Welcome to Hafnia's Third Quarter 2024 Financial Results Presentation. We will begin shortly. You will be brought through today's presentation by Hafnia CEO, Mikael Skov; CFO, Perry Van Echtelt; VP, Commercial, Søren Winther; and EVP, Head of Investor Relations, Thomas Andersen. They will be pleased to address any questions after the presentation. [Operator Instructions] During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties, and other factors, many of which are beyond Hafnia's control that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities. With that, I'm pleased to turn the call over to Hafnia CEO Mikael Skov.

Thank you, and hello, everyone. I'm Mikael Skov, CEO of Hafnia. Welcome, and thank you for joining Hafnia's third quarter 2024 earnings call. Joining me here today are our CFO, Perry Van Echtelt; our VP of Commercial, Søren Winther; and our EVP and Head of Investor Relations, Thomas Andersen. Together, we will walk you through Hafnia's performance for the third quarter of 2024. Today's agenda focuses on four main areas. I will start by highlighting our key achievements and milestones from the third quarter. Next, we will recap Hafnia's key investment opportunities. We will then review recent commercial developments and provide our outlook for the product tanker market. Finally, we will review the quarter's financial performance before concluding with an update on our ongoing ESG initiatives. Let's move to the next slide. Before proceeding, you should all be aware and take note of the mandatory disclaimer. Some statements in this call may be forward looking and carry inherent risks. This call does not constitute an offer to buy or sell securities. Thank you for your attention, and let's start the presentation. Let me begin by outlining some of the key highlights from the quarter. We now move to Slide #4. I'm proud to announce that Hafnia has delivered another strong quarter of financial results. For the third quarter, we achieved a net profit of $215.6 million, bringing our total net profit for the first nine months of 2024 to $694.4 million, marking the best nine months performance in our company's history. Our cooperations maintained their momentum to deliver robust earnings, supported by contributions from our adjacent fee-generating businesses, which added $7.8 million to our results this quarter. Additionally, I'm pleased to share that Hafnia has successfully completed its redomiciliation from Bermuda to Singapore. Singapore's position as a global hub for…

Thanks, Søren. If we move to the next page on the financials, as already highlighted by Søren, the product tanker market softened seasonally in the third quarter, but despite that, Hafnia has continued to perform well and delivered solid earnings for the third quarter. For Q3, we generated a TCE income of $361.6 million, bringing our year-to-date TCE income to over $1.15 billion. Additionally, our fee-focused commercial pool and bunker procurement businesses continued to perform strongly, contributing $7.8 million in fee income. This all resulted in an adjusted EBITDA of $257 million for the quarter and a net profit of $215.6 million, which includes a $15.6 million gain from the sale of a vessel. This all translates to return on equity of 37.1% and a return on invested capital of 26.7% for the quarter. And let's look at the balance sheet on the next page. Our balance sheet has strengthened further, with a cash balance of approximately $200 million at the end of the quarter and a total liquidity of over $600 million, which includes $430 million in undrawn credit facilities. At the end of Q3, about 75% of our loans were hedged at the weighted average of 1.64% base rate or on a SOFR basis. Hafnia settled a few portfolio hedges at the end of Q3 for net profit of approximately $5 million. We continue to maintain an active interest rate management strategy and we'll continually monitor market conditions while optimizing our hedging portfolio as we further reduce leverage over time. During the quarter, we also made further progress in optimizing the balance sheet capital structure. Our net LTV has been on a steady decline, decreasing by more than 18 percentage points over the past two years. For this quarter, our net LTV ratio has further decreased to 19.1%,…

Thank you. We're on Slide 23. Moving on, I would like to provide insight into Hafnia's ESG strategy and targets. As we navigate the evolving maritime landscape, we recognize the responsibility across our operations and are committed to minimizing our environmental footprint. Equally, we're dedicated to promoting diversity, inclusion, belonging and equity within our organization while upholding the high standards of corporate governance. We actively collaborate with industry peers, international organizations, and other stakeholders to address these challenges in a collective and effective manner. Slide 24. Next, I would like to highlight some of the key ESG initiatives Hafnia is actively driving as we lead the way toward a more sustainable maritime industry. As part of our joint venture with Socatra at France, we're excited to announce that the first of our four dual-fuel methanol MR newbuilds is on track for delivery in early 2025 following the successful completion of construction and sea trials. We also continue to enhance our technological capabilities and are optimistic about our strategic investment in Complexio, a foundational AI, to advance data automation. Complexio's bottom-up approach can ingest companies' unstructured and structured data, and map it into a comprehensive landscape, enabling the organization of recurring processes such as chartering, ship clearance, finance management, and contract negotiation. Together with our expanding partnerships across the industry, these efforts reinforce our position at the forefront of maritime innovation. Slide 25. To conclude, as we approach the end of 2024 and move into 2025, I remain confident in the market's trajectory driven by robust demand and favorable supply fundamentals. We are well positioned to build on this momentum to deliver even stronger results. This will enable us to pursue our strategic objectives, invest in a greener future, and generate greater returns for our shareholders. This concludes our presentation. With that, I would now like to open up the call for questions.

We will begin our Q&A session now. [Operator Instructions] So, for the sake of good order, I'm going to take the questions first with the Raise Hand function before moving on to the chat. So, the first one I see up is, Frode. Please, can you take yourself off mute? Frode Mørkedal: Yes. Thank you, guys. On the dividend policy, could you maybe clarify how strictly you plan to stick to this loan to value calculations? For example, let's say vessel value decline and loan to value rises above 20% again. Should we then expect payouts to automatically decline to 80%, or is there room for more, let's say, subjective adjustments under way here?

Perry, over to you. If you could take off your mic, please?

Yeah. Sorry. I was on mute. Yeah. Hi, Frode. Thanks for the question. I think up until now, we've been very consistent with the dividend policy whenever we go through a threshold. That's where we adopt the dividend policy. If or when markets change or there would be something else that is something to be discussed in the Board, but we like the consistency that we have on the payout. Frode Mørkedal: Okay. I also have a question on the market. Maybe this is for Søren. On the Suez Canal, let's say it's -- at one point it reopens, right? One thing is that the diversions around Africa have increased average calls, right? But as you mentioned in the slides, a lot of that extra tonne-miles might have gone to VLCCs and Suezmaxes, the crude cannibalization. So maybe the reopening of Suez Canal transits basically shifts more of the clean cargoes back to product tankers. So, could actually reopen Suez Canal be a positive, or is it going to be a negative event do you think? Søren Winther: I think overall now you are stepping out of the cannibalization from the Suezmaxes and Vs, in any case because of seasonal market strength on the crude tanker segments. So, tonne-mile via Cape of Good Hope that is now, well, already today starting to accumulate on normal tonnage if you want is a positive for the market. I think it's inevitable if Suez opens and you have shorter distances to travel, shorter voyage days in essence for cargoes traveling to and from the Eastern and Western Hemisphere, that will be a negative overall for the market and create some extra supply to the overall landscape for sure. Frode Mørkedal: Okay. Thanks for that.

Thank you, Frode. Omar, please, can you take yourself off mute?

Sure. Thank you. Hi, guys. Good afternoon. I mean, good evening. Just a couple of questions for me, maybe just as a follow-up to the capital returns. Maybe just for clarity, it could be just a simple question or stupid question, but in terms of the authorized buyback of $100 million, it says in the release that, it's to be initiated from December 2nd until January 27th. Does that mean it needs to be initiated within that window or does it actually expire January 27th?

Yeah. Hi, thanks for that question. January 27 is where we go into our blackout period ahead of the financials in February, which is a month before. So that is for the quarter the trading period that we have.

Okay. Thank you. And then perhaps kind of reading into when you had the chart on the NAV valuation and all that, and obviously, you've seen the stock under pressure. It seems like perhaps you're signaling a bit more of an aggressive approach to the buyback. Don't want to put words in your mouth, but it sounds like that could be the case. Let's -- if we were to think about that and if you were to utilize the buyback into in its entirety, perhaps, and you stick to that 90% threshold in terms of capital returns, could you envision that the 4Q payout is exclusively buyback and you would forego paying a dividend in that case?

Yeah, that's correct. So, what we have announced is that, for the buyback that we would initiate for that period, it's part of the shareholder distribution. So, connected to our net LTV, we go to 90% payout ratio. We have a mandate to buy back shares, but that will be in a balance of cash dividends. So, whatever we buy back in shares would go out of the calculated cash dividends, so to say.

Okay. All right. Well, thanks, Perry. Thanks, guys. I'll turn it over.

Thank you, Omar. [Sheriff] (ph), if you could take yourself off mute, please?

Hey, thanks for taking my questions. So, I just want to start off, piggybacking on Omar about the buybacks. Should we expect the focus, shareholder return focus that is, to shift back to primarily dividends if the share price converges to NAV, or are buybacks here to stay, given there might be a tax advantage to different investors?

Yeah. So, we've always been consistent in paying out cash dividends because -- and we've never been ruling out share buybacks. As we have said, we now see such a big discrepancy between where we're trading and where the NAV is, so that the share buyback becomes an element within the dividend policy. Obviously also now trading in the U.S., we've also seen that there is a bigger interest from some U.S. investors on share buybacks as well. So, all that has been part of the equation of looking at the share buyback program.

And then, I want to ask about the vessels with purchase options coming up next year. It looks like those options are a bit below where the current sale and purchase market is at. And so, I'm wondering how are you balancing the exercise of those options as they come available with shareholder returns.

Yeah. I think the way we look at those is that, yeah, every time there's a purchase option up, it's obviously an issue whether we want to exercise or keep on going on time charter depending on where the rates are and what the economics look like. So, it's not -- if your question is about, do we intend to exercise to sell, that's not a strategy in itself for us. I think most of the ships we have on time charter, [with purchase options] (ph) also modern ships, so they're kind of part of our future thing. But we will be looking at more about the refinancing part of it, whether it makes sense to acquire and refinance rather than continue with TC. So, for selling assets in general, the focus is still on the older part of our fleet. That's where the sales focus is.

And less on the prospect of kind of acquiring them and then reselling them, but more just on the implicit value locked away and having purchase options below market, but you answered my question, so thank you very much.

Thank you, [Sheriff]. I think I don't actually see any more in the Raise Hand function, so I'm going to move on to the chat. We have a question which is about clearing up confusion regarding stock buybacks. There was a headline in trade wins in July, about $1.2 billion buyback program for the company, but today, there's an announcement regarding $100 million buyback program. Are these different? Have any shares been repurchased in the past six months? Over to you, Mikael.

Yeah. Otherwise, Sheena, I can take that.

Okay, great.

I think that article was referring to two different things. So, we had the annual approval for share buybacks up to 10%, which is more of the global mandate that you approve in the AGM without actually starting to do share buyback, which was for 10%, and also a renewal of 20% share sales. So, somehow trade wins at the $8 share price back then added the $400 million and $800 million together. So, we haven't earlier announced the buyback program, if that clarifies it.

Okay. So, we have one more question, which is about considering selling vessels and buying back more shares due to discrepancy between stock market and asset market.

Yeah. So, I think I can take that and as Perry explained, I mean obviously the way we look at the buyback now is that the discount to NAV is so substantial and with our view on the markets going forward that Søren explained, we think that it makes obviously a lot more sense to look at the buybacks at the moment. For the selling strategy, as I just mentioned before, our focus is still the same as we have targeted ships which is primarily due to age and ships that we don't find -- is part of the fleet strategy going forward. So, we will just continue to sell those. So, there will be some element of connection of selling ships and buying back shares, but it's not like it's a connected strategy as such. It's two separate strategies that just happen to make a lot of sense at the moment.

Okay. Thank you, Mikael. We have another question which is about, will we see an increase in selling older ships as it will be very accretive for shareholders to use the funds for buybacks as -- far below NAV?

Yeah, okay, that was -- I think that's probably what I addressed before. So, yes, we will continue our focus on selling older ships, but as I mentioned, these are two different strategies that will also work independently. But at this point, of course, they are connected since we are pursuing both.

Okay. Thank you, Mikael. I'm not seeing any more questions in the chats, neither in the Q&A and neither in the Raise Hand function. So -- and we have come today to the end of today's presentation. So, thank you for attending Hafnia's third quarter 2024 financial results conference call. You can find more information available online at www.hafnia.com. Goodbye, everyone.