d'Amico International Shipping S.A.

Good afternoon. This is the Corsco Conference Operator. Welcome and thank you for joining the D'Amico International Shipping Full Year 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. Should anyone need assistance during the conference, call them and 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, CEO of D'Amico International Shipping. Please go ahead, sir.

Thank you. Hello to everybody. Welcome to this full year 2020 presentation. Thank you for being with us. I would jump the executive summary because we end up repeating ourselves twice, so just to make things a little bit easier. I'll jump and just tell you as an introduction that DIS posted a net profit of 16.6 in full year 2020 and is an adjusted net result excluding the non-recurring and non-cash items of 22.5 for full year 2020. What I would like to point out that the The fourth quarter 2020, DIS generated a daily spot average rate of 11,699. But if you blend that with our time charter coverage, it becomes 15,192, which means that DIS got the right strategy last year as far as chartering out the fleet. But anyhow, I'll come back later on on the market, and I leave the floor to Carlos Balestra on the financials. Thank you.

Thank you, Paolo. Good afternoon to everyone. Just a quick look, as usual, to our fleet profile. We'll start with that. Not much has changed since the last quarter, but if we look over a longer period, of course, you'll notice that the fleet has been contracting slightly. It has been the result of the re-delivery of some shorter-term TCM vessels and also, of course, the result of the vessel disposals that we actively pursued to strengthen our financial structure. And last year we sold five vessels, one in JV and four fully owned. And therefore, thanks to that and of course also thanks to the good results in the year, we managed to significantly strengthen our balance sheet as we will see later. We are and we remain, of course, a predominantly MR operator. I would also like to highlight that the TCN fleet as a proportion of the overall fleet has decreased. And today, 70% of our fleet is either owned or bearable chartered in. And for us, these are like owned vessels because we have purchase obligations. They're just financed through leasing structures. We have a very young fleet, an average age of 6.9 years, of course, which is a result of the disposals of the older vessels in our fleet and also of the delivery of several young vessels over the last few years. 22, which we ordered since 2012 and which were delivered to us since 2014, with the last one delivered in Q4-19. Going on to the following page, CAPEX commitments. These, as we have highlighted over the last few quarters, have been falling and will continue falling over the next few years. In 2021, it is of only 5.5 million of our estimates. and relative to 12 million in 2020. It's only maintenance capex that we have left, and it will fall further to 3.1 million in 2022. Going on to the following page, the debt repayments. Here we would like to highlight once again that we are And now we don't have any more balloons to refinance in 2021. We are fully refinanced there. So first balloons, which we will have to refinance in 2022, and we will start working on that in the second half of this year. And in terms of daily debt repayments on the own vessels, We highlighted in the past already how this has fallen considerably since 2019 when we finished reimbursing the medium-term facility we had with Intesa. And it will gradually fall over the next two years. And then more sharply in 2023, we have a small working capital facility on some vessels which is fully reimbursed by 2022. And thereafter, therefore, our breakeven on the own vessels will also benefit from having terminated the reimbursement of this facility. Going on to the following page, here we show the purchase options we have. We had nine. We exercised one in February this year on the high priority. It was a bit of an outlier. It was by far the most expensive leasing structure we had. And it's also the only leasing structure we had on an old vessel. And it had a shorter maturity in October 22. So we had ample cash reserves, as you will see at the end of the year. So we decided to exercise this to save considerable amount of interest expense. And we refinance with traditional bank debt at quite a low LTV. Of course, the objective is then to sell this vessel at the right time. We are not in a hurry. Given the current weak markets, we're not going to be pushing for an imminent sale. That's a very good opportunity arise for people possibly to dispose of this vessel over the course of the next 18 months, maximum two years. Going on, of the remaining options, we have eight remaining. Six are already exercisable. Seven are theoretically in the money. A seventh option will be exercisable at the High Voyager in April already this year, so very soon. And the Chelsea-Hulson, well, that one we have to wait until 2024. So going on to the following page, we have a quick look here at our coverage and the average rates at which our vessels are covered. Since we last provided these figures, you will notice that the average rates for 2021 have fallen, but of course also the percentage of the fleet covered has risen. We are now around 37% covered for the full year 2021 through context, which is slightly below our minimum target coverage of 40% for the following 12 months. As some contracts terminate, we would most likely be expanding them with the current charter, so this percentage coverage is likely to increase, although, of course, at a lower rate than the average rate that we currently have, given the current week market conditions. Nonetheless, the average rates which we have are above our break even on the contracts. I would say well above. And also the positive aspect is that we have 51% coverage for Q1 and 43% for Q2. where we expect markets, where we are seeing Q1 that markets are weak and Q2 we don't expect markets to have improved yet. So, for the second half of the year, there is a chance the markets might show some signs of improvement. So, we have a good chance of being open when more open, having more open days as the market starts improving in Q4 2021 especially and then in 2022 our coverage is still very low at only 10%. So we have covered when the market is weak now and we will be exposed hopefully when the market will be strong or very strong in 2022. In terms of the percentage of the fleet that we control, it is increasingly an echo fleet. This is a percentage of all controlled vessels, so also TCE and vessels. It went up from 38% in Q118 to 70% in Q420 and an estimated 70% in fiscal year 21. So as we continue selling some of our older vessels, this percentage will continue rising. If we go to the following page, we have the fleet evolution, and we show the average number of vessels controlled. It is falling slightly over the next two years as a result of the re-delivery of some TCN vessels. But the spot exposure overall increases because of the lower contract average that I just mentioned. In 2022, we have a $12 million exposure for every $1,000 per day change in the TCA equivalent rate, and a $13 million exposure in 2023, and only an $8.6 million in 2021. So going on to the following period, page 13, we look also at the costs here. We have been working hard to bring down our daily operating costs. Of course, we have benefited from the fact that we have an increasingly younger fleet. Of course, that means lower operating costs, lower failures. Also, we have benefited over the last few years from a relatively strong dollar. since some of our technical management expenses are in currencies other than the US dollar. But we also have benefits from investments in technology, which allowed us to adopt condition-based maintenance, which means that we can inspect parts and we can determine much better when they have to be replaced, lengthening the average life of these spare parts in our vessels significantly, and also reducing off-tires. We also did quite well in terms of G&A costs. We have brought them down significantly since 2018 by 20%. Small increase between 19 and 20, but a very significant increase, decrease between 18 and 20.