Klaveness Combination Carriers

Investor Presentation • Nov 8, 2019

Klaveness Combination Carriers ASA Q3 2019 presentation Oslo, 8 November 2019

Profitable quarter on improved combi earnings of 1.7x to standard tankers

Disclaimer

This presentation has been prepared by Klaveness Combination Carriers ASA (the "Company") and is furnished to you for information purposes only and may not be reproduced or redistributed, in whole or in part, to any other person. The presentation does not constitute or form part of any offering of securities, and the contents of this presentation have not been reviewed by any regulatory authority.

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Highlights

Business & market update

Q3 2019 Result

Summary and outlook

KCC – the world leader in combination carriers Highlights

Unique proprietary vessel designs 9x CABU vessels

Designed to safely and efficiently carry and switch between dry and wet cargo

Servicing the alumina/aluminium industry

3+5x CLEANBU vessels

Expanding service to the petroleum/petrochemical industries

WET/ DRY WET/ DRY WET/ DRY WET/ DRY WET/ DRY WET/ DRY WET/ DRY

KCC delivers the most carbon efficient deep-sea transportation service today Highlights

→ Up to 40% lower GHG emissions than standard tankers and bulk vessels

Further decarbonization – a center piece in KCC's strategy

• Taking active measures to achieve a substantial additional cut in GHG emissions

• Shall be in the forefront of the transition to low carbon deep-sea shipping

Substantially higher earnings and positive EBT in Q3 2019 Highlights

Substantial earnings premium vs. standard tankers	• CABU of \$17,287/day and CLEANBU of \$22,820/day in Q3 2019 • → 1.7 x spot earnings of standard tankers
Strong EBITDA improvement – profitable quarter	• EBITDA improved by 84% compared to Q2 2019 • EBT of USD 1.5 million
Solid progress in the phase-in of the CLEANBUs	• CLEANBU # 2 and 3 delivered in Q3 2019 • First dry/wet switch - shorter lead time to combi trading
2020 CSS bookings for the CABUs on track	• Higher TCE on CSS COAs for 2020 ~70% of CSS capacity booked for 1st • half 2020
Continue quarterly dividend payments	• USD 0.5 million / USD 0.01 per share dividends

Highlights

Business & market update

Q3 2019 Result

Summary and outlook

Strong CABU performance with earnings 1.7x to standard MR tankers Business and market update | CABU

CABU Net revenue - USD per onhire day¹

1) CABU Carrier: Average monthly earnings per on-hire day for the period 2015 to YTD 2019, Gross of commissions and commercial management fees. Bulk carrier spot earnings: Average of the 4 Spot Routes for Baltic Panamax Index (P4TC). Gross rate. MR Tanker spot earnings: Average MR Clean Earnings, Gross rate. Spot earnings benchmark source: Clarksons SIN

Substantially higher caustic soda shipments in 2nd half of 2019 Business and market update | CABU

• Lower COA volume under one Pacific CSS COA than expected – cargo volume rolled into 2020
• Alunorte production ramp up to 85% of full capacity increased CSS volumes to Brazil in 2H 2019

Solid progress in CLEANBU phase-in - continue to shorten lead time to high value combi-trading Business and market update | CLEANBU

of days phase-in time from delivery to first combination voyage

• Successful technical and operational experience transfers
• Shorter lead time from delivery to start of combi trading
• Guarantee docking on MV Baru in Oct-Nov. Planned guarantee works on MV Barracuda and MV Barramundi in November

CLEANBU earnings improves quarter by quarter and vessel by vessel Business and market update | CLEANBU

CLEANBU Q3-earnings = 1.7 x standard LR1 tankers

Increasing earnings on performed combi voyages

CLEANBUs, 2

1) KMAX is P5TC, LR1 is LR1 MEG-UK/MED-EAST TRIANGULATED. Source: Clarksons SIN, Baltic exchange

2)First Baru voyage with consecutive switch from dry to wet cargo was India to Argentina /Argentina Vietnam, first Barracuda voyage with consecutive switch from dry to wet cargo was Australia to Bahrain / India to Singapore

Barracuda's first combi voyage and first successful dry bulk/CPP switch Business and market update | CLEANBU

MV Barracuda's first combi voyage: Substantially higher operational efficiency and lower carbon footprint Business and market update | CLEANBU

Substantially lower ballast than standard vessels performing the same trades…

CLEANBU ballast share compared to standard vessels doing the same transportation work as Barracuda1
Cargo	Standard vessel	CLEANBU
Caustic Soda	MR Tanker = 30%
Dry Bulk	PMAX = 30%	10%
CPP	LR1 Tanker = 34%

… resulting in CO² emissions reductions equal to the annual emission of ~800 cars²

1) For tankers ballast percentage for standard vessels based on AIS trackings and average ballast distance prior/after discharge. For dry bulk vessel ballast percentage is based on AIS trackings of average ballast distance prior to discharge

2) CO2 emission reduction is compared to that of standard tankers and a standard dry bulk vessel performing the same cargoes as MV Barracuda, with the weighted average ballast leg connected for the standard vessels. AIS data and Baltic Exchange vessel description has been used to estimate this effect. Ballast leg for the dry bulk vessel is basis the weighted average inbound ballast leg prior loading, and the ballast contribution from the tankers is basis the ballast distance prior/after discharge. Source: EIA.gov, AXSmarine.com, Baltic Exchange and company data.

Improving environmental KPIs following the delivery of more CLEANBUs and more efficient combi-trading Business and market update

CO2 emission per ton transported cargo per nautical mile (EEOI)1, 2 Ballast days in % of total onhire days²

14

1) EEOI (Energy Efficiency Operational Index) is defined by IMO and represents CO2 emitted per transported cargo per nautical mile for a period of time (both fuel consumption at sea and in port included). In theory, this index will show the good energy efficiency for the combination carriers as we have a little degree of ballast, but we have also seen that the index is highly affected by one or two longer ballast legs since the fleet is relatively small. These variations are evident when we look at the historical numbers, but will most likely be more stable when we have more vessels in the fleet.

vessels. The EEOI for "Benchmark standard vessels" is calculated as the weighted average of EEOI for the individual trades performed.

OPEX moving down, but CLEANBU OPEX will continue to be impacted by start-up costs next quarters Business and market update | OPEX

1) CLEANBU Opex include MV Baru in Q1/Q2 2019 in addition to MV Barracuda from Q3 2019.

Limited financial/market coverage for 2020 set to increase over the next months Business and market update

Financial/market coverage

Share of estimated rate (i.e. price) exposure that has been fixed for rest of 2019¹and 2020

IMO 2020 countdown: 54 days to go… Business and market update | Oil and fuel markets

KCC will be ready for IMO 2020 within mid December 2019

• Ongoing work to clean bunker tanks
• Bunkered VLSFO in 2 bunker tanks
• Test-burning new fuels
• Complete cleaning and switch to VLSFO within mid December

Higher premiums and higher price volatility

Fuel prices with HFO/MGO spread Dotted lines forward curve MGO HFO MGO/HFO Spread

KCC will benefit from IMO 2020 without investing in scrubbers

1) Source: Shipping Intelligence Network, NOS, ICE, FIS & company data

Strong product tanker and moderate dry bulk market outlook despite a weaker macro-economic outlook Business and market update | The dry bulk and product tanker markets

Dry bulk market peaking in Q3 -forward outlook is more muted

P4TC (USD/day) historical and forward curve

Early tanker spike in October faltering, but IMO 2020 story is intact

1) Source: Shipping Intelligence Network, NOS, ICE, FIS & company data. Product tanker markets: Triangle trade TC5 PG-Japan+TC5 Korea/Australia. Earnings for TC5 triangle trade and TC7 bunker is basis based on Sing380 until Nov 2019. From Dec 2019 bunker based on forward curve for Singapore VLSFO 0.5% compliant fuel.

Highlights

Business & market update

Q3 2019 Result

Summary and outlook

Higher profit as an effect of CLEANBU introduction and higher CABU rates Q3 2019 results

Year-on-year results (MUSD) Q3 2019 vs Q3 2018

Improved results on increased combination trading, stronger dry bulk markets and more vessels on water Q3 2019 results

Quarter-on-quarter results (MUSD)

EBT MUSD 2.8 adjusted for CLEANBU introduction effects and unrealized financial derivatives¹ Q3 2019 results

1) Underlying EBT defined and reconciliated on slide 30 "Alternative performance measures used in the quarterly presentation"

Consolidated financial statements Q3 2019 (unaudited) Q3 2019 results

Income Statement ('000 USD)	Q3 2019	Q3 2018	YTD 2019	YTD 2018
Net revenues	16 571	13 392	42 503	41 413
Operating expenses, vessels	(7 563)	(5 719)	(21 401)	(15 729)
SG&A	(1 244)	(887)	(4 377)	(2 841)
EBITDA	7 764	6 786	16 726	22 842
Depreciation	(3 621)	(4 110)	(9 541)	(12 383)
EBIT	4 143	2 676	7 185	10 459
Net financial items	(2 598)	(1 364)	(8 324)	(2 289)
Profit before tax	1 545	1 312	(1 139)	8 170
Tax	-	-	-	-
Profit after tax	1 545	1 312	(1 139)	8 170
EPS	0.03	0.04	(0.03)	0.24

• Profit of USD 1.5 million for the quarter
• CABU earnings of USD 17,287/day
• CLEANBU earnings of USD 22,802/day
• Increase in operating expenses due to CLEANBU
• Administration costs is up compared to 2018 due to increased complexity and higher activity level
• Negative unrealised effects from changes in fair value of derivatives (-0.5)

Dividends in line with policy and other key financials on-track Q3 2019 results

Highlights

Business & market update

Q3 2019 Result

Summary and outlook

Summary and outlook

Improving CABU earnings Q4- 19- positive 2020 outlook	• CABU earnings full year 2019 guiding is around \$17,000 per day • Higher CSS cargo volume and improved COA earnings levels in 2020
Proven CLEANBU earnings capacity - solid progress in CLEANBU phase-in	• Proven earnings capacity – positive outlook Q4-19 and 2020 • Technical phase-in progressing, ongoing guarantee work/adjustments • Operating costs and start-up costs trending down
Proven CLEANBU earnings capacity - solid progress in CLEANBU phase-in	• IMO 2020 effects through expected higher fuel prices and a strong tanker market • Limited downside risks in dry bulk (vs. FFA-pricing)

Enclosures

Torvald Klaveness & Klaveness Combination Carriers (KCC) Enclosures

Torvald Klaveness' business segments

Note: Simplified orginazational chart, for illustration purposes only

Fleet list Enclosures

Vessel	Type	Built	Yard	DWT	Flag	Manager	Ownership
MV Banastar	CABU	2001	Oshima, Japan	72 562	MI	KSM AS2	100%
MV Barcarena	CABU	2001	Oshima, Japan	72 562	NIS	KSM AS	100%
MV Banasol	CABU	2001	Oshima, Japan	72 562	MI	KSM AS	100%
MV Bangor	CABU	2002	Oshima, Japan	72 562	NIS	KSM AS	100%
MV Bantry	CABU	2005	Oshima, Japan	72 562	MI	KSM AS	100%
MV Bakkedal	CABU	2007	Oshima, Japan	72 562	MI	KSM AS	100%
MV Baffin	CABU	2016	Ouhua Zhejiang, China	80 200	MI	KSM AS	100%
MV Balboa	CABU	2016	Ouhua Zhejiang, China	80 200	NIS	KSM AS	100%
MV Ballard	CABU	2017	Ouhua Zhejiang, China	80 200	MI	KSM AS	100%
MV Baru	CLEANBU	2019	YZJ, China	82 400	MI	KSM AS	100%
MV Barracuda	CLEANBU	2019	YZJ, China	82 400	MI	KSM AS	100%
MV Barramundi	CLEANBU	2019	YZJ, China	82 400	MI	KSM AS	100%
MV Baleen 1	CLEANBU	E2020	YZJ, China	82 500	MI	KSM AS	100%
1 MV Bangus	CLEANBU	E2020	YZJ, China	82 500	MI	KSM AS	100%
1 MV Baiaco	CLEANBU	E2020	YZJ, China	82 500	MI	KSM AS	100%
Newbuild #7 1	CLEANBU	E2021	YZJ, China	82 500	MI	KSM AS	100%
Newbuild #8 1	CLEANBU	E2021	YZJ, China	82 500	MI	KSM AS	100%

CLEANBU OPTIONS: KCC holds six fixed price options with expiry in the period between February 2020 and January 2021. The option vessels have scheduled delivery dates in the period September 2021 to November 2022.

1) Planned / estimated delivery dates and DWT based on newbuild contract 2)KSM AS = Klaveness Ship Management AS

Strong bank support and balanced interest rate hedging Enclosures

Limited refinancing risk

Maturity profile for debt as per 31.12.2018 and committed debt (5XCLEANBU with 2019 and 2020 delivery) ¹

• Instalments Balloons Bond Limited refinancing risk with no maturities (excluding overdraft facility) prior to the bond due date in May 2021. The current bank debt matures in March 2022 and December 2023 and August 2025
• Bank loans have been secured for six newbuilds with delivery in 2019 and 2020
• Average margin for bank debt is 2.3% as of 30 June 2019 and the NOK bond loan is swapped to a USD fixed interest rate 6.98%
• Interest hedge ratio is ~60% as of 30 June 2019 which will fall to ~55% 31 December 2019. Average swap interest rate on LIBOR swaps (excl. margin) is 2.4% as of 30 June 2019

1) In January 2019 the USD 36 million unsecured loan from KSH was cancelled while simultaneously the KCC assumed the obligations of the KCC03 bond loan

Alternative performance measures used in the quarterly presentation Enclosures

Definitions and reconciliation

• TCE earnings = time charter equivalent earnings equals average revenue per on-hire day as further described in the quarterly report for Q3 2109, note 11 (page 22) which is published on the company's homepage: https://www.combinationcarriers.com/investor-relations/#reports-presentation
• EBT = Earnings before tax equals Profit before tax in the income statement
• Underlying EBT is defined as EBT excluding items that are not considered as part of normal operation and effects from financial items not realized. The Group has adjusted for one off costs related to start up of the CLEANBU vessels and other operating expenses occurred before delivery of the CLEANBU vessels. Underlying EBT is included because the management believes that the measure provide information of the Group's profitability beyond the phase in period of the CLEANBU fleet.
• ROCE see definition and reconciliation in Note 11 (page 22) in Q3 2019 report published:https://www.combinationcarriers.com/investor-relations/#reports-presentation

Reconciliation of alternative performance measures

Reconciliation of underlying EBT

USD'000	Q3 2019
Profit before tax (EBT)	1 545
Start up costs CLEANBU vessels	647
Opex vessels not delivered	110
Fair value changes in FFA (Q3 2019, note 7)	(99)
Gain on foreign exchange (Q3 2019, note 7)	(1 953)
Fair value changes interest rate swaps (Q3 2019, note 7)	2 577
Underlying EBT	2 827