Welcome to BW LPG’s First Quarter 2018 Financial Results Presentation. We will begin shortly. You will be brought through the presentation by BW LPG’s CEO, Martin Ackermann; and CFO, Elaine Ong. They will be pleased to answer and address any questions after the presentation. [Operator Instructions] Certain statements in this conference call may constitute forward-looking statements based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which BW LPG isn’t able to predict or control, that may cause BW LPG’s actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. In addition, nothing in this conference call constitutes any – an offer to purchase or sell or a solicitation of an offer to purchase or sell any securities. With that, I am now pleased to turn the call over to BW LPG’s CEO, Martin Ackermann. Please go ahead sir.

Thank you very much, Anna and good morning. Welcome to the presentation of BW LPG’s results for the first quarter of 2018, the financial period ending 31st of March. We will be – also be discussing with you the proposal we announced yesterday to combine with Dorian LPG. I’m joined by our CFO, Elaine Ong, as always. And we appreciate your interest, and we will take your questions at the end of this call. The winter market was weaker than anticipated, with a nearly 7% drop in U.S. exports for first quarter of 2018, led mainly by increased domestic consumption, inventory drawdowns in the Far East and mostly closed arbitrage windows. The loss of exports from the U.S. was partially offset by an increase in exports from the Middle East, mainly into China. The lost in ton miles led to a drop freight rates towards the second half of the quarter, from a peak of $18,100 per day to a low of $9,200 per day on the benchmark Baltic index route. BW LPG’s VLGC performance at $17,300 per day has been in excess of the spot market Baltic index despite a drop in utilization rate. This has been mainly due to a capture of long-haul cargoes from the West in the first half of the quarter. The market remains challenging in the near-term, although the recent strength in global oil prices may spur some additional petchem demand. Turning to Slide 4. We review the highlights of first quarter. We generated net revenues of $73 million based on daily rates of $17,300 for the VLGC segment, with VLGC contract coverage of 14% and total contract coverage of 19% for the quarter. Our EBITDA came in at $25 million. We netted a loss of $8 million or $0.05 per share. Through the…

Thanks, Martin. Starting with our income statement on Slide 9. Our net revenue for the quarter was $73 million compared to $95 million in the same quarter last year. This is mostly due to lower spot rates and lower utilization. Charter hire expenses for the quarter decreased mainly due to lower hire rates for our charter-in vessels. Operating expenses were approximately $5 million lower year-over-year, reflecting our cost-control initiatives in place for operating our fleet. We generated EBITDA of $25 million in the quarter compared to $45 million in the same quarter last year. We recorded a net loss of $8 million or $0.05 per share in the quarter. Turning to Slide 10. We provide a snapshot of our balance sheet and cash flow position. We continue to maintain a strong balance sheet with a leverage of 55%. We ended the quarter with cash and cash equivalents of $44 million. On Slide 11, you will see our net debt position at $1.3 billion at the end of the quarter. Total liquidity, consisting of available cash and undrawn facilities, was $275 million – sorry, it’s $279 million. We currently have five debt facilities. The first one is an $800 million facility with $323 million outstanding and $235 million of undrawn credit. The second facility is a $400 million ECA facility with $341 million outstanding. A $221 million ECA facility with $190 million outstanding is our third facility. The fourth is ECA financing at $290 million, with $270 million outstanding. And finally, our new $150 million term loan with $140 million outstanding. This term loan was drawn down in February 2018 to redeem our $150 million short-term revolving credit facility. With that, I’d like to hand it back to Martin to conclude our presentation.

Thank you very much, Elaine. So if you please turn to Slide 12, then I will summarize our earnings presentation. We netted a loss per share of $0.05 in the first quarter on net revenue of $73 million. BW Boss was delivered into the joint venture in India, and BW Empress was sold with a book gain of $3 million. BW Denise was sold, and BW Havis was recycled. And together, these generated additional liquidity of $22 million. Our share buyback program announced on 6th of March was concluded with 2.1 million shares purchased at an average price of NOK 35.96 per share. Looking ahead, we expect total contract coverage of 16% for the remainder of the year. Our short-term outlook remains cautious as we enter the summer months, with freight rates remaining depressed due to the large fleet supply growth, unfavorable geographical LPG price spreads, high VLGC utilization of the Panama Canal and global geopolitical tensions. With relatively low U.S. LPG inventory levels propping up domestic LPG prices, we maintain our view that sustained U.S. LPG production growth and no further fleet supply growth is the key to reopening global price spreads and a rebound in freight rates. Looking forward, the following factors should help rebalance the VLGC market, including continued U.S. export growth and new wave of PDH facilities in Asia, an expansion of existing plants as well as healthy growth in the Asian retail demand. Now that we’ve taken you through our earnings results, I will now discuss our proposed combination with Dorian that we announced yesterday. And I ask that you please turn your attention to the separate presentation regarding the combination of Dorian LPG and BW LPG, which can be found on our webpage. If you turn to Slide 2 of the deck, I just…

Thank you. [Operator Instructions]. Your first question comes from Nils from Ludvig.

Hello. This is Nils Foldal from Ludvig Lorentzen. Congratulations on your number and the proposed merger with Dorian. I have two main questions: one is on the efficiency differences; and two, on the offer itself. So I’m looking at the two companies and trying to understand the efficiency differences because, when rates are low, low cost really matters. And that’s probably one of the thoughts you have behind the combination. So my first question related to efficiency is speed consumption. How much more estimated fuel in dollars per day does your vessel consume compared with the ones at Dorian? Second, what is the OpEx difference per day between the two companies? And then I have two follow-up questions. Thank you.

Thank you for your question. I think you’re absolutely right that low cost really matters. And when you look closely to both fleets, you definitely see that one is slightly younger than the other, but as you can also see, the fleet of BW LPG is highly modern, although it has an average age which is a couple of years older than Dorian’s. Without going into very specific consumption per day numbers for specific vessels, which I think is probably not appropriate for this call, we have a very modern fleet which has high utilizations. And when you compare to Dorian’s performance historically, we think we’re quite well on par. I think it’s important to focus on not only speed consumption, which is just, you could say, a small combination – or a small part of an overall cost of running a vessel. The OpEx is an element, as you’ve mentioned. I think here, we’re very competitive when you compare the two fleets. I’m sure the analysts that are on the call would be able to confirm that. But the most important part is, of course, the CapEx of these ships. If you look at the return – the aggregate return on capital employed on a vessel which has, say, for argument’s sake, $40 million of debt attached to it, the returns are just more compelling on the slightly older ship. And this is also – when we talk about accretion, we’re offering this accretion to Dorian shareholders, and it’s embedded in the offer. Did you have any other questions?

Yes. I have the follow-up questions on the OpEx difference, so just a general comment. The way I understand it, you’re saying you have the same fuel consumption per day on average, not on each individual vessel, but on average as Dorian. But when it comes to the OpEx difference, I’ve been looking into your annual report, and I see there’s some related-party OpEx referenced to your prospectus in connection with the IPO. Is the related party still only BC – BW Fleet Management? If yes, thanks. If no, which other companies are there in the annual filing, where we can see the updated list of related parties or subsidies? Just to understand better the difference in the OpEx question as such.

Yeah. I think the number on the OpEx speaks to itself. You would probably see that we have driven considerable savings on our operating expenses over the past three years. I’ve had several discussions with equity analysts in the Oslo community around this for the past years, and I think most of them, I don’t think anyone is disagreeing with us that we have made considerable headway on that. When you look at the number specifically, we’ve been guiding that we are somewhere shy of $8,000 per day on a direct OpEx. And on top of that, you have to add provisions for dry-dock expenses and, of course, G&A. When you compare the two companies, I’m very confident you would find that we’re quite competitive on an aggregate level, including, of course, the OpEx that you’re asking specifically to. The – as regards to the related party, I don’t have the prospectus in front of me, so I don't have exactly the details. But I can tell you that BW Fleet Management is the related party that is operating most of our fleet. So we consider that as an in-house service, but there – we have created – this is a shared service across BW LPG and BW LNG to create scale and benefits for both divisions. And of course, we're paying for these services on an arm's-length basis. So it's very clear and straightforward. But I do understand that it's registered as a related-party transaction. We can go – we can talk offline. If you have further questions, we can – we are happy to go into specific details on managers and related party here.

Okay. Thanks for that. But just my last question related to the merger itself. It seems that you are very generous. So it's a good offer for Dorian, but not such a good – not as compelling for BW LPG. Could you just elaborate why you think this is such a good deal for you since you're willing to overpay in relative terms?

I wouldn't say – I wouldn't use the word overpay. We think both companies are trading today at significant discounts, and we're offering – we think what we're offering here is a compelling proposal. And although it offers a 50% premium to historical exchange rates of the two companies, we think – we believe that there is substantial synergies which will also flow back to BW LPG shareholders. And the better platform of a combined entity will be highly beneficial for existing BW LPG shareholders as well.

Okay. And just the last thing that hasn't been mentioned, it's – this is my final, last question. What about management of the combined entity? Is it going to be done from Dorian? Or is it going to be done from BW LPG?

We sent a proposal yesterday after the chairman of BW LPG had a very short conversation with the chairman of Dorian, and that is as far as discussions has been going between the companies. But ultimately, that's a question for the combined Board of Directors to decide. And I'm – these are highly capable people that will make prudent decisions on how best to run the company.

Okay. Thank you and good luck.

Thank you very much. Thanks for your interest.

Your next question comes from Lukas from ABG. Please go ahead.

Thank you. Good afternoon, Martin and Elaine. If I could just start with OpEx that you printed in the first quarter. It was a decent decline compared to previous periods. Is that something you are planning to or we can expect you to repeat going forward? Or was there any extraordinary things that contributed to that?

Well, I think – as I just said, conservatively, I think you should estimate a run rate of $8,000. I do realize we came in a little bit lower on the quarter, but just allow for quarterly swings – smaller swings on the OpEx side. I don't want to overpromise anything here. But we're very pleased with the cost level that we have achieved over the past few years.

And do you have sort of a dry-docking schedule for this year and the next in terms of numbers of vessels going through dry-docking?

Yes. I do have that somewhere, but I must admit that we probably have to do a little digging. I think in the – I have about – Elaine, can you…

Yes. Lukas, Elaine here. I think we kind of project about $15 million for this year – the rest of the year this year. I think that would be a decent number. In terms of the number of – exact number of ships, I can get back to you offline. And it's going to be a bit lower than 10 in 2010, if that helps you.

Okay. Thanks. And then, obviously, on the transaction with Dorian or on the proposed transaction, you're talking about potentially controlling about 25% of the global fleet. But I was wondering, if you look at the spot market – the vessels that are operating in the spot market, what kind of market share would we be talking about in that context?

It would be very close to the same number. I mean, it's a highly competitive market. As you have seen, owners have little to no pricing power, as experienced over the past 24 months. And even though some would argue that a ship is on a time charter to a client, that ship is being used in the spot market as well as the positions have been re-let by an oil company or traders. So even though you may not see it on your list as a spot vessel, it's competing with all the other ships out there. So I think the market share, as you mentioned, it will be in the low 20s.

Okay. And do you think that is sufficient to sort of turn the needle and get some pricing power? Or is that not maybe the main motive behind the deal?

Well, that's not the main motive. I don't think we have any pricing power in this market. The market is enormously competitive. But I mentioned on the presentation that there are some synergies that we can extract from this. And I think that driving a stronger company, we will be able to perform better to our clients. We will offer them greater flexibility, fleet availability in any corners of the world. And just to take a step back. You saw we did a transaction where we bought Aurora two years back. That hasn't resulted in any pricing power at all. So this is not the driver for this transaction. I think this is about creating a stronger combined company with all the advantages to both customers and stakeholders and, of course, shareholders that I mentioned before.

Okay. And finally, and I don't know if you can answer that, but has there been any dialogue with Dorian shareholders?

The dialogue was yesterday. So that was when our – the chairman spoke briefly to the chairman of Dorian. I mean, we would have preferred to approach Dorian confidentially, but since our larger shareholder, BW Group, is a 13D shareholder of Dorian, we were required to disclose our initial approach.

Okay, understand. Okay. Thank you, Martin and thank you, Elaine.

Okay. Thank you very much.

Thank you. There are currently no more questions in queue. [Operator Instructions] Your next question comes from Eirik from Pareto. Please go ahead.

Can you give some guidance on what the time line will be going forward for this transaction? Is this now – are you now going to have a dialogue with the company – with Dorian management, the shareholders? Or are you just now launching an offer and will sit and wait for a period of time to get some response?

Eirik, yes. I mean, we're – as you just said it yourself, we made the proposal yesterday. And the next step is Dorian and their advisers will come back to us at some point and respond, and maybe we'll take it from there. That's as close as we can be on the time line right now.

Okay, understand. Just two sort of housekeeping question as well. The depreciation run rate you had now in Q1 was a bit lower than I expected. Is that the run rate going forward? Or is there something special there, Elaine, maybe?

No, I think that was going to be reflective of the run rate going forward. I think the lower depreciation reflects some of the vessel sales that we've conducted in the last little while.

Yes, sure. And with Havis and Denise leaving in Q2, so then it should even be lower then from Q2?

That's right. Although I would say that Havis is a really old ship, so there wasn't much left in her.

No, I understand. And just the $13 million of liquidity you mentioned from those ships, is that after debt repayment? Or is it gross?

No, that is after debt. That's $22 million, Eirik [ph].

So can you just – you're getting 20 – how much are you getting in gross liquidity from those two ships in the second quarter?

Eirik, I don't have the gross liquidity number on me, but I can try and pop you an e-mail.

Okay, great. Thanks.

Thanks, Eirik. Thank you.

Thank you. Your next question comes from Anders from Danske Bank. Please go ahead.

Good afternoon. I was just wondering in terms of synergies. You mentioned some, but are there additional synergies that could be added beyond the $15 million that you kind of suggest in your presentation?

It's very early days. We've been working on – from publicly available numbers, and we think $15 million, as I mentioned on the call, is a conservative number. But I think it's the number we should use for now. Do you have any other questions Anders?

No, no. That’s all from me.

Thank you, Anders.

Yes. Sorry, I can't be more forthcoming on this, but we don't have any more detail at this point.

That’s understandable.

Thank you.

Thank you. As there are no more questions in queue, we have come to the end of today's presentation. Thank you for attending BW LPG's first quarter 2018 financial results presentation. More information on BW LPG is available online at www.bwlpg.com. Goodbye.