support the different departments when they do so. While the accounting team – split between fleet accounting and Group accounting – and the Group reporting team are mainly in charge of satisfying external stakeholders, financial controllers mainly serve internal needs. They are the ones who analyse company developments in the retrospect, and also create forecasts and budgets for the current and for upcoming years. During the last few years, these teams have been brought closer together not only as regards the systems used, but also as one department. Additionally, a business intelligence systems team has been formed to focus on extracting and processing the data available into easily evaluable overviews. “We have come a long way over the last few years and it was a lot of hard work. Of course there is always room for improvement, but we have achieved a level that is hard to find at other companies of our size in the German shipping industry,” concludes Kriete. NM

Ulrik Kriete, Director Accounting & Controlling

Thomas Faust, Manager Group Reporting

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Feedback from participants

Rickmers Group

Rickmers Academy – navigating towards the future

Annett Hickmann

Martin Nühlen

The portfolio of courses offered by Rickmers Academy is a good way to gain and expand knowledge in different areas. The courses I attended were well organized and the trainer explained all in an easily understandable way.

The tour to the Wallmann terminal and aboard the Rickmers-Linie vessel RICKMERS DALIAN was a great experience: first a Wallmann employee introduced us to the processes taking place at the terminal, then Mr. Sandmann and Mr. Suehlmann from Rickmers-Linie took over and guided us aboard the vessel. Being with two experts, we learned a lot about the technical details and different duties aboard, watched how the vessel was discharged and gained insight into a variety of jobs, such as being a pilot or supercargo. I think the visit aboard is a valuable way for everyone working ashore to understand and appreciate the work done at sea.

Accounting Department

Barbara Pallasdies

Assistant to the Executive Management I attended a course that took place in the Hamburg office and with an internal trainer, Mr. Kais. Since he not only knows the software but also the company very well, he has a better understanding of what our daily challenges are and can adjust his delivery accordingly. Plus, being with people only from the company helped me to get to know colleagues from other departments better.

Charter Control

Feedback from in-house trainers

Wolfgang Kais

Sebastian Tesch

The Rickmers Academy courses are not only something positive for the participants, but also for me as a trainer. On the one hand it is fun for me to teach others, and on the other hand, I can meet some colleagues personally who I usually only talk to on the telephone. Furthermore, from time to time I enjoy seeing something else than what I normally see on a daily basis: the program code of BRIDGE and COBRA.

I think exploiting the existing internal knowledge within Rickmers is a good idea. The Academy is well organised – from involving the departments, the process of registration to the delivery of the training. And also the seminar programme and processes presented in Rickipedia are clearly structured. Everyone who is interested has easy access to internal know-how.

Application Development/Rickmers Holding Trainer for MS Office products

“By bundling all training activities, we can find high-quality solutions and still have a wider group of people benefitting from it.” Katharina Struchholz

The on-going development and training of employees is one of the key factors in determining employee satisfaction and business success. To promote this, the Rickmers Academy was re-launched by the Human Resources department in March this year. A new and broader seminar programme has been elaborated focusing on three core areas: professional skills, personal skills and industry-specific skills. Moreover, German and English language classes are offered at different levels. The courses have been customized for employees ashore and for the time being are only conducted in Germany, but will later be expanded to further locations. Courses for crew members at sea are organised separately. Development programmes are delivered either by an external provider or in-house. Based on the notion of ‘sharing Rickmers knowledge’, various colleagues support the Rickmers Academy by offering internal courses on such topics as basic and advanced levels of using MS Office software, Data Protection and Introduction to Shipping and learning more about the Facts and Figures of Rickmers Group. The external programmes focus on topics such as Communication & Conflict Management, Organisation and Self-

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management and Presenting Successfully. Besides basic courses, the Rickmers Academy team, which comprises Katharina Struchholz, Mandy Kranich and Susanne Henne, also supports departments with specific and individual needs to find and arrange the required training. “By bundling all training activities, we can find high-quality solutions and still have a wider group of people benefitting from it,” explains Katharina Struchholz. 20 programmes with over 240 registrations have been conducted since the re-launch and the feedback from the colleagues is very positive. One highlight were the vessel and terminal visits in June and September. With the kind support of Rickmers-Linie, interested employees were given the chance to visit a Rickmers multi-purpose carrier and enjoy a guided tour through the Wallmann terminal in Hamburg.

Fleet Controlling/Maritime Services Trainer of ‘Introduction to Shipping’ (together with Felix Wigand)

Courses by number of registrations Professional skills

English/ German 14.8%

40.3% 27.3%

Personal skills

17.6%

Inustry-specific skills

Since its relaunch, Rickmers Academy has offered language courses with more than 40 participants and has conducted 20 seminars with above 240 registrations.

Upcoming programmes Date Topic

10/10 28–29/10 5/11 5–6/11 7/11 13/11 26–27/11

Introduction to Shipping Leadership Data Protection Communication and Conflict Management Organisation and Self-Management Rickmers Group - Facts and Figures Presenting successfully

For registration, please follow the instructions that can be found in Rickipedia.

The Rickmers Academy team is looking forward to supporting the constant development of all employees in their professional and personal skills. All available courses can be found in the Rickipedia intranet. For more information just send an email to [email protected]. NM

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Maritime Assets At a glance

Maritime Assets

The link between Rickmers and Egypt

In the business segment Maritime Assets, the Rickmers Group acts as an asset manager for its own and third-party vessels and initiates and coordinates vessel projects, arranges financing, acquires, charters out and sells vessels. The segment Maritime Assets also comprises the vesselowning companies of Rickmers Group.

87

310,000

Total number of ships under asset management

Fleet by ship type

3

6

15

Multi-purpose carrier

3

58

22

Car carrier

Rickmers Group incl. 16 Rickmers Maritime ships

67

Companies Rickmers Reederei Hamburg, Germany (100%)

Polaris Douglas, Isle of Man (100%)

ESSE Expert Shipping Service Hamburg, Germany (100%)

Rickmers Trust Management Singapore, Singapore (100%)

Rickmers Maritime Singapore, Singapore (33.1%)

Single-vessel companies

Tokyo

11,192 N. Miles

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Singapore

Singapore – New York: Saving in distace via the Suez Canal 2,373 N. Miles = 19% Tokyo–Rotterdam: Saving in distace via the Suez Canal 3,315 N. Mile = 23%

14,507 N. Miles

Source: www.suezcanal.gov.eg

Whenever a ship transports goods between Europe and Asia, the Suez Canal is of a great importance. This artificial sea-level waterway in Egypt connects the Mediterranean Sea with the Red Sea and spares carriers navigating around Africa. This not only cuts down distances, it also saves time and money. As a result, the Suez canal – in Arabic, Qanat AlSuways – is one of the world’s most heavilyused shipping lanes and one of the most important waterways in the world. Located in Port Said, Consult Navigation Agency (CNA) provides a wide variety of excellent marine services on behalf of ship owners. “We are always keen to secure trouble-free operations for our vessels in all Egyptian ports and to serve as a link between Rickmers and the Egyptian authorities,” says Farid Marcos, director of CNA. “It is our mission to offer our ship owners the in-depth experience of our professional team, who make every effort to meet a ship’s requirements from the moment it arrives until it leaves the canal,” he adds. A remarkable 25 years connects Marcos with Rickmers. “It has been a long time since I took over my father’s responsibilities, who worked as an agent for Rickmers at that time. Since then, I have made every effort to develop trustworthy relations with the Rickmers’ staff in the different departments and I am strongly dedicated to developing my company’s services and facilities to ensure they are the best,” Marcos explains. In fact, the nature of shipping in Egypt requires

EVT Elbe Vermögens Treuhand Hamburg, Germany (80%)


8

n ≤ 900 n 1,100-1,850 n 2,000-2,850 n 3,450-4,444 n 5,100 n 13,100

16

Container ships

14

12,506 N. Miles

Container ships

2

Conbulker

Other

Harper Petersen Hamburg, Germany (50%)

10,133 N. Miles

Offices in Hamburg, Isle of Man, Singapore

Fleet by owner KG ships

New York

Employees as at 30 June 2013

as at 18 Sept. 2013

26

Rotterdam

49

Total TEU approx.

The geographical position of the Suez Canal makes it the shortest route between East and West, as compared to a route via South Africa. The Canal opened in November 1869 after 10 years of construction work. After multiple enlargements, it is now 193.30 km long, 24 metres deep and 205 metres wide. The northern terminus is Port Said and the southern terminus is Port Tawfiq at the city of Suez. Since the canal is single lane with passing places, the transfer of ships is organised in convoys. The canal is owned and maintained by the Suez Canal Authority.


The team of Consult Navigation

companies to have unimpeachable experience and a tactful approach to achieve professional standards. “My team and I believe that the key point of success is cooperation. They always keep me up to date with all the details which is crucial to avoid mistakes. They never fail to inspire me with their sense of pride, integrity, and timely plans to complete the job,” he says.

Agency with their director Farid Marcos (in the middle) provides marine services in Port Said on behalf of Rickmers.

“Rickmers has a special place in my heart with all its esteemed staff considered as my family. I really owe a big portion of my success to them for they have been my constant motivation to achieve success in business. Working for Rickmers is an essential part of my life and with every ship comes a new challenge.” NM

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AKKI RICKMERS is one of the

Maritime Assets

How a 2nd-hand vessel joins the Rickmers fleet

second-hand vessels recently purchased by Rickmers Group

2nd-hand acquisition process

Wigand started his career with a professional training in shipping at P&O Nedlloyd. Followed by further studies at the Jade Hochschule and the Australian Maritime College he graduated with a degree as an industrial engineer, specialised in maritime economics and port management. After various project management positions in the field of shipping, he finally worked as Sales & Purchase Broker before he joined Rickmers. Alongside his professional commitments, he is currently studying Shipmanagement at the North West Kent College.

Evaluation phase The first step towards the purchase of a second-hand vessel usually is a project proposal from a Sale and Purchase Broker. The proposal consists of a brief technical vessel description, a price idea, employment information and the owner. The Asset Management team at Rickmers Reederei then evaluates the project by taking a closer look at the vessel (type, size and age) and the corresponding market segment. An indicative investment calculation is made on basis of the given purchase price and current market assumptions. If the result of the evaluation is positive and the investment calculation meets certain profitability requirements, an investment proposal is prepared and presented to the Rickmers Group’s extended board for approval. The investment proposal includes basic vessel data and a brief commercial history. In addition, charts on the historical development of second-hand prices, charter rates and changes in the current fleet and orderbook are displayed. The research department at Rickmers Reederei constantly collects and updates market intelligence in a database, which then automatically feeds the charts. According to the board’s decision, the broker will be informed of the current status. If the board gives the green light, the negotiation phase begins.

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Negotiation phase The negotiations are initiated by sending out an initial offer, including price indication, through the broker to the seller. Besides the purchase price, the offer includes provisions in regard to the seller’s reply time, the amount of deposit and payments, commission, inspection and items (bunker, stores, and equipment) included in the price. Furthermore arrangements in regard to delivery of the vessel, crew exchange, buyer’s representatives, and finally the place of jurisdiction are clarified. Mostly, the terms of such offers are already based on a standard sales contract: the Norwegian Saleform. The seller reviews the offer and sends back a counter. This procedure continues until both parties agree on all terms. An inspection takes place parallel to ongoing negotiations. The inspection is carried out by a Rickmers Shipmanagement Superintendent (SI) or an external surveyor. First the ship’s class records are checked to reveal the areas on board which require special attention during the physical inspection. The findings of the inspection are translated into numbers and a first technical budget is prepared by the SI. Besides the operating expenses, an estimate of the initial costs necessary to bring the vessel up to ‘Rickmers Standard’ is made. These upgrading costs play an important role in the final negotiations with the seller and may lead to a reduction of the purchase price.

Takeover phase After successful negotiations, the take over phase commences. Within the Rickmers Group several departments are involved in this process. The insurance cover is arranged through the insurance broker Global Marine Insurance. The manning of the vessel is organised in line with internal and flag state requirements by Rickmers Shipmanagement. Furthermore the internal administrative infrastructure and IT systems are set up, necessary initial supplies are ordered, surveys and services (e.g. diving inspection, bunker survey) are arranged, communication infrastructure is set up and change of ownership is arranged with the responsible authorities.

Project evaluation

The last step of acquisition is the legal and physical transfer of ownership. On board, the handover is handled by a Rickmers SI and the closing (signing of the sales contract) is executed at a lawyers’ office by the managing directors. The legal and physical transfer is executed simultaneously regardless of the time zone and the place of handover. FW


reparation of investment teaser P (Presentation to board) Feedback to broker (Incl. price indication)

Start of purchase negotiations

Finally, the budget is updated to include the currently contracted crew, insurance costs and technical budget assumptions. On basis of the recap the actual purchase contract (Memorandum of Agreement) is drafted and agreed by both parties.

The investment calculation is updated with the agreed purchase price and the latest cost assumptions from the technical budget. If agreement is reached on all terms, a final recap is produced. At this stage the terms are still subject to Rickmers’ board approval. A final investment proposal is prepared and presented to the board. After approval by the board the subjects are lifted.

Issue 1 | 2013

Project proposal (from S&P broker)

Evaluation phase

Since July 2013, Felix Wigand has been working as Asset Manager at Rickmers Reederei. Together with his colleague Johannes Winkler he is responsible for the acquisition of new vessels. Prior to this, he worked nearly three years for Rickmers Holding as Fleet Controller.

Rickmers Group recently announced the purchase of five new second-hand vessels. The acquisition process is a multi-level process, requiring the close cooperation of different departments. An efficient acquisition process enables the Rickmers Group to exploit market opportunities as they arise at short notice.

Inspection (Physical + records) reparation of budget P (OPEX, reactivation, class) Re-evaluation (Adjust. of assumptions)

Negotiation phase

Felix Wigand

Takeover phase

Portrait

Final recap

Board approval (Final investment teaser)

Arrangement of Organise maninsurance cover ning of vessel

Preparation of takeover

Preparation of final budget

Drafting of purchase contract (MOA)

Closing / physical takeover

Issue 1 | 2013

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Maritime Assets

Why invest in small tonnage?

are increasingly deployed in smaller markets such as intra-regional trades in Europe and Asia, and trades related to Africa and Oceania. These trades are mainly related to emerging markets with high growth rates (see IMF figures below). The growing economic strength of the emerging markets also leads to higher trade flows. Whereas main routes, where we have an ever-increasing supply of larger vessels, are growing only slowly, the secondary routes mentioned are recording high levels of trade growth (see chart on next page).

In June, Rickmers Group announced the purchase of five 2,200 TEU container vessels. The Group regards this particular vessel size as one of the few market segments with positive short-term upside potential for charter rates and second-hand prices. aroundtheglobe asked Bernd Bornholdt, Researcher at Rickmers, for more information on the thoughts behind this.

As a result, there is a higher demand for smaller tonnage from the emerging markets. This effect is further intensified by the fact that the number of smaller ships has constantly decreased over the last years due to enhanced scrapping and fewer newbuilds. As with every market, higher demand and lower supply inevitably lead to increas-

2,200 TEU vessel ANGIE RICKMERS, one of the vessels recently purchased by Rickmers Group.

ing prices. So taking into account the details above, the market of ships between 1,500 TEU and 3,000 TEU is set to see higher charter rates and second-hand values in the near future. In the light of this and given that the current second-hand prices are at a historically low, Rickmers has decided to take its chance and invest in the five ships of 2,200 TEU. BAB/NM →

World output change 7.0%

In the last couple of years, the increasing supply of tonnage resulting from the delivery of new ships has put the container shipping market under continuous pressure. This situation is further exacerbated by a large order book, which will bring more and more ships on the market in the coming years. However, this is somewhat of a shallow view. If we take a look at the different ship segments in detail, the highest growth can be found in the segment greater than 7,500 TEU. These large ships are mainly constructed to be deployed on the Far East–Europe routes.

But due to the fact, that supply of transport capacity in this trade is much higher than demand, container lines are replacing less economic smaller ships with larger newbuilds. This phenomenon, the so called cascading down effect, is not only limited to the Far East-Europe route, but trickles down to other markets as far as Latin America, the smallest market, where ships of less than 4,000 TEU are cascaded from. Ships that are pushed out of these larger trades, especially sizes of less than 3,000 TEU,

6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 2011

2012

2013*

* Figures for 2013 and 2014 are projections

Estimated fleet development in 2013

2014*

Advanced economies Emerging market and developing economies

Source: International Monetary Fund

30%

Container Ship 10-Year-Old Secondhand Prices Index

25%

150 20% 130 15% 110 10% 90 5% 70 0%

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

30

2003

10,000+ TEU

2002

7,800 9,999 TEU

2001

Source: Howe Robinson

5,150 7,799 TEU

2000

4,000 5,150 TEU

1999

3,000 3,999 TEU

1998

2,000 2,999 TEU

1997

1,000 1,999 TEU

1996