Ladies and gentlemen, welcome to BW LPG’s Fourth Quarter 2019 Financial Results Presentation. We will begin shortly. You will be brought through the presentation by BW LPG CEO, Anders Onarheim; CFO, Elaine Ong; and Executive Vice President, Commercial, Niels Rigault. They will be pleased to address any questions after the presentation. [Operator Instructions] Certain statements in this conference call may constitute forward-looking statements based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which BW LPG is unable to predict or control, that may cause BW LPG’s actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. In addition, nothing in this conference call constitutes an offer to purchase or sell or a solicitation of an offer to purchase or sell any securities. With that, I am now pleased to turn the call over to BW LPG CEO, Anders Onarheim. Please go ahead, sir.

Thank you and good afternoon and welcome to the presentation of our results for the fourth quarter of 2019. As the Operator said, I’m joined here by our CFO, Elaine Ong, and our Executive Vice President of Commercial, Niels Rigault. Thank you for taking the time to listen in a hectic day, and we’ll take questions after the call. So if I can direct you in the presentation to Slide number 4, the highlights. So the fourth quarter TCE rates on our VLGC fleet averaged $50,600 per day, with spot earnings of $56,000 per day. The strong results were underpinned by our outstanding commercial performance but also a strong underlying VLGC market. Earnings per share was $1.11 for Q4 and $1.97 for the full year 2019. The VLGC assets, their values have improved on the back of the freight rate improvement. So that’s resulting in a $38 million write-back of our previous vessel impairment, and this is based on the broker-based fleet valuation. So adjusted for the $38 million write-back, earnings per share was $0.83 for Q4 and $1.73 for the full year 2019. With our strong financial performance in the fourth quarter we’re able to once again return cash to our shareholders. The board has declared for Q4 2019 a cash dividend of $0.42 per share, amounting to $58 million. This brings the total dividends declared for 2019 to $0.85, amounting to $118 million in total. As previously announced, 2 LGCs were sold in Q4 2019: one has been delivered, in December 2019, while the other is expected to be delivered in March this year. Our strong financial performance has generated a return on equity of 55% for the fourth quarter and 25% for 2019. And with our low cash breakeven and a strong cash flow from our operating…

Thank you, Anders. So in Q4, TCE rates on our VLGC fleet averaged $51,100 per day, excluding offhire. We achieved high commercial utilization, of 97%. Excluding waiting time, our VLGC spot earnings came in at $56,000 per day. I will now turn to Slide 7 for an overview of our 2019 full year commercial performance. In 2019, the VLGC market had a strong recovery, starting from end of Q1. This was supported by sustained U.S. export growth. As a result, our TCE earnings have also improved from 2018. Full year 2019 TCE rates on our VLGC fleet averaged $35,400 per day, excluding offhire. Our 2019 spot earnings came in at $39,100 per day, excluding waiting time, compared to $19,400 per day in 2018. Turning to Slide 8, we provide an overview of waterborne LPG trade in the fourth quarter of 2019. In 2019, global LPG seaborne trade increased 13% from 2018 due to the strong export growth in North America. Over 38% of the LPG seaborne trade went to the Far East. Chinese LPG imports increased by 2% in Q4. Total 2019 Chinese imports increased by an impressive 11% from 2018. Q4 imports both Japan and South Korea increased by 10% and 38% year-over-year. In the fourth quarter, Indian LPG imports increased by 10%. Retail demand in Indian remained firm, and total 2019 Indian imports increased by 12%. Southeast Asian LPG imports decreased by 13% in Q4. However, total 2019 southeast Asian imports increased by 21% from 2018, due to high imports in Q1 and Q3 2019. On the export side, in the fourth quarter Middle Eastern waterborne LPG exports were down by 8%. Q4 exports from Saudi Arabia fell by 18% year-over-year, following the drone attacks on Saudi Aramco’s processing facilities in September 2019. The decrease in the Middle…

Thanks, Niels. Starting with the financial highlights on Slide 12. In 2019, we have a cumulative net profits of $274 million, following the strong recovery in the VLGC market. Our EBITDA was consistently positive through the cycle, despite the very challenging market in the last two years. EBITDA came in at $399 million for the full year 2019, representing a strong margin of 73%. With the cash flows from our operating activities, we have consciously started to deleverage our balance sheet. Our leverage ratio has decreased from 59% at the end of the first quarter this year to 52% at the end of 2019. Sine Q2 2019 we have also started to pay quarterly dividends and have declared a Q4 2019 dividend of $0.42 per share. Turning to Page 13, we provide an overview of our income statement. Our TCE income for the quarter was $192 million, driven mainly by the strong spot rates and high fleet utilization of over 97%. EBITDA came in at $154 million, representing an EBITDA margin of over 80%. Following the IFRS accounting standards, our charter-in contracts with more than 12 months duration have been capitalized on our balance sheet, while our charter-in contracts that expire within the next 12 months will continue to be reported as charter hire expenses. As such, our charter hire expenses for the quarter declined to $2.2 million. The net impact of adopting the new IFRS on leases was an increase of $7.6 million in EBITDA for 2019 Q4 and a decrease in profit of $1.6 million for the same quarter. As previously announced, two LGCs were sold in Q4 2019: one has been delivered in December, generating a net gain of $5.2 million; the last LGC is expected to be delivered in March 2020. In addition, fleet impairment charge…

Thank you, Elaine. If you go to the Slide 16, I’ll try to summarize our outlook for the market, going forward. For 2020 we expect the VLGC exports from North America to continue increasing, with strong U.S. production growth in 2020. 2021 U.S. exports is more uncertain, as reflected in the EIA’s February forecast, where we see they took down there forecast quite a bit. We see little potential for growth in Middle Eastern exports in 2020 due to the uncertainties of whether OPEC+ production cuts will be extended and also heightened geopolitical tensions in the region. The growth in LPG exports is well supported by the strong demand for imports, mostly driven by the petrochemical sector in Asia as well as the retail sector. As such, we expect the ton-mile demand for VLGCs will increase, giving a positive rate outlook for 2020. However, the increased demand will, in part, be offset by a high level of newbuild deliveries. So in conclusion, we continue to have a positive freight outlook for 2020, and this is supported by sustained U.S. LPG exports. So far, the impact of the virus outbreak on LPG freight rates has been limited. However, as I stated previously, the unpredictable development of this outbreak has increased uncertainties, with potential near-term impact on LPG imports into China, particularly. And it also could have a longer-term impact on LPG production following the decline in oil and gas prices. We expect the scheduled terminal expansion by Targa in the latter half of 2020 and gradual ramp up of Enterprise’s second terminal expansion which was recently delayed to 2020, combined with an increasingly likely easing of the U.S.-China trade war, to support the strong U.S. export growth. On 15 January 2020, China and U.S. signed the Phase one trade deal, where China has pledged to increase U. S. exports of energy products by $52.4 billion over a 2-year period. And on the 17 of February this year, the Chinese government announced that it would accept applications for firms seeking exemptions on the additional tariffs on U.S. products from 2 March 2020, and onwards. The exemptions include LPG product s. So to conclude, in the longer term we maintain our view that sustained U.S. LPG production growth and no further newbuilder orders remains the key to a balanced VLGC market. So with that, I would like to open the call for questions.

Thank you, sir. [Operator Instructions] We have the first question from the line of Dennis Anghelopoulos, from EABG. Please ask your question.

First question, about remaining CapEx. In Note 7b, you guys stipulate that there’s around $16 million remaining in capital commitments. But now with another eight retrofits declared, how should we think about the capital commitments, going forward?

Dennis, if we look at the 8 LPG retrofit options we’ve just declared, I think you can add another approximately $70 million of CapEx for 2021.

Thank you. And then one question on these lease in trust receipts. I see that they’ve gone from $172 million in the previous quarter up to $250 million. But then when I look at the cash flow I only see a plus $23 million delta, whereas the presentation showed plus $78 million. Is there something I’m missing here?

Well I think it has to do with the timing of the cargo trading activities. two of our cargoes actually crossed over into the new year. So I think we see that kind of factoring into the balance sheet. But we will be able to actually walk through that offline with you later on if you want to give me a call, Dennis, the details of that.

Thank you guys for that.

We have the next question from the line of Eirik Haavaldsen, from Pareto Securities. Please go ahead.

I was actually just going to ask you on those latest upgrades. So these eight ships, we should think about them as all being done then in 2021, right?

That’s right.

And do you have an update on now where we are for the ones in 2020?

So Eirik, just to make sure we’re clear here, we had four for 2020. We declared another four for 2020. That brings it up to eight in 2020. And then in 2021 we’ll have four more ships. That brings the total to 12.

Okay. And then the total CapEx, you said $17 million or $70 million earlier?

$70 million for the eight ships. So I would expect that half of that will be absorbed in 2020 and the other half in 2021.

All right. Perfect. And taking a step back now, the market from basically everything shipping related has felt like there’s no tomorrow and then VLGC rates are holding and they’re holding quite well, even though they’re sliding and it’s quiet now. But can you give a little bit, can you update us a little bit on where you’ve been fixing ships for the past two weeks? Maybe if you have anything to say in terms of coverage for Q1 on the spot days? That will be helpful I think in this environment.

Niels, do you want to take that?

Yes. Basically, we have seen lately this week that has been a bigger impact maybe on the rate than just two weeks ago. I would say that so far in Q1 the TCE has been approximately the same number as it was in December.

Okay. Perfect. And also, on the ships that you now have on time charter, can you just tell me which ships that are rolling off this year and 2021, please?

You mean the three ships we?

There is one expiring this year and three next year, right? There’s one expiring this year and three in 2021.

So we have one expiring in Q3 this year, and then the rest will be one in Q1 2021 and then Q3 2021.

Excellent, thank you very much.

[Operator Instructions] We have our next question from the line of Anders Karlsen, from Danske Bank. Please ask your question.

Just most of my questions have been answered really, but I was thinking about you changed the depreciation period to 25 years. Is that a reflection of your expectations that ships won’t be lasting any more than 25 years, going forward? Or is it just a precautionary measure? What can we read into that?

Anders, I think it’s going to be a combination of both. We’re just trying to align the depreciation towards what is more commonly seen in the market. But also with the developments on the regulatory side, I think it is prudent to actually bring it forward to 25 years.

Okay. Given where the market is strong today. So you would expect very little scrapping. But if you look in the past, ships have been scrapped at a pretty significant age. Pushing that forward to 25 years, it’s looks interesting. But what are your expectations, given what you said in the report today, near term the forward scrapping age is going to be? And when do you think you’ll see that ships are being scrapped at 25?

I would say that with the current strong market we haven’t seen anyone sending any ship for demolition. So far, there are [indiscernible] which pay a premium to the demolition prices. So I don’t know if those premiums are there, we don’t expect any demolition. But obviously, with all the ESG focus and so forth and new technologies coming, I’m sure that that picture might be quite different a year from now.

Okay. Thank you.

[Operator Instructions] We have come to the end of today’s presentation. Thank you for attending BW LPG’s fourth quarter 2019 financial results presentation. More information on BW LPG is available online, at www.bwlpg.com. Goodbye.

Thank you very much from our side also.