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 9 Month 2022 results. As a reminder, all participants are in listen-only mode. After the presentation, there will be a Q&A session. For operator assistance via web call, please press the headset icon on the bottom left side of your screen. For conference call assistance, please press star and zero on your 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. So, welcome to our third quarter and nine-month result presentation. Let's go straight to the presentation itself. As usual, we jump the executive summary because we don't want to repeat ourselves twice. And I leave the floor to Carlos for the first part of it. Please, Carlos.

Thank you, Paolo, and good afternoon to everyone. So just as usual, a quick glance at our fleet composition. As at the end of the quarter, 36 vessels, which 24 MRs and the same number, of handies and other ones, six of each. In terms of control, 19 are owned, eight are variable chartered, and nine are time chartered in. Young fleet, average age of 7.5 years, mostly IMO class, almost 78%, and also 78% eco design, meaning by that vessels which were delivered since 2014 and which consume around 30 percent less fuel than the conventionally designed vessels. This fleet composition is the result of important investments we did between 2000 and in 2019 to renew our fleet. Over that period, we ordered and received 22 new buildings. And since then, we have had mostly maintenance CapEx, which has been falling actually over the last few years. This year, we had a few opportunities that we could seize in terms of investments. And the first one being the redemption of the shares of our JV partner, England International Shipping, for around $27 million. That company controlled four MR vessels, three built in 2011 and one built in 2010. And the values of the the implicit values of the vessels acquired were around 21 million, whilst today they are around 27 million. So that was a very good deal for us. And we were, I would say, lucky with the timing because the agreement was reached just before vessels' values started moving sharply upwards. We also had a purchase option on a vessel time charted in whose purchase option was in yen and the strong depreciation of the yen relative to the dollar made that purchase option very attractive. So we were able to declare that option and acquire the vessel. It still has to be delivered to us. It will be delivered towards the end of November for $30 million. The vessel, it's a five-year-old vessel built in the Onomichi shipyard, very good shipyard in Japan. We have time-charged the vessel since its delivery, so we knew it very well. The vessel value today is probably around $39 to $40 million. So also that one was, we believe, a very good deal, which allows us to significantly lower our break-even on that particular vessel. Going forward, we still have only mostly maintenance capex. And we do have, however, another option on a vessel, a time charter in, as we will look in more detail later in the presentation that we are likely to exercise. Going on here, we look at bank financing repayments and balloons and As previously discussed, we have already refinanced all the debt, which was maturing in 2023. And we only have one facility maturing in 2024 with a balloon of around 22 million. And so, yeah, that is also quite positive from our perspective, although, of course, Today, this is not a big concern for us as it was in the past, given the very strong markets we are experiencing. The daily repayments on the loans had been falling from 2019 to 2022. As a result of the recent refinancing, these increased in 2023, but should start then gradually falling again. Going on to the next page, the purchase option on the lease vessels. We exercise and sold the high priority in 2021. It was one of the oldest vessels in our fleet. And this year we exercise and refinance through new leasing transactions, the high fidelity and high discovery. We have six other options on these vessels that can be exercised. We are most likely gradually going to be exercising them over the coming quarters and years. as a way of deleveraging and reducing our break even and strengthening our company to be able to then act counter cyclically at the right time. So that is a potential use of funds going forward. Here we then look at the vessels which are time charted in and on which we have purchase options. One, as previously mentioned, High Adventure, was already exercised. And we have also the High Explorer, which has a purchase option in yen. And we have to exercise it by January next year. And it is that the price in yen is the same as for the high adventure. And so it is likely that we are going to be exercising this option in the coming months. The other options, the other, the remaining four options on these vessels are in the money, but They are at a significantly higher value relative to the high adventure and explorers, so we are unlikely to exercise them anytime soon. Going on to the following page, here we show our contract coverage. The blue line includes both the time charter contracts and the verbal charter contracts. The average rates on this coverage is moving up quite sharply over the coming quarters. It is of around 20,500 for Q4 this year. It was of only 15,500 in Q3, and it rises to just over 28,000 for 2023. We have fixed recently some vessels at some very attractive rates. And that is why these average rates have been moving up fast. And we might decide to take some more coverage. We are likely to take some more coverage at the current very attractive rates. We would like to reach coverage of around 20 to 30%. at least 4,023 at the current high rates. The percentage of our echo fleet has been increasing over the years and this trend should continue over the coming years as we sell some of our older vessels in our fleet. Going on to the following page, this is a new slide that we didn't include in the past in our presentation, but we wanted to align ourselves with our peers, which provide also an outlook on the earnings of the current quarter. And so here we are showing, based on the fixed dates, both relating to period contracts and to spot dates already fixed, what is the blended rate achieved so far, which is 32,440. This is composed by 46%. of the available days in the court are fixed to spot contracts at an average rate of 37,500 and period rate contracts representing 20% of the available days at an average rate of 20,500. So we have 65% of our days covered at this blended rate of 32,440 and 35% of our days and the port is still open. Here, these are not indications of what we expect to earn on these three days, but we just made some assumptions. Of course, you as analysts and investors are free to make your own assumptions given how the market is performing and what the outlook for the remaining of the rest of the quarter is. I would say these are quite conservative assumptions. We look here at what our earnings would be if we earned $20,000 per day on average on the free days. Their blended earnings for the quarter would be $28,000, around $28,000. If we earned $25,000 per day on the open days, then our earnings for the quarter would be $30,000. And if we earned $30,000 per day on the free day, our blended earnings for the quarter would be $31,600. And that is higher than the blended rate we achieved in Q3. So it doesn't look like a very high hurdle to overcome to earn $30,000 per day on the remaining quarter. On the remaining open days, given so far we have achieved 37,500 on the spot days, and the market continues to be very strong. We're actually looking at the paper market. The expectation is for the market to strengthen further in the second half of November and in December this year. So going on to the following page, this slide is slightly modified relative to what we presented before. We decided here to show also on the left in the bottom what are the potential earnings from the contracts which are already fixed in relation to Q4 that includes both the spot days already fixed and the time charter days already fixed, assuming P&L breakeven costs, all inclusive of $15,000 per day, but excluding, of course, non-recurring items. And that would imply that on these fixed days, we already have locked in $36 million in profit for Q4. So assuming the remaining days are employed at breakeven, this would be the profits that we would be earning in Q4. And for 2023, we did the same exercise, assuming the same P&L breakeven of $15,000 per day. And the locked-in profits there from the period contracts is $20 million. So on the right-hand side, then we show given the sensitivity that we show on the upper part of the graph of the page of $1.1 million for every $1,000 per day change in the DC equivalent earnings, how this would affect our overall earnings for Q4 and for 2023 and 2024. So... We show them if our earnings on the three days were $20,000 per day. In Q4, our recurring results would be of $40 million. If our earnings on our three days were $25,000 per day, our overall recurring net results would be of $46 million. And if our earnings on our remaining three days were of $30,000 per day, then our net earnings for the period would be of 51 million. We do the same exercise also for 2023, and you can see how the earnings would vary. Here we show the evolution of our daily operating costs and of our GNA. We are glad that we managed to keep under control the daily operating costs despite the inflationary environment that we are confronting. Unfortunately, I believe that is going to be more complicated to keep at the same level going next year because we are likely, especially on the cruise, to face some upward pressure in this respect. Ukrainian crews are important for our vessels and generally for the industry. Of course, there are some issues today finding enough Ukrainian seafarers, so recruiting Ukrainian seafarers. It was a market that was already tight, and so that is, of course, not helping. On the right-hand side, we saw the GNA, where the evolution has been not as positive as on the daily operating costs. Of course, partly this is related to the greater traveling that is happening now, There's also some catch-up traveling for business purposes after the COVID period. There is also some accruals of benefits linked to the long-term incentive plan, which are taken into account this year, which are also contributing to the increase in G&A. It is important to note that they remain below the 2018 figures. Going on to the following page, we show the ratio between the net financial position and fleet market value, which not surprisingly has improved markedly since the end of last year. We are now at 42%. Of course, this is the result of the cash that significant cash we generated this year. as well as the increase in asset values. And yeah, in the end of 2018, this figure was at 73%. So this is a very big improvement and we are glad that we can count today on a very strong balance sheet with 85 million in cash and cash equivalents at the end of the quarter. Here we look at the key P&L line item. The profit for the quarter Q3 was of $44 million and over the nine months it was of $63 million excluding non-recurring items. The profit for Q3 was of almost $46 million and for the first nine months of the year of $68 million. Looking in greater detail at the daily results of our vessels, those employed on the spot market, as previously mentioned, earned on average just over $37,000 per day, which is more than three times more than what they earned in Q4 21. And given also the contracts that we had at an average rate of around 15,500, the blended rate for Q3 was of 30,230. In Q3 and the blended rate for the nine months was of 22,400. I pass it over to Paolo for the market overview. Thank you, Carlos.

Now, of course, we had a strong upside from last year to today, not in earnings and as a consequence in fleet value. We are still below the last cycle peak. But this doesn't mean that we are going to repeat ourselves in the same way, which is something else to be seen. But the fundamentals are very strong. And today an MR is currently valued for a one-year period of $3,500 and another one is valued at 42,500. By the way, we fixed two LR1s at 43,000. So we even did better than these Clarkson assumptions. Talking about the situation in Ukraine, as you very well know, starting in December 1st, the Russian crude will be sanctioned by EU. And by February 1st, the products will be sanctioned. Already, the flow of crude is going down, is reducing, due to the fact that the sanction works in a way that you have to discharge the Russian cargo before the 1st of December. Whatever is on the water today has to arrive to destination before the 1st of December. And which means that traders are already not taking position on the Russian oil. What is going to happen is that, of course, the Russians have to look for something like a million and a half barrels per day of crude and a million barrels per day of products. They have to look for new clients. It is, I would say, clear that the clients will be mostly China, India and Turkey. And if they manage to have enough fleet to move the soil, We doubt it, but if the so-called dark fleet will be big enough to take care of the Russian trade, this is going to move around. But as I said, we find it extremely unlikely. On the product side, now we have to see what the new president was going to happen, but Brazil struck a deal with Bolsonaro and Putin for supply of diesel. Diesel is extremely important in Brazil. So we should receive this Russian diesel at the highly discounted price. The point is, has to be, if Lula is going to continue this type of deal. But this to give you an idea how long and how far the Russian crude and the Russian product they have to, uh to navigate to get to get to a new market now that they lost you saying that on the european side as i said last time europe has to look for her own products in other from other sources and this is going to happen Either Middle East, either China, or if there is any availability in the United States. But the United States, as you know, are very short of diesel, especially in this moment. But this also adds new ton miles to the today equation, which, as you can see, is very tight. And is, let's say, for us a very good market. So the sanctions are going certainly to tighten more the freight market, and we expect an increase out of this on the freight rates. How much has to be seen? There have been various calculations, but we prefer not to make numbers. COVID, H23, is not anymore, excluding China, a problem, thanks God, and that's why we stay this way. China is the only one which still does lockdown. In some ways, even a good thing, because if China was there buying crude and buying products today with the rest of the world, the cost of a barrel, as you can imagine, it could have been. The refining, the demand for refining products is recovered totally from the disaster of COVID-19. The demand is growing. As far as global oil demand, we expect to go basically where we were before the COVID, so around 100 million barrels per day. The refinery runs In 21 rose by 3.2 million barrels on average, and we expect another 1.3 million barrels of increase in refining capacity. The refinery products inventory are still very low. United States is facing a strong shortage of diesel on the East Coast. And this has been the stocks are something like 56% of what they used to be on as an average over the last 10 years. So you can imagine how tight the market is over there. And where we can see a recovery, a strong recovery on the product side always is from jet fuel because people are traveling again. And we have a recovery on the gasoline, but it's flattening out due to the price. And the prices start denting the demand instead on the jet fuel. we see a very strong potential coming in. We have more and more flight coming in operation. And so the consumption. We expect also a strong crude tanker market, which helps us a lot. It does help us for two elements. Number one, we have a number of swing ships like the LR2s that they move from crude to products. If a crude is strong enough, they could well shift to crude and stay crude, and this will be limiting even more the supply side on products. And number two, the VLs, they used to, let's say in a difficult moment, the new buildings, They used to load full cargo, and when I talk of full cargo, I'm talking two million barrels, full cargo of diesel oil in the Far East, in China, Singapore, Korea, and carrying it to North Europe. But on their way to North Europe, they were stopping in West Africa, doing ship-to-ship operation. So they were basically killing two markets for us. The West Africa market that used to be supplied by Yamars from North Europe and the North Europe market itself. But thanks God, due to the fact they are making a lot of money on they will stay out. So it's another element of supply that should be out of our way. The long-term demand is there, is healthy and resilient. I mean, we are, the participation of the products to the seaborne, the share of the products of total seaborne trade is always increasing. Always on the long term demand, you know, this is like very well for those who have been with us recently. We have the old refineries in Europe are closing down and all the growth in refining capacity coming out between Middle East. and Far East, principally from China. In the Far East, Australia and New Zealand, New Zealand closed the last refinery they had, and Australia already lost 50% of the refining capacity. So they are both supplied by Singapore and Korea. And this trade is growing every day, every year. Shell oil will be on long term demand. Shell oil will be there. We have a majority today of private company drilling, so not subjects to environmental pressures of shareholders or pressure from shareholders to be paid in dividends and not to spend in production because we're a private company, they can do what they want and they are investing in production. So we can expect, thanks to this, an increase of oil production, of shale oil production in the future. There are a number of elements, I would say more ruling elements that will limit our future supply. We have two indexes which are extremely severe coming in in Europe next year. And they are both related to CO2 emissions. As a consequence of these indexes, The old ships, they either have to reduce their speed, and this is reducing supply, and or even go to demolition because they are not going to be economical anymore. So even from the ruling side in Europe, we have this element which, of course, for those who have a younger fleet like we have, is more than possible. When the fleet due to a very low order book is becoming older, a big number of 57% is going to overtake the 15 year of age. this is a moment where the ship is technical, still very valid, but from a commercial point of view, the big oil companies and the big traders, they don't trade them anymore. So they have to move to secondary trades with second quality type of traders. And 50% are overtaking the 20 years of age. And this is an element instead of thinking of scrapping yourself so the candidates going on and not being replaced by new buildings can you see we can expect the fleet growth but you are going to see the few pages basically exposed to zero the delivery as you can see in the coming month are really non-existent. I mean, I think that only the element of the indexes coming in force, the European indexes that I was saying before, can offset completely the new building capacity coming in operation in these months. We do not think that we are going to see a rush to new buildings for two elements. Number one, if you want a ship today, you're going to have it at the end of 24, if not beginning 25. And you don't know what the market could be. It's too far away. Number two, it's going to be an extremely expensive ship. And you tend to refrain to put money on these numbers. And number three is a technical limitation that we don't know what technology is going to be needed. As you know, we are entering in this decarbonization. And so you can easily make a mistake. So this is keeping, and you will see finally on page 37, the fleet is not growing. I mean, we expect a 0.5%. growth. This is coming from Clarkson, but we are talking 0.5%. It's like saying, yeah. Say that I leave to Carlos for VNAD. Thank you.

Thank you, Paolo. Yeah, this is the usual graph we show with our NAV evolution. And between June and September, there was a sharp increase, which reflects the results we achieved and also the increase in asset value. So our NAD increased from $420 million to around 610. So it's almost a 50% increase on a per share basis. It increased from $0.34 per share to $0.5 per share. And So although our share price has performed very well also during the period here, we are showing our share price as at 30th of September, but since then it has traded up significantly. We are still trading at a very important discount to NAV. And of course, this is an NAV which we expect to continue rising over the coming quarters. Maybe there is some upside, but maybe not as strong as we have seen in terms of increases in asset values. But the cash we expect to generate in Q4 and in 2023 should drive the future increases in NAVs. And so there's still potentially quite a lot of upside to our share price, we believe. I believe that covers the main presentation, so I pass it over to you for the question and answer session.

Excuse me, this is the Core School Conference Operator. We will now begin the question and answer session. To ask a question, please click on the Q&A icon on the left side of your screen and then press the raise your hand button. Please do not mute your microphone locally and when prompt, make sure you turn on your webcam in the pop-up window. If you are on the phone instead, please press star and one on your telephone. The first question is from Daniele Alibrandi of Stifel. Please go ahead.

Yes, good afternoon, everybody. And first of all, congrats for these strong results. I was suspecting one of the best quarters in your history, but when I look at the commentary you gave on Q4, I mean, I'm not that sure that that was Q3 anyway. My first question actually is a $1 million question. I really appreciate the comments you provided us on where we stand in uh in terms of pc fixed rates and coverage in q4 this was very very helpful uh nevertheless when it comes down to forecast these two parameters for the next year this is a much more difficult exercise so you provided us the the picture where we stand today on the slides but i was trying to figuring out where we could land at the end of next year I know that this is a function of where the spot rates will be, which are the opportunities that you can take on securing these strong rates on the fixed side and so on. But maybe if you can elaborate a little bit, what's your best guess on this?

That's really a $1 million question. More than that, I would say. More than $1 million. Well, I wish we knew, but I think we cannot help you much more than what we did by providing this sensitivity analysis and the earnings on the contracts that we already secured and given different scenarios, what the earnings could be for next year. Also taking into account, Daniele, that the time charter rates today are very high and you know they do reflect an expectation that the market is going to be very strong next year uh one year rates i'm saying i'm talking about so an echo mr is around 30 33 000 per day and an echo lr1 is around 43 000 per day so that can help you guide you in your i guess in your in your forecasts we internally prefer to be a bit more prudent, but that doesn't mean that we actually expect and hope, we are a bit superstitious, but we expect and hope to do better than the numbers we are providing when we do these simulations and say, okay, what will happen at 20 or 25 or 30,000 dollars per day? These are, of course, Historically speaking, very good numbers. But, you know, as as things stand today, we could actually do even better than that. So it's but but, you know, if it ended up being twenty five thousand. will still be a great year.

I mean, so it's... Can we say, let's say two things that first of all, that at this level of spot rates, is that correct? That it's still represented like five or for sure less than 10% of the total value of the cargo still at this rate. So maybe... The spot has possibly some way to go up. And also, given that the TCE are really attractive, maybe you will take advantage progressively of these high rates.

Yes, yes, it is true. I mean, we did mention, you know, we are not in a hurry to cover our vessels with TCE contracts. We will do it if we find the right opportunities. But we feel that today, at least for periods of one year, the rates start to make sense. So we have started taking coverage. We covered the two LL1s, and Paolo mentioned that $43,000 per day. And we covered also one of the older vessels in our fleet, an MR2, for one year. And we are likely to take more coverage going forward and reach this 20 to 30% level of coverage that I was referring to previously. But, you know, we don't have any formal commitments to do so. I mean, we will do it if we feel that it is the right thing to do. and currently the numbers seem to make sense. But we will keep re-evaluating the situation constantly when making these decisions.

Thank you. The last one is that we all know that there are two key catalysts, basically. One in December, the other one in with the sanctions on Russian products and Europe kicking in. So you perfectly explained to us what can happen. And I'm really struggling to see maybe what can go wrong. So sorry for the question, but what do you think maybe can be the other flip of the coin? can go wrong with the, actually, it is expected by all of us in terms of higher demand.

What it can go wrong, I mean, in respect of the sanction, is this. Look, on short term, what it can go wrong is the peace, if you want to. I mean, the fact that We leave the sanction itself and Russia goes back where it was. But even with Russia going back where it was and where it is today, because today Russia is exporting its product, we go back to where we are today. So I wouldn't, it's a beautiful way to go around. And, of course, if the conflict will be resolved on the medium term, the world will be by far better. So I think things will improve in other directions. Consumption will go up for different reasons. So the overall picture, to me at least, it doesn't look... I don't see the dark side of the coin. Not exactly in this moment. Maybe it's one of the few times in my life. But frankly, today, the way things are, I see it quite positively. Let's put it this way, always to be prudent.

Yeah, take into account, Daniele, that demand this year, oil demand, would have increased much more if this war hadn't occurred. I mean, this war has created economic mayhem. I mean, it was a lot of inflation, forced central banks to increase interest rates very fast, and it's starting to affect demand, and this could worsen potentially in the coming quarters but if there were a peace agreement we would expect a much more benign economic scenario as Paolo was saying and we might lose some ton miles by that I mean the distances sailed might shorten again, maybe some inefficiencies would disappear but the flip side, the positive flip side would be that consumption and volumes transported would increase much faster. So it is not a given that it would be negative. Potentially, I would say, if I were to think of what is the worst scenario that could happen, it is deep recession in the US and Europe because of the monetary tightening coupled with the high commodities prices and China not reopening and so Chinese GDP growth remaining depressed because of continuous COVID lockdowns. That and OPEC Plus remaining very disciplined in cutting supply in the face of a non-spectacular growth in demand or a potential contraction in demand. Today, the base case scenario is still for oil demand, even taking into account all these factors to increase next year. But if the situation from a macroeconomic perspective were worse than currently anticipated by by most analysts and we were to experience a contraction and if opec were to react to that by cutting oil supply then potentially we could have an issue which however could in theory still be compensated by an increase in ton miles because the effects of these sanctions uh still have to come into pay uh the full effect of these sanctions so So, yeah, so even that scenario is not necessarily a bad scenario for us. But yes, there could be, let's say, a correction at a certain point, but we don't expect it to be a long lasting correction because the supply side looks very good.

Thank you. Very, very explicative. Thanks.

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

Hello, good afternoon. Thank you for the presentation and congratulations for the results as well from my side. I have two questions. One is on the On rates, I understand you are taking some more coverage, but clearly now the coverage rates are quite strong, so why not accelerating the coverage in your portfolio? And if you can give us some color on the... on the willingness of the clients to, let's say, engage at such high rates for longer terms. If they are very willing or very reluctant right now, just to have an idea from the other side. And the second question is on the new vessel. How long does it take from the day of the order to receive a new vessel on the market right now? I understood that there are some concerns regarding the new technology, and that's something that we appreciate, but just to understand how quick new vessels can arrive on the market.

Now, the reason why we didn't take more coverage, because there was a very strong differential between the spot rates and what the charters were prepared to pay for period. As you rightly say, how much the charters are reluctant or prepared to take certain rates in. They were not on the beginning. This thing is changing. It's a working in progress. So it's not something that happens tomorrow morning. Things are getting to maturity. And as we see, as we saw on the case of a 201 that we fixed for one year at 43,000 a day, as we see race entering in certain, let's say, in certain levels, we are willing to take that. We have in our mind anyhow coverage for next year between 20 and 30%. This is not the Bible in the sense it will be always a market dictating what we are going to do. But this is the ballpark where we want to arrive. As far as the traders and the oil companies, they are certainly more prepared to look at longer term today. They are even looking someone at three years. The three years is still very much discounted. So we wait a little bit on looking at such a long thing. And I have to say, we also would like to wait for February to see how in reality the sanction would work. Because what we say is what we expect. But, I mean, reality can be different even if I doubt it. So today is a life that you really live every day. And every day is a different day. So to take a strategic position that we want to take and we will take, needs some more maturity the way the market is going. Also because don't forget that we have this result, but on the first quarter of this year, we lost money. So the speed, how the market is recovering, and the way the market is proposing itself, it really changes every day. And we are trying to be prudent, which is always our sort of, this is our Bible. But in the meantime, we know that we have to exploit the market the way it is today because it's unique. As far as the second question, today if you order an Emma, you are going to have a delivery in 24 at earliest. What's happened? Yes, end of 24. What happened that the LNG moved in very heavily and the containers moved in very heavily. And if you follow the rest of the shipping industry, you'll notice that. So the yacht, they fill up their capacity, mostly these two type of ships. We have living space. tankers this this is a good thing because it's going to restrain the supply for quite a while as far as new technology okay you can read it on the papers i mean we are talking about many things i still suspect that we are still going on fuels maybe blended with biofuels for a while before we do really do a big change because Not only the technology is not totally there, but it's the supply network which is not totally there. Because we can even have an engine which goes on ammonia. If I don't see and I don't find the ammonia, I cannot refuel my ship. So it's the whole thing that has to go to maturity, and this is going to take years, maybe more years than I think. I hope I gave a good answer.

Very good. Thank you very much.

The next question is from Matteo Bonizzoni of Kepler. Please go ahead.

Thank you. Good afternoon. I have two questions. The first one is related on the purchase option which you have on your lease vessels. So you show that you have still six purchase options in the money. The question is just to understand what is the maximum theoretical cash out to exercise these options and how this cash out compares with the IFRS liabilities just to assess the net balance on your total net financial position in case you exercise. The second question is as regards your capital allocation. Clearly, you have dramatically improved your loan-to-value to 42%. It was, let's say, about 60% only a few quarters ago, so a very, very sharp improvement. What are your thinking about capital allocation, including dividends, but above all, including a potential return to a more aggressive CapEx mode or fleet expansion or decision of this kind? Thanks.

Yeah, thank you. So regarding the purchase options, it depends, of course, when we exercise these options. But I would say that most of them today are between the purchase option prices between 22 and 19 million dollars. So that is, let's say, the residual leasing liability that has to be settled to exercise these options. And of course, this declines over time. But so we can, as a very rough of the envelope, you can assume between 120 and 125 if they were all exercised today. to exercise these six remaining options and keep the vessels debt-free. So that is just a rough approximation of the leveraging that could be achieved in this respect. The purchase option on the high explorer, it's in yen and today's yen values, it's around just below $30 million. So, but yeah, so. And in terms of dividends, our expectation is that the dividend, of course, this is a decision that has to be taken by the board and then by the shareholders, but our expectation is that the dividend will be distributed next year out of the 2022 results. So it might not be, you know, a very big payout ratio this year, but it is, you know, a signal and the idea is that the payout ratio will increase over time. as we leverage our balance sheet. What we will look at is not necessarily the ratio between the net financial position and the fleet market value at a certain point in time, but the ratio between the net financial position and the average market value of our vessels over the cycle. So we will look over the last 10 years at these averages and look at this independence ratio when deciding what portion of our profits to pay out as dividends.

I don't know if this answered the question.

In terms of other investments, we don't have any plans currently to order new buildings. for the reasons Paolo mentioned. And I think we are not the only ones who are thinking that way. And that is why only 24 vessels were ordered this year in the MR1, MR2, LR1 segments, which is a very low number. And You know, it's a new vessel today would cost you around 44, 45 million delivered. And that is not including the financing cost between the date you order the vessel and the date the vessel is delivered to you. And then in two years' time, you might have missed a good portion of this strong market. So is that a good idea? And you remain with that? an expensive vessel in your fleet. So I think that it doesn't look very appealing today to order new buildings, and that is the reason why very few are being ordered.

I hope that answers your question.

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I'll turn the call back to you for any closing remarks.

Okay, gentlemen, thank you very much for being with us. Of course, we are extremely satisfied from the results, and we hope in the future to keep going the way we did now. So thank you to be here, and I hope, I mean, we'll talk at the next call. Thank you. Bye-bye.