BW LPG Limited Common Shares

Welcome to BWLPG's first quarter 2024 financial results presentation. Bringing you through the presentation today are CEO Christian Sorensen and CFO Samantha Shi. We are pleased to answer questions at the end of the presentation. Should you have any, please type them into the Q&A function in your Zoom panel. You may also use the raise hand option. Before we begin, we wish to highlight the legal disclaimers shown on the current slide. This presentation held on Zoom is also recorded. I now turn the call over to Christian.

Hi, everyone, and welcome to our 2024 Q1 presentation. Thank you for taking time to join us today as we present our financial results and recent events. It's been a busy period for our company, so let's turn to slide four, please. We delivered another strong quarter with a result of $150 million net profit after tax on the back of a strong time charter equivalent of $61,500 per available day, which includes a positive IFRS adjustment of $26 million. We booked a net gain of $20 million from the sale of the BW Princess and it was another good quarter by a trading unit BW Product Services showing a profit of $21 million where we subsequently returned $30 million to its shareholders in April through the pre-announced capital return. The quarterly NPAT translates into an earnings per share of $1.07 And the board has declared $1 per share in dividends, which is equivalent to 106% of the earnings from our shipping activities, which calculates to an annualized dividend yield of 22% basis Tuesday's closing price in New York. On the shipping side, we have mutually agreed with Vittel to terminate their pool and charter back arrangements. There is no financial impact anticipated from the termination of the agreement, and we look forward to continuing doing business together in the day-to-day charging markets. For our trading activity, we are happy to announce that product services have concluded a multi-year extension of their cargo contract with enterprise product partners, which will significantly improve our optionality and ability to capture profit in the LPG value chain. In addition, the transaction is enabling us to grow our business at a time when growing in shipping is more expensive than ever, and it bolsters our business model for the future markets. The expansion of our trading volumes will be financed by trading facilities already in place, and the value at risk is anticipated to only increase from $6 million to $8 million, reflecting the balanced trading portfolio that Product Services is running. And finally, we are very proud about our milestone dual listing on the New York Stock Exchange. The reception in the US investor market has been very satisfactory, reflected in a 27% increase in our US dollar denominated share price since the listing, and the share trading volume in the US is picking up. Turning over to our market outlook, we remain positive on the sector with several indicators pointing in the right direction. both in the underlying LPG commodity market as well as the supply demand balance in the VLGC markets. And this is even without disruptions in the Panama Canal. So let's turn to page six for a closer look at the market fundamentals. The US production and export volumes are still the locomotives in the LPG growth story and continue to deliver on the upside of the expectations. According to recent EIA figures, the production and export volumes are up 8% and 14% respectively year to date compared to the same period last year. We maintain a positive view on the US export volumes for 2024 and 2025. We regard the CapEx plans by the US terminal companies as a positive sign for the future US LPG export volumes and believe they will remove any potential bottlenecks for the medium term. The Middle East exports are expected to be stable for this year, unless OPEC decides on any cutback reversals, while we anticipate more volumes to come on stream from next year onwards from Abu Dhabi and later Qatar. The increasing LPG exports from the US and the Middle East are meeting a growing demand side in Asia, both for industrial purposes, well represented by rapidly increasing demand by the Chinese PTH plants, and from the residential sector, especially in the Indian subcontinent and Southeast Asian countries. The Indian demand for LPG is now consuming about half of the Middle East exports, making the rest of the Asian market increasingly dependent on the US LPG exports, to meet the underlying and high demand which follows growing population and prosperity. Also worthwhile to note is that LPG, by being a byproduct from oil and natural gas production, has a history of always being priced to clear and eventually finding a home since no producers want to store LPG for a prolonged period of time. And this market dynamics makes it a competitively priced energy source, which easily penetrates new markets since it's relatively easy to handle compared with other energy sources, which require much higher infrastructure investments. Let's turn to slide seven. Looking at the global VLGC fleet balance for the next 18 to 24 months, it is a sharply abating curve of new building deliveries when we move into the second half of this year. We only have a handful of VLGCs set for delivery from the yards, while the global fleet is approaching 400 units. And for 2025, only a dozen vessels are scheduled for delivery. Yours are still talking deliveries for new orders more than three years forward and this gives us good visibility of the market the next 18 to 24 months. So to summarize, The market fundamentals for both the LPG commodity markets and the BLGC markets are strong and reflected in the current rate level, which is fluctuating between $60,000 to $70,000 per day. The FFA market is priced for the remainder of this year at levels in the region low to mid $60,000 per day. And this is without any serious delays in the Panama Canal, which continue to be a wild card also in the future. And with this, I'm pleased to let Samantha take you through the commercial performance and our financials.

Thank you, Christian. And hello, everyone in the Gulf. Good to speak to you. For the first quarter of 2024, we deliver a TCE of $9,400 per calendar day and $61,500 per available day, a continued solid performance. We have a healthy coverage through our time charter and FFA portfolio, which represents about 37% of our shipping exposure. For the second quarter, we have fixed 84% of the available days at about 49,000 US dollars per day. For 24, Our time charter outfeed generates a profit and around 25 million US dollar over our time charter in fleet. Additionally, more shipping capacity that is fixed on time charter during the quarter is estimated to generate about 39 million US dollar for year 2024, up from 19 million US dollar as reported in Q1. Moving to slide 11, Product services deliver a solid performance in the beginning of the year. In Q1, it yielded a net profit of $20 million and increased its net asset value to $82 million as of end March. The net profit was contributed by a gross profit of $33 million after netting off G&A and tax provisions. The gross profit includes realized gain of $18.7 million and unrealized cargo and derivative gain of $40 million. The reported net profit does not include the unrealized fiscal shipping valuation, which is $31 million at the end of March, based on our internal valuations. This shipping valuation dropped from the previous quarter, reflecting a decline of a 12-month freight forward market at the end of March, compared with the substantially higher market in Q4. For Q1, we reported an average value at risk of a $5 million on a well-balanced trading book, including cargoes, shipping, and derivatives. As announced earlier, We concluded a multi-year contract with the enterprise product partners in Texas. The contract will have the potential to double our volume out from the U.S. Gulf, providing product services with a strong cargo position. Next slide, please. Moving to the financial highlights. In Q1, we continued a good business performance and reported a net profit after tax of $150 million. on a consolidated basis. This includes 10 million in profit from BWLPG India and 21 million from product services. The net profit also includes a positive adjustment of 26 million related to the effect of IFRS 15 for the quarter as the TCE for the straddling voyages over the quarter end is recognized on the low to discharge base. We reported an earnings per share of $1.07, mainly contributed by our core shipping business. This translates into an annualized earning yield of 38% when compared against our share price at the end of March. We reported a net leverage ratio of 7% in Q1, a decrease from 21% at the end of December. This substantial decrease was due to repayment of shipping loan, decrease in restricted cash held for the derivative margin requirement, and decrease in product services or short-term trade finance drawn at the end of Q1. On the basis of a low leverage ratio and considering the business performance as well as the capital requirement ahead, the board has declared a dividend of $1 per share in Q1. This represents a 93% of payout ratio of a Q1 total profit or 106% of a shipping impact. The dividend payout reflects our commitment to return value to our shareholders as we continue to deliver a high dividend yield of 22% when calculated on yesterday's share price. Our balance sheet ended the quarter with a shareholders equity of a 1.7 billion US dollar. Our annualized Q1 return on equity and capital employed was 37 and 30% respectively. In Q1, our daily OPEX came in at $8,700 per day due to higher than expected maintenance and repair expense. For 2024, we expect our own fleet operating cash break even to be about $17,300 per day. As you can see, our liquidity continue to remain healthy. On a consolidated basis, we ended Q1 with a 661 million in liquidity, including 340 million in cash, 347 million in unjoined revolving facilities, which will support us for upcoming CAPEX expenditures. SHIP financing debt stood at 244 million as end March, comprised of the balance the SHIP financed the term loan, was spread out with no major repayment until 2026. Trade finance drawn stood at a moderate level of 167 million or 21% of our 796 million trading line, leaving a healthy headroom for growth. With that, I would like to conclude my update. I'm back to you, Lisa.

Thank you for attending BWLPG's first quarter 2024 financial results presentation. More information on BWLPG and BW Product Services are available at www.bwlpg.com and www.bwproductservices.com, respectively. Have a good day and a good night.