Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — FY2010 Earnings Presentation

34 slides from Pacific Basin Shipping's earnings presentation, Mar 1, 2011

1. Slide 1: 2010 Annual Results

   Pacific Basin 2010 Annual Results 1 March 2011 - Analyst 1

2. Slide 2: 2010 Group Highlights

   2010 Group p Highlights g g ƒ Net Profit: US$104m (2009: US$110m) Net Profit, Underlying Profit US$m & Cash Flow ƒ Underlying y g Profit: US$120m (2009: US$116m) Cash flow ƒ Basic EPS: HK$0.42 (2009: HK$0.46) Underlying Profit Net Profit 199 ƒ ROE: 7% (2009: 9%) 145 ƒ Operating cash flow: US$199m (2

3. Slide 3: Pacific Basin Dry Bulk Performance

   Pacific Basin-Dry Bulk Performance Pacific Basin Dry Bulk Fleet: 136 ƒ Dry bulk net profit: US$145m (↑17% vs 2009) as at 25 Feb 2011 Average age: 66.4 4 years ƒ Handysize: US$136m (↑10%) Owned + ƒ Handymax: US$9m (↓35%) 92 Committed ƒ 31.7m tonnes of cargoes were carried in 2010 (↑9.4%) Chartered NB

4. Slide 4: Differentiated from BDI & Traditional Ship Owning

   Differentiated from BDI & Traditional Ship Owning Fleet Smaller bulk carrier segment ƒ Modern, large scale & interchangeable ships benefits from: ƒ Ability to change market exposure through charter activity ti it ƒ Handysize orderbook ƒ Higher utilisation and earnings ability through smaller than sh

5. Slide 5: Dry Bulk Market Information

   Dry y Bulk Market Information Sector Earnings Performance in 2010 versus Average 2009 200% Handysize has been the 180% best performer in 2010 160% 140% 120% Handysize (BHSI) 100% Handymax (BSI) 80% Panamax (BPI) 60% 40% Capesize (BCI) 20% Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Baltic Dry Index US

6. Slide 6: 2010 Dry Bulk Market

   2010 Dry y Bulk Market 1H 2010 2H 2010 ƒ Buoyancy early in the year: ƒ Weakness in the second half 2010: ƒ Strong gggrowth in minor bulk ƒ Seasonallyy reduced activity y mid y year commodity demand from China ƒ Chinese government policy on and other emerging economies energy consumption reduced ƒ Re

7. Slide 7: Chinese Dry Bulk Trade

   Chinese Dry y Bulk Trade Chinese Dry Bulk Trade Volume Utilisation of the dry bulk fleet m tonnes m tonnes Ratio 1200 3,295 28% 3,500 8.5 26% 2,965 , 900 3,000 8.0 2,500 600 7.5 14% 1018 2,000 11% 957 1,500 7.0 300 8% 8% 1,000 6.8 6.5 500 6.7 0 0 6.0 -129 -159 01 02 03 04 05 06 07 08 09 10 -300 2005

8. Slide 8: Strong Minor Bulk & Coal Demand from China

   Strong Minor Bulk & Coal Demand from China China Soya Bean Import China Imports of Forest Products China Imports of Copper Concentrates m tonnes m tonnes m tonnes 60 +29% 54.8 30 +19% 28.2 3.5 3.2 -6% 50 25 23.7 42 6 42.6 3.0 3.0 40 20 2.5 30 15 2.0 20 10 1.5 1.0 10 5 0.5 0 0 0 2006 2007 2008 2009 2

9. Slide 9: Dry Bulk Demand

   Dry Bulk Demand Dry Bulk Fleet Effective Demand % change YOY % Change 24.2 YOY 25 18 20 13.4 14.4 14.0 15 13.0 15 9.4 10.7 5.6 12 10 7.9 6.7 9 5 6 0 3 6.1 4.3 -5 -0.3 3.8 0 -10 0.2 -5.9 -33 -8.3 8.3 -15 -10.5 2005 2006 2007 2008 2009 2010E Q1 Q2 Q3 Q4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2008 2009 2010E China co

10. Slide 10: Dry Bulk Fleet Changes

    Dry Bulk Fleet Changes ƒ79m tonnes of new dry bulk capacity delivered in 2010, growth 16.7% net YOY y ƒHandysize fleet 2010 g growth 11% net YOY ƒ38% delivery shortfall in 2010 against scheduled orderbook ƒ41% of handysize fleet is over 25 years old High scrapping price supports scrapping activities

11. Slide 11: Dry Bulk Orderbook

    Dry Bulk Orderbook Handysize Scheduled Orderbook 738 vessels (24.8m dwt) - 39% ƒ 137 m dwt* of new dry bulk capacity scheduled to m dwt 18 23% deliver this year (2010: 126m) 15 21% ƒ We expect 3030-40% 40% of slippage in 2011, net 12 13% deliveries before scrapping in 2011 will be 15-18% 12% 9 ƒ Min

12. Slide 12: Pacific Basin Dry Bulk Earnings Coverage

    Pacific Basin Dry y Bulk Earnings g Coverage g as at 17 Feb 2011 2011 Total Combined Cover: 56% Handysize Handymax Revenue Days ƒ Solid coverage: our cargo (US$/day) Unfixed contracts performed as 29,070 days 26,100 days Fixed expected in 2010 with no 22,950days counterparty defaults ƒ 4% of Handysi

13. Slide 13: Dry Bulk Outlook

    Dry Bulk Outlook Positive Factors Negative Factors ƒ China’s continued dependence on ƒ Continued excessive newbuilding imported p minor bulks from further afield d li i deliveries ƒ Strong growth in developing countries ƒ Dry bulk demand stifled by shortfall increased steel & raw materials demand in

14. Slide 14: PB Energy & Infrastructure Services

    PB Energy & Infrastructure Services US$m Towage Fleet: 42 vessels Offshore/project supply & harbour towage services (“Towage”) 1.0 (as at 25 Feb 2011) PacMarine Services 1.0 2 Chartered Tugs Fujairah Bulk Shipping (“FBSL”) 2.9 7 Barges Segment net profit in 2010 (2009: US$8.2m) 4.9 32 Owned Tugs 1 B

15. Slide 15: Energy & Infrastructure – Outlook

    Energy & Infrastructure – Outlook Positive Factors Negative Factors ƒ Increasing oil and energy prices are ƒ Slow resumption of infrastructure and leading to more offshore projects and offshore projects in the Middle East related infrastructure development ƒ Some further delays to new project activi

16. Slide 16: PB RoRo

    PB RoRo Net loss in 2010: -US$1.1m (2009: Profit US$0.1m) World RoRo Fleet 438 Vessels ƒ Slow export-led p recovery y in European p (862,453 Lane Metres) economy remains fragile ƒ Charter demand for RoRo vessels is still very weak and well below what we had expected a 30+ Year 29% year ago 0-14 Year

17. Slide 17: RoRo – Outlook

    RoRo – Outlook Positive Factors Negative Factors ƒ Global and especially European economic ƒ Significant number of large RoRo recovery expected to support modest newbuilding scheduled to deliver in 2011 growth in trailer volumes and short-sea ƒ Excess capacity and reluctant to charter RoRo trades ne

18. Slide 18: 2010 Financial Highlights

    2010 Financial Highlights As at 31 December 2010 2010 2009 Segment net profit 146.3 141.9 Treasury (18.5) (13.8) Non direct G&A (8.0) (12.3) Underlying profit 119.8 115.8 Unrealised derivative expenses (12.4) (4.5) Impairment of Fujairah Bulk Shipping (19.1) - Gain from partial sale of shares in Gre

19. Slide 19: Pacific Basin Dry Bulk – Handysize

    Pacific Basin Dry Bulk – Handysize As at 31 December 2010 1H10 2H10 2010 2009 Change Revenue days (days) 13,940 15,130 29,070 26,100 +11% TCE earnings g ((US$/day) y) 16,840 , , 16,670 16,750 , 14,500 , +16% Owned + chartered cost (US$/day) 11,750 12,170 11,970 9,690 +24% Segment net profits (US$m)

20. Slide 20: Daily Vessel Costs - Handysize

    Daily Vessel Costs - Handysize Year ended 31 Dec 2010 Owned Chartered US$/day Blended US$11,970 US$11 970 (2009: US$9,690) US$9 690) Opex Charter-hire days & rates Depreciation 2011-2013 Finance cost 14,700 US$11,650 $ , US$11 570 US$11,570 Direct overhead 500 Charter-hire US$11,480 10,380 8,770 480

21. Slide 21: Balance Sheet

    Balance Sheet As at 31 Dec 2010 PB PB PB US$ US$m Dry Bulk EIS RoRo Treasury 31 Dec 10 31 Dec 09 Vessels & other fixed assets 829 224 429 - 1,519 998 Total assets 979 291 444 680 , 2,555 , 2,470 Long term borrowings 185 45 55 575 860 877 Total liabilities 288 62 59 576 1,011 1,014 Net assets 691 229

22. Slide 22: Borrowings and Capex

    Borrowings and Capex As at 31 Dec 2010 + Funded from US$703m cash, Authorised commitments new borrowings, and US$m future operating cashflows 250 230 Redeemable in Apr 2014 200 159 150 120 125 105 111 100 61 69 50 44 43 44 37 21 26 16 17 18 20 20 10 8 0 2011 2012 2013 2014 2015 2016 2017 2018-2021 V

23. Slide 23: Cashflow

    Cashflow Year ended 31 Dec 2010 US$m 2010 2009 Operating cash inflows 199 145 Investing cash out / inflows (462) (178) - Vessels & other fixed assets related payments (541) (298) - Sales of vessels - 105 - JJointly y controlled entities related p payments y and receipts p ((10)) 45 - Disposal of par

24. Slide 24: Outlook

    Outlook ƒ We anticipate the dry bulk market will be weaker than 2010 ƒ Recovery from regional export disruptions and increased scrapping will be ultimately eclipsed by continued excessive newbuilding deliveries during the year ƒ Prospects for minor bulk segments in long term remain positive ƒ Busine

25. Slide 25: 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,

26. Slide 26: Appendix: Pacific Basin Overview

    Appendix: pp Pacific Basin Overview ƒ One of the world’s leading dry bulk owners & operators of modern handysize and handymax vessels ƒ Flexible Pacific Basin dry bulk business model ƒ Large scale fleet of uniform, interchangeable modern vessels ƒ Mix of owned, long-term and short-term chartered shi

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

    Appendix: Pacific Basin Dry Bulk - Diversified Cargo Pacific Basin Dry Bulk Cargo Volume 2010 Alumina 6% (0%) Coal / Coke 7% (-2%) Concentrates 10% (+2%) 31.7 Other Bulks 5% (0%) Million Fertilisers 8% (+1%) Cement & Tonnes Cement Clinker 6% (-2%) Logs & Forest +9.4% 12% (+3%) Products Grains & Agri

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

    Appendix: China at late-Industrialisation Stage Steel Consumption p Per Capita p China (from 1990) ƒ China growth matches Tons per Capita Japan (from 1950) 1.0 Korea (from 1970) historical trend in India (from 2005) 0.9 JJapan p and Korea 0.8 ƒ Suggests strong 0.7 growth in dry bulk 0.6 05 0.5 segme

29. Slide 29: Appendix: Chinese Iron Ore Demand

    Appendix: pp Chinese Iron Ore Demand m tonnes China Iron Ore Sourcing for Steel Production 11% 1,100 2004-2010 CAGR for Iron ore import: 17% 1,002 900 906 700 628 619 -1% Slow down of Chinese iron ore 500 import mainly due to the Chinese 383 300 278 energy conservation policy 100 2004 2005 2006 2007

30. Slide 30: Appendix: Pacific Basin Dry Bulk – Handymax

    Appendix: Pacific Basin Dry y Bulk – Handymax y As at 31 December 2010 1H10 2H10 2010 2009 Change Revenue days (days) 5,570 5,880 11,450 10,640 +8% TCE earnings g ((US$/day) y) 23,680 , , 21,520 22,570 , 19,490 , +16% Owned + chartered cost (US$/day) 22,050 21,350 21,690 18,120 +20% Segment net prof

31. Slide 31: Appendix: PB Energy & Infrastructure Services, PB RoRo

    Appendix: PB Energy & Infrastructure Services PB RoRo R R As at 31 Dec 2010 2010 2009 PB Energy & Infrastructure Services Offshore and project supply and harbour towage services (“Towage”) 1.0 1.0 PacMarine Services 1.0 0.9 Fujairah Bulk Shipping (“FBSL”) 2.9 6.3 Segment net profit 4.9 8.2 PB RoRo s

32. Slide 32: Appendix: Capex and Combined Value by Vessel Types

    Appendix: Capex and Combined Value by Vessel Types As at 31 Dec 2010 + Authorised commitments Vessels Commitments A Combined View of (including authorised commitments) Vessel Carrying Values and Commitments US$m Total US$411m US$m Total US$1,925m 180 159 1,226 150 120 364 120 87 111 25 122 90 3 78 6

33. Slide 33: Appendix: Impact of Financial Instruments

    Appendix: Impact of Financial Instruments US$m Realised Unrealised 2010 2009 Net Gains / (Losses) Forward freight agreements (3.4) (3.4) (6.8) (25.7) Bunker swap contracts 6.0 (8.2) (2.2) 45.7 Interest rate swap contracts (5.5) (0.8) (6.3) 1.2 (2.9) (12.4) (15.3) 18.8 ƒ Cash settlement of contracts

34. Slide 34: 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$7.79 (with e

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