BW LPG Limited

Welcome to BWLPG's first quarter 2020 financial results presentation. We will begin shortly. You will be brought through the presentations by BWLPG CEO, Mr. Anders Ohnaheim, CFO, Ms. Elaine Ong, and EBP Commercials, Mr. Niels Rigaud. They will be pleased to address any questions after the presentation. Should you have any questions, please press star 1 on your telephone keypad or type your questions into the chat box on the website. You will receive further instructions as required. Certain statements in this conference call may constitute forward-looking statements based upon management's current expectations and include known and unknown risks. uncertainties and other factors, many of which BWLPG is unable to predict or control, that may cause BWLPG's actual results, performance or plans to differ materially from any future results, performance of plans expressed or implied by such forward-looking statements. In addition, nothing in this conference call constitutes an offer to purchase or sell or a solicitation of an offer to purchase or sell any securities. With that, I'm now pleased to turn the call over to BWLPG CEO, Mr. Anders Ohnheim.

Thank you, and welcome to the presentation of results for our first quarter. As you heard, I'm joined by our CFO, Elaine Ong, and our EVP commercial, Neil Sweedle. And thank you for taking the time to hear our presentation. If we then go to slide page four, along with the highlights, the first quarter TCE rates on our VLGC fleet averaged $42,300 per day, generating a net profit after tax of $81 million, or an earnings per share of 58 cents. We are very pleased to announce a strong commercial and operational performance in a quarter challenged by the transition to IMO 2020 Cleaner Fuel, the COVID-19, and a changing market outlook. The extra effort put in by the organization is shown in the results, and we efficiently addressed challenges to crew changes, optimized dry docking schedules, and transitioned to Cleaner Fuel to meet the new IMO 2020 requirements. On top of this, the quarter was completed with no injuries on any of our onshore or crew members. With our continued strong performance in the first quarter, we were once again able to return cash to our shareholders. The Board has declared a Q1 dividend cash dividend of 20 cents per share amounting to $28 million. With this dividend payment, we demonstrate our continued commitment to payment paying 50% of our annual net profits as dividends. Also, subsequent to the quarter end, we secured financing for five of the 12-plan dual-fuel LPG retrofittings. The additional $38 million financing covers more than 80 percent of the expected capex and will have an interest cost of LIBOR plus 170 basis points. We also announced a few things previously. We delivered our last LGC to our new owners in March, which generated $15 million in liquidity and a net gain of $5 million. In February, we also exercised two options for the retrofit of eight additional LPG dual-fuel engines. With this, we committed to retrofit a total of 12 vessels with pioneering propulsion technology. We also signed a supplemental agreement to amend our existing $458 million senior security facility to convert $100 million of term loan to revolving credit, with all other terms remaining the same. This increased our financial flexibility in these challenging times. And lastly, in February, we took delivery of a time chartering BLGC new build. Including this delivery, we now operate 47 BLGCs, and we remain the largest operator in this segment. We are well prepared for the future. First, we will be the first company in the world to retrofit vessels with LPG propulsion technology. This is an economically sensible investment that significantly reduces emissions, and paves the way for carbon emission free shipping fleet. It's important to us. Secondly, we continue to invest in our Smart Ship technology, which allows us to collect live data for our ships to increase automation, improve fuel consumption, reduce operating costs, and improve safety. If we turn to page five, we review the key financial record. So in the first quarter, we achieved a daily rate of $42,300 for the VODC segment, with 50% of the fleet on time charter contracts, and an achieved spot rate of $45,100, including waiting time. The strong spot rates were achieved as the fleet was well-positioned to benefit from the strong market in the quarter, matched with a strong operational performance. So we delivered an EBITDA margin of 78 percent, giving a return on capital employed of 15 percent and a return on equity of 28 percent. The annualized earnings yield based on quarter and market value was 77 percent. As mentioned, profit after tax was $81 million for the quarter, or 58 cents per share. Our net leverage ratio decreased from 58 percent in the first quarter of 2019 to 49 percent in the first quarter of 2020. and we were able to return $180 million in cash to our shareholders, and at the same time, significantly pay down our debt to a comfortable level. Our EVP commercial, Niels Vergaal, will now take you through our market review and the commercial update. Niels.

Thank you, Anders. Let me start with our updated market outlook on page 7. It has been an eventful start to the year, with OPEC Plus leaving their quotas before turning 180 degrees and agreeing on the largest oil cut in history. And of course, the spread of COVID-19. In March, OPEC Plus failed to reach an agreement on oil production cuts, which created more LPG cargoes from the Middle East. However, in April, OPEC and Russia were forced to end the oil price, following the sharp drop in oil demand caused by COVID-19. This led to a record high cut in oil production starting from May. We now see the effects of this with a reduction in the number of cargoes available in the Middle East. Starting with the LPG supply, we look ahead to the rest of 2020 and 2021, and we expect LPG export from North America to be negatively impacted by lower shale oil and gas production. However, we believe that the impact will be partly offset by the existing high LPG inventory and the fact that some producers have started to favor higher NGL production. We have also downgraded our base assumption for Middle East LPG export for the rest of 2020 and 2021 due to the agreed oil production cuts, which is expected to have negative impact on LPG available for export. The demand for retail LPG remains strong. driven by significant benefits it provides to the importing countries as a cleaner source of fuel for cooking. For the petrochemical sector, we expect demand to recover as the virus outbreak eases. In addition, demand should be further supported with about 1.7 million tons of additional PDH capacity being completed this year. On the fleet capacity side, the new building order book stands at 12%, with 10% of the fleets over 27 years old by end of 2022. The impact on freight rates from our expectations of weakening export combined with the high order book is downward pressure on utilization in the medium term. On the positive side, a sudden recovery to higher oil price scenario would positively impact this outlook, and we have already seen some signs of oil price increasing. As of 20 May, we have fixed 85% of our second quarter shift days. The obtained TCE rates on spot and time charter are on average in the mid-30s. Turning to page 8. Here we share an overview of Seabourn LPG trade in the first quarter. There was an overall increase of 2% compared to the same quarter in 2019. In the first quarter this year, Chinese LPG import fell by 20% to 3.8 million tons due to the outbreak of COVID-19. In January, China and U.S. signed the Phase 1 trade deal. From March, LPG was exempt from the import tariffs, and we saw the return of cargoes shipping directly from the U.S. to China. Towards the end of the quarter, we witnessed a rush in India demand for LPG import due to the countrywide lockdown to stem the spread of COVID-19. Similar phenomena have been observed in Brazil, as the country's import for LPG has increased more than 30% in the first half of April, compared to the same period in 2019. The overall demand for LPG remains very strong. On the export side, global LPG export continues to be driven by the U.S. Total North American LPG export reached 10.9 million tons in Q1, up 32% year-over-year. However, the gain in U.S. export were offset by the decreased export from the Middle East. Total Middle Eastern export decreased by 11% year-over-year to 8.9 million tons. Turning to page 9, we provide an update snapshot of U.S. LPG net export. EIA short-term energy outlook released in April, they reduced both 2020 and 2021 US LPG net export forecast. Though they still anticipate growth in US LPG export in 2020 by 16%, but it expects net export to decline by 11% in 2021. Turning to page 10. NewBuild order book stands of 35 vessels, or 12% of total VLGC fleets, which will give a fleet growth of about 6% next year and 3% in 2022, if no vessels are recycled. However, the recycling potential is higher than it has been in the past, with 10% of the fleets being over 27 years old, which is the average recycling age for VLGCs. This should shorten the down cycle, so we enter a weaker rate environment where several of these vessels could be recycled. We have no new buildings on order, but we are investing over $100 million in upgrading our existing fleet with LPG propulsion technology. This investment is expected to increase our competitiveness by using efficient fuel and at the same time contribute to significant reduction in emissions. This concludes our market review and we now move on to our commercial performance starting at page 12. We achieved the strongest first quarter since our listing in 2013 with a VLC fleet average TCE of $4,300 per day, which is $1,000 higher than the peak in 2015. we continue to maintain a high commercial utilization of 97.1%, reflecting only 2.9 waiting time across the fleet. A well-planned transition to IMU 2020, which secured fuel contracts, enable us to avoid bunkering, delays, and any issues related to fuel quality and specifications. Operationally, we had a strong quarter with technical off-fire of 2.7%, related mainly to the dry docking of BW Arias and the BW Sakura. The BW Arias was fitted with scrubbers and simultaneously upgraded with our smart chip technology, while the BW Sakura was upgraded with balanced water treatment system. I will now turn to patients. 13 for an overview of the time charter portfolio. Increasing our coverage has been the focus in the first quarter, and we will continue to take on coverage at the right levels. As of 31st of March, our VOGC time charter out coverage for 2020 stood at 16%, up from 7% last quarter. Our average TC rate for 2020 was 36%. $300 per day. For 2021, the TC coverage was at 5%. On the time charter in portfolio, with the delivery of BW-Yushi in February, we now operate nine BLGCs. This fleet contributes for 14% of our total calendar days in 2020, at a total cost of $55 million, or an average cost of $26,500 per day. Our net time charter position stands at $27 million for the full year of 2020, with $82 million in time charter out revenues and $55 million in time charter costs. With that, I will hand it back to Anders, who will share with you some technical highlights.