Slide 1: Pacific Basin 2016 Annual Results
Pacific Basin 28 Feb 2017
Slide 2: 2016 Annual Results – Highlights
2016 Annual Results – Highlights 2016 2015 Operating Cash Flow US$50m US$99m EBITDA US$23m US$93m Cash Position US$269m US$358m Net Gearing 34% 35% Record low dry bulk market conditions significantly undermined our results in 2016 Net loss of US$87m Our Handysize daily TCE earnings outperforme
Slide 3: Our Performance in 2016 and Cover for 2017
Our Performance in 2016 and Cover for 2017 As at 23 Feb 2017 US$/day Handysize Supramax PB daily TCE rate 1 $6,630 $6,740 Market Index Rate $4,950 $5,920 2016 PB Outperformance $1,680 $820 34% 14% PB daily TCE cover $8,200 $8,680 2017 % of Contracted Days Covered 44% 71% 1 Excluding short-term days:
Slide 4: Freight Market Improves From Very Low Base
Freight Market Improves From Very Low Base Baltic Handysize Index (BHSI) and Atlantic vs Pacific Spot Rates US$/day net* Baltic Supramax Index (BSI) Atlantic Pacific 10,000 BSI: US$/day net* Supramax 9,000 $7,920 14,000 8,000 12,000 7,000 10,000 Atlantic: 6,000 8,000 $8,470 5,000 BHSI: 6,000 Pacific
Slide 5: Market Freight Rates Development
Market Freight Rates Development Baltic Handysize Index (BHSI) US$/day net* $9,000 $8,000 2016 $8,080 $7,000 2017 $5,860 $6,000 $5,000 2015 $4,000 $3,760 $3,000 $2,000 Significant difference in $1,000 development since Sep 2016 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Typical seasonal decl
Slide 6: Global Dry Bulk Demand
Global Dry Bulk Demand Global Dry Bulk Seaborne Trade Growth in FY 2016 (Volume) Million Tonnes YOY Change Iron Ore 1,412 4% Coal 2016: 1,135 0% Sub major bulk total 2,547 2.0% Dry bulk volume growth: 1.2% Copper Concentrates 29 12% Dry bulk effective demand: 2.0% Sugar 62 11% Cement 109 6% Soyb
Slide 7: Secondhand Vessel Values Recovering
Secondhand Vessel Values Recovering Handysize Vessel Values US$ Million 55 50 45 40 35 23 Feb 2017 Newbuilding (35,000 dwt): 30 US$19.5m 25 20 15 10 5 years (32,000 dwt): US$13.5m 5 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Ship values stabilised at end 1Q16, have since increased with improved fre
Slide 8: Self Correcting Supply Factors
Self Correcting Supply Factors New Vessel Ordering is Down Fleet Growth is Reducing Total ordering vs 18% Total Dry Bulk existing fleet 16% Year-on-Year Net Fleet Growth 50% 43% 14% 12% 40% 10% 30% 8% 6% 1 Jan 2017: 20% 4% 2.3% 10% 2% 2% 0% 06 07 08 09 10 11 12 13 14 15 16 0% 03 04 05 06 07 08 09 10
Slide 9: Dry Bulk Supply & Demand
Dry Bulk Supply & Demand YOY (%) Supply: FY2016 global net fleet growth about 2.3% 10 Positive factors: 8 Fewer ships delivering in 2017-18 Higher oil prices reduces sensitivity of ship operating 6 speeds to increasing freight rates Ballast water management convention will encourage 4 scra
Slide 10: 2016 Financial Highlights
2016 Financial Highlights US$m 2016 2015 Dry Bulk (87.6) (34.7) Towage & Others (0.1) 6.9 Underlying loss (87.7) (27.8) Unrealised derivative income 23.6 8.8 Sale of properties 1.7 - Vessel impairments (15.2) - Sale of towage assets (4.9) 2.8 Towage exchange charge (2.8) (1.5) Other impa
Slide 11: 2016 Pacific Basin Dry Bulk
2016 Pacific Basin Dry Bulk Handysize 2016 2015 Change Revenue days (days) 47,590 51,600 -8% TCE earnings (US$/day) 6,630 7,870 -16% Owned + chartered costs (US$/day) 7,320 7,930 +8% Handysize contribution (US$m) (37.1) (8.4) >-100% Supramax Revenue days (days) 29,590 23,300 +27% TCE earnings (US$/d
Slide 12: 2016 Daily Vessel Costs – Handysize
2016 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2016 Opex Owned Chartered Inward Charter Commitments US$/day Days & rates Blended US$7,320 (2015: US$7,930) 2016-2017 10,000 Vessel Days 8,460 7
Slide 13: 2016 Daily Vessel Costs – Supramax
2016 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2016 Opex Owned Chartered Inward Charter Commitments US$/Day Days & Rates 10,000 Blended US$6,830 (2015: US$8,190) 2016-2017 8,490 8,590 Vessel D
Slide 14: 2016 Balance Sheet
2016 Balance Sheet US$m 31 Dec 16 31 Dec 15 Vessels & other fixed assets 1,653 1,611 Total assets 2,107 2,146 Total borrowings 839 926 Total liabilities 1,066 1,175 Net assets 1,041 971 Net borrowings (total cash US$269m) 570 568 Net borrowings to net book value of property, plant and equipment 34%
Slide 15: Borrowings and Capex
Borrowings and Capex As at 31 December 2016 Secured borrowings (US$723.8million) Vessel capital commitments (US$119.1million) Convertible bonds (face value US$125million, book value US$115.4million, maturity July 2021) US$158m of undrawn committed borrowing including: US$140m of Japanese export
Slide 16: Cash Flow in 2016
Cash Flow in 2016 As at 31 December 2016 Operating cash flow US$49.5m EBITDA US$22.8m Borrowings decreased by US$94m due to: 2016CB repayment of US$106m 2018CB repayment of US$124m Net repayment of US$70m of secured borrowings Drew down US$205m of new secured borrowings 2016 Annual Results 1
Slide 17: 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
Slide 18: Our Outlook and Strategy
Our Outlook and Strategy Dry Bulk Outlook Pacific Basin Benefits: Demand is growing for agricultural products & construction material, our two largest cargo groups Fully Handy focused Infrastructure investment spending from China and US bodes well for dry bulk shipping Increasing fuel prices a
Slide 19: 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,
Slide 20: Appendix: 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 200 dry bulk ships on the water serving major industrial customers around the world Hong Kong headquarters, 12 offices worl
Slide 21: Appendix: 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
Slide 22: Appendix: Understanding Our Core Market
Appendix: Understanding Our Core Market 2016 Annual Results 22
Slide 23: Appendix: Why Handysize? Why Minor Bulk?
Appendix: Why Handysize? Why Minor Bulk? Estimated Full Year 2016 Global Dry Bulk Trade More diverse customer, cargo and 4.9 billion tonnes (+1.2% YOY) geographical exposure enables high utilisation Pacific Basin A segment where scale and operational focuses on 38% expertise make a difference th
Slide 24: Pacific Basin Dry Bulk – Diversified Cargo
Appendix: Pacific Basin Dry Bulk – Diversified Cargo Diverse range of commodities reduces product risk China and North America were our largest market 60% of business in Pacific and 40% in Atlantic 2016 Annual Results 24
Slide 25: Appendix: China Major and Minor Bulk Trade
Appendix: China Major and Minor Bulk Trade China Coal Trade 2016 Chinese Minor Bulk Imports Mil Tonnes Million Tonnes 400 30 Increased 0.2% YOY 350 25 300 199 247 20 250 15 200 150 256 10 100 204 5 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 -5 -9 -50 2016 2015 2014 06 07 08 09 10 11 12 1
Slide 26: Appendix: Earnings Cover for 2016 and 2017
Appendix: Earnings Cover for 2016 and 2017 Handysize Supramax Contracted Revenue Days 47,590 Days 29,590 39,950 Days Days 15,970 Days 100% 44% $6,630 $8,200 100% 71% $6,740 $8,680 2016 2017 2016 2017 Covered Uncovered Currency: US$ Data as at 23 Feb 2017 2016 Annual Results 26
Slide 27: Fleet List – 31 Jan 2017
Appendix: Fleet List – 31 Jan 2017* Pacific Basin Dry Bulk Fleet: 226 www.pacificbasin.com Average age of core fleet: 6.8 years old Customers > Our Fleet Owned Chartered Total Delivered Newbuilding Delivered* Newbuilding Handysize 75 2 56 3 136 Supramax 20 1 67 - 88 Post-Panamax 1 - 1 - 2 Total 96 3
Slide 28: Appendix: Dry Bulk Supply
Appendix: Dry Bulk Supply Handysize Orderbook 258 vessels (9.54 million dwt) m Dwt 10 11.2% Orderbook Average Over 2016 Scrapping as 9 as % of Age 20 Years % of Existing Fleet 8 47% Existing as at 1 Jan 2017 9.2% Shortfall Fleet 7 6 5.9% Handysize 5 (25,000-39,999 dwt) 12% 9 11% 3% 4 3 2.2% 2 Handym
Slide 29: Appendix: Sustainability
Appendix: Sustainability Applying sustainable thinking in our decisions and the way we run our business Creating long-term value through good corporate governance and CSR Corporate Social Responsibility (CSR) Guided by strategic objectives on (i) workplace practices (primarily safety), (ii) th
Slide 30: Appendix: 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