Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — Investor Day (October 2015)
27 slides from Pacific Basin Shipping's investor day presentation, Oct 14, 2015
Slide 1: 2015 Analyst Day: Navigating with resilience
2 Pacific Basin 2015 Analyst Day Navigating with resilience Presentation .| el 14 Oct 2015 Experienced team Fr Exceptional fleet N Customers first % = = - 14 Oct 2015
Slide 2: Strategy and Market Update
Strategy and Market Update 2015 Analyst Day 2
Slide 3: Our Increased Focus on Dry Bulk
Our Increased Focus on Dry Bulk Early 2012 2015 Four business units Fully dry bulk focused US$m ME Towage 17 Newbuildings Terminals, etc Towage Minor player with no competitive RoRo 81 World’s largest advantage Dry Bulk Handysize Ships owner & operator Dry Bulk in operation Ships Strong platform but
Slide 4: Experienced Management - Team
Experienced Management - Team Chairman & BOD Numbers Indicate Years in Company / Years in Shipping CEO Mats Berglund Asset Management 3/29 Morten Ingebrigtsen Finance & Accounting, CFO 26/29 Andrew Broomhead 12/12 HR P.B. Subbiah Company Secretary & Risk 12/21 Kitty Mok 19/19 Chartering Chartering P
Slide 5: Handysize Vessel Values
Handysize Vessel Values Handysize vessel values at historical lows US$ Million 55 50 45 40 35 30 Sep 2015: Newbuilding (35,000 dwt) 25 US$20.5m 20 5 years (32,000 dwt): 15 US$13.0m 10 04 05 06 07 08 09 10 11 12 13 14 15 Second hand values substantially flat in recent months Source: Clarksons Plato
Slide 6: Dry Bulk Supply & Demand
Dry Bulk Supply & Demand Quarterly YOY change % 25% 20% Supply 15% 10% 5% Demand 0% -5% 2010 2011 2012 2013 2014 2015 Demand Supply Analyst's demand forecast Demand disappointment due primarily to much lower Chinese coal imports Source: Clarksons Platou 2015 Analyst Day 6
Slide 7: Dry Bulk Supply – Self Correcting Factors
Dry Bulk Supply – Self Correcting Factors New Vessel Ordering is Down Per quarter annualised in % of fleet (dwt) Number of Delivery 25% 24% Chinese yards Slippage 20% delivering Handy bulk 15% vessels decreased Orderbook from 54 in 2012 Cancellations & 10% 11% to 21 in 2015 Conversions 5% 1.6% Fleet
Slide 8: Chinese Minor Bulk Imports
Chinese Minor Bulk Imports Million Tonnes 30 25 20 15 10 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2014 2013 Chinese imports of 7 minor bulks including Logs, Soyabean, Fertiliser, Bauxite, Nickel, Copper Concentrates & Manganese Ore These 7 commodities make up over one third of the carg
Slide 9: Beating the Markets
Beating the Markets 2015 Analyst Day 9
Slide 10: Dry Bulk Market and Strategy
Dry Bulk Market and Strategy Dry Bulk Market Pacific Basin Benefits: Uncertain market situation - Oversupplied global fleet and reduced growth in dry bulk commodity demand – especially coal into China Now fully Handy focused Scrapping, NB cancellations & postponements and very little new orderin
Slide 11: Cargo Mapping
Cargo Mapping 2015 Analyst Day 11
Slide 12: Cargo System – Outperforming Market
Cargo System – Outperforming Market Cargo Contract Business Model – Outperforming Market Indices Experienced staff & global office network Large fleet of high-quality substitutable ships US$/day Large portfolio of cargo contracts & relationships 15,000 Direct end-user interaction 12,500 Hi
Slide 13: A day in the life of a Chartering Manager – Cargo
A day in the life of a Chartering Manager – Cargo Useful tips for using this PowerPoint template: ￭ Cover 1) Select one ship photo that represents the best of Pacific Basin and your presentation subject 2) Insert or paste the picture into the cover slide (see sample for inspiration on look and feel)
Slide 14: Daily work
Daily work Calling Collecting market information Port information Calculating 2015 Analyst Day 14
Slide 15: Daily work
Daily work Negotiating Following up Team work 2015 Analyst Day 15
Slide 16: A day in the life of a Chartering Manager – Tonnage
A day in the life of a Chartering Manager – Tonnage Useful tips for using this PowerPoint template: ￭ Cover 1) Select one ship photo that represents the best of Pacific Basin and your presentation subject 2) Insert or paste the picture into the cover slide (see sample for inspiration on look and fee
Slide 17: Time Chartering In – A Brief Introduction
Time Chartering In – A Brief Introduction Typical would involve the following: ￭ Read overnight emails including BDI Market and fixture reports. ￭ Either a call with overseas offices or desk ‘scrum’. ￭ Circulate market orders or discussion with brokers. ￭ Assess what comes in and market direction. ￭
Slide 18: Booking Ships….. The Chartering Process
Booking Ships….. Pricing / Booking Cargo Market the Order Tonnage Lists The CP details. Lift subs Chartering and clean fix. In Process Compare tonnage and run P/L Fix on subjects / nominate to head Enter into a firm trade charterers. 2015 Analyst Day 18
Slide 19: Bunker Derivatives Mark-to-Market Accounting Treatment
Bunker Derivatives Mark-to-Market Accounting Treatment 2015 Analyst Day 19
Slide 20: Our hedging policy
Our hedging policy • We HEDGE bunker exposure on ALL firm fixed-rate forward cargoes and Contracts of Affreightment (COAs) • Any cargo loading >2 months from the date of fixing • Assumptions considered based on: • Intended physical bunker port; • Ship’s deviation; • Speed; and • Bunker delivery cost
Slide 21: Why hedge accounting doesn't qualify
Why hedge accounting doesn’t qualify • Accounting standards require very high correlation between the derivative and the physical commodity at execution date • Derivative month and voyage start/end dates do not match • Location of reference bunker derivative (Singapore, Rotterdam) and physical bunke
Slide 22: What happen to physical bunker
What happen to physical bunker Physical Bunker Prices (1) CoA fixing (30 Sep 15) $230 (2) & (3) In between (YE 15/16) $330/270 (4) CoA execution (30 Jan 17) $270 (1) Oct-Dec 15 (2) 2016 (3) 30/Jan/17 (4) 30/Sep/15 value YE 2015 value YE 2016 Cash 30/Jan/17 Fix CoA Change Balance Change Balance settl
Slide 23: What happen to bunker derivative during its life
What happen to bunker derivative during its life Bunker Derivative Values (1) CoA fixing (30 Sep 15) $0 (2) & (3) In between (YE 15/16) $100/40 (4) CoA execution (30 Jan 17) $40 (1) Oct-Dec 15 (2) 2016 (3) 30/Jan/17 30/Jan/17 (4) 30/Sep/15 value YE 2015 value YE 2016 Eliminate Cash 30/Jan/17 Fix CoA
Slide 24: How our bunker hedge works - summary
How our bunker hedge works - summary At Fixing of COA At Execution of COA Physical bunker price $230 Physical bunker price $270 Bunker derivative $0 Bunker derivative $(40) Physical bunker B/S Cash (270) P/L Reserve (earnings) / loss 270 - P/L Net effect of execution Voyage results before underlying
Slide 25: Summary: 2015 Interim Report Note 7(e)
Summary 2015 Interim Report: Note to Financial Statement Note 7(e) D A B C 2015 Analyst Day 25
Slide 26: Summary: M2M creates fluctuation in P/L
Summary • We HEDGE only. We do not trade. • Hedge accounting not available for most derivatives • M2M creates fluctuation in P/L during the derivative’s life • M2M fluctuations are non cash • We disclose M2M movement after Underlying Results • Actual derivative settlements are included before Underl
Slide 27: 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,