Welcome to BW LPG's Second Quarter 2024 Financial Results Presentation. Bringing you through the presentation today are CEO, Kristian Sorensen; and CFO, Samantha Xu. 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 on the current slide. This presentation, held on Zoom, is also recorded. I now turn the call over to Kristian.

Thank you, Lisa, and hi, everyone, and welcome to our 2024 Q2 presentation. Thank you for taking time to join us today as we present our financial results and recent events. It's been an eventful period for our company. So, let's turn to slide four. Before we talk about the more recent events, let's focus on the Q2 numbers, where we are pleased to report another good quarter for our fleets, with time charter equivalent in line with our guiding of $49,000 per day. We're also happy to report another profitable quarter for our trading activity in product services, with net account profit just below $16 million. As you will see from slide 16, with our usual waterfall illustration of product services performance, there was a $29 million profit from realized positions, which were offset against an unrealized net loss from physical and paper hedging positions. Following our good results, our Board declared a dividend of $0.58 per share, which corresponds to a 100% payout of our shipping NPAT of $0.48 plus $0.10 top-up from product services. The biggest news is the subsequent event of last week, where we announced the acquisition of the 12 of Avance Gas VLGCs for a total transaction price of $1,050 million. This transaction is a major milestone, and shows our capacity to strike transactions with big scale and strategic significance. It also propels BW LPG forward as the leading VLGC shipping and LPG value chain player. On the next slide, we will look at the highlights of the transaction, which was enabled by our successful listing on the New York Stock Exchange, which has boosted the liquidity and robustness in our share. Looking at the market outlook, we are currently in the market, which is on its way back from the summer doldrums, with…

Thank you, Kristian, and hello, everyone. So, let's have a closer look of the shipping performance. For the second quarter 2024, we delivered a TCE of a $48,000 per calendar day and $49,700 per available day, a continued solid performance on shipping. We have a healthy coverage through our time charter and FFA portfolio, which represents about 39% of our shipping exposure. For the third quarter, we have fixed 86% of the available days at about $43,300 per day. For 2024, our time charter outfit generates a profit of around $27 million over the time charter in-fleet. The remaining of our fixed time charter out portfolio is estimated to generate $68 million for year '24. Coming to product services, we're pleased to share that we delivered another quarter of a strong performance. In Q2, product services yield a net profit of $16 million contributed by a gross profit of $25 million after netting of G&A and tax provisions. After deducting share capital returns concluded in Q2, the net asset value ended in June at $69 million. The gross profit of $25 million includes a realized gain of $29 million as mentioned, offset by $5 million of unrealized or cargo and derivative loss. Due to increased fiscal forward volume from the new multi-year term contract with enterprise products partners being phased in and included in the 12-month rolling mark-to-market valuation, we may see larger movements in unrealized positions in the future quarter as cargo price fluctuates. The reported net profit does not include the $31 million unrealized physical shipping position based on our internal valuation. For Q2, we reported an average of $5 million on a well-balanced trading book, including cargoes, shipping, and derivatives. Going on to our financial highlights, on the back of good performance from both shipping and product…

Thank you, Samantha. We will open the floor for questions now. Should you have questions, please type them into the Q&A channel. You can also click the raise hand button to ask your question verbally. Please note that participants have been automatically muted. Please press unmute before speaking. We will open the floor for questions now. Should you have questions, please type them into the Q&A channel. You can also click the raise hand button to ask your question verbally. Please note that participants have been automatically muted. Please press unmute before speaking. We have one question from Petter. Petter, please go ahead.

Good afternoon. Yes, this is Petter Haugen from ABG, asking. In terms of the cost side of taking over those 12 VLGCs, could you give some specific guiding on just how we should model that going into Q3 and further into Q4, potentially also impacts in Q1?

Hi, Petter. Cost side, can you be a bit more specific what you are thinking of?

Well, in terms of doing inspections and so forth, I would assume that the handover would take longer than what a normal turnaround would be, and if there are any -- well, any planned non-revenue-making days needed for the transaction to go along, or if it's no cost, Kristian, that's just fantastic.

Well, the way it works is that -- and it's contracted, these vessels, the transaction is done on standard sail form terms in shipping, where you inspect with the underwater inspection and have the delivery of the vessel at the same time as you pay for the ships, and then the ship is in our hands. So, there is no difference from a regular sale and purchase transaction to this transaction in that respect.

Yes, I understand. But in terms of the revenue days in this time period, so are you capable of fixing prior to the inspection and the delivery, or effectively not having most revenues days when taking over the ships?

Well, the ships are on for advance cost until we have taken delivery. And they can deliver the ship typically in Asia, and then we balance the ship into the Middle East, and [lot of it] (ph) goes back to the U.S. Gulf. So, it depends on the position of the ship. But all the cost for the vessel up until delivery to BWLPG is, as per normal, sale and purchase transactions for the sellers at the seller's expense. Of course, the inspection is on the regular, let's say, procedure around that is at our cost, but this is nothing, I mean, there is no material cost to be thought of in this respect on our side.

Okay, that's helpful. Thank you. And if I just follow-up on a quick one on the market's outlook, so this time you talk about the future growth for the next three years, which is -- well, at least in what I can read, longer than what you normally have guided for. Could you shed some light on what sorts of considerations you have been making to make statements now going into '26? And perhaps also shed some light on why you think U.S. LPG export growth is going to be in the high single-digit territory also in the coming few years?

Yes, sure. I mean, we usually take our view, have a view two to three years out in time based on our own data collection. And I think the way we see -- and I said this before, the way we see that the big terminals and the big players in U.S. Gulf are gearing up and investing, and also guiding on their volumes is, on top of our own data gathering, supporting this. So, we source our data from various sources. And of course, we also take a look at what the big infrastructure players in the U.S. Gulf are planning for, because this is obviously having a big impact on the capacity and what they also see as the potential for exports going forward.

Okay, thank you. I'll hand it over.

Thank you, Petter. Eirik, you're next. Please go ahead.

Yes, hi. Just a question, because you've taken some coverage recently, but obviously now with another 12 vessels, you're kind of naked going into '25, '26. So, with your -- at least on a percentage basis, so as you're increasing your financial leverage, should we expect you to also then maybe be a bit more aggressive on time charters now going into peak season, or will you be happy with 15% coverage with a much bigger fleet?

Yes. I think without promising anything or guaranteeing anything, like, I have guided on previously, we are quite happy with the coverage that we've had over the last years, which has been in the range, 35, little bit higher percent. So, I think for us, we like to have exposure to the markets, but we also want to -- and have always had a certain downside protection being somewhere in the 30% to 40% range of our fleet capacity. So, I think that's what I can say at the moment, but yes, if that answers your question.

Yes, that's good. And just to follow-up on the cost question, but more so on your efficient G&A, should we expect, I mean, the addition of Avance, those vessels, will it do a lot to your organization, or is it just something you'll swallow with the team you have now?

Yes. We are able to absorb that basically with the team now. So, there is no plans to increase the number of people or the G&A in any way.

Excellent. Thank you very much.

Hopefully to the contrary.

Good.

We have another question from [Johanna] (ph). Johanna, please go ahead.

Hello. Thank you. I'm Johanna [indiscernible], reporter for August Media. I'm curious to know how BWC is the new announcement from Panama Canal for long-term slot reservation. So, I would like to understand how BW thinks that will impact the market and how it will, if it's interested in securing some slots as well. Thank you.

Thanks for the question. We have actually spent quite a bit of time trying to decipher this, and what it means for us. And the conclusion is that I don't think we'll bid in for this tender. I think that's it's more designed for container ships and the likes which are shuttling back and forth, the way we see it.

If I can, just a follow-up, because that is going to use up about 40% of those lots there, they go for auctions. So, can we expect that to be included in some there would be more less vessels, or less slots around for auctions. So, is that a factor at play here?

The Panama Canal is basically designed for container ships, and you can say LNG carriers also prioritize above VLGCs. So, we're quite and the Panama Canal is a big black box and a wild card in our market. So, what's happening there has a big impact, but for the dynamics in the market, but it's hard for us to also justify going in on a tender where you book slots, because we don't -- we are in a market where you have the charter is auctioned to discharge in Europe or go to Asia or other parts, after loading or the role after loading in the U.S. So, I think for us, we are as it looks now at least, better off to play the spot market, so to say in the Panama Canal.

Okay, thank you.

Thank you. Axel, please go ahead.

Yes. Thank you, Axel Styrman from Kepler Cheuvreux. It's a question, related to the product services division. Do you have any, do you plan to ramp up the activity now as you grow the VLGC fleet to such a big scale as you're doing?

Well, we announced an extension of the enterprise contract last quarter. So, there are no plans to further expand on the contract basis more than we already have announced.

We will now move on to questions from the Q&A channel. [Kaja] (ph), over to you.

Yes. So, we have one question here from the audience asking if you could elaborate on how much additional free cash flow earnings you expect to generate from the larger fleet post acquisition and the long run dividend per share, assuming TCE remains approximately at current levels.

Yes, thanks for the question. I think, first of all, is that without a doubt adding 12 vessels to the fleet is definitely increasing the revenue generation potentials. We expect that this fleet to perform at a similar level of our existing fleet as well as on the cost front as well. So, I think that that would likely give you a very good guidance in terms of, based on our cash breakeven and the market where it's trending, our guiding on the coverage, et cetera will probably give you a very good idea, where the free cash flow will likely land following the market fluctuations. And as from a dividend perspective, well as we shared many times, this is at the board's discretion. We would largely follow the dividend policies while maintaining to distribute values back to the shareholders as much as possible. I hope that answer your questions.

Yes. And then, we'll go over to a question from [Dasha] (ph) here, asking in terms of terminal export capacity, is it pre-booked, or do you pay spot for terminal pricing?

I can just answer. In general, if you enter a term contract with the export terminals in the U.S. Gulf, you have a pricing mechanism which is agreed on a case-by-case basis depending on the negotiations with the terminal which again boils down to flexibility, volume, duration and so on. And if you play the spot market, then of course, you are exposed to the supply and demand there and then, when you want to buy the cargo. So, this is quite as in any other market, I think quite normal.

Dasha is following up with a second question. What are the specific projects expansions you're looking at which should increase LPG export capacity in the U.S., Canada?

Yes. So, if you look at our slide, we are mentioning enterprise energy transfer. I mean that in Canada, there are plans for ramping up the exports on the West Coast of Canada. So, I think there's a fairly long list of expansion plans on the terminal infrastructure side in the U.S. and Canada over the next years. Argus actually have been there last -- since they had Argus on the line here now in the last monthly review, they had a long list of, they showed the different expansion plans, which are confirmed in the U.S. Gulf. So, I think the companies are quite open about this since they're also stock listed.

Then we have a question from [Aman] (ph) here asking, we see most ship owners in LPG are opting to order new build, very large carriers. Thus, BW LPG also have any plans or intend to focus on VLACs or ammonia trade.

Thanks for the question. If you go back in time, we were one of the biggest shipping companies in the ammonia space actually. These ships -- the last ship, I think was sold in 2019. That was a large gas carrier, which is the size below VLGCs. So, we are not strangers to trading in ammonia. At the moment, we do not have any ammonia lifting capacity on our ships, except for in the Indian fleet, which are tied up in trading LPG from the Middle East to India. So, we are absolutely believers in the ammonia case going forward, but we do not have any VLACs on order at the moment, but let's see what the future brings. Like I said, we are no strangers to trading and lifting cargoes in the ammonia space.

And Aman is also following up on that answer. There are concerns for oversupply in LPG shipping, especially for VLGCs with 40-something VLACs scheduled for delivery in 2026. Any thoughts on how it would impact the earnings?

Like in any other shipping market, if you have overcapacity in the fleet, of course, that will impact the rates negatively. So, it depends on how the LPG volumes are expanding in the period from now up to '26-'27. And also, of course, how the much talked about ammonia projects are materializing in the same period and towards the end of this decade. So, this is I would say a million dollar question. And like in any other shipping segment, of course, overcapacity is a challenge, if that occurs.

Next, a question from [Knut] (ph), he has two questions. The redomiciliation to Singapore, tax-wise, will the company still be assumed to be outside the exemption method according to Norwegian tax legislation. Second question, when will the new shares related to the Avance Gas transaction be issued?

I can start off with replying to number two, and then I'll leave to Samantha to reply the first question. So, the Avance Gas will receive their shares when the ships are being delivered. So, every ship has a pre-agreed portion of shares and cash to be paid before they are delivered to us. And then, for the next question, I leave that to Samantha to reply on, please.

Yes. Maybe I would ask you to elaborate a little bit on what you mean by the exemption methods about the Norwegian tax legislation. But basically, there is no change as for the investors domicile in Norway, how the taxes status has changed. Still now we have [indiscernible] site to Singapore. There is no withholding tax applied for dividend paid from BW LPG to the investors around the world. And as for either as a dividend or in the case of a share buyback, all the proceeds will be taxable based on the investors' tax status. I hope that answers your question.

And then we have another question from [Tyrone] (ph) asking the fleet taken over from Avance is younger than your current fleet and probably more fuel efficient. How will this impact on your average OpEx?

Yes, we hope that it will impact positively on our OpEx. So, like you say, the fleet is a few years younger on the average than our current fleet. So, that's also one of the parts we found attractive with this transaction. So, we hope that we can benefit from that and also from the scale when adding 12 more ships to our fleet.

Final call, should you have questions, please type them into the Q&A channel. You can also click the raise hand button to ask your question verbally. Please note that participants have been automatically muted. Please press unmute before speaking. There being no questions, over to you, Kristian.

We had one question just at the end here. Is there more analyst coverage in the USA? We are working on it. So, we hope that more equity analysts in the states will take up coverage of our share and company, especially now that we are growing in size. So, that's something we are working on.

Yes, and then we have a question from [Damian] (ph). How many shares of the company belong to owners, directors, and how many are traded on New York Stock Exchange and also Stock Exchange approximately?

I think, there is an overview. We report on this. So, it's something you can you can find on our website or we can just send the mail to our e-mail. We can reply to you on that, if that's fine by Damian.

And then we have one question from Johanna. How has EPS impacting the market so far?

I would say that EPS has impacted the market in the sense that there is more focus on newer vessels and well, of course, the fact that we now have 22 ships with dual-fuel technology on the water by the end of the year is something which is to our advantage in that sense. So, overall, it's shifting the focus and the preference in the market slowly towards more fuel-efficient and environmentally friendly vessels with the latest technology.

No more questions.

Okay, everyone. Then I'd like to thank you all for joining us today. And thank you for your support and we see you again next quarter.

Thank you for attending BW LPG's second quarter 2024 financial results presentation. More information on BW LPG and BW Product Services are available at www.bwlpg.com and www.bwproductservices.com respectively. Have a good day and a good night.