Welcome to BW LPG's First Quarter 2021 Financial Results Presentation. Bringing you through the presentation today are CEO, Anders Onarheim; CFO, Elaine Ong; EVP Commercial, Niels Rigault; and EVP, Technical and Operations, Pontus Berg. We are pleased to answer questions at the end of the presentation. [Operator Instructions] Before we begin, we wish to highlight the legal disclaimers shown in the current slide. I now turn the call over to BW LPG CEO, Anders Onarheim.

Thank you, Lisa, and welcome to our first quarter results presentation. As you're heard, I'm joined here by Elaine, Niels and Pontus; and they will also go through some of their pro [ph] sections. Before we beginning [ph], I would like to just speak on behalf of all the BW LPG employees to express our deep concern for the COVID-19 situation globally and especially in India. Crude exchanges [ph] have been extremely challenging due to global travel restrictions and other and other problems. We continue to support our sea thrust [ph] with initiatives to protect your safety, support your mental health and offer financial assistance where needed. Their lives are ever used [ph] at the moment, and they deserve a big thank you. The first quarter of 2021 was eventful in several fronts. VLGC freight rates experienced a record drop for more than $100,000 per day to OpEx levels within one month. That's volatility for you. While navigating through the extreme volatilities and challenging market conditions, we have expanded our presence in India and secured financing at attractive terms there. And we've also kept our LPG retrofitting program on track. We go to Slide 4. Our program to retrofit 50 of VLGCs with LPG propulsion technology continuous, is on budget and with zero safety incidents. This translates to a commitment of $130 million, is the sector's largest investment towards decarbonization. And we're proud to lead the way and to act on our promise to decarbonize and transition towards cleaner fuels for a cleaner environment. Today, we have four vessels on water, with help with of the propulsion and four additional ships are being retrofitted at the Yiu Lian dockyard right now as we speak. Once all of our 15 year VLGCs are retrofitted, we will have saved 1 million tons…

Thank you, Anders. So, let's turn to Slide 8. Good afternoon and good morning to all of you. So towards the second half of January, extreme cold weather in the U.S. narrowed the LPG price arbitrage between the U.S. and the far east from over $200 per metric tons to below $100. Falling LPG export from both the U.S. and the Middle East have led to one of the quickest and most pronounced corrections in the VLGC freights in history. Today, VLGC freight market has recovered from the bottom. It seems like the worst is behind us when rates stabilizing about $40,000 per day. We keep our positive market outlook for the second half of 2021. This is supported by the recovery in LPG export from both the U.S. and the Middle East, reduced fleet supply due to the drydocks and the shipping efficiencies. In Q2, we have fixed approximately 80% of our available days at an average rate around $28,000 per day on a discharge basis. During the quarter, we have witnessed a flurry of newbuilding orders. The order book now stands at 20% with heavy delivery in 2023. We maintain our positive view for the medium term VLGC rate market our current order book, but more newbuilding order will certainly put downward pressure on freight rates especially in 2023. Turning to Slide 9 and talk about Seaborne LPG Trade overview. In the first quarter, LPG imports into China has recovered and has increased by 18% year-over-year. This is supported by recovering retail demand and wrapping up productions from the newly commissioned PDH plants. Retail demand in India continue to grow India LPG import have increased by 50% year-over-year, the highest quarterly import in history. As mentioned by Anders, we are proud to take part of the Indian growth…

Thank you very much, Niels. Turning to Page 15 for some technical highlights. We continue our strong technical and operational performance for previous quarters with market leading OpEx and safety stats [ph], despite the again increasing global challenges from COVID-19. I'll begin with an update of our LPG propulsion, retrofitting program progress. The progress remains on-track and we now have four vessels in service and we have four vessels at the yard simultaneously. BW Gemini, the world's first LGIP have sailed continuously for over six months and counting without the need to stop for bunkers. This saves voyage time and increases our commercial availability just as planned. In what will be another world's first, we will conduct a ship-to-ship LPG bunkering between BW Epic St. Martin in just a couple of days' time. With this STS, we will demonstrate that the industry has infrastructure and the technical know-how for LPG to be our mainstream marine fuel. As we have said on many occasions, shipping is ready for LPG as a fuel. Currently, we're enjoying savings of approximately $4,000 to $5,000 a day by running on LPG versus very low sulfur fuel oil, not a compelling reason to use LPG as fuel. Next to safety. Zero-harm is a non-negotiable expectation from all crew and colleagues and a BW initiative we have been working hard on for years to ensure the best-in-class safety for our group, cargo and the environment. I'm pleased to share that our joint efforts are paying dividend. For nearly two years, we have not had any serious injuries in our managed fleet. This means that our crew get to go home safely to their loved ones, and we deliver energy to the world's markets safely and reliably. We have seen limited impacts on operating from COVID-19. However, crude…

Thanks, Pontus. Here on Page 16 is an overview of our income statement. Our TCE income was $150 million for the quarter. This also includes a positive $18 million impact related to the effects of IFRS 15. That's when operating expenses came in at $7,800 per day. This includes incremental manning cost incurred due to the pandemic. We have recorded gains of $2.8 million in the quarter relating to our investment in the shares of advanced gas [ph]. EBITDA came in at $113 million for the quarter, representing a continued high EBITDA margin of 75%. We sold the BW Elm during the quarter, realizing a net gain of $1.6 million. The vessel was delivered to our Indian joint venture in February for continued trading. Our net profit after tax for this quarter was $71 million or $0.51 per share, yielding a return on equity of 22%. Page 17 provides a snapshot of our balance sheet and cash flow statement. Our vessels book values supported by broker valuations stood at $1.7 billion at the end of the quarter after the delivery of BW Elm and the reclassification of BW Empress into asset held for sale. We delivered BW Empress to a new owner in April and this will be reflected in our Q2 report. Shareholders' equity was $1.3 billion or $9.04 per share. As mentioned earlier, we have increased our ownership in our Indian joint venture from 50% to 85%. Our investment in India will now be accounted for as a subsidiary and its results will be consolidated from next quarter. Had this transaction happened with effect from March 31, the impact on our balance sheet would have been as follows -- approximately $200 million increase in vessel values relating to the five joint venture vessels; $80 million increase in cash;…

Thank you, Elaine. We will begin our Q&A session now. [Operator Instructions] We have one question.

Yes. Hi, can you hear me? This is Anders from Danske Bank.

Yes. Please, go ahead.

Thank you. It's probably a question for Neils. Could you elaborate a little bit about the earnings effect that you see on the LPG propelled vessels in terms of excess earnings compared to the other ships in your fleet?

Yes. Well, the question was for me, Anders said. I think what was mentioned, first of all, it's always obviously the price that would cost between combined fuel and LPG prices, which in today's market is around $4,000. So, that's per day savings. And another big effect that we've talked about, the BW Elm and Gemini for the first ship, she's now been sailing for six months and we haven't had any downtime due for her to bunker. So, you save also a lot of on the bunker operations also. Was that the answer you wanted to hear?

Yes. There is probably a small effect from higher lifting capacity as well, isn't it?

Yes, of course. Those ships could be -- maybe 4,000 cubics, which is the five or todays [indiscernible] could carry about 46,000 to 200,000 tons, and ours could do 49,300 tons. But I mean, for a round voyage, Houston, Chiba [ph] with a couple of these charts, we use about 3,000 tons.

At your flexibility of course.

Yes.

Okay, that's all for me. Thank you.

Sure.

Okay. We have one more question here from the web. This is from Eirik Haavaldsen at Pareto. 'Can you elaborate a little bit more on your India JV? What are the plans there? Did that facility of $198 million is sizable versus defined ships currently there?'

I'll start and Elaine, you can follow up. Obviously, Eirik, it's up $298 million a facility and we find India a very interesting market. And if we think there are good opportunities for us to expand our presence whether it's more ships or even looking at infrastructure, we will consider that. I don't know if, Elaine, if you want to elaborate a little bit more on the facility itself?

Sure. Thanks, Anders. Basically as we've mentioned, the facilities were up to $198 million, so it doesn't mean that on day one, we will be drawing on the full facility. It will be drawn on different tranches as we continue to look for options to grow and expand in in the JV.

Okay, there's a follow-up from Eirik from Pareto here. 'Given the success you've had so far with the retrofits, are all for pre-2014 vessels?'

Our whole vessels build are newer than 2014.

'What about the vessels from pre-2014? Will these also be candidates for retrofits?'

I'll give a quick answer and then Pontus, I'll let you follow through. Obviously, this is a question both in terms of what's technically feasible, but it's also in terms of, what's the expected lifetime of a ship? And I think, of course, if we see increasing spreads in the fuels between conventional fuel and LPG, obviously, it could make sense. Bu I think for now, we're very happy with the 15 ships that we have in the program. Pontus, do you want to elaborate on that?

Yes, it is technically possible to convert the pre-2014 ships as well. It is unfortunately going to take a little bit more time and money to do so because these ships are not all -- but not all of them have electronically-controlled engines. So first, you'd have to convert them up to a certain standard and then for that to be able to convert into LPG engines. And that together with the effective lifespan of the ship, probably gives the answer of no right now.

Good, thank you for that. Yes, so about half of the current VLGC LPG fit and be retrofitted with the technology available today. So then we move-over-to another question from the web here from Lucas Daul. Why have the cargo ton miles been decreasing in recent quarters?

Neils?

[Technical Difficulty].

So, he is referring here to the fleet environmental data slide in the appendix. So, it means why has the voyage length been decreasing?

That's a good question. We do lift most of our cargos out of the U.S. and I don't have that right in front of me. But if you look at 2020 and expecting in Q2, we lifted a lot for the product services.

So, he's referring to the cargo on my slide [ph] where you can put it up there. It's on the fleet environmental data showing that the cargo ton miles have gone from 21 million to 18 million.

It's a similar trade. So we lifted most of our cargos out of the U.S., obviously in Q4 and all that. We still have the lockdown in Europe, but a lot went into India. Some went to South America. That's basically it. It's just a trading incident of supply and demand. But for us staying in our home, most of our other thing, it's from the U.S. But I think that's also the reason, is that the ship is pointing to India and then it was South America.

Okay, thank you Neils. Then we have one more question here from Ullas Sturburke [ph]. It is, 'Why is the dividend less than 50% of all net profits?'

Well, as you know, we have an annual policy of 50% and this is as we've seen as a volatile market. And we think it's better to be conservative at the start of the year and then as we show in the past, if everything permits, we will do a catch up later. So I think it's simply being fairly conservative in the market that we've seen to be quite volatile. So then quarterly, we're not committed to paying 50% every quarter. So it's been on annual basis; that's our policy.

Okay, so then we will take a live question here from Lucas Daul from ABG.

Thanks, guys. I was just wondering on your outlook for 2022 and 2023. You remain optimistic, barring any further orders. But when you sort of showed the volumes, you expect them to be flat or flattish from the U.S. and the fleet is going to grow by 20%. So, I was just sort of wondering how all that adds up? Are you sort of assuming that the fleet inefficiencies are here to stay? Or what is sort of behind that line of thought? Thank you.

I will start, but Neils or Pontus, feel free to fill in. I think you're right. We believe that inefficiencies, they will continue for quite some time and we think also drydocks are being pushed back. And we feel also, still the underlying fundamental violent demand is going to be there. But obviously, it's -- and of course, if we do see a -- both, a decent market, but also with new regulations coming in, we might -- traditionally very conservative on the scrapping side, but I think, we might start seeing some tough decisions having to be made with some of the older part of the fleet coming economy to work 2023. So, I think a combination of those things makes us feel fairly comfortable. Neils, you want to add to that?

You said it. I think the main thing in in 2022 is the Panama, that until now, we could have pre-booked the Panama slots. Now, for next year, it's not possible and we always see one of the reasons why the market went that $100,000 per day in December, early of first half January. That was the inefficiency from the Panama Canal where you almost had the two weeks waiting to do a round voyage from Houston to the Far East due to the Panama waiting. For 2023, it's -- as you mentioned Anders, it's the environmental regulation and especially EXI kicking in. So those are the two main factors that we are quite positive going forward on the favorites, but mainly due to inefficiencies [ph].

Okay. And then just to double-check the guidance on the days that you're providing the appendix going forward, does it already include the Indian vessels that you will start consolidating from the second quarter?

Short answer, yes.

Okay. Thank you.

Okay, thank you, Lukas. Then we have another question from the web here. And this is from Nick [ph]. And he asks, 'What sort of LPG infrastructure assets would you consider investing into in India? How sizable might these investment be in terms of dollars?'

Obviously, we will want to make a decision on that. We will communicate around it. So for now, I think we are really spending time analyzing, looking at various situations. We're not going to jump in and make any huge investments at this stage. But we still think the Indian market is very interesting, also long term and if we can both help our whole server shipping operations, it could be even more substantial and get better volumes and at the same time also contribute to the growth of LPG in India. We think that's a good proposition. So, we are looking at several opportunities, but nothing concrete that we can communicate around at this at this stage.

Okay, he has one more question here. As a follow up. 'Can you please explain the $18 million revenue benefit in Q1 from IFRS? Is a portion of this a benefit likely to reverse in Q2? Or is it a one-off benefit, but will not reverse unless the accounting treatment changes back?'

Maybe Elaine you will take that one?

I'll do that. Basically, this is a quarter-on-quarter impact. So, we would expect a portion of this $18 million revenue benefit to reverse in Q2. Again, it really depends on the direction that the rates take at the end of each quarter. So, it is a differential between the opening at the beginning of a quarter and the end of the quarter. And so if the rates continue to basically move upwards, we will expect a reversal of this benefit.

Okay. Thank you, Elaine. I think that was clear. Then we have one more question from the web here. This is from Marcus [ph]. He says, 'Hi, how much can you expect depreciation and interest expense to increase in Q2 2021 due to the consolidation?'

I think you can see Q2 depreciation to be approximately $7-ish million to $8 million. And interest, I think you can estimate it to be roughly or between $1 million to $2 million. It really depends on the amount that will be drawn down over the course of the quarter.

Okay. Yes, Lisa?

Yes. [Operator Instructions] We have come to the end of today's presentation. Thank you for attending BW LPG's First Quarter 2021 Financial Results Presentation. More information on BW LPG, it's available online www.bwlpg.com. Have a good day and a good night.