28 Feb 2018 Highlights 1 2017 Annual Results - Highlights US$m - PowerPoint PPT Presentation

28 Feb 2018

Highlights 1

2017 Annual Results - Highlights US$m 2017 2016 Change EBITDA 133.8 22.8 +111.0 Net profit (86.5) +90.1 3.6 Cash 269.2 244.7 Net gearing 35% 34% Owned fleet / Total fleet * 105 / 225 92 / 226  Significantly improved dry bulk market supported a much improved EBITDA and positive net result in 2017  During the year, we took delivery of our last 7 newbuildings and recommenced secondhand acquisitions – purchasing 8 modern ships at historically low asset values  Our innovative combination of a share issue and private placement in Aug 2017 enabled us to grow our fleet with 5 modern ships while strengthening our balance sheet  We are cautiously optimistic for a continued market recovery albeit with some volatility along the way * As at 31 Dec 2 2017 Annual Results

2017 Performance and 2018 Cover US$/day Handysize Supramax Market (BHSI/BSI) index net rate 7,250 8,880 Improvement over 2016: Handysize: +25% / $1,690 PB daily TCE net rate 9,610 8,320 Supramax: 2017 +43% / $2,870 PB outperformance 15% / 1,070 8% / 730 Excluding short-term operating days We supplement our core PB daily TCE net rate 8,410 10,100 fleet with short-term operated ships with PB outperformance 16% / 1,160 14% / 1,220 which we typically make a positive margin throughout the market Cover as at 23 Feb 2018 cycle 2018 PB daily TCE net rate 9,280 11,400 % of contracted days covered 50% 69% 3 2017 Annual Results

Market Review 4

Market Continues to Improve Year on Year Supramax Market Spot Rates in 2016-2018 # Handysize Market Spot Rates in 2016-2018 US$/day net* US$/day net* 12,000 26 Feb 2018 12,000 2017 $9,980 26 Feb 2018 10,000 10,000 2017 $7,490 8,000 8,000 2016 2016 6,000 6,000 4,000 4,000 2,000 2,000 $0 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec  Market improved significantly in 2017 from an historically low level in 2016  Market was largely demand driven with stronger seaborne trade growth apparent across most dry bulk cargo categories  However, 2017 average rates were still in the bottom third of the 33 years since the dry bulk index began  YTD 2018 is following a similar seasonal pattern as last year but at a higher level (note that CNY occurs later this year) * excludes 5% commission # BSI is now based on a standard 58,000 dwt bulk carrier 5 2017 Annual Results Source: Baltic Exchange, data as at 26 Feb 2018

2017 Was a Demand Story Key Drivers in 2017 Dry Bulk Trade Volumes  Stronger seaborne trade growth apparent Million Tonnes across most dry bulk cargo categories – 4% Iron Ore 1,474 both major and minor bulks 5% Coal 1,201  Stronger Chinese industrial activity 4% Major bulk total 2,675  Record South American grain exports 20% Manganese Ore 30  14% Longer trade distances supported stronger Bauxite / Alumina 130 14% Salt 49 seaborne tonne-mile demand (5.1%) 13% Soybean 151 11%  Reduced steel and cement shipments primarily Scrap Steel 112 7% PB Focus Nickel Ore 44 due to strong Chinese domestic demand 7% Fertiliser 160 limiting export 7% Agribulks 174 4% Wheat / Grains 362 Long-Term Trends 3% Forest Products 364 1%  Strong world GDP (+3.7%*) – highly correlated Copper Concentrates 29 -2% Others 263 with dry bulk demand growth -3% Steel Products 392 -4% Cement 106  Continued strong grain demand for animal feed -6% Sugar 58 due to shift towards meat-based diet 3% PB focus cargoes total 2,424  Strong industrial growth and infrastructure investment in China and Asian countries 4% 2017 Total Dry Bulk 5,099  Environmental policy in China encouraging shift from domestic to imported supply of resources * 2017E: 3.7%; 2018E: 3.9% Source: International Monetary Fund (IMF) as at 11 Jan 2018; 6 2017 Annual Results Clarksons Research, as at 1 Feb 2018

Newbuilding Deliveries Continue to Shrink Dry Bulk Supply Development Dry Bulk Orderbook Development (Orderbook vs Existing Fleet as %) Mil Dwt % Mil Dwt 100 20 350 64% 75 15 300 50 10 38.4 250 25 5 Primarily 3.0% 200 large vessels 0 0 150 - 14.5 -25 -5 100 9.8% -50 -10 50 2010 2011 2012 2013 2014 2015 2016 2017 0 New Deliveries mil dwt Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Scrapping mil dwt Net Fleet Growth %  3.0% net fleet growth in 2017 (4.7% deliveries less 1.7% scrapping)  New ship ordering in 2017 increased from a very low base in 2016. Most new orders were for larger vessels, while ordering for Handysize and Supramax remained at historically low levels (1.9% of fleet) Source: Clarksons Research, as at 1 Feb 2018 2017 Annual Results 7

Handysize and Supramax Scheduled Orderbook at Historically Low Level Total Dry Bulk Orderbook Combined Orderbook: Handysize and Supramax Mil Dwt 8.6% Mil Dwt 70 7.1% 24m 24 58m 34% 42% 60 Shortfall Shortfall 20 50 4.7% 0.6% 5.1% 38m 0.7% 4.8m 16 14m 40 1.9m delivered 3.2% delivered in Jan 2.7% 12 26m 30 in Jan 22m 8 1.4% 20 3.9% 3.3% 1.0% 4m 32m 9m 3m 4 10 orderbook orderbook 0 0 Scheduled Actual 2018 2019 2020+ Scheduled Actual 2018 2019 2020+ orderbook delivery orderbook delivery 2017 2017 Handysize (25,000-41,999 dwt) Orderbook Actual Deliveries Supramax (formerly Handymax) (42,000-64,999 dwt) Handysize (25,000-41,999 dwt) Panamax (65,000-119,999 dwt) Supramax (formerly Handymax) (42,000-64,999 dwt) Capesize (120,000+ dwt)  Combined Handysize and Supramax orderbook reduced to 5.7%, the lowest since 1990s 8 Source: Clarksons Research, as at 1 Feb 2018 2017 Annual Results

Better Fundamentals for Handysize Orderbook Over 2017 Scrapping as Average Over as % of 15 Years % of Existing Fleet Age 20 Years Existing as at 1 Jan 2018 Fleet Lower orderbook Handysize – 81m dwt 6.3% 10 11% 18% 1.6% (25,000-41,999 dwt) More older Supramax – 194m dwt 5.5% 9 7% 15% 1.5% ships (42,000-64,999 dwt) Panamax – 218m dwt 8.2% 9 6% 17% 1.6% (65,000-119,999 dwt) Capesize – 311m dwt 15.0% 8 6% 12% 2.0% (120,000+ dwt) Total Dry Bulk – 821m dwt 9.8% 10 7% 15% 1.8% (>10,000 dwt) We now refer to the Handymax, Supramax and Ultramax segments more generally as “Supramax”, and we now consider 42,000 dwt as the cut-off between Handysize and Supramax Source: Clarksons Research , as at 1 Feb 2018 2017 Annual Results 9

Favourable Dry Bulk Supply and Demand Outlook Dry Bulk Supply and Demand  % YOY Demand outpaced supply in 2017 8  Progressively fewer new ships will deliver from shipyards in 2018 and 2019  6 Clarkson Research estimate: 5.1% 3.7% tonne-mile demand growth and 1.8% net fleet growth in 2018 3.7% (3.1% deliveries – 1.3% scrapping) 4  Expected actual deliveries will be around 26m dwt compared to 38m dwt in 2017 2 3.0% 1.8% 0 2014 2015 2016 2017 2018E Tonne-mile Demand Growth (%) Net Fleet Growth (%), (deliveries net of scrapping) 10 Source: Clarksons Research, as at 1 Feb 2018 2017 Annual Results

Improved Outlook Supports Vessel Values Supramax Vessel Values Handysize Vessel Values US$ Million US$ Million 80 60 70 50 60 40 Newbuilding (38,000 dwt): 50 US$22.3m Newbuilding (62,000 dwt): 40 30 US$24.3m 30 20 20 10 10 5 years (56,000 dwt): US$17.5m 5 years (32,000 dwt): US$14.0m 0 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18  Improved freight market conditions supported improved vessel values in 2017  Sale and purchase activity increased during the year  Newbuilding prices have also increased on the back of higher steel prices and labour costs  However, gap between newbuilding and secondhand prices continues to discourage new ship ordering  We still see upside in secondhand values Source: Clarksons Research, as at 26 Feb 2018 11 2017 Annual Results

Financial and Operating Review 12

Significant Improvement in 2017 Financial Results As at 31 Dec US$m 2017 2016 Owned vessel costs 2017 2016 Revenue 1,488.0 1,087.4 Opex (139.3) (130.9) Voyage expenses (701.5) (555.4) Depreciation (97.1) (107.6) Finance (32.3) (32.8) 786.5 532.0 Time-charter equivalent earnings ("TCE") (279.2) (260.8) Owned vessel costs Derivatives M2M and one-off items (451.0) (305.5) Charter costs* 2017 2016 Derivative M2M 5.4 23.6 Office relocation costs (1.4) - Operating profit/(loss) 56.3 (34.3) Vessel impairments (0.8) (15.2) Total G&A overheads (54.4) (52.9) Sale of towage assets (0.5) (4.9) Taxation & others 0.3 (0.5) Towage exchange loss (1.3) (2.8) Others 0.5 - Underlying profit/(loss) 2.2 (87.7) Derivatives M2M and one-off items 1.2 1.4 Profit/(loss) attributable to shareholders 2017 2016 Profit/(loss) attributable to shareholders 3.6 (86.5) Dry Bulk 2.6 (87.6) Towage (0.5) (0.1) EBITDA Others 1.5 1.2 133.8 22.8  In view of small net profit in 2017, the Board recommends not to pay a dividend for 2017  However, we continue to target a pay-out ratio of at least 50% of net profits excluding disposal gains once we return to a more meaningful level of profitability 13 2017 Annual Results *including write-back of onerous contract provisions