Welcome to BW LPG's Fourth Quarter 2023 Financial Results Presentation. Bringing you through the presentation today are CEO, Kristian Sørensen and CFO, Samantha Xu. We are pleased to answer questions at the end of the presentation. 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 2023 Q4 presentation. I'm joined today by our CFO, Samantha. And together, we will take you through the slides. Q4 ended the strongest year on record for BW LPG. We achieved a time charter equivalent income per available day of $76,000 in a steaming hot VLGC market. And together with a strong performance from our Product Services team, we had a net profit after tax of $162 million for the quarter, and a full year NPAT of $493 million, our highest ever. After the first full calendar year in operation, as a new and expanded trading team, Product Services generated a net accounting profit of $18 million in Q4. This is after adjusting for G&A and tax provisions from the earlier announced $27 million quarterly profits. We're also scheduled to return $30 million to the shareholders in Q2 this year following a substantial cash generation during 2023. Given the strong quarter for our company, our Board has declared a dividend of $0.90 per share, which brings our year-to-date dividend per share to $3.46, representing a 98% payout of our annual earnings and an annualized dividend yield of 28%. The quarter was eventful also in other fronts. We are moving forward with our dual listing in New York, which will likely take place in the second quarter this year on the New York Stock Exchange. We had road shows in the US, where we received strong interest in our company's and the sector story. We're confident that the listing in New York will expand our investor universe in the future and increase the liquidity in our share. Our company also made a milestone announcement on the 30th of November with the announcement of a signed joint venture with our Indian partners Confidence Petroleum and Ganesh Benzoplast, to invest in the development of a new LPG import terminal in India. In addition and as part of the agreement, we have just concluded a $30 million investment in Confidence Petroleum, which gives us a strategic 8.5% ownership in the company to participate and get a foothold in the distribution of LPG in India. As we moved into 2024, the VLGC market has again proven itself as exceptionally volatile, with rates dropping more than 90% in three weeks due to cold weather in the US, which increased U.S. LPG prices and halts to the US exports. At the same time, the sudden availability of more Panama Canal transit slots reduced the sailing distance and put pressure on rates. However, since January, rates have increased sharply. We're currently seeing rates in the $40,000 per day range in the Middle East as well as US Gulf with a contango in the FFA market for 2024. And on the back of this, we maintain our positive view for the year, backed by sound fundamentals. Those are the highlights.

Thank you, Kristian. And good morning, good afternoon to everyone. Let me continue to add some color to Product Services' performance. The net asset value of Product Services increased by $18 million to $62 million at the end of December. The increase comes from the positive gross profit after netting off other expenses. In Q4, Product Services generated a gross profit of $32 million, which includes $50 million of unrealized cargo and derivatives gains, offset by a $17 million realized loss during the quarter. The loss includes the depreciation from Product Services' lease-in vessels. Other expenses of $14 million largely comprise G&A expenses, including bonus provision, and additional income tax provisions. The reported net profit does not include the unrealized mark-to-market valuation of physical shipping position which was excluded from the accounting result. Our internal valuation of these TC-in contracts at the end of December was $84 million. This positive value reflects the continued strong development in the 12-month forward freight market for VLGCs, which is the period we use to evaluate freight positions in Product Services. Due to the increased volatility in the LPG product and freight market that in Q4, we reported a higher average VAR of $8 million, on a well-balanced trading book, including cargoes, shipping and derivatives. We continue to see good collaboration and synergy between Product Services and our Shipping business through improved information flow, optionalities and enlarged footprint.

So, moving on to the financial performance for our core shipping segment. We achieved a historical high TCE performance of $76,000 per available day for the fourth quarter. This figure includes Fixed Time Charters and Derivative Hedges. The spot fleet achieved a TCE of $108,300 per day, excluding waiting days. For the first quarter, around 83% of our available days are fixed at an average of $55,000 per day. As highlighted earlier, we saw a sharp decline in spot rates down to less than $10,000 per day in January which impacts the guidance rate together with a number of previously fixed ships ending up sailing trans-Atlantic voyage from the US after a long ballast from the Far East. We anticipate that we will recoup this ballast cost for the voyages in the next quarter. Looking at our coverage for 2024, 23% of our fleet is already fixed under time charter, with an average daily rate of $41,500. We've balanced our TCE-in and TCE-out commitments for 2024 and have already secured a $23 million profit. Additionally, 14% of our days are hedged with derivatives at an average of $56,500 per day. I am pleased to let Samantha take you through the Product Services update and our financials.

Thank you, Kristian. Moving to the financial highlights. In Q4, we reported a net profit after-tax of $162 million on a consolidated basis. This includes $16 million in profit from BW LPG India and $18 million in profit from Product Services. The net profit also includes a downward adjustment of $4 million related to the effect of IFRS 15 for the quarter, as the TCE for the straddling voyage over the quarter end is recognized on a load-to-discharge basis. We reported an earnings per share of $1.14 this quarter mainly contributed by our core Shipping segment. This translates into an annualized earning yield of 31% when compared against our year-end share price. We reported a net leverage ratio of 21% in Q4. The Board declared a Q4 dividend of $0.90 per share. We have in total declared $3.46 per share including Q1 to Q3, or a 98% payout ratio in 2023. The dividend payout reflects our commitment to return value to our shareholders, as we continue to deliver a high dividend yield of 28% when calculated on our share price at yesterday's closing. Our balance sheet ended the quarter with a shareholders' equity of $1.6 billion. We continue to see a healthy headroom for more than $400 million comparing broker valuation with our fleet's book values. Our annualized Q4 return on equity and capital employed were 42% and 33% respectively. In Q4, our daily OpEx came in at $8,200 per day due to slightly higher than expected maintenance and repair expenses. For 2024, we expect our owned fleet's operating cash breakeven to be about $17,600 per day, which is $1,000 per day lower than previous quarter, driven by early debt repayment. On a consolidated basis, we ended the year with close to $0.5 billion in liquidity which consists of $162 million in cash net of $126 million held in broker margin accounts; and $295 million in undrawn revolving credit facilities. As of end December, ship financing debt outstanding was $311 million, of which $257 million was term loans and revolving credit facility of $54 million. Looking at trade finance, $319 million, or 48% of our $660 million line has been used as of end Q4, with $85 million related to trade advances drawdown and $234 million in letters of credit leaving a healthy headroom for further growth. As of January 2024, we upsized our trade finance line to $746 million with two additional lenders increasing our headroom further to support future growth. In terms of overall repayment profile, excluding short-term trade advances, settlements are well spread out with no major repayment until 2026. So with that, I would like to conclude our Q4 update; and I will give it back to you, Lisa.

Thank you, Samantha. We will open the floor for questions now.

Yeah. So we have one written question here from Johanna Nero asking if you could elaborate on how increased ammonia new buildings may bring uncertainties to the VLGC market?

Yes. Thank you for the question. Ammonia has for several decades already been carried onboard LPG vessels. And today it's the mid-sized LPG vessels which are the workhorses of the ammonia market. These new VLAC new buildings are essentially VLGCs which are specially designed and have strengthened the tank structure to carry up to 98% ammonia. But they can also shift their trade into LPG if the ammonia trade is not as lucrative or attractive as they expect; so these ships can theoretically also trade LPG.

Yes. Hello, Kristian and Samantha. This is Jørgen from DNB Markets. I just wanted to ask if there can be a discussion and some more details on the considerations around the payout ratio this quarter on the dividend versus the EPS number you reported?

Yeah, sure Jørgen. First of all, we do not like to disappoint the market, but the fact is that we have a dividend policy which aims for an annual payout ratio of 75% of our shipping segment's NPAT if the net leverage is between 20% and 30% and 100% if it's below 20% net leverage. We have a net leverage of 21%. Consequently, the Board decided to pay out 98% of NPAT for the year, which generates a dividend yield of 28%, so it's in accordance with our dividend policy where we aim for an annual payout ratio.

Thank you. Additionally, could you provide insights on how the IFRS effects are expected to shape up in the next quarter, given the volatile markets and the guidance you have shared so far?

Yes. Sure Jørgen. From the IFRS 15 impact perspective, first of all, let's put it that way. It's very difficult to anticipate what kind of effect it could bring to the quarter that has ended because this very much depends on the vessel deployments, loading and discharge locations as well. Given that we have had both negative adjustments in the previous quarter and Q4, we see that the negative impact should be less, if not a reversal in this quarter. But as you can appreciate, I'm sure you know very well; it's really hard to model this kind of impact.

Then we'll move to the next question here from Axel Styrman. Kristian, you mentioned the risk that VLGC newbuilds may trade in LPG, but you then referred to the ammonia trade. I assume you meant VLAC newbuilds?

Yeah, you're right. Actually, it's my English which is a bit broken, so it's VLACs ammonia carriers, not the ethane carriers.

We have a question here from Desmond Burmil. When do you expect environmental regulations concerning the slower ship speeds to materialize?

Well, the world fleet of VLGCs have already reduced speed on some of the vessels, so you can see for instance, our fleet trading in and out of India is down to 14 knots these days. So we already see the impact of slower speeds, and I would say that this is already ongoing.

Once again we have a question from the channel.

Yeah, a question from an unidentified source. What is your estimate of negative ton-mile demand impact for the full year 2024 due to increased Panama Canal transits?

So negative ton-mile demand; you can say that if you turn it the other way around, if the ships are sailing from the US via South Africa towards the Far East, it's approximately a 50% longer voyage on a round voyage. So I think that is kind of the rule of thumb that you can have. It depends on where you discharge in Asia, of course, but if you go all the way to Japan via South Africa back and forth, it's about a 50% longer distance; more down to 45% if you go to the more western parts of Asia.

And we have a question here from Nick Linane. You had some tax expense in the fourth quarter of 2023. Can you explain what drove this?

Nick, this is Samantha. I think you're referring to the tax we have disclosed for product services. That does stand out in Q4. Maybe just a little bit. The way we accrue tax is on a quarterly basis. At year end, we would true up the tax provision for the year. That is basically the full year impact of the tax reflected in Q4 as we generated a positive profit for product services. From a tax percentage and tax rate perspective, we have different tax rates in where the business was conducted, respectively in Singapore and Spain. It’s under different tax schemes as well. The effective tax rate is very difficult to calculate until at year end. So I will be happy to get back to you if you're interested after I have done some fact-finding for 2023.

What is your view on demand from China? What is the latest on PDH utilization?

Our view on the demand from China is that, of course, we recognize that the Chinese economy is on a slower pace than what we have been used to over the last years. The imports especially last year were very, very high despite this, because they have a political goal to capture more of the petrochemical market. We can see that the PDH demand is increasing, but it's not a linear increase going straight up. For the moment, you asked also about the PDH utilization rate, which I don't have the latest but it's been down to 60%-70%. There is definitely upside potential, but I don't have the latest number in front of me just now, so I need to get back to you on that. But all in all, very positive for the increase of LPG imports to China despite the economic challenges that they have.

We have one more question from Nick Linnane here. How many VLAC orders do you see in the order book?

Well, the vessels on order with ammonia lifting capacity is 73, as far as I can see from my list here. These are both VLGCs with ammonia lifting capacity, and then there are these VLACs, which have a strengthened tank structure and load more and more. In combination, it’s 73 in total on our list.

We have one question coming in.

We have one question from Desmond Burmil. Do you plan on repurchasing any more shares?

Samantha, will you reply to this?

Yes. Sure. As you know, we had a share repurchase program announced in May 2023, and we have already repurchased back $13 million worth of shares and have $37 million remaining. Prior to that, we also had a $15 million repurchase program in 2022, which we have finalized. We will continue to evaluate and get back to the investors.

We have another question here from Nick Linnane. What do you think is the current US LPG export capacity?

Well, we can see that in the US Gulf, they have increased the export capacity by removing the restrictions on nighttime berthing on Targa and Enterprise terminals. They have increased that up to nearly 100 liftings in the Gulf Coast region per month on a regular basis. In addition, you have the US East Coast, where another 10% of the US export volumes are currently exported from the US East Coast. Also, on the west coast of Canada and the US, it's another 2 to 2.5 million tonnes on an annual basis as export capacity. Based on what we have seen, according to Furness, the ship broker, about 6.5 million tonnes are exported on mid-sized vessels which in theory are occupying the berths. If you exchange them with VLGCs, in theory, you can probably increase the VLGC lifting capacity out of the States even more. However, we do see that the American terminals are very efficient if they need to export more than what we anticipate. For instance, what we have seen now in February is higher than what we expected. About 100 berthings per calendar month in the U.S. Gulf Coast alone is what we see approximately. Okay, that rounds off our quarterly earnings presentation. Thank you everyone. See you next quarter.

We have come to the end of today's presentation. Thank you for attending BW LPG's fourth quarter financial results presentation. More information on BW LPG and BW Product Services are available at bwlpg.com and bwproductservices.com respectively. Have a good day and a good night.