d'Amico International Shipping S.A.

Good afternoon, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the D'Amico International Shipping 3rd Quarter and 9 Month 2021 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, 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. Please go ahead, sir.

Thank you. And good afternoon to everybody. Thank you for joining us to our call. And I suggest going to a presentation, I suggest to jump the executive summary because we are going to repeat afterwards exactly all points that they are in there. And if you don't mind, I, at this point, leave the floor to Carlos for the overview and key financials. Carlos, please.

Yes, good afternoon to everyone and thank you, Paolo. So, as usual, we start with a quick look at our fleet, a snapshot as of 30th of September. We control the 38 vessels. As usual, the overwhelming majority MRs, 26 and 601s and 6 Handys. Since the 30th of September, as you know, we announced the sale of one of our older MR vessels, which will allow us to generate around $8 million in cash and therefore a fleet of decrease slightly because, will decrease slightly because of that when the vessel will be delivered to the new buyers. The fleet is still a young fleet, an average age of 7.2 years and mostly echo and IMO class, 75% of own and bear boat vessels are echo. As you know well, The reason we have such a young and efficient fleet is because we ordered 22 new buildings since 2012, which were delivered to us between 14 and 19. Going on to the following page, our CapEx commitments. Not much change since our last meeting. quarterly results presentation. We don't have any commitments now left for the last quarter of 2021 and the commitments, CapEx commitments for 2022, which are, once again, only maintenance commitments related to maintenance CapEx for quite significantly relative to 2021 to around $3 million and then stay at around that same level in 2023. So we are very light in terms of CapEx commitments going forward. The same applies to our bank debt repayments. We are making very good progress with regards to the refinancing of our 2022 balloons. which are of around $65 million. And we expect to finalize this process by the end of this year. And then we will start working soon thereafter on refinancing the 2023 balloons. But we are seeing good appetite for the banks to work on these projects on these transactions. Our loan repayments, scheduled loan repayments fall over the course of the next few years. This is a trend that started in 2020 and it's expected to continue over the course of the next few years. And so once again, this is good for our cash flow generation going forward. On the purchase options, not much changed since last time. In February this year, we exercised the purchase option high priority, as you know. Of the eight remaining vessels on which we have purchase options, the news is that now they are all in the money, and I would say well in the money. At LTVs, mostly around... 80%, meaning that the purchase option price today is around, for most of these vessels, around 80% of their market value. In some cases, for two vessels, we're actually slightly below 80%, and on the remaining vessels, slightly above 80%. But that is good news. and hopefully a window will open up in 2022, allowing us to refinance these vessels with traditional bank debt at a lower cost, further reducing our financial breakeven without possibly having to invest too much equity to do so. And we are monitoring the situation closely as market values, if market values continue improving and if freight rates and TC rates also move in the same direction and we feel confident that the recovery is sustainable, we will definitely look forward to exercising some of these options. Going on to the following page, this graph changed slightly since Our last presentation, we now have this blue line which we introduced, which we call the daily average TCA equivalent covered rate. It includes also the earnings on the bearable charter contract. As you know, because we announced it, because of its significance, because it's a very long contract we signed, a very profitable contract with an important industrial player for five years plus two optional years for the charterer. And this contract is a bare boat out contract, which is a first such contract for us. We usually charter in vessels on a bare boat basis, but we don't charter out vessels on a bare boat basis. So, but in this case, this opportunity was, uh, uh, was very attractive. And, uh, also a plus is that the management of the vessel stays with the Damico group, the technical management. Uh, so, uh, so we have better control on the fact that the vessel is being kept to our usual high standards. Uh, and, uh, So the blue line was calculated by adding to the bearable charter hire an assumption as to the daily operating costs for these vessels, which we would have incurred if the vessel had been employed through a time charter contract so that we can then compare apples with apples. and therefore transform the bearable charter rate into a TC equivalent rate. As you see, the inclusion of this contract in our coverage raised our average rates significantly. As we go forward, of course, this one contract weighs more in the overall average, and therefore the delta between the yellow and the blue line increases as we move forward. Our coverage, we also now show here in this page the detail of our quarterly coverage in 2022 before we only had the annual figure. As we now approach 2022, this becomes a more relevant information, we thought. and it shows that, of course, as is to be expected, our coverage falls throughout the year, but it's still at quite a decent level in the first quarter of 2022. Until not long ago, there was not much appetite for taking vessels on time charter, and especially not at rates which we deem attractive. this opportunity we had for this bearable charter out was quite unique. And so, of course, we took advantage. But what we have been seeing in the last few weeks is that there is much more positive sentiment, which has also translated into more interest for period contract at also more attractive levels. So hopefully this will allow us to then renew some of our time charters as they approach termination at attractive and hopefully also profitable levels. The percentage of our fleet, of course, as we have seen, several times in the past has risen significantly over the last few years and is expected to continue rising as we dispose of our older non-echo vessels. Here we are going on to the following page. Our fleet evolution, the average number of vessels controlled falls slightly over the course of the next two years, but nonetheless our spot exposure increases and Our spot exposure increases since the average number of vessels exposed, the proportion of the fleet exposed to the spot market increases. So the sensitivity for every $1,000 per day change in DTC equivalent rate rises to $10 million in 2020 and $12 million in 2021. Going on to the following page, we see that the daily operating costs have fallen significantly since 2018. They also have fallen this year relative to last year. And last year, Because of COVID, crew rotations were very complicated. And unfortunately, that meant we could perform less crew rotations. And that led to some savings, which we would rather not have benefited from. But this year, the situation in this respect is better, but it's still complicated. which means that we are doing more rotations, but we're also doing more expensive rotations. And despite this, we managed to obtain some savings in our direct operating costs. And furthermore, of course, we have benefited over the course of the last few years from managing a more homogeneous fleet with a more modern fleet. So that, of course, also has contributed to the savings achieved, as well as the strong U.S. dollar, which after a period of relative weakness at the beginning of this year now is, again, very strong. Also on the GNA front, we achieved some significant savings, at least relative to 2018. the dynamics has been at least a bit less positive in 2021, but we still have a 15% savings in the first nine months of 21 relative to the same period of 18. Going on to the following page. the cash and cash equivalent position is still a comfortable one of $42 million, so well above our minimum liquidity covenant of $25 million in our bank loans. And the ratio of our net financial position to fleet market value is just below 61%. and has improved significantly since the end of December 2020 and also since the 30th of June. That is because asset values have been rising over the last two quarters, driven by the increase in steel price, which led to increase in demolition prices and increasing new building costs. and also driven by the strong fundamentals, perceived strong fundamentals of the market, which means that there is an increasing interest and increasing liquidity in the S&P market for the acquisition of second-hand vessels. And we have seen this firsthand in the moment we wanted to dispose of some of our older vessels, as the high venture which we recently announced the sale of. And towards the beginning of this year, it was very, very difficult to find interested buyers. There were a few people fishing around, but they would come with completely unacceptable offers. And instead, we have seen a much more competitive and dynamic market over the course of the last few weeks with a lot of interested buyers and wanting to inspect our vessels and offering much more reasonable and firm prices. Going on to the following page, the results for the third quarter, as can be expected by following the public rates announced, published by brokers and has not been spectacular to the country. Of course, there are that there is a loss of 13.8 million. And this loss, however, has been quite significantly impacted by non-recurring items, in particular, the disposal of the vessel we just discussed, which led to an asset impairment of 5.8 million. The vessel was classified as held for sale at the end of the quarter. and was valued at its disposal price, actual disposal price. So excluding these non-recurring items, which the result for the third quarter would have been of a loss of $8.2 million, which is still a significant loss, but definitely better than $13.8 million loss. For the first nine months, the loss was of almost $29 million and excluding recurring items of $22.6 million. Going on to the following page, we look at here at the daily results of our vessels employed on the spot market and through time charters. And not surprising, we get what was just said, the results of the vessels employed on the spot market was very, very weak and even weaker than the results achieved in the first quarter of this year. The good news, once again, is that we, it seems that we have turned the corner here. Q3 is always a weak quarter, it's almost always a Not always, but almost always a big quarter for us. And there is usually quite a lot of refinery maintenance going on. In this year, there was also the Hurricane Ida, which led to important shutdowns of refinery activity in the U.S. Gulf. And, of course, there was the effects relating to the pandemic, which, although diminishing, was still weighing on the market for part of the quarter. In particular, the U.S. Gulf market was extremely, and the Atlantic market and European market was extremely weak during the third quarter. But as I mentioned, it seems that we have turned the court and we are seeing a much more dynamic market, much more activity, increasing refining margins, increasing refining exports out of the U.S. Gulf. And Paolo will be telling more about that in the in the next few slides. So, I mean, just quickly on the, you know, the overall result, the average DC earnings is, was $12,100 per day in the third quarter. That includes the coverage of almost 48% at 15,160. And... If we look at the nine-month results, the average earnings was of 12,900, benefiting from a coverage of 48% of our available days at 15.4 and an average on the spot market of 10,600. So as previously mentioned, I pass it over to Paolo, which will now give you much more color about what happened in the markets and what is our future view for the markets.

Thank you, Carlos. And as Carlos just said, it looks like we are turning the corner. You know where we are coming from because the consequences of COVID-19 has been unique. But now it looks like the global oil demand is now forecast to rise by 5.5 million barrels per day in 2021 to reach 96.3 million, and by 3.3 million barrels a day in 2022, reaching close to the 100 million barrels per day, which was where we were before the COVID. the global refining throughput stood at 77.9 million bar per day for Q3 and is expected to reach 79.6 in Q4. So we are having, we are having, we are seeing a recovery. We are seeing a recovery which is totally correlated to the, to the trend of COVID because COVID People are getting more and more vaccinated, and they start moving more and more around. Even the inventories on clean, refined products have been declining. We are now below the five-year average, so we are rebalancing the inventories. We have a series of, let's say, positive elements to look at, the vehicle miles driven in the US, Europe and Latin America are returning to pre-COVID levels. This is due not only to the fact that people are going around again, but also because they are avoiding public transportation And they are using their own cars. So the consumption between cars and tracking is improving. The tracking is improving, increasing due to e-commerce deliveries. And you know very well the situation on the container side. where the logistics are a problem, but are a problem because there is a lack of drivers of trucks. And we know this, the number of trucks on the road is bigger. On jet fuel, jet fuel started coming back. It was the big missing element. since last Monday, U.S. and Europe, where we started again, the flights for fully vaccinated people. And as far as I know, these flights are totally full, even overbooked. So we are seeing a movement of jet fuel not seen before, even if we are still a good 20%. under the levels of 2019. So on jet fuel, there is still a long way to go, but it's there. And then we have the oil for electricity, which is a potential element there due to the lack of gas, of LNG, and the cost of LNG there. LNG is touching the equivalent of $170 a barrel of oil equivalent. So there are many power plants that they can switch from LNG back to fuel oil. And in certain cases, can be used also diesel oil on smaller utilities. And this is something which is partially happening and probably will happen even more. The numbers that Goldman Sachs put on this type of consumption is as much as 20 million barrels per day of potential generation capacity from liquids so it is a big number if all this is going to happen and we see we should see this happening mostly in the Middle East and the Far East as far as Pakistan Bangladesh and this country more than in Europe because Europe doesn't have any more too many utilities that can run on fuel. The demand growth is there, is healthy, the long-term one. The participation of clean products on the seaborne oil trade is always high. We are always talking about one-third since from 25% as it was in 2000. We have a long-term potential upside to asset value because coming where we are coming, with the markets where we were, certainly the potential upside is very strong. And we are seeing this already because As Carlos said, we had a revaluation of the fleet substantially over the last nine months. Going back to refinery, the landscape is more and more on the east side. The growth of new refinery is mostly concentrated in the Middle East region. And Far East, I would say China. And instead we have a closure of not economical run anymore refineries in Europe and Australia and New Zealand. 1.9 million barrels a day of capacity has been already closed. And 0.6 million barrels per day of capacity is under assessment. One, let's say, very strong example is the fact that New Zealand lost all its refining capacity. On the supply side, on the fleet, we have strong incentives to to demolition, to push all ships to be dismantled. The scrap value is on its 10-year high. Rarely we saw this type of numbers. And demolition will be, of course, stimulated by the new requirements that are coming in in 2023. like the CII and the EXI, and the recently approved European Emission Trading Scheme. So, all elements that will push more consuming and older tonnage to be dismantled and will be also more difficult for older ships to get the financing. So, there is a growing demand pool of demolition candidates. This is due to the fact that there has been a super cycle between 2003 and 2008, and these are coming, this part of the fleet is coming to maturity, let's say, of 15 to 20 years of life, and probably you will see an acceleration of of the demolition dates. We see already this pickup in scrapping. In 2020, there have been scrapped only 10 vessels between MR and LR1, versus 44 ships only in the first nine months of 2021. And Clarkson estimates 97 MRs and 4 LR1 to be delivered in 2021. But if you look at the last quarters of this year in the graph, you can see that the fleet basically had no growth. So the deliveries have been totally offset by the scrap ships. There is a limited new building order. There is, on top of the price and the cost, so due to the cost of steel, but there is also the uncertainty on what technology to use because still we do not know what is going to be our future bankers and investors. We're talking about a new building. You're talking about an asset that you will keep for 20 years. So before you move to a yard and you decide to build a new ship, you have to be certain that for the next 20 years, this ship will be in line with the rules required. So we have a very slowing fleet growth. is only 1.9% in 2021 and less than 1% in 2022. And this is on the supply side. So I think there are all the fundamentals there to be optimistic in the near future. And I leave the floor again to Carlos on our NAV evolution. Thank you.

Yes, hello again. So just a quick look at our historical NAV evolution and where it stands today. As previously mentioned, this is based on broker's valuations that we receive on a quarterly basis and they are the same valuations we use to measure compliance with our loan to value covenants in our bank financings. And so they are from a renowned broker and I would say they are quite reliable in this respect. It peaked last time, the last mini cycle, let's say, In December 19, 314 million, then it traded down the overall NAV to a trough in March, 21 of 213 million. And despite the weak markets we have seen throughout 2021, the surprising thing is that the NAV has increased. And now it's back close to $300 million, 291. million, so not that distant from the December 19 figure. On a per share basis in U.S. dollars, it's at $0.24 as at the end of September, which meant that our shares were trading at a very deep discount to NAV as at the end of September of around 52%. we are convinced because we have seen this many times in the past that as soon as we start generating profits and the market turns, this NAV discount will start falling. And of course, as we generate profits in cash, also the NAV will increase significantly. Uh, and, um, and so that should be very positive for, for our shares going forward. Um, and, uh, yeah, basically that's, uh, that's it. Um, the other slides in the presentation, uh, cover some of our ESG credentials, uh, which, uh, uh, and, um, So I think that you can look through those at your ease. But of course, we are more than willing and available to discuss any of our such credentials. So I pass it over to the Q&A. Please let us know if you have any questions relating to the material presented.

Excuse me, this is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 Matteo Bonizzoni of Kepler. Please go ahead.

Thank you. Good morning. Just two quick questions. The first one is a typical question related to the rates environment which you are experiencing in the fourth quarter. So we have seen in the third quarter a new weakening of the spot to below 10,000 per day. So let's say in the fourth quarter, should we assume similar level? higher or lower and the second the last question is on the slide 11 of your presentation in which you have introduced this new blue line so i would just like to understand how to model the estimates going forward we were used to model your tc revenues let's say using the the yellow line Now I wonder, we should continue to use the yellow line or alternatively to use the blue line to model your revenues and to put a higher cost on top, just to understand how it works.

Thanks. I pick up the first one and I leave to Carlos the second one. Things going as they are going, I would say rates are going certainly better. To give you an idea, last week in the U.S. Gulf, 18 MRs, they disappeared, so they have been fixed out. Many of them went to South America, so it's a long trip, long-term miles. I'm not going to tell you this is going to be a bonanza. We are not there yet, but Certainly the market improved. We saw that in another corner of the world. And also because quite a number of old ships disappeared. And also because I would say in this moment, in this part of the year, you have a very low delivery of new ships from the yards because at this point they postponed all the deliveries in January, February in order to gain one year of life. So say that, yes, there is an improvement. How much is going to be, frankly speaking, I don't know. I cannot say, but it's not certainly to be terribly rich, not for a minute at least. Carlos.

Yes, thank you, Paolo. Regarding the markets and the rates, I would just like to add that, I mean, unfortunately, October was still a very weak month. So when... when we are going to then average the results for the quarter, the week of October, unfortunately, is going to wait on the overall averages. I mean, the improvement we have been seeing is really has occurred over the last few weeks. And as you know, you know, the vessels are not always immediately available to fix for employment. Voyages last on average around 20 days. So they are slowly opening up into this better market and they will be benefiting from an improving market, which I believe will improve further in December, but only for not that many days in the quarter, unfortunately. So the FFA's for December are showing a much better picture. And so we actually recently covered one, the equivalent of one vessel through FFA contracts for Q4 for conventional vessel, which would lead to equivalent earnings for us of $14,500 per day. Now, given where the bankers' prices are today, that means around $17,500 per day earnings for an echo vessel. And given that we have 75% of our fleet that is echoed, that is definitely a very attractive level. So what the market today anticipates is that December is going to be a very interesting month for the product anchors, at least judging by the paper levels for the TC2, TC14 routes in the Atlantic. And going then on your second question, we can cover this also outside of the call, because I will try to explain. I hope my explanation is going to be clear. But if it is not, we can talk also after the call. And I'll try to clarify that. The bare boots, we are going to change the way we present our income statement because of this new additional source of revenue, which we didn't have previously. So beneath what we will have the freight revenue and the time charter revenue appearing in one line, Then we will have the voyage costs appearing in another line, and the sum of the two is going to be what we have always called our time charter equivalent earnings. Then we will add to that our bearable charter revenue, and the sum of the time charter, what we call the time charter equivalent earnings, and our bearable charter revenue will be equal to our total net revenue. Now, the reason we are including the verbal charter revenue beneath the time charter equivalent earnings is because if we added it before together with the freight and time charter revenue, we would be comparing apples with oranges. And the sum of these less the voyage costs would not have been equal to the time charter equivalent earnings. That is one explanation. Now, relating specifically to these lines here, what we did here is we tried to adjust the bearable charter rate to transform it into a time charter equivalent rate, into a rate which is comparable to the rate which we earned if we employ our vessel on a type charter basis. The way we did this is to add to the bare boat rate, which we, on this contract, what we deem will be an assumed, let's say, direct operating cost level for a daily direct operating cost to service this contract. we use the assumed level of the daily direct operating costs in this particular analysis was the actual level of our daily direct operating costs in the first nine months of the year, which is around $6,700. So you can then work backwards, you know, and derive what the bearable charter rate would have been But it would, yeah, we thought that from an analytical perspective for the analysts, it would have been better to present this variable charter rate on a time charter equivalent basis so that it can be compared with the other contracts and so that we can then also include an overall average on a time charter equivalent basis for our time charter contracts and for the bearable charter contract. I hope that that is clear.

Okay, thank you.

The next question is from Massimo Bonissoli of Equita. Please go ahead.

Good afternoon, gentlemen. I hope you can hear me well. Just a couple of questions. The first on the vessel impairment in third quarter, if you can shed some light on the on the impairment considering that, if I got correctly, the NAD of the vessel were improving over the quarter. The second question is on the refinancing of the balloons. If you can provide any details on the cost of the refinancing that you expect versus the existing funding cost now in place.

Yes, thank you. I think that I can take both questions relating to the impairment. Yes, it is true that there has been a positive dynamic in the vessel prices over the last few quarters. And I would say that the price at which we sold the vessel was quite close to the broker assessment that we received for the value of that vessel as at 30th of September. Nonetheless, unfortunately, the book value of the vessel is not reflective of the current market conditions. It's reflective of the market conditions at the time the vessel was bought. And this was a vessel which was amongst the most expensive in our fleet, especially when we compare it to other vessels of the same age, of a similar age. And that is why there is this impairment. Regarding the financing costs, all the balloons have been refinanced at very similar levels. and I would say competitive levels also relative to what we have negotiated in the recent past. So I think that there is good appetite by the banks today to provide new bank loans to the IS. It might not be the case that there is a good appetite to finance the sector as a whole, but I understand that there is good appetite to finance what they perceive as being the strongest players in the sector. So all of these financings are at a cost below 250 basis points and I would say around 240 basis points with some additional potential benefits depending on how the vessel is employed that can further reduce the costs, the margins on the loans.

An additional question, if I may squeeze in, just your NAV calculation at the end of September, I imagine it doesn't include the divestment of the high venture vessel you just announced.

No, no, it doesn't. No, it includes it at the broker valuation as at 30th of September.

Okay, thank you very much.

The next question is from Daniela Librandi of Stifel. Please go ahead.

Yes, hello everybody. Thanks for taking my question and let me say it's good to feel an improved sentiment with respect to the previous calls together. Going to the question, the first one is actually a little bit already answered, but I'll try anyway. In light of these deals that you have announced, I mean, the bearable charter out for LR1 and the disposal of the high venture, how should we expect your direct operating cost line and also your financial profile going into 2022? And maybe related to this, if... It's possible to expect in next year maybe another disposal, because I saw that there are some vessels like, for example, Valor, which have similar features to the one which was disposed. This is my first question. I'll let you answer, because then I have another more technical question.

I'm not too sure on the first part of the question. It's relating to how this disposal is going to affect our costs?

Yes, your operating cost line and also your financial profile, both the deal announced on the bare boat and the disposal of the venture.

Well, the deal announced on the bare boat out, we will have this, as I mentioned previously, this bare boat charter revenue. which will appear on a separate line below the time charter equivalent earnings. And the sum of the two, we are going to classify it as our total, let's say, total net revenues. And then the line items beneath the total net revenues are not going to change. They're going to be the usual line items we have on this particular vessel. since it's bearable chartered out, we are not going to be incurring direct operating costs. So from a modeling perspective for you, this vessel would not be generating direct operating costs. Of course, the same applies, but we will have the usual financial expenses related to the financing of this vessel. So the interest expenses related to the financing of the vessel will of course, continue flowing through our income statement. Of course, relating to the other vessel that is sold from the disposal date, there is going to be one less owned vessel in our fleet, so we are going to, the direct operating costs going forward will decrease. As it is one of our older vessels, it is, it is, one of also the most expensive to manage from an operating perspective. So it should, the disposal, should other things be equal, contribute to a decrease in the average daily costs. But, of course, we are talking only about one vessel disposal. So the benefit should be marginal. And I hope I answered your question.

Sure. And maybe should we expect potential other disposal?

The potential other disposal, yes. You can expect potential other disposals, yes. There is quite a lot of interest there, as I mentioned previously. at more attractive levels. And we had these three older vessels in a fleet, which we mentioned several times. It was our intention to dispose of them at the right moment. So we sold one now, and there are two more to be sold. And so over the course of the next few months, year we expect to sell these other two vessels.

Okay, thanks. And the other question relates on the asset values which have been increasing since YQQQ3. So on the ND size, can you please share with us which is the current price for an ND size new build and after five years, please? I know it's a boring question, but it also helped me to model some things.

For a handy size new build vessel? Oh, I don't know. We have the answer for an MR new build vessel. We have that in our presentation. I would say maybe a handy size is at a small discount to that size. a few million dollars less, I would imagine. But Paolo, do you know?

If you are talking about a high cubic handy, they normally have the same beam of an MR. So the space that they occupy in the yard during construction is exactly the same of an MR. So you can discount a couple of million dollars from the MR price at maximum.

We are assuming in our presentation, you know, based on the recent data from Clarkson's 41 and a half, the different costs for an MR new building. So you would probably be around 40, 39 and a half. Okay.

And is it fair to assume you build prices for LR1 around, you build around 50 million?

Yes, maybe something, even something more, I would say.

Okay, thank you.

The next question is from Arianna Terazzi of Inteso San Paolo. Please go ahead.

Good afternoon, everyone. Thank you for your presentation. I have a question on the impact of payment on carbon emissions. Have you already estimated this impact on your financial for the next years or are you accounting any provision relating to this item? Thank you.

Yeah.

No, no. The only thing I wanted to say is the reason why we are selling the older ships is because we are exactly putting the fleet online for this new trading emission coming in. But Carlos, go ahead.

Yeah, so we... We are actually working on this right now, and today I received a first kind of simulation, which I personally didn't have time to focus on because we had the board meetings this morning and the call with you later. But we are working on this. We don't have a figure yet on the cost of the emissions on Of course, we would only be able to provide eventually have a forecast based on some assumptions that we would have to make as to how many vessels would be operating and where they would be operating. But we don't have a figure yet for this. What we believe is that this cost is going to be passed on to the to the charterer eventually it will have to be paid by the owner most likely but it will then be passed on to the charterer as part of the negotiation of the charter rate for the employment of the vessel because who is going to be generating the paying for the bunkers is the charterer and the charter is the one who's going to be deciding where the vessel is going to be sailing to, and is going to be in control of the overall emissions of the vessel, so depending on how the vessel is employed. So it is going to be a matter of negotiation between the owner and the charter. it is going to increase the cost of operating the vessel, but it is a similar effect to an increase in the banker cost of the vessel. So that is the way I would look at it.

Thank you. Yeah.

The next question is a follow-up from Matteo Bonizzoni of Kepler, please go ahead.

Yes, just a follow-up question on this point on the CO2. I was looking at your sustainability report, which is in any case for the entire group, D'Amico, not only, I think, for international shipping. I was looking that the group should have CO2 emission, if I remember correctly, around 0.8 million tonnes. Is it right? Just to share... what is the part related to the micro international shipping?

Yes, I mean, look, I don't have the figures of the emissions, but you're probably correct if you're referring to the emissions that you found in our report, yes. We have to make some assumptions as to where our vessels are going to be trading, and there is a phase-in. So basically what happens is that we are going to be paying for 100% of the emissions for voyages between European ports. We're going to be paying for 100% of the emissions where the vessels are in ports. and we are going to be paying for 50% of the emissions for a voyage between an European port and a non-European port. And then there is also a phase-in, which happens, so in the first year, we are going only to be paying for 20% of the emissions that our vessels are going to be generating, and then In the following year, this percentage rises to 40%, then to 70%, and then to 100%. So we are going only to be paying for 100% of the emissions in 2026. So the cost in euros for the first year should not be, which is 2023, It's the first year of measurement, and it should not be that significant. The cost is going to be generated in 2023, and then we will need to buy allowances to be surrendered by April 24. So, of course, we can start buying the allowances later. in advance and building a stock of allowances that we then can surrender at the first date, which looks today will be April 24. But the cost, I prefer not to give a cost until we have really fine-tuned our calculations here. Okay, thank you. Yeah.

Gentlemen, there are no more questions registered at this time. I'll turn the conference back to you for any closing remarks.

Thank you very much for attending our call and let's meet again on the phone for the result of the next quarter. I thank you, and bye-bye.