Thank you for dialing in and welcome to TORM's Conference Call regarding the Results for the Third Quarter of 2019. My name is Morten Agdrup and I’m the Head of Corporate Finance and Strategy in TORM. We will refer to the slides as we speak and at the end of the presentation, we will open up for questions. Slide 2, please. Before commencing, I would like to draw your attention to our Safe Harbor statement. Slide 3, please. With me today is Executive Director, Jacob Meldgaard; and he will be hosting the call.

Slide 4, please. Thank you Morten, and good afternoon. TORM's third quarter 2019 results reflects the softer market conditions in the product tanker segment. Going into the fourth quarter, this product tanker market has strengthened significantly and as the demand and supply balance tightens towards the upcoming IMO 2020 individual events have caused spikes in product tanker freight rates to levels last seen in 2008. We remain excited about the developments in the market. And I'll take you through our results. In the third quarter of 2019, we realized a positive EBITDA of $32 million and a loss before tax of $8.5 million or $0.12 per share. TORM's return on invested capital was positive at 0.4%. The estimated net asset value was $887 million as of 30th, September, and later in the presentation, I'll take you through a breakdown of this metric. Illustrating our continued focus on maintaining a solid balance sheet, the net loan to value was 50% at the end of the quarter, and available liquidity was $337 million. With respect to the freight rates, TROM realized an average TCE rate of $13,392 per day in the third quarter of 2019. In the third quarter and so far into the fourth quarter, we've taken delivery of three MR newbuildings and four 2011-built MR vessels acquired during the second quarter. We've also sold four older vessels, two MR vessels, and two handy size vessels. Vessels have been sold for a total consideration of $35 million and a total $18 million in debt will be repaid in connection with the vessel sales. Two of the vessels have already been delivered to the new owners. In support of our strong capital structure, we also entered into eight sale and leaseback agreements in the third quarter of 2019, providing total proceeds of…

Thank you. [Operator Instructions] Your first question today is from the line of Jonathan Chappell from Evercore. Please go ahead.

Thank you. Good afternoon, Jacob.

Yes, morning John.

Three questions for you. First one, you laid out a great presentation on your coverage in your lower cost and your liquidity to cover your CapEx. So, therefore there should be a cash windfall coming in I would imagine. So, can you just remind us I think the dividend policy from the past cycle was 25% to 50% and would you look at that maybe differently in the first innings of the quarter or other cycle maybe the fourth quarter start out slowly and then once you've taken delivery of all your newbuildings and fitted all your scrubbers and your CapEx falls, could you foresee being a little bit closer to higher end of that capital return policy?

Yes thanks, John. That's an important point obviously. So, first and foremost just to recap. As you point to, we have a policy where we distribute 25% to 50% of our net profit semiannually. So, maybe we will have a strategic discussion around this, would be after the second half of the year. I do expect that the policy remains intact but obviously we need to be guided as you point to by the facts at the time. But with what has that been laid out so far in our presentation and on our expectation, I would expect that we will be evaluating whether to distribute at that time buyback share or a dividend payout alternatively of course look at other two capital needs that we need to go through at that time. But with this in mind, I do expect that depending on the results that clearly in next year in 2020 will be much more clear what we are going to be doing and maybe as you point to we need to have more of an evaluation in the upcoming second half of '19.

That makes sense. And just a follow-up to be clear on the timing, so you would have the discussion post the 4Q results which based on your bookings so far would indicate a profit. And then would that be like a February board meeting with March payment or would it be a kind of a second quarter payment as part of the semiannual policy?

I think on this occasion, it will actually be something we will evaluate at the AGM that we have in April.

Okay alright, thank you. My second question has to do with the scrubber retrofitting and I understand the thought process behind delaying a given the strength of the market but you'd also mention some delays. We know that you have a percentage ownership of a scrubber manufacturer or so. Maybe incorrectly I assume that, that if there were delays, you would still be at the front of the queue. Can you talk about how much the delays played into your decision to delays at the yard played into your decision to delay the timing of the retrofitting versus the strength of the market. And is there any compensation that you get or maybe savings from pushing back the timing on those?

Yes, very good. So, to be clear -- thanks, Jon. So, number one, the delay is not on the production of the scrubber. Actually our production as you point to is it's going according to plan. We have no delays and the scrubbers are ready. The delay that we are experiencing is more of a general nature that larger vessels that are planned to have scrubbers are competing with other ship segments. So, that means that you have basically across the global fleet you have large container ships, you have the capsize, as you got the VLCCs all the segments you know well. They'll be competing for a limited number of shipyards that cannot accommodate larger vessels. So, the delay we have to be very precise is on our LR2s, LR1s, we've seen that there is that they’re delayed of getting the scrubber installed, not the adaption. And we are not experiencing the same type of delays on our MRs because there the number of yards that are available to us and others is significantly higher simply because of dimensions of the vessels.

Okay, that's very helpful. Thanks, Jacob.

So, --.

Final one, --.

It isn't around delays, then there was one example where we had to sort of the choice on one of our LR2s to either go into a potential dock where we would be installing and retrofitting a scrubber and that the alternative market was at that time around $80,000. So, that was kind of a very easy decision to say okay let's take the money on the table and then let us delay.

Yes, that makes it. So, it was -- it's a case-by-case basis but it seems like it's mostly on the larger ships.

Exactly.

It was a yard issue. Final question for you, and very detailed view on the market and especially your expectations of the IMO impact which we obviously agree with. But outside of a global macro recession which seems maybe that's even the odds of that are lessening a little bit. What concern do you that maybe we don't get the cycle as it's laid out right now. I mean the order book really can't change, is it maybe the IMO 2020 impact isn't as large as we anticipate, is there some other issue on regional trade. What could possibly go wrong next year outside of a macro demand event that can kind of throw off this really good set up?

Yes. So of course, we all have to play out the scenario. So, I think the scenario, we had two teams would be unlikely, what which could spoil the party here would be that the refinery side gets their act together faster on the production of VLSFO, so that you basically our theory and thesis around that there will not be sufficient compliant 0.5 VLSFO available from the refinery side. And that will lead to incremental demand for transportation of diesel-based refined products. That if that thesis should be wrong, i.e., that there is sufficient VLSFO to supply the market, then ship owners in general will obviously opt for that since it is cheaper.

Understood. Alright, thank you very much Jacob.

That's the curveball that you would have in the market. I don't see that as, if I look at the data points that we get from independent sources, this is not how it's playing out for of course if it did that would be I think the party spoiler.

No, that's a good way to think about that. So, thank you very much for your insight.

Thanks, Jon.

Thank you. The next question is from the line of Epson Landmark from Fearnley. Please go ahead.

Hey, good afternoon. Just a follow-up on the last one there. I mean we had big refinery maintenance in the spring and we had big refinery maintenance now in October. I think some was just said you know with more than 10 million barrels. And the U.S. crude runs they're trending lower year-over-year and think you're decision last week was even low 85.5. It seems a bit strange seeing the crack spreads the price differentials that we're seeing at the moment. So, I guess the question is are you concerned that some of these maintenance might reflect something else just like lack of demand?

We're not really seeing anything to that effect so far but obviously I think to your observation, we need to follow that. But clearly in the trading patterns that we've got in the data points we have, we are not seeing an indication of that. That is the fact but yes time will tell whether it's one or the other. We do see it as a general normalization.

Alright. And on Page 9, you're kind of decomposing the bunker usage next year. Can you also quantify how much you think will be diesel which I think is interesting though. It's still early on but any insight into what you're seeing of demand of compliant fuel at the moment. What's going to split the 4.1 and 0.5 blends the ship owners are wanting?

No, I think it's too early. In our case, the preparatory work that is taking place on the ship owner side right now is that I think everybody is preparing to clean the tanks in order to shift into VLSFO either 0.1 or 0.5. But the number of vessels for instance in our fleet that has already taken onboard these products is very much on the margin. So, I think this is the test phase and by early part of next year we will know much more about the demand picture whether its 0.1 or 0.5. I think everybody is preparing but it's not really ramped up the demand in the marketplace in general yet it's too early.

Okay. And maybe finally, a bit around the current spot market, it's always a bit difficult assess in the prevailing rates especially on the LRs. So, the fixtures you're seeing at the moment, would you say they are materially different from the 4Q booking?

And I did before this call, I've checked up on that and because I think is a very relevant question and as of date the bookings we have is actually almost bought on the average that we have so far.

Okay, that's interesting. And maybe as a quick follow-up on that. I mean just make sure you said you don't expect any kind of impact on TCE performance from having a lot of ships and then the East with scrubber installations?

No. We cannot point to that our earnings are negatively impacted on the vessels that we imply. From scrubbers what we can see is obviously that we have by definition fewer operating days that we can, that we have as earning days.

Okay.

Because that will find, yes.

Thank you. Perfect, thank you Jacob.

Thanks. Thanks for the question.

Thank you. [Operator Instructions]

So, we have in the mean time we have one question from the web which is where it reads here based on the current newbuilding prices, are you looking to order new vessels in order to continue fleet renewal of your fleet and potentially new the 36 vessels not scheduled for scrubber retrofit. And I think, in general we are always looking to have a fleet maintenance program. We've done that over a continuous period where we take in younger vessels into the fleet and we dispose off older vessels. And we don't have a big program where we would take out a significant number of vessels and then substitute them by new vessels. So, the answer to this is that no we have a balanced approach where we year-by-year evaluate what is the best operational fit in our fleet.

There are no questions on the phones at the moment.