Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — RS Platou Markets Shipping Conference 2013

36 slides from Pacific Basin Shipping's conference presentation, Sep 26, 2013

  1. Slide 1: RS Platou Markets Shipping Conference

    > RS Platou Markets Shipping Conference New York, 26 September 2013 Pacific Basin 23 Sep 2013

  2. Slide 2: World's Largest Handysize Bulker Owner/Operator

    World’s Largest Handysize Bulker Owner/Operator Pacific Basin Dry Bulk Fleet Development 224 No. of vessels on the water  With a growing Handymax fleet 155  Listed in Hong Kong  US$1.3bill market cap (at 19 Sep 2013)  Global geographically  Diversified customers & cargo  Focus & growth of core

  3. Slide 3: Why Handysize?

    Why Handysize? 350 Bulk Carrier Fleet Growth Index deadweight basis, Sep 2003 = 100 pts 313 300  Modest Handysize fleet growth 269 250  Older age profile – higher scrapping Capesize 100k+ 225 Panamax 65-100k  Robust minor bulk demand 200 Handymax 40-60k  A segment in which scale & Handy 10-40k o

  4. Slide 4: Cargo Contract Business Model

    Cargo Contract Business Model Pacific Basin Handysize – Outperformance Compared to Market US$/day  Large portfolio of cargo contracts – 20,000 No outward timecharters  Large fleet of high-quality 15,000 $10,460 substitutable ships $9,290 10,000  High laden percentage 5,000  Model allows for both

  5. Slide 5: Why Secondhand Ships?

    Why Secondhand Ships? Handysize Newbuilding* 10 year old*  A slow steaming strategy Price 24 Mill 11 Mill  Well designed secondhand Japanese TCE / day 11,000 10,500 ships remain operationally competitive Opex & dd / day 5,000 5,500 EBITDA / year 2.2 Million 1.8 Million 28 Depreciation / year 0.8 M

  6. Slide 6: Taking Advantage of Strong Cash Position & Historically Low Prices

    Taking Advantage of Strong Cash Position & Historically Low Prices Pacific Basin Dry Bulk  Owned fleet of bulkers is growing from Owned Fleet 37 to 72 during 2013 No of Ships 80 72  All ships acquired in past year are 70 Japanese 60  Access to Japanese export credit 50 40 37 financing 30  Balanc

  7. Slide 7: Disclaimer

    Disclaimer This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks,

  8. Slide 8: 2013 Interim Results – Group Highlights

    2013 Interim Results – Group Highlights 1H13 1H12 Underlying Profit US$13.6m US$3.2m EBITDA US$59.4m US$53.7m Underlying Profit US$m Net Profit / (Loss) US$0.3m US$(195.9)m 13.6 Earnings per Share HK¢0.1 HK¢(79) Cash Position US$442.3m US$753.5m (31 Dec) 3.2  Group results were impacted by: 1H12 1H

  9. Slide 9: Pacific Basin Dry Bulk – 1H13 Performance

    Pacific Basin Dry Bulk – 1H13 Performance 1H13 Handysize US$ million  Handysize daily rate: US$9,290 (-12% YOY) Dry Bulk net profit 11.3  PB outperformed spot market by 32%  Handysize contribution 22.4  Respectable performance reflects value of our industrial and  Handymax contribution 4.3 cust

  10. Slide 10: Revenue Days and Earnings Cover

    Pacific Basin Dry Bulk Earnings Cover as at interim results announcement date Handysize Handymax 39,800 16,420 Uncovered Strong dry bulk Days Days Covered business model 33,060 1H Completed Days 28,740 enables us to 2H 64% Days 10,680 2H 66% Revenue Days outperform the US$9,350 Days US$10,060 2H 64%

  11. Slide 11: Dry Bulk Market Information

    Dry Bulk Market Information  Continued oversupply of larger ships impacted freight rates across all dry bulk segments  Lowest half-year average BDI since 1986  Handysize and Handymax freight rates significantly outperformed rates for larger Capesize ships  Increased buying interest and owners’ r

  12. Slide 12: Dry Bulk Demand

    Dry Bulk Demand Dry Bulk Effective Demand Chinese Minor Bulk Imports % change YOY Million tonnes 30 14 YTD Imports have 25 increased 13% YOY 12 25 24 23 21 21 10 7.3% 20 8 6 5.1% 15 4 15 2 10 2013 2012 0 2011 2010 -2 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -4 China imports of a basket of 7

  13. Slide 13: Global Dry Bulk Fleet Development

    Global Dry Bulk Fleet Development Handysize Age Profile (25,000-39,999 dwt) net fleet growth: Handysize Dry Bulk overall 2,137 vessels (68.8m dwt) 1 Jan – 30 June +1% +3% 30+ years 6% 25-29 years 13% 0-15 years Dry bulk net fleet growth: 11%  Driven by 35m tonnes of new capacity 70% 70%  Partially

  14. Slide 14: Dry Bulk Orderbook

    Dry Bulk Orderbook Handysize Orderbook 323 vessels (11.3m dwt) Million dwt 6 7.8%  New orders for large vessels increased significantly YOY 5 41% 6.9% due to lack of availability and increasing price of high-quality, Shortfall modern secondhand ships 5.7% 4 4.7% 3 3.8%  Handysize orderbook down fr

  15. Slide 15: Pacific Basin Dry Bulk – Outlook

    Pacific Basin Dry Bulk – Outlook  China’s continued strong demand for minor  Excessive newbuilding capacity, especially in bulks despite slower economic growth China, and competition from shipyards to win  Continued US economic recovery and reviving new orders industrialisation in North America 

  16. Slide 16: PB Towage – 1H13 Performance

    PB Towage – 1H13 Performance 1H13 Performance 1H13  Continued strong demand for marine logistics, offshore construction US$ million support and harbour towage solutions Towage net profit 12.6  Steady growth in harbour towage sector EBITDA 19.8  Continued activity across a number of LNG projects R

  17. Slide 17: PB Towage – Outlook

    PB Towage – Outlook  Growth in Australian bulk exports and port  Volatile global markets and hesitation in infrastructure development global economic recovery, amplified by a  Exclusive licences in a number of bulk ports credit squeeze in China, impacting growth in up for tender in 2015 onwards d

  18. Slide 18: 2013 Interim Financial Highlights

    2013 Interim Financial Highlights US$m 1H13 1H12 Segment net profit 25.8 18.2  Treasury (4.3) (0.9)  Discontinued Operations - RoRo (0.8) (8.5)  Non direct G&A (7.1) (5.6) Underlying profit 13.6 3.2  Unrealised derivative expenses (3.5) (9.1)  RoRo vessel exchange loss & impairment charge (8.3)

  19. Slide 19: Pacific Basin Dry Bulk

    Pacific Basin Dry Bulk Handysize 1H13 1H12 Change Revenue days (days) 23,740 19,210 +24% TCE earnings (US$/day) 9,290 10,540 -12% Owned + chartered costs (US$/day) 8,280 9,250 -11% Handysize contribution (US$m) 22.4 22.8 -2% Handymax contribution (US$m) 4.3 (1.4) +407% Post Panamax contribution (US$

  20. Slide 20: Daily Vessel Costs – Handysize

    Daily Vessel Costs – Handysize As at 30 June 2013 Charter-hire Finance cost Inward Charter Depreciation Commitments Opex Owned Chartered US$/day Including finance lease vessels Daily charter hire rates & days Blended US$8,280 (FY2012: US$8,910) 2013-2015 12,000 $10,520 $10,080 10,000 9,340 $8,990 8,

  21. Slide 21: Balance Sheet

    Balance Sheet PB PB Discontinued US$m Dry Bulk Towage Treasury RoRo 30 Jun 13 31 Dec 12 Vessels & other fixed assets 1,250 181 - - 1,436 1,270 Total assets 1,501 249 544 32 2,347 2,470 Long term borrowings 466 25 366 - 857 931 Total liabilities 616 39 373 3 1,051 1,138 Net assets 885 210 171 29 1,29

  22. Slide 22: Borrowings and Capex

    Borrowings and Capex The Group had cash balances of US$442m, borrowings of US$857m and a net borrowings ratio of 29% against the Net Book Value of property, plant and equipment US$m 250 230 200 Redeemable in Apr 2014 167 150 140 124 Redeemable in Oct 2016 100 83 84 77 65 50 31 38 36 29 28 22 18 18 5

  23. Slide 23: Cash Flow

    Cash Flow 1H2013 Sources and Uses of Group Cash Flow US$ m 900 Operating cash flow US$34.5m EBITDA US$59.4m 800 +35 +754 2H13 cash levels expected to be affected by: 700  Drawdown from US$67 million unutilised ECA facility -76  New loan facilities to be secured using our existing 50 unmortgaged ve

  24. Slide 24: Our Outlook and Strategy

    Our Outlook and Strategy We are focused on growth in our two core businesses Dry Bulk  Robust business model enables outperformance of the market, outperformance of larger ships  Expect Handy bulk market to remain weak in the rest of 2013  Demand to remain relatively healthy, but market needs tim

  25. Slide 25: Appendix: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Handymax dry bulk ships  Flexible Pacific Basin Dry Bulk business model  Large fleet of uniform, interchangeable, modern ships  Mix of owned and long-term, short-term chartered ships  Operating mainly on long ter

  26. Slide 26: Appendix: How we create value

    Appendix: How we create value Our large, flexible Fleet Our strong corporate profile  Large scale, high-quality dry bulk fleet  Founded in 1987  Interchangeable nature provides flexibility  Strong balance sheet enhancing our to customers and ability to optimise profile as a preferred counterpart

  27. Slide 27: Pacific Basin Dry Bulk – Diversified Cargo

    Appendix: Pacific Basin Dry Bulk – Diversified Cargo Pacific Basin Handysize and Handymax Cargo Volume 1H13 Minerals Agricultural Products Salt 3% 9% Grains & Agricultural Products 16% Sand & Gypsum 6% Fertiliser 8% Sugar 4% 28% Metals 18% 22.4 Alumina 4% Ores 8% Million Tonnes Concentrates & Other

  28. Slide 28: Appendix: China at late-Industrialisation Stage

    Appendix: China at late-Industrialisation Stage Steel Consumption Per Capita Tons per Capita 1.0  China growth matches historical trend in Japan and Korea 0.9  Suggests strong growth in dry bulk 0.8 segment to remain for medium term 0.7  Similar trend for electricity and cement 0.6 0.5 0.4 0.3 0.

  29. Slide 29: Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand

    Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand Chinese Dry Bulk Trade Volume China is a significant net importer China Iron Ore Sourcing of coal in 1H13 for Steel Production % of total dry m tonnes bulk trade m tonnes m tonnes 400 1,400 1,200 32% 1,245 29% 28% 350 1,134 1,200 27% 26% 309 900

  30. Slide 30: Pacific Basin Dry Bulk – Handymax

    Appendix: Pacific Basin Dry Bulk – Handymax 1H13 1H12 Change Revenue days (days) 9,050 6,940 +30% TCE earnings (US$/day) 10,570 11,520 -8% Owned + chartered costs (US$/day) 10,060 11,720 -14% Handymax contribution (US$m) 4.3 (1.4) +407% Post Panamax contribution (US$m) 2.9 2.8 +4% Total contribution

  31. Slide 31: Daily Vessel Costs – Handymax

    Appendix: Daily Vessel Costs – Handymax Charter-hire As at 30 June 2013 Finance cost Depreciation Inward Charter Opex Commitments Owned Chartered US$/Day Daily charter hire rates & days Blended US$10,060 (FY2012: US$11,240) 2013-2015 14,000 $13,720 $12,880 12,000 11,430 10,250 $10,190 10,000 8,550 8

  32. Slide 32: Appendix: Towage Segment Operating Performance Before Overheads

    Appendix: Towage Segment Operating Performance Before Overheads As at 30 June 2013 US$m % 30 15 12.0% Operating performance US$22.3m 25 11.5% 12 22.3 22.1 Direct overheads US$(9.7)m 20 9 Segment net profit US$12.6m 15 39.4 15.2 15.3 6 EBITDA US$19.8m 10 3 5 6.4 6.2 0 0.5 0.8 0 1H12 1H13 Offshore & I

  33. Slide 33: Appendix: Capex and Combined Vessel Value

    Appendix: Capex and Combined Vessel Value A Combined View of Vessels Commitments Vessel Carrying Values and Commitments Total US$298m Total US$1,735m US$m US$m 180 167 1,600 1,555 160 298 1,400 140 52 1,200 120 113 100 1,000 84 80 800 20 60 600 1,144 115 40 29 400 3 64 18 20 180 26 18 200 0 0 2H13 2

  34. Slide 34: Appendix: PB RoRo

    Appendix: PB RoRo US$ Million 2H13 2014 2015 Total Interest Income - Treasury 3.8 6.1 2.9 12.8 Exchange Losses - Unallocated - (5.0) - (5.0) Total 3.8 1.1 2.9 7.8  Considered a discontinued operation  2012: Agreed sale of all 6 RoRos to Grimaldi for Eur153m (approx. US$188m)  All 6 vessels to be

  35. Slide 35: Appendix: Convertible Bonds Due 2018

    Appendix: Convertible Bonds Due 2018 Issue size US$123.8 million Maturity Date 22 October 2018 (6 years) Investor Put Date and Price 22 October 2016 (4 years) at par PB’s Call Option 1) Trading price for 30 consecutive days > 130% conversion price in effect 2) >90% of Bond converted / redeemed / pur

  36. Slide 36: Appendix: Convertible Bonds Due 2016

    Appendix: Convertible Bonds Due 2016 Issue size US$230 million Maturity Date 12 April 2016 (6 years) Investor Put Date and Price 12 April 2014 (4 years) at par Coupon 1.75% p.a. payable semi-annually in arrears on 12 April and 12 October Redemption Price 100% Initial Conversion Price HK$7.98 (Curren

Pacific Basin Shipping — RS Platou Markets Shipping Conference 2013 on 6ix