Thank you very much. Good evening, everybody. I'm very pleased to be with you. I would like to introduce you to the persons with me tonight. We have Thierry Hochoa with the Group CFO. We have Jean-Baptiste Aubagnac and Matthew Burgess from the investor relations team. We are gathered to talk about the acquisition of Danelec by GTT. Danelec is a recognized player in maritime digitalization. For GTT, it's a transformative step in its digital journey. It's a key milestone in the development of our digital vision. We are securing a global leadership position in the high-potential segment of vessel performance management, as we are achieving a top-tier position in the critical voyage data recorder segment. We are going to unlock significant synergy potential thanks to the complementary offerings of Danelec, Ascenz Marorka, and VPS. This move is fully aligned with our strategic roadmap.
We have now, we're going to have an installed base of approximately 17,000 vessels, one of the largest in the world. It will enable technology uplift with trusted expertise in high-frequency data handling. It's an acquisition which is going to deliver dual strategic value for GTT. In terms of vessel performance management, we become the world leader in high-potential market segments. We are reaching critical mass, and we are covering the entire segment from noon reports based on solutions enhanced with VPS acquisition in February 2024 to high-frequency data solutions with Danelec in 2025. In safety, we secure a top-tier position in a critical, highly regulated market, offering steady growth and recurring revenues. Strong profitability driven by VDR, mandatory piece of equipment under IMO regulations, visibility and recurring high-margin revenues through annual maintenance services.
Very well-established player with more than 20 years of experience and 15% of the global fleet equipped, including a remarkable 30% market share of annual retrofits .
Anouar [Foreign language]
Thank you, Philippe. Danelec, as mentioned by Philippe, is a recognized player in the maritime industry, and it is a very good fit in our digital setup. Danelec operates in two segments. Safety, mainly represented by the VDR, which represents today 64% of the revenue, and that is associated with annual services or annual reviews that are part of the recurrent revenue generated by the company. Also maintaining a close relationship with the different customers. The second segment is vessel performance management, representing 31% of the revenue, where we have solutions like the shaft power meters and other devices like the VRS. On top of that, Danelec offers software, maritime software as a service, mainly for the vessel performance management, as mentioned. Some key numbers about the company. Danelec generated EUR 44 million revenues in the last exercise.
The installed base was mentioned by Philippe, EUR 15,500, which is one of the largest fleets managed or installed by a digital company in our space. In terms of employees, 168 employees work in Danelec. On top of that, Danelec uses a highly qualified network of 700 technicians that are present all around the globe, close to the main hubs of operations of the customers to be as close as possible to them and serve them. The company is headquartered in Denmark, Farum, close to Copenhagen. One of the key aspects of this acquisition mentioned by Philippe is the significant synergy potential that this operation represents. What you see on the left is some of the key items that will benefit from this synergy.
First, I would like to mention that the companies within the group, Danelec, Ascenz Marorka, VPS, are talking to the same customer base, so that increases our exposure in this market. Going back to the synergies, in terms of vessel performance management, Ascenz Marorka and VPS develop or design and deliver digital solutions that are complementary to the Danelec, I would say, setup. On the other side, Danelec has a very large installed base equipped with high-frequency data devices that are compatible, of course, with these solutions. Regarding the voyage optimization, usually called also weather routing in the industry, Danelec does not have today an in-house solution for that. That means that the customer base is a natural, I would say, target for the combined solution, combining, by the way, also some solutions from the vessel performance management.
By bundling all this, we can easily think that we will have a competitive advantage to serve these customers. The other devices provided by Danelec, like the VRS or the shaft power meter, generate very important or key data that can be used to deliver vessel performance management tools. The combined solution, again, between the different entities, will be a very good solution bundled or sold alone, by the way, for this customer base. Beyond the different segments mentioned, the customers using Danelec VDR, voyage data recorder, are a sticky customer base that can be, of course, a very natural target for our sales operations to upsell our vessel performance solutions in general. Thank you, Anouar. A few words on the metrics of this acquisition. We have signed an agreement with the European Investment Fund, Verdane, to acquire 100% of Danelec, valued at EUR 194 million.
This represents about 15 times the 2024-2025 EBITDA before synergies. The integration of Danelec into GTT is expected to generate substantial synergies, as mentioned by Anouar, by combining the complementary technologies and offerings of Danelec, Ascenz Marorka, VPS in order to continue creating value for shareholders. In addition, an accretive impact on the group's earnings per share is expected from the first year. Regarding the next steps, the transaction is expected to close in the second half of 2025, subject to customary conditions precedent. We will finalize the new incentive scheme for the Danelec top management to ensure continuity while supporting the acceleration of growth of the combined digital division. I now hand the floor back to Philippe.
Thank you, Thierry. To conclude, I would say that GTT is completing today its largest acquisition in its history. This is a transformational transaction which positions GTT as the world leader in the fast-growing segment of digital solutions for vessel performance. Danelec has a leading position with 15% of the global equipment fit in the highly strategic segment of maritime black boxes. Finally, and more importantly, I would say that Danelec is an excellent company aligned with GTT Group's technological culture and its values of excellence, innovation, and safety. Now, we are going to answer your questions.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Kevin Roger, Kepler Cheuvreux. Please go ahead.
Yes. Hi, good evening. Thanks for taking the questions. I have three, if I may. The first one is on the financing. Will it be 100% cash, or do you anticipate to use new sources of funding, such as bonds, convertible, or whatever, just to understand how you will fund the acquisition? The second one is on the synergies. If you can, maybe just quantify early the potential synergy that you see on cost and on revenues with this acquisition. The third one is just to be sure on the kind of market that we are talking about. At the full-year earnings presentation, you divided the global maritime market in three segments, and you were arguing that Ascenz Marorka was targeting a kind of EUR 400 million addressable market.
Do we stay in those EUR 400 million addressable market, or we move to the EUR 1.8 billion global smart shipping opportunities that you were arguing during the full-year presentation, please?
Okay. Thank you, Kevin. Regarding the financing of this acquisition, we are very open on this topic. We have enough cash today to finance this acquisition by our own cash. I think that to have a mix, it's perhaps an opportunity for us to have a leverage regarding the debt, but it's very open today regarding this question, Kevin. Regarding the second one, Philippe?
Yes. On synergies, today we announced the signing of this transaction. Now we are going to work on the closing that we expect by early July, and then we are going to start to work on the integration. Let's wait a little bit before we give you figures on synergies. We do take note of your question. Anouar?
Yeah. Regarding the third question about the market size, during the annual results last February, there was this targeted market valued at EUR 400 million. This actually includes the vessel performance management share, I would say, 20%-31% today from Danelec revenue. When it comes to safety, it was on this EUR 1.8 billion. This is actually something that goes beyond what actually was valued in this EUR 400 million, meaning that we opened the door to other segments that we did not target so far.
Okay. Very clear. Thanks.
The next question is from Guillaume Delaby Bernstein. Please go ahead.
Yes. Good afternoon and congratulations for the acquisition. Sorry, Philippe, but I'm going to come back to synergies because, of course, if we want to value the acquisition, I do understand, and globally, I do subscribe to the strategic rationale. On first sight, the amount seems extremely reasonable. However, we need to just make our work to have an idea of synergies. Given the fact that the two companies are extremely complementary, I know that you're not going to give me a number, but I think, listening to you, that it is reasonable to assume that the vast majority of synergies, let's say maybe 75%, are going to be revenue synergies. Of course, I would like just you to tell me whether it's going to be the case. Second, the difficulty, this is how financial markets work.
Financial markets tend not to give a lot of value to revenue synergies. Could you give us maybe something more? Because I'm happy to factor in 75% of revenue synergies, but give me an additional sweetener, please. Thank you.
Okay. As I was saying, we are today announcing the signing, and we have to go through the closing, which is going to take us something like a couple of months. We are going to be in a better situation to tell you what the synergies are. I will not comment on your assessment about 75%, but let's take into consideration that Danelec is talking to shipowners who operate 15,500 ships. That is a huge potential. That is an opportunity to talk to these owners with vessel performance solutions that Danelec has, that Ascenz Marorka has, that we can further develop, and we can bring to them further improved solutions there. That is some examples of what we can do together, and it is why this acquisition is very promising.
One follow-up, if I may, and maybe I missed it. What is the proportion of Danelec revenue, which today is in strict competition with GTT? Is it what? Is it 15%-20%? Meaning selling the same kind of product to the same precisely identified client?
The portion of the common revenues or common solutions is very few or very non-significant compared to the VDR product and solutions developed by Danelec.
Okay. Okay. Okay. It's not going to be 75% revenue synergies. It's going to be 95% revenue synergies. Thank you. I turn it over.
That's your interpretation, but why not?
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Jean-François Delpech, ODDO BHF. Please go ahead.
Yes. Good evening. A quick question from my side. Could you come back more specifically on the business for the safety, for the first part, and for the vessel performance management to understand what is exactly the business? The second question is, which is the percentage of the recurring revenue, and mainly for both safety and vessel performance management? What is the proportion for the recurring revenue? The last question, due to the figures mentioned for the acquisition, is it that probably the sales, the revenue could be higher than EUR 50 million this year, up by more than 15%? Is that some exact expectation? Thank you.
Okay. Regarding the first question, what is the VDR business, if I understand the question well? To make it actually very simple to explain, it's really similar to what Philippe mentioned, the black box in the aviation industry. This is something similar, of course, but for ships. This device, mandatory by the way, for ships having a gross tonnage above 3,000 since 2002. This is a SOLAS, we call it SOLAS, regulation from the IMO. This device records critical information allowing to explain, for example, the reason behind an incident or something like that. This is what I mentioned by saying that this is a mandatory device given a strong presence in this market. This is why also we said that it offers a sticky customer base because it comes with an annual maintenance. Yeah.
This is actually what this VDR business is about. It relies on high-quality devices and services because we are talking about a critical service. Regarding the second question, it was, I think, the split between the recurrent revenue between performance and safety. We did not provide. Yes. Regarding safety, we presented 64% of the total revenue. You have 59% from hardware, 3% from software, 27% for services, and 10% for other. You need to understand that you have a large portion of recurring revenue, about 30% of the global revenue of Danelec.
Answered question.
Answered question.
On the last question, regarding the.
Yes. Regarding the revenue, at this stage, it's difficult for us to answer your question regarding the EUR 50 million of revenue this year because they have not yet closed their figures, their books, Danelec. It will be at the end of June, and we need to have a proforma for the end of December because it's not the same timing for the closing. I think that we can leave it to you, perhaps at the end of this year, but regarding the guidance, we do not have any elements to revise this guidance today.
Okay. Thank you.
I think we have a.
The next question is a follow-up from Guillaume Delaby Bernstein. Please go ahead.
Yes. Thank you. Just a quick question. Is there any debt at Danelec? And second, what is the typical free cash flow, VDR to free cash flow conversion? Because I would believe that associated CapEx is limited. Can you write some color on that? Thank you.
Regarding the CapEx, it's very light or not intensive CapEx because it's more in the assembly, some elements, and they do not have any significant CapEx on it, and mainly innovation and R&D. Regarding the debt at Danelec, it's around EUR 30 million at the end of June 2024. That's the debt that they have today due to their different acquisitions and for Danelec.
Just so I didn't get the number. The net debt number is how much?
30. 30.
Okay. Thank you. I'll turn it over. Thank you very much.
The next question is a follow-up from Kevin Roger, Kepler Cheuvreux. Please go ahead.
Yes. Sorry, me again, but just wanted to be sure on one element. You used part of your cash. Just to understand if there would be any impact on the dividend policy, please.
No. We cannot say how we are going to finance the operation. We are not specific about that. We are working on that. We do not change our guidance, neither on our profitability nor on our distribution policy.
Okay. Thanks. I think we are done with the questions from the phone, and we have some written questions. The first one is coming from Nicolas Roux from BNP. Could you give us the historical rate of growth, CARG 3 or 5 years, for example?
Thank you for the ring one. Funding is not clear. We do not intend to issue non-convertible debt or to pay partially the acquisition insurance. On the weakering.
Please say.
On the weakening part of the business, weakening, it amounts to 30% of the business.
We don't have any follow-up questions.
We can answer regarding the CAGR, if you want. Yeah. For the Voyage Data Recorder, as a VDR, it's around 5%, the CAGR, and the shaft power, SPM, is around 5-6%. And for the software, maritime performance, it's around 10-11%. That's the CAGR.
Which sends back to the fact that the growth potential is there. Also, while you see the importance of the weaker revenues, you see what has been the growth. It is why we are quite happy to have made this strategic move for the GTT group. Any other questions? No? No other questions.
Okay. I would like to thank you very much, and we are going to be very pleased to keep you aware of the evolution of this move in the next weeks and next months. Thank you very much. Have a good evening.