Welcome to the BW LPG's Fourth Quarter 2016 Financial Results Presentation. We will begin shortly. You will be brought through the presentation by Martin Ackermann, the CEO, and Ms. Elaine Ong, CFO of BW LPG. They will be pleased to address any questions raised after the presentation. [Operator Instructions]. We will begin the presentation now. Please go ahead.

Hello. Good afternoon. Thank you. Welcome everyone to the presentation of BW LPG’s results for the fourth quarter of 2016, the financial period ending December 31. I'm joined by our CFO, Elaine Ong. We appreciate your interest in our results and encourage your queries at the end of the call. Freight rates improved slightly to $13,600 on the benchmark Baltic route due to expansion of geographic LPG price spreads. This recovery in Asian LPG prices was led by significant restocking demand ahead of the winter heating season, as well as rising crude prices and delays in receiving U.S. sourced cargoes. After rebounding to about $20,000 per day in January, the markets have since softened as extremely high U.S. LPG prices and a heavily participated Asian LPGs forward price curves, both the arbitrage window and prompted cargo cancellations in the U.S. Gulf Coast. However we remain encouraged by the responsiveness of freight rates, the improvements in geographic LPG price spreads with the January and we continued to believe that a resumption of U.S. LPG production growth will be the key to a sustainable freight rate recovery. Spot rates currently stand at around $15,000 a day and we have seen a pickup in the West East trade in the [indiscernible] as they are reopened. The market is awaiting the announcement of March CP declines [ph] with expectations in the $475 to $480 per tonne range for propane. Turning to Slide 4. We review the highlights of 2016. 2016 was a difficult year but the company remained profitable and grew its fleet by nine VLGCs at attractive values. We generated net revenue of $407 million based on daily rates on $27,100 for the VLGC segment and $23,400 for our LGCs with total contract coverage of 50%. EBITDA came in at $210 million, while…

Thanks Martin. Starting with our income statement on Slide 11, our net revenue for the quarter was $89 million compared to $160 million in the same quarter last year. Charter hire expenses for the quarter decreased, as we operated one less chartering vessel. Operating expenses were approximately $6.3 million higher year-on-year, reflecting in a large BW LPG stand-alone fleet, as well as the December expense contribution from the Aurora fleet. We generated EBITDA of $35 million in the quarter compared to $111 million in the same quarter last year. Finance expenses were higher by $4.5 million year-on-year due to the drawdown from $221 million ECA facility as well as the consolidation of Aurora’s December interest expense. Recorded net profit for the quarter of $80 million due to the recognition of $111 million of negative goodwill arising from the acquisition of Aurora LPG; $8 million of non-cash gains, offset by $38 million of the impairment charges on vessels. Excluding non-cash non-recurring items, we reported a loss of $600,000 in Q4. Turning to Slide 12. We provide a snapshot of our balance sheet and cash flow position. We continued to maintain a strong balance sheet with a leverage ratio is 56% following a nine-ship acquisition and an asset base of $2.6 billion. In the first quarter of 2017, we paid the final installment on our two newbuilds of approximately $70 million. This concludes our newbuild program, and as of today, we have no remaining growth CapEx commitment. Cash and cash equivalents at the end of the quarter was $81 million. On Slide 13, you will see our net debt position at $1.3 billion at the end of the quarter. Available cash and undrawn facilities were $326 million. As of December 31, we had seven debt facilities, four of which are pre-existing and…

Thank you very much, Elaine. So if you please all turn to Slide 14. I would summarize the presentation, after which we will open up for questions. We generated earnings per share of $0.18 in 2016 and $0.58 in the fourth quarter, while the board has proposed a no final dividend to be paid for the second of 2016, in line with our policy. We completed the acquisition and integration of Aurora LPG and are close to refinancing the Aurora vessels, as described by Elaine earlier. As result of our large fleet, we established commercial and technical operations in Oslo and Houston to better service our customer base in the West. Looking ahead, we expect total contract coverage of between 24% to 31% for the full year of 2017. I'd like to conclude our presentation with some thoughts on our current financial position and outlook. In the last month, we have taken significant measures to strengthen our balance sheet and liquidity position. We sold the BW Borg, freeing up more than $40 million of liquidity; sold the BW Messina, which freed up more than $20 million of equity and a further $6 million cash gain. And finally, we upsized our OCBC facility by $50 million. These three initiatives alone saved $150 million of liquidity without distorting to any issues of issuing dilutive equity below NAV in an already depressed asset valuation. We still remain cautious on the market short-term due to the forward curves, substantial newbuilding deliveries in the first half of the year and a potential for further inventory drilldowns in the U.S. keeping LPG prices elevated. The medium term fundamentals for VLGC trade however are positive. U.S. production should track to recovery in oil prices following the OPEC product cost; signal by the recent announcements of increased E&P spending by a major producer and an increasing rig count; softening in the U.S. domestic LPG pricing as a result of renewed LPG production growth and sharp drop in newbuilding deliveries by late 2017 should allow for an improved in freight rates in 2018 and beyond, assuming no more ships are ordered. But we would be proactive in managing our balance sheet. We can make it through a $12,000 per day market until beginning of 2020, assuming no additional debt capital from our unencumbered fleet. We hope for the best but always plan for the worst, and we are very well prepared to ride out the current downturn. So this concludes our results update for the fourth quarter of 2016. We appreciate your interest in our market update. And now I'd like to open up the line for questions. Thank you.

Thank you, sir. We'll now begin the question-and-answer session. [Operator Instructions]. We will now take our first question from Peder Jarlsby from Fearnley Securities. Please go ahead. Your line is open.

Good morning guys. Just a quick one on your contract portfolio. So given that rates remain below cash cost breakeven level throughout the year, is it just fair to assume that you’d rather have the optionality of having the vessels in the spot market than, call it, firming up further contracts going forward?

Good morning, Peder, and thanks for asking. We were expecting questions on our CoA. And to your point, that is a yes, exactly, and maybe I can elaborate a little further on that question. So as I said during the call, in 2016, our CoAs generated rates that were almost doubled also the spot market and CoAs are and will remain a core part of our charter portfolio strategy. So we’re keen to contract with players across VLGC value chain but only at the right rate levels and we are seeing a healthy demand for CoAs but we will hold off on entering into contracts that are based on extrapolation of today’s sweet markets into the future. So our current CoA books expires at the end of the year and we have already started talking about renewals, even though they do not expire for another 10 months. So it’s still very early days.

Okay. Thank you. And just the question on your fleet. You’ve done quite a lot on in terms of renewing the fleet through the Aurora acquisition, and just looking at your fleet now, I think you have your one 1990-built which I think is on a long-term contract and then you have three or four early 2000-built VLs. I’m just curious as what are your thoughts on these vessels going forward? Is there room for further, say, leasebacks or what are your thoughts on these vessels going forward?

Well, there is always plenty of room for, say, leasebacks, and we no shortage of those being pushed through us. I would say as a general note, we are a little bit careful with, say, leasebacks and typically we see them being primed at levels which are slightly above what Elaine is able to do on our financing. So we only do a very moderate amount of these, but of course it’s always something we can restore to free up additional liquidity. Right now I don’t think we need to.

Okay, that makes sense. And just a final one for me. I think last year or in the fall we saw two VLGCs scrapped and then we saw another one this year. And I think the first ones were ‘87 or ‘90 built and then the last one this year was, I think it was north of 40 years. I’m just curious to hear what’s your view on scrapping potential of the fleet going forward is, and you probably know more of the private fleet and what kind of contracts they have, so just curious to hear your views and at what age do you think we will see uncontracted vessels to be scrapped through 2017?

Well, you saw we did one LDC [ph] ourself.

Yes.

I think the ones that we have seen being scrapped so far had been rather old and much older than the normal average. I think it’s natural when we come from a market which is very high in ‘14, ‘15, that there was very little scrapping. I think now a year of challenging markets probably changing that and I think owners that are operating vessels, say, in the late 20s or anything above 25 years old is probably considering their options typically when they reach the next dry-dock. So I think we’ll see more of that.

Okay. That makes sense.

I’d say another key element to that is that the Ballast Water Maritime Convention will come into effect in September 2017. So the estimated cost for retrofit of the VLGC with U.S. Coast Guard approval for Ballast Water Treatment Plant is about $0.81 million. So effectively it’s a large CapEx increase if you’re operating in older ship and of course this also incentive earlier scrapping of vessels, but again we would probably see some of these ships being able to operate elsewhere, so certainly be a new effect of a positive.

Okay, perfect. That’s all for me. Thank you very much.

Thanks Peder.

Thank you. We will take our next question from Lukas Daul from ABG. Please go ahead.

Thank you and good morning. Martin, I was wondering if you could shed some light on the current situation in the market in terms of very strong January U.S. exports. How is that panning out right now? And obviously we see the increase in exports in 2018. My question is, what you think happens if OPEC ramps up production again later this year. Is this going to be a competition for - against the U.S. LPG just like we saw it last year?

Good morning, Lukas, and thanks for calling in. Well, on the short-term market outlook, we saw the ARP [ph] window opened in Q4 but very large one and inventory brought on some U.S. for all the domestic LPG price two or three year high and closed the ARPs [ph] again from very late January through to last week where it opened again slightly. And as we’ve seen also the Middle East prices have firmed on tighter supply of cargos following the production cost as you mentioned. So ARPs [ph] have reopened as U.S. needs with the end of this - with their heating demand and I think we are moving forward on the curve here. So Asian buyers should also return to the market for inventory restocking since they’ve been absence since the late of January due to the of the aggregation [ph] of the price curve and I think before they do we expect weaker demand in the short-term as the domestic prices in Asia roughly equal to seaborne delivered prices. And I think as a consequence of that, we’ve seen lot of owners balancing west in the recent weeks. In addition to that, we have 23 more ship to deliver this year. For these reasons afraid to remain at low levels for the short-term. So as of right now, the Middle Eastern LPG prices are not very competitive, and as I mentioned earlier on, all eyes are on the CP March pricing.

Okay. Thank you. And the second question regarding the CoA renewal. Obviously you have stated before that you want to price the optionality in the CoAs in the right way and we are not there as of now. So my simple question relates, if you don’t succeed with that, how is the spot market going to look like if you move your vessels into the spot market?

Well, I mentioned the uptake we have on our contracts as of now and I think we have a sizable portion of our fleet already operating in the spot market and we’re, of course, willing to do that. I think we’re - to be very clear, we’re not going to be pushed into taking any CoAs based clearly on an extrapolation of today’s freight rates into the future and I think also our clients realize that’s not going to happen. Everyone knows that for us to remain here on longer term as VLGC owners, we have to have sustainable freight market. So I think it’s a good sign that both our existing as well as new customer wants CoAs. And for us it’s good not to have full exposure to the spot market in order to cover the freight needs, and to that extent, we also understand the role that BW LPG must play in order to facilitate the continued growth of LPG trade and this aligns with the long-term view we take on the market. But again we’re not balanced clearly the need to generate a good return on our assets and our capital and contract at a rate that recognizes the agility CoAs offer our customers and I do think our customers see great benefits in the flexibility and the service that they are getting under these contract and of course we have to price that in. So going forward, we’re happy to look at contract with other parties wherever optionality is priced appropriately and wherever rates are at least at parity with our internal spot forecast. So I hope that answers your question.

Okay. Thanks for the color.

Thank you very much.

[Operator Instructions]. We will now take our next question from Eirik Haavaldsen from Pareto Securities. Please go ahead. Your line is open.

Yes, hi. Just you say there is a lot of interest from charters to secure CoAs. Is it possible to give any indication on what levels you’re seeing there, or is that something you want to keep for yourself?

Good morning, Eirik, and thanks for asking. And you’re absolutely right, that is exactly something we like to do for ourselves. That could be probably my shortest reply on the day.

Very well. And secondly, if we look at this in the broader scheme of things, BW today has a different leverage. It has more operational leverage and financial leverage than what BW LPG has had historically at least. So is this just a way of sort of managing the cycle or should we also interpret this as the way BW LPG will go into the next up-cycle in a way? Will you be more opportunistic when rates eventually will cover now or go back to the sort of 40%, 50% coverage once rates reach to this actual level?

I think this is - of course what you’re seeing right now, 56% leverage is a result of investing countercyclically. So I think you will see our leverage respond to that and our vision which we’ve also been very clear about is to grow during downturns in the market and of course then the deleverage from the market is high. So I think we’re in a very comfortable position right now both on bank debt and liquidity, and so this is a fairly big investment.

Sure, I understand that. But also in terms of your operational coverage terms, so your CoAs and TCEs again, as rates go back to a healthier level, will you seek to increase coverage again to the same levels you had in two, three years ago or will you - will the new BW LPG be more of a spot company than what it has been before your time essentially?

No, there is no change in our strategy on this. As I said before, CoAs are and will remain a core part of our charter portfolio strategy and - but of course we are also slightly opportunistic on the other opportunities that are out there. And of course in this situation that we’ve just had here in 2016, we’ve managed to invest countercyclically and grow the company, and with that comes slight increase on the leverage for a shorter period of time.

Thank you. And finally one for Elaine. Will the G&A impact - or D&A, is that increasing from January on the back of Aurora or will you sort of maintain the same overhead costs as you’ve had previously?

It will likely be pretty much the same.

Okay. Thank you.

At the current levels that we’re currently seeing.

Perfect. Thank you.

Thanks Eirik.

Thank you. [Operator Instructions]. Thank you. There are no more questions. I would like now to hand the conference back to today’s presenters. Please continue.

Does that mean that there are no questions on the webcast?

Yes, that’s correct. There are no more questions on the webcast and via phone?

Okay. Well, thank you very much for that. So thank you everyone for your attention and for the ongoing support of BW LPG. I hope we answered your questions appropriately. I’d like to take this opportunity to alert you to the availability of our 2016 Annual Report which we have also released this morning. You will find further insights on the LPG market as including few stories and further insights and as well as the macro sight to grow further into the outlook and our numbers. So everything is available on our web page and we hope that the Annual Report becomes a go-to source for the world of LPG and we welcome your feedback. So thanks again everyone and we’ll speak again soon.

Thank you. We have come to the end of today’s presentation. Thank you for attending BW LPG’s fourth quarter 2016 financial report presentation. More information on BW LPG is available online at www.bwlpg.com. Goodbye.