d'Amico International Shipping S.A.

Good afternoon. This is the Coruscall Conference Operator. Welcome and thank you for joining the D'Amico International Shipping Full Year 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. Good afternoon to everybody. Thank you for joining us in this call. And we go straight to the presentation. And I would jump in. the executive summary, because it would be a repeat of what we are going to say in the second stage. So I think it's just useless. And I leave the floor to Carlos Barresta-Dimottola, who is our CAFO. Carlos, the floor is yours.

Thank you, Paolo, and good afternoon to everyone. So as usual, we start with a quick overview of our fleet profile. We control the 37 vessels at the end of the year. Over 70% either owned or bare-boated or controlled through bare-boat contracts. For us, bare-boat contracts are just alternative financing arrangements. Mostly an MR fleet, 25 out of these 37, and then an equal presence of six vessels in both the LR1 and Handy segments. Young fleet, average age of 7.1 years, mostly IMO class, and more importantly, mostly echo vessels. And today, this is a very important event. given the very high fuel oil prices that we are confronting. So these echo vessels are providing us a very important earnings upside relative to conventional vessels. We, as you know, we renewed our fleet ordering vessels since 2002, which were delivered to us between 14 and 19, 22 new buildings. And that is why we benefit from such a young fleet young and efficient fleet. Going forward, CapEx commitments, this hasn't changed very much since we last presented our Q3 results. Declining CapEx commitments now only related to maintenance CapEx. 2022 figures are just over 50% of the 2021 figures, which were just over 50% of the 2020 figures. So it has been declining, and it is over the next three years, it should stay at a pretty stable and low level. And we by now have installed water ballast tank systems in most of our vessels, and we don't have any new buildings on order. Going on to the following page, we are glad to, well, as previously announced, but to confirm that we have refinanced already all debt maturing in 2022. One of these loans was drawn down at the beginning of this year. The rest was already drawn down at the end of 21. And we are now starting to work on the refinancing of the 2023 maturities, which are more substantial, almost $110 million, the balloons relating to those financings. But we are seeing quite a lot of appetite. And so we expect to be able to achieve attractive terms and to close these refinancings soon. in the not too distant future, but definitely before the end of the year. And in terms of bank loan repayments on our own vessels, these have been declining and are expected to continue declining. We had some financings with some additional working capital facilities, which had a faster amortization profile and which we are either refinancing today with a new bank debt or we have what we will be fully repaying, in any case, over the next few years. And that explains the continuing downward trend in that respect. So we are also lighter in terms of – in terms of financing obligations going forward. Going on to the following page, the purchase options. This hasn't changed much from the last time. As you know, we exercised the purchase option on the high priority. We still have eight vessels which are financed through bare boat structures and they all have purchase options and there are seven of these are already exercisable. One will have Its first exercise date in March 24. They are all in the money or theoretically in the money. So at the right time, as soon as we see sustainable strong rates, we will be looking to exercise these options and to refinance them with traditional bank debt at a lower cost, reducing our financial break-even. Going on to the following page, the employment of our fleet. We recently added this blue line because we also have now one vessel pairboard charted out, which is quite unusual for us, but we kept the technical management of the vessel. And this employment was at a very attractive rate for us, a very profitable rate, and that explains why there is this increasing delta between the blue and the yellow lines, but most importantly, the blue lines, which includes both the bearable charter out contracts and the type charter out contracts is rising over the course of the next two years. And it's reached a trough in the Q4 of 21. And we are now starting to experience an increase in these rates. It's also quite positive. We believe that our coverage does fall over the next few quarters. It's still quite high in Q1, but it then falls to 32% in Q2 and then much lower in Q3 and Q4. And we do expect a much stronger market in the second half of the year and in particular in Q4. Of course, we are now, we are going to comment more on this later. experiencing exceptional circumstances given the conflict in Ukraine. And this has helped very much our markets. And we don't know for how long this will last. And Paolo will cover this more thoroughly in his part of the presentation. we are now in this very moment experiencing quite strong raids, which of course are strong for different reasons from the ones we would have expected and are also linked to the invasion of Ukraine. Also on this page we show underneath how the percentage of our fleet, which is ECO, has been rising over the last few years. And as I mentioned, this has become a very important factor today because of the very high fuel oil prices that we are experiencing. So the earnings differential between ECO and conventional vessels has increased significantly. And we are glad that for all our controlled vessels, the percentage of echo vessels in 2022 is going to be of 80%, and this should continue rising over the course of the next few years as we sell some of the older vessels that we still have in our fleet. Going on to the following page, we show the sensitivity of our earnings to a change of $1,000 per day in the TC equivalent earnings, and it is of around $9 million in 2022, and it rises to $12 million in 23. So there's quite a big upside potential in a strengthening market, which as you probably saw looking at other shipping sectors, which are now going through an up cycle, when markets do strengthen, they do strengthen, they can strengthen quite dramatically depending on the dynamics which are underlying the recovery. And therefore, we are glad that we have this increasing sensitivity going forward to what we expect to be a recovering market. We also worked quite hard on the cost fronts over the last few years, and we are glad that even in 2021, despite the inflationary pressures that we are starting to experience, we managed to keep our daily operating costs under control and only marginally higher than in 2020, but still well below the costs in 2018, so a 5% decrease. And the same applies to the GNA, where we did experience a slightly more pronounced increase in 2021, but where we are still well below the 2018 figure. There is also currency effect that penalized us in 2021. It is true that the dollar has strengthened quite significantly because of its safe haven appeal in the course of 2022. But on average in 2021, it was weaker than in 2020. And that is one of the factors which explains this increase in G&A costs last year, since 75% of our G&A costs are in currencies other than the US dollar, mostly in euros. Going on to the following page, our, a quick snapshot here of our financial structure. We have a, at the end of the 2021 or the ratio between the net financial position, the fleet market value is just over 60%. And we ended the year with $43 million in liquidity. This is a, in terms of ratio net financial position to fleet market value. We saw quite a big improvement relative to the figure at the end of 2020, which was closer to 66%. And this is thanks to our strategy of continuing to dispose of all the vessels to generate liquidity and strengthen our balance sheet, but also due to the increase in asset values we experienced in the second half of the year, partly driven by the pull effect of the increase in new building prices and in demolition prices, partly associated with the sharp increase in steel prices, but also on the new building front with the many orders that were received by by yards for other types of vessels, leading to most of their building capacity being filled up and therefore their pricing becoming more aggressive. Proforma for the disposal of the high-value, which occurred in the first few days of January, on the 4th of January, our liquidity at the end of the year would have been of just so $51 million. And the ratio of net financial position to meet fleet market value would have been just under 60%. So these are ratios which we are quite happy with. Of course, we will continue to seek to deliver job balance sheets. But given the very young age of our fleet, we believe these ratios are sustainable and healthy. Going on to the following page, we look here at the