Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — H1 2017 Earnings Presentation

34 slides from Pacific Basin Shipping's earnings presentation, Jul 28, 2017

  1. Slide 1: 2017 Interim Results

    E Pacific Basin / TEAM » + CARGOES + RELATIONSHIPS + BUSINESS MODEL = PERFORMANCE | oan | 2017 Interim Results a2 —

  2. Slide 2: 2017 Interim Results - Highlights

    2017 Interim Results - Highlights 1H17 1H16 EBITDA US$56.6m US$(5.0)m Underlying Loss US$(6.7)m US$(61.6)m Net Loss US$(12.0)m US$(49.8)m Cash Position US$247.6m US$406.1m Net Gearing 40% 29% (New borrowings/Net book value of PP&E)  2017 Market freight rates well above historic lows one year ago an

  3. Slide 3: 1H17 Performance and 2H17 Cover

    1H17 Performance and 2H17 Cover As at 26 July 2017 US$/day Handysize Supramax PB daily TCE rate 1H17 1 $7,920 $8,920 Market Index Rate $6,590 $8,010 PB Outperformance $1,330 $910 20% 11% PB daily TCE cover 2H17 $8,360 $9,830 % of Contracted Days Covered 57% 80% 1 Excluding short-term vessels days: H

  4. Slide 4: Handysize Market Rates Development in 1H17

    Handysize Market Rates Development in 1H17 Baltic Handysize Index (BHSI)  Key drivers for 1H17 actual: US$/day net* 2016  1Q17 dry bulk effective demand 4.9% $9,000 $8,080 compared to +0.4% in 1Q16 and -1.7% $8,000 26 Jul 2017 in 1Q15 $6,970 $7,000  Improved North & South American grain $6,000 20

  5. Slide 5: Supramax Rates Follow Same Pattern

    Supramax Rates Follow Same Pattern Baltic Handysize Index (BHSI) and Baltic Supramax Index (BSI) # YTD 2017 US$/day net* BSI $10,000 $8,700 $9,000 $8,000 $7,000 $6,000 BHSI $5,000 $6,970 $4,000 $3,000 $2,000 $1,000 $0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 * excludes 5% commission # BSI is

  6. Slide 6: Atlantic Rates Stronger than Pacific

    Atlantic Rates Stronger than Pacific Handysize (BHSI) Supramax (BSI) # US$/day net* US$/day net* 12,000 14,000 12,000 10,000 Atlantic 10,000 Atlantic 8,000 $7,340 $8,440 8,000 Pacific 6,000 $8,200 Pacific 6,000 4,000 $6,600 4,000 2,000 2,000 0 0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Jan-1

  7. Slide 7: PB Focus: Estimated 3.9% Growth in Seaborne Dry Bulk Demand

    Estimated 3.9% Growth in Seaborne Dry Bulk Demand in Full Year 2017 (Volume) Million Tonnes YOY Change 5% Iron Ore 1,488 Coal 3% 1,173 4.3% Major bulk total 2,661 20% Manganese Ore 30 7% Soybean 144 Fertiliser 161 7% Clarksons estimate FY2017: 6% Scrap Steel 107 Bauxite / Alumina 120 5%  3.9% Effec

  8. Slide 8: Orderbook Continues to Shrink

    Orderbook Continues to Shrink Handysize Orderbook New Vessel Ordering is Down 170 vessels (6.3 million dwt) % of Fleet (dwt) Mil Dwt 50% Historically low 5.0 5.9% levels of ordering 40% 4.0 49% 4.5% 30% Shortfall 3.0 20% 2.9% H’max: 0.7% 4.6m 2.5% 2.0 10% H’size: 0.5% 2.3m 1.0% 0% 1.0 2000 2005 2010

  9. Slide 9: Vessel Values Increased

    Vessel Values Increased Handysize Vessel Values US$ Million 60 50 40 30 Newbuilding (35,000 dwt): US$21.5m 20 10 5 years (32,000 dwt): US$14m 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17  Improved freight market conditions supported increased vessel values  Sale and purchase activity has increased

  10. Slide 10: Dry Bulk Supply & Demand

    Dry Bulk Supply & Demand % YOY 10  Demand is recovering and 8 outpacing supply so far in 2017  For full year 2017: 6 4.9%  Clarksons estimate effective 4 demand growth of 3.9% 2.2% 3.4%  PB estimate net supply growth 2 around 3% (5% deliveries – 2% scrapping) 1.9% 0  Progressively fewer new shi

  11. Slide 11: 2017 First Half Financial Highlights

    2017 First Half Financial Highlights US$m 1H17 1H16 Dry Bulk (6.3) (60.4) Towage & Others (0.4) (1.2) Underlying loss (6.7) (61.6)  Unrealised derivative (expenses)/income (2.6) 13.7  Office relocation costs (1.4) -  Impairment of towage vessels (0.9) -  Sales of vessels (0.4) (1.9) Loss attribu

  12. Slide 12: 1H17 By Vessel Segment

    1H17 By Vessel Segment Handysize 1H17 1H16 Change Revenue days (days) 25,660 23,070 +11% TCE earnings (US$/day) 7,920 6,080 +30% Owned + chartered costs (US$/day) 7,550 7,300 -3% Handysize contribution (US$m) 7.8 (30.2) >+100% Supramax Revenue days (days) 17,330 14,180 +22% TCE earnings (US$/day) 8,

  13. Slide 13: Balance Sheet

    Balance Sheet US$m 30 Jun 17 30 Dec 16 Vessels & other fixed assets 1,763 1,653 Total assets 2,204 2,107 Total borrowings 952 839 Total liabilities 1,174 1,066 Net assets 1,030 1,041 Net borrowings (total cash US$248m) 705 570 Net borrowings to net book value of property, plant and equipment 40% 34%

  14. Slide 14: 1H17 Daily Vessel Costs – Handysize

    1H17 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2017 Depreciation Charter-hire : Index-linked Opex Owned Chartered Inward Charter Commitments US$/day Days & rates Blended US$7,550 (FY2016: US$7,320) 2017-2018 10,000 Vessel Days 7,840 7,6

  15. Slide 15: 1H17 Daily Vessel Costs – Supramax

    1H17 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 30 June 2017 Opex Owned Chartered Inward Charter Commitments US$/day Days & Rates Blended US$8,360 (FY2016: US$6,830) 2017-2018 Vessel Days 10,000 8,590 8,40

  16. Slide 16: Borrowings and Capex

    Borrowings and Capex As at 30 June 2017 Secured borrowings (US$835.9m) Convertible bonds (face value US$125.0m, book value US$116.5m, maturity July 2021)  Our final 7 newbuildings delivered in 1H17, all remaining facilities were drawn down 2017 Interim Results 15

  17. Slide 17: Cash Flow in 1H17

    Cash Flow in 1H17 As at 30 June 2017 Operating cash flow US$47.6m EBITDA US$56.6m Borrowings increased by US$106m due to:  Net repayment of US$52m of secured borrowings  Drew down US$158m:  US$140m Japanese export credit facilities  US$18m other borrowings on 2 existing vessels Capex US$119m new

  18. Slide 18: Our Ability to Outperform

    Our Ability to Outperform Our TCE Outperformance Compared to Market Our business model has been refined over many years. We are Baltic Handysize Index - net rate able to generate a TCE earnings premium over market rates PB Handysize Performance because of our high laden percentage (minimum ballast l

  19. Slide 19: Our Outlook and Strategy

    Our Outlook and Strategy Dry Bulk Outlook Pacific Basin Benefits:  Market conditions have improved since last year and we believe the worst of Fully Handysize & Supramax the current Dry Bulk market cycle is behind us focused  Demand has recovered and should benefit from growing grain consumption f

  20. Slide 20: 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,

  21. Slide 21: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Supramax dry bulk ships  Cargo system business model – outperforming market rates  About 250 dry bulk ships on the water serving major industrial customers around the world  Hong Kong headquarters, 12 offices worl

  22. Slide 22: Strategic Model

    Appendix: Strategic Model MARKET-LEADING COMPREHENSIVE GLOBAL CUSTOMER FOCUS & SERVICE OFFICE NETWORK Priority to build and sustain long-term Integrated international service enhanced by customer relationships experienced commercial and technical staff around the world Solution-driven approach ensur

  23. Slide 23: Understanding Our Core Market

    Appendix: Understanding Our Core Market 2017 Interim Results 22

  24. Slide 24: Why Handysize? Why Minor Bulk?

    Appendix: Why Handysize? Why Minor Bulk? Full Year 2017E Global Dry Bulk Trade  More diverse customer, cargo and 5.1 billion tonnes (+3.5% YOY) geographical exposure enables high utilisation Pacific Basin  A segment where scale and operational focuses on 38% expertise make a difference these growi

  25. Slide 25: Earnings Cover in 2017

    Appendix: Earnings Cover in 2017 Handysize Supramax Contracted Revenue Days 47,080 27,120 42,490 Days Days Days 23,250 36,480 Days Days 2H 80% 2H 2H 57% $9,830 58% $8,360 2H 65% $7,670 FY17 $8,020 FY17 81% 93% 10,480 $8,060 17,330 $9,200 Days 23,070 25,660 14,180 days days days days 100% 100% 10% 10

  26. Slide 26: Fleet List – 30 Jun 2017

    Appendix: Fleet List – 30 Jun 2017* Pacific Basin Dry Bulk Fleet: 257 www.pacificbasin.com Average age of core fleet: 7.3 years old Customers > Our Fleet Owned Chartered * Total Handysize 79 73 152 Supramax 21 82 103 Post-Panamax 1 1 2 Total 101 156 257 * Average number of vessels operated in June 2

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

    Appendix: Pacific Basin Dry Bulk – Diversified Cargo Our Dry Bulk Cargo Volumes (1Jan17 – 30Jun17)  Diverse range of commodities reduces product risk  China and North America were our largest market  60% of business in Pacific and 40% in Atlantic 2017 Interim Results 26

  28. Slide 28: Sustainability

    Appendix: Sustainability  Applying sustainable thinking in our decisions and the way we run our business 2016 CSR Report  Creating long-term value through good corporate www.pacificbasin.com/ar2016 governance and CSR Corporate Social Responsibility (CSR)  Guided by strategic objectives on (i) wor

  29. Slide 29: Convertible Bonds Due 2021

    Appendix: Convertible Bonds Due 2021 Issue size US$125 million Maturity Date 3 July 2021 (approx. 6 years) Investor Put Date and Price 3 July 2019 (approx. 4 years) at par Coupon 3.25% p.a. payable semi-annually in arrears on 3 January and 3 July Redemption Price 100% Initial Conversion Price HK$4.0

  30. Slide 30: Supramax Rates Follow Same Pattern

    Appendix: Supramax Rates Follow Same Pattern Baltic Supramax Index (BSI) # US$/day net* 26 Jul 2017 $10,000 $8,560 $8,000 2016 $6,000 $8,970 $4,000 2015 $2,000 $4,470 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2016 2015 * excludes 5% commission # BSI is based on a standard 52,000 dwt bu

  31. Slide 31: Vessel Values Increased

    Appendix: Vessel Values Increased Handymax Vessel Values US$ Million 80 70 60 50 40 Newbuilding (61,000 dwt): US$23.5m 30 20 10 5 years (56,000 dwt): US$16m 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Source: Clarksons Platou, as at 26 Jul 2017 2017 Interim Results 30

  32. Slide 32: 1H17 Dry Bulk Supply Development

    Appendix: 1H17 Dry Bulk Supply Development Mil Dwt % 80 8 Jan-Jun:2.3% 6 60 47 40 4 18 1.7% 2 20 2.2% 8 0.6% 0 0 4.5 3.5 -20 -2 -40 29 -4 2013 2014 2015 2016 1Q17 2Q17 New Deliveries Scrapping Net Fleet Growth Source: Clarksons Platou 2017 Interim Results 31

  33. Slide 33: Dry Bulk Supply

    Appendix: Dry Bulk Supply Orderbook Average Over Over 1H17 Scrapping as as % of Age 20 Years 15 Years % of Existing Fleet Existing as at 1 Jul 2017 Fleet (annualised) Handysize (25,000-39,999 dwt) 8% 8.6 10% 16% 1.9% Handymax (incl. Supramax) (40,000-64,999 dwt) 6% 8.3 7% - 2.0% Panamax (65,000-119,

  34. Slide 34: China Major and Minor Bulk Trade

    Appendix: China Major and Minor Bulk Trade China Coal Trade 2017 Chinese Minor Bulk Imports Mil Tonnes Mil Tonnes 350 35 Increased 15% YOY 300 30 247 257 250 25 200 20 15 150 10 100 5 50 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -9 -11 -50 06 07 08 09 10 11 12 13 14 15 16 17E 2015 2016 201

Pacific Basin Shipping — H1 2017 Earnings Presentation on 6ix