d'Amico International Shipping S.A.

Good afternoon. This is the conference operator. Welcome and thank you for joining the Di Amico second quarter and first half 2020 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. If anyone needs assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo D'Amico, Chairman and CEO of D'Amico. Please go ahead, sir.

Hello to everybody, and thank you for joining us to our usual call. Let's go straight to the results. On the 1st of 2020, Our company posted a net profit of $17,100,000. This is Versus 24.3 million loss in first half 2019. And adjusted net result excluding non-recurring, non-cash items from both periods, we have 26.4 million in first half 2020 versus a loss of 9.2 million in first half of 2019. So we have an increase of 35.6 million year on year. In Q2 2020, the company posted its best quarterly result since Q2 2015. with a net profit of 15.6 million versus a loss of 18.8 million last year. Here again, excluding non-recurring items from both Q2 2020 and Q2 2019, the net result would have been 20.1 million profit this year against a loss of 4.8 last year. The daily spot rate on the first half of 2020 has been $21,238 per day, against $13,326 achieved last year. So it's a 59.4% improvement, or if you prefer, a $7,900 per day improvement. In Q2 2020, this generated its best quarterly spot result since Q3 2008, with a daily spot average rate of 25,118, so 92.1% higher than the 13,000 achieved on Q2 of 2019. 63% of the company days on first half 2020 were covered through time-charted contracts at an average daily rate of 16,042 against the coverage on the first half of 2019 of 47.3% coverage at $14,496. So the company achieved a total daily average rate of $17,930 on the first half of 2020, versus $13,879 last year, and $19,555 on Q2 2020, against $13,700 and 10 on Q2 2019. The net financial position, excluding IFRS 16, to the fleet market value ratio, was 62% at the end of June 2020, versus 64% at the end of 2019, and compared with a 72.9% at the end of 2018. In April 2020, this announced that Glenda International Shipping, a 50-50 joint venture with Glencoe, signed a memorandum of agreement for the sale of EMR vessel Glenda Meredith. In Q2 2020, this transaction allowed Glenda to generate around $18.8 million in cash, net of commission. In May 2020, this announced that D'Amico Tankers signed a memorandum of agreement for the sale of the anti-size vessel Cerro de Guanzo. In Q2 2020, this transaction allowed D'Amico Tankers to generate $8.8 million in cash, net of commissions. Both of these vessels were delivered to their new owners before the end of the first semester. In July 2020, this announced that D'Amico Tankers signed a memorandum of agreement for the sale of two MRs, high progress and high performance. This further transaction will allow D'Amico Tankers to generate a total net cash around $16.3 million in the second half of 2020. Talking about the market, the beginning of the year, the general idea and outlook was quite positive based on the fundamentals due to the implementation on IMO 2020. So we were expecting a very good period. Unfortunately, the sentiment changed rapidly at the end of January when COVID arrived in China, COVID-19. basically killing the demand and refining activity under the biggest importer of crude oil in the world. In March, the OPEC members and Russia, they didn't agree on a price and this took basically the oil market to a price war which killed the level of the barrel at very low levels. This sparked a rush from many traders and oil companies to try to stock as much oil as they could. As you know, the oil storage on shore has been rapidly filled up and then they start moving at sea. which has been taking in a lot of crude oil tankers and also product tankers who went on dirty. The storage moved also a lot on products. Anyhow, after this war, OPEC Plus, they agreed to reduce to reduce the production in two tranches, one in June and another one should be now in July, and this is already improving the price of the barrel. Certainly for us today, we are very much in a different market since the last three to four months, but we look at the end of the year in a very positive way because we think the fundamentals are still there. Of course, we must see how COVID will, let's say, behave. If we are going to have a second wave, if we are going to have a lockdown again, I don't think so, and how all this will fall on our system. Say that I leave a word to Carlos.

Good afternoon to everyone. Just a quick look at our fleet, which is at the June 30th was composed of 42 vessels. Fortunately, thanks to the strong markets over the last year or so, these strengthening markets, for the last year or so and very strong markets over the last six months. We had the opportunity to sell some of our older vessels which we have intended to do for some time now and we found a much greater liquidity in the market over this period and so we managed to execute on this plan. Therefore, we have now a very young fleet, 6.8 years, of course, also young because of the important new building program that we executed between 2012 and 2019, which entailed the delivery of 22 new buildings to us and over 750 million dollars in investments just in terms of payments to the yards. We are basically an MR player with a presence also most recently in the L01 segment that we built. They are all echo vessels and in the handy size segment too. Going on to the following page, the new building, the CAPEX commitments, important to highlight that they now don't comprise any more investments for new buildings, so we are much lighter in that respect, and it's only maintenance CAPEX over the foreseeable future. and also the second half of the year in terms of maintenance CapEx is much lighter than the first half. It's only around $3 million in investments against $7 million in the first half of the year. The CapEx commitments fall further in 2021, where we only have $5 million in commitment in 2022, which is around $4 million. Going on to the next page, the bank debt repayments also are going to be lighter from this year, following the reimbursement of the Intesa facility which we had, which entailed $15 million in repayments every year, and that was in addition to the traditional bank financing. we use and that has been fully reimbursed in December 19. In terms of refinancing needs, balloons, upcoming balloons, we still have some here that we show in 2020 and those are relating to our vessels which are in joint venture with Glencore through Glenda International Shipping. and we are in advance discussions already working on the loan documentation for the refinancing of these vessels. And for those, for the balloons which are here shown in 2021 of $26 million, we are in advance discussions with some banks to refinance these and we hope to finalize these in Q3 this year. and so then we would only have, if we manage to execute on this plan, the $65 million to be refinanced in 2022. So we believe we are in a very strong position also in terms of bank debt repayments. In terms of purchase options, all the purchase options that we have on the nine sales deals we closed on are theoretically in the money and six of these are already exercisable today. Another three will become so soon, one in September this year, another one in April 2021. The fact that they are in the money doesn't mean we won't be exercising them because they would in any case entail quite high LTV laws which cannot be obtained today with traditional banks and therefore they would require additional equity which we right now prefer not to invest. for this purpose, given the uncertainty regarding the timing of the recovery because of COVID. But at the latest stage, when we have more visibility in the firm market, that could be a potential use of funds for the cash that we have been generating this year, both operationally and through vessel disposals. Going on to the following page, the coverage, we benefited from the very strong markets in Q2 this year and for a lesser extent also in Q1, but we nonetheless kept our feet firmly on the ground. We realized that the strong markets was based on imbalances As Paolo was mentioning, we entered the year with very strong fundamentals and a very positive outlook for completely different reasons. But things changed fast with COVID. And so we continued taking contract coverage throughout Q2 when the markets were booming and we managed to increase our contract coverage for the second half of the year to 57%. at an average rate of 16.4. So this positions us very well to confront the weak markets we have right now. Particularly in Q3, we are 62% covered. So it's almost two-thirds at 16.3. And hopefully this soft patch will not last that long. the percentage of echo vessels in our fleet has been increasing as we have been selling the older vessels, as previously mentioned. Going on to the following page, we show the fleet evolution. This is, let's say, the organic fleet evolution. If we don't do anything, the fleet decreases naturally as some of these TCNs terminate. and the sensitivity to every $1,000 per day change. NTC equivalent earnings we showed at the bottom right of the page, and it is actually quite low today for 2020. It's only $3 million, but it rises considerably in 2021 to $10 million because we are still very exposed to the spot market in 2021, although with a slightly smaller fleet. Going on to the following page, the daily operating costs, they have been falling. This is for the half year 2020 compared to the half year 2019 and 2018. So there was a slight improvement also relative to the first half of 2019. Of course, the biggest improvement was between the first half of 2018 and the first half of 2019, but overall we have an 11% decrease since the first half of 2018. And it is due to the fact that we are managing a younger fleet, a more efficient fleet, two changes in our purchasing strategy, and to the stronger dollar to a small extent, and also that we experienced during this period mostly I would say to investments also in technology and the adoption of condition-based maintenance, which allows us to considerably lengthen the life of spare parts and generating important savings for us in this respect. On the GNA, we reorganized some of our activities and we managed to achieve some savings. We also benefited to some extent of the strong dollar and we achieved the saving relative to the first half of 2018. There is an increase relative to the first half of 2019. These are daily figures, so the increase is mostly attributable to the fact that we are managing in the first half of 2020 a slightly smaller feat than we did in the first half of 2019. But I can assure you our GNAs are very competitive on a daily basis, still today in the first half of 2020. relative to most of our or if not all of our listed peers. Going on to the following page on the ratio of net financial position to fleet market value. This is also a key indicator we follow and we aim to keep within certain levels and it has been falling since December 18 when it was at 73%. It fell to 64% by the end of 19, also thanks to the capital increase that we pursued that year. And it fell further to 62% at the 30th of June. It benefited from the, in addition to the capital increase I mentioned, of course, from the strong operating cash flow generation in the first half of the year. We finished the first half with over $15 million in cash. which is quite a comfortable position to be in given that our minimum liquidity covenants in our bank financing is of 25 million. And as I mentioned, the sensitivity for every $1,000 per day change in the TC equivalent earnings is only 3 million, around $3 million for the second half of 2020. And in addition to that, as Paolo mentioned in the beginning of the presentation, in July, We signed MOAs for the sale of two additional vessels which should bring in another $16 million to our coffers. We have a much stronger financial position and liquidity position generally. Looking at the key line items of the P&L, as Paolo mentioned in Q2 2020, the profit of $15.6 million. and excluding non-recurring items of 20 million. This figure is the strongest since Q2 2015 and of course it was driven mostly by the very strong markets in the second quarter of the year. If we look at the first half, the bottom line figure of 17 million and excluding our recurring items, we are at 26. If we look in detail at the daily results of our vessels trading on the spot market and employed through TC contracts on page 16, we see that the average rate for the vessels operating on the spot market was of 25,000 in Q2, And that is the highest since Q3 2008. So it is a very, very strong result. And even if we look at the first half, we are above 20,000. We are at 21,200, coupled with the TC contracts, which were just over 60% for Q2 in the first half. We have an average, a blended average of $19,500 for Q2 and $17,900 for the first half of 2020. When I pass it over to Paolo again for the market overview.