Klaveness Combination Carriers

Investor Presentation • Sep 12, 2019

Klaveness Combination Carriers ASA Pareto Oil and Offshore Conference Oslo, 12 September 2019

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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This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances, not historical facts, and are sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this presentation (including assumptions, opinions and views of the Company or opinions cited from third party sources) are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company, any of its parent or subsidiary undertakings, or any such person's officers, directors, or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors, nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments described herein.

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The information and opinions contained in this document are provided as at the date of this presentation and may be subject to change without notice. Except as required by law, neither the Company nor any of its affiliates undertake any obligation to update any forward-looking statements or other information herein for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations or publicly release or inform of the result of any revisions to these forward-looking statements which the Company or any of its affiliates may make to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.

This presentation speaks as of September 2019. Neither the delivery of this presentation nor any further discussions by the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not intend to, or will assume any obligation to, update this presentation or any of the information included herein.

This presentation shall be governed by Norwegian law. Any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts with the Oslo City Court as exclusive legal venue.

Contents / agenda

• I. Klaveness Combination Carriers ASA at a glance
• II. Business & market update + Financials 1h-2019

Company highlights Klaveness Combination Carriers ASA (KCC)

Torvald Klaveness (TK) and KCC

Industrial/long term "sponsor" - substantial synergies

Note: Simplified orginazational chart, for illustration purposes only

Own unique vessel designs KCC's combination carriers

High value creation in combination trades to/from dry bulk export hubs KCC and its combination carrier concepts

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CABU business

Long term logistic provider for the aluminium industry 9 vessels, built 2001-2017, 72,500-80,400 Dwt

• 9 CABU vessels on water built 2001-2017, 72,500-80,400 Dwt.

The CLEANBUs

Expanding the service into the petroleum and petrochemical industries 8 vessels, 2 on water + 6 newbuildings + 4 options | 82,500 Dwt

Earnings capacity of KCC's combi fleet

The CABUs consistently outperforming standard tonnage by 1.5-2 Target same earnings premium on the new CLEANBU fleet

CABU historical TCE earnings vs standard tonnage¹

1) Average monthly earnings per on-hire day for the period 2005 to 2018. Gross of commissions and commercial management fees, Average of the 4 Spot Routes for Baltic Panamax Index (P4TC). Gross rate., Average MR Clean Earnings. Gross rate. 2) Average ROCE for five CABU ship owning SPCs in the period 2005 – 2017. 2018 ROCE based on KCC figures excluding newbuilds and cash. ROCE = EBIT/ (Average total asset less average current liabilities).

KCC and the environment

Substantially lower total life-cycle carbon footprint The best ESG case in deep sea bulk shipping

Substantially more energy efficient and environmentally friendly The best ESG case in deep sea bulk shipping KCC and the environment

~40% more energy efficient and ~40% lower carbon footprint than standard vessels

Reduction in GHG emissions per year compared to standard vessels after delivery of contracted newbuilds in 2020 is equivalent to annual pollution from

~44,000 cars

KCC and the fuel markets

Capitalizing on more expensive bunker fuels from 2020 The best shipping exposure to IMO 2020

IMO 2020 leads to higher fuel prices for shipping Forward fuel prices and spreads USD/mt²

• No scrubber investments

• Higher earnings with higher fuel prices due increased value of operational efficiency

+/- \$100 Pmt in bunker prices

+/- \$1,000 TCE earnings per day for CABU & CLEANBU1)

1) Bunker effect on earnings depend on contract portfolio and trading pattern. Effect estimated to be in the range of USD 600-1,200/day

13

Quarterly dividend payments equal to min. 80% of free cash flow* Substantial dividend potential KCC and dividends

Strong dividend track-record

Average dividend yield p.a. ¹

%

Substantial cash generation and dividend potential

Estimated cash flow to equity (operating CF less maintenance CAPEX and debt service)² USDm

Dividend Policy: Minimum 80% of operating cash flow less debt service and maintenance CAPEX to be paid as dividends

12.09.2019

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1) 2005-2016: Average of five CABU ship owning SPCs annual average dividend yield | 2017: Average of six CABU ship owning SPCs annual average dividend yield | 2019 is annualized dividends paid to date divided by book value less debt of vessels on water and bond loan. Dividend yield = Dividends/ (Average book equity) 2) Illustrative. Excludes yard instalments on new builds, other newbuild costs and balloon repayments of debt.

Content / agenda

I. Klaveness Combination Carriers ASA at a glance

II. Business & market update + Financials 1h-2019

A "transition year" impacted by CLEANBU deliveries Positive Adjusted EBT after "introduction costs" and MtM effects 1H 2019 results

1H 2019 | CABU performance

Continued healthy CABU performance, to improve considerably in 2H 2019

CABUs outperforming standard vessels

despite lack of CSS cargoes following Alunortesituation and COA-timing effects

CABU TCE Earnings USD '000 per day

Substantially stronger CABU outlook 2H 2019 based on higher CSS COA bookings

3 2 4 2 2 8 6 9 10 11 8 13 14 0 2 4 6 8 10 12 14 16 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Atlantic Expected Atlantic Pacific

# of CSS Cargoes per quarter 2019

CLEANBU introduction

CLEANBU introduction progressing well - cutting lead time to high value combi-trading by 2/3

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

• Technical and operational experience transfers from 1st vessel to the 2nd and subsequent vessels
• Cutting phase-in time by 2/3 on the 2nd vessel – MV Barracuda ready for combitrading in mid-September
• MV Baru scheduled for guarantee docking in October 2019

Successful first wet/dry combi voyage Proving the superior earnings capacity of the CLEANBU concept… CLEANBU introduction

USD/day BARU Combi RV estimated TCE of 20 000/day or ~1.5x earnings premium to standard tonnage¹

TCE for same round voyage estimated to ~USD 30 000 per day with current market conditions² USD/day

1) Source: Baltic Exchange and Clarksons

2) For illustration purposes only. Estimated based on spot dry bulk and tanker market, and bunker prices 23 August 2019, Source: Baltic Exchange and Clarksons

…and reduces CO2 emissions compared to standard vessels equal to the annual emissions from ~1 000 cars¹

1) CO2 emission reduction is compared to that of a standard tanker and a standard dry bulk vessel performing the same cargoes as MV Baru, 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 LR1 tanker is basis the repositioning leg after CPP discharge. Source: EIA.gov, AXSmarine.com, Baltic Exchange and company data.

Market update

Strong product tanker and fuel market outlook bodes well for KCC's 2020 earnings¹

Panamax Dry Bulk market¹

Continued strong product tanker outlook based on low orderbook and positive IMO 2020 effects

Product tanker markets

Solid line shows MR (orange) and TC5 triangle trade (dark blue) earnings. Dotted lines forward curves.

Strong recovery in dry bulk markets - weak forward markets due to fear of trade wars and recession

0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 jan.17 apr.17 jul.17 okt.17 jan.18 apr.18 jul.18 okt.18 jan.19 apr.19 jul.19 okt.19 jan.20 apr.20 jul.20 okt.20 \$/day Solid line is the P4TC historical settled values. Dotted lines forward curve

Increasing fuel prices (and freight rates) following implementation of IMO 2020 sulphur cap

1) Source: Shipping Intelligence Network, NOS, ICE, FIS & company data. Product tanker markets: Triangle trade TC5 PG-Japan+TC5 Korea/Australia. Bunker is basis Sing380 cst with an estimated USD190 pmt premium for the compliant IMO 2020 0.5% sulphur fuel. MR TCE basis TC7 as per Baltic Exchange.

Summary Klaveness Combination Carriers ASA (KCC)

The CABUs	The CLEANBUs
«Well	"Well underway
proven	proving the concept
and	both commercially
profitable»	and technically "
→Considerably improved earnings outlook 2H 2019 and 2020	→Higher earnings after start of combi-trading →Lower start up costs and shorter phase-in time	→Positive outlook in product tanker and the fuel markets for balance 2019 and 2020

One of the best

shipping/fuel market exposures available

• → "Future proof"
• → Earnings 1.5- 2 x standard markets

Enclosures

1H 2019 results

Consolidated financial statements 1H 2019 (unaudited)

Income Statement	1H 2019	1H 2018
Net revenues	25 933	27 764
Operating expenses, vessels	(13 911)	(10 086)
SG&A	(3 059)	(1 853)
EBITDA	8 963	15 824
Depreciation	(5 920)	(8 273)
EBIT	3 043	7 551
Net financial items	(5 723)	(925)
Profit before tax	(2 680)	6 626
Tax	-	-
Profit after tax	(2 680)	6 626
EPS	(0.06)	0.22

• Loss of USD 2.7 million for the first half
• CABU earnings of USD 15,560/day
• CLEANBU earnings of USD 12,255/day
• Increase in operating expenses explained by "One-off costs" linked to introduction of the CLEANBUs
• Administration costs is up for the period due to transaction costs related to listing process (-0.6)
• Negative unrealised effects from changes in fair value of derivatives (-2.0)
• Company established end March 2018 so that 1H-2018 not comparable for SG&A and loan costs in parent company. Shareholder loan/bond loan in KCC only from April 2018.

1H 2019 results

Balance sheet

• mainly due to equity raise of USD 38.8 million and delivery of two CLEANBU vessels. Final instalments of in total USD 62 million were financed by drawdown on the DNB/SEB loan facility.
• Payment of dividends of in total 2.9 million in 1H 2019.
• Equity ratio is 49 %, down from 53 % YE-18.

1H 2019 results

Positive cash flow and liquidity development from equity raise and draw down loan financing

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Consolidated financial statements Q2-2019 (unaudited) Enclosures

		Quarter ended		YTD		Year ended
		Unaudited	Unaudited	Unaudited	Unaudited	Audited
USD'000	Notes	30 Jun 2019	30 Jun 2018	30 Jun 2019	30 Jun 2018	31 Dec 2018
Freight revenue	3	31 774	26 748	60 081	26 748	84 284
Charter hire revenue	3	349	2796	581	16 145	17540
Total revenues, vessels	3	32 122	29 544	60 663	42 893	101 824
Voyage expenses		(19515)	(15 130)	(34 730)	(15 130)	(45 431)
Net revenues from operations of vessels		12 607	14 415	25 933	27 764	56393
Operating expenses, vessels		(6 875)	(5 064)	(13 837)	(10 010)	(21 599)
Group commercial and administrative services	10	(1 067)	(776)	(2 328)	(1 747)	(3618)
Tonnage tax	11	(38)	(32)	(74)	(76)	(119)
Other operating and administrative expenses		(401)	(92)	(731)	(107)	(300)
Operating profit before depreciation		4 227	8 450	8 963	15 824	30 757
Ordinary depreciation	4	(3 142)	(4 102)	(5 920)	(8 273)	(16 840)
Operating profit after depreciation		1085	4 348	3 043	7 551	13 917
Finance income	8	815	631	1 545	2 300	2 234
Finance costs	8	(3 776)	(1 807)	(7 268)	(3 225)	(7 374)
Profit before tax		(1 876)	3172	(2 680)	6626	8777
Income tax expenses	11					ਦਰੇ
Profit after tax		(1 876)	3172	(2 680)	6626	8 836
Attributable to:
Equity holders of the parent company		(1 876)	2 487	(2 680)	5 768	7 978
Non-controlling interests			685		858	858
Total		(1 876)	3172	(2 680)	6626	8 836

	Quarter ended		YTD		Year ended
	Unaudited	Unaudited	Unaudited	Unaudited	Audited
USD '000				30 Jun 2019 30 Jun 2018 30 Jun 2019 30 Jun 2018 31 Dec 2018
Profit/ (loss) of the period	(1 876)	3172	(2 680)	6626	8 836
Other comprehensive income to be reclassified to profit or loss
Net movement fair value on cross-currency interest rate swaps (CCIRS)	(14)		105
Reclassification to profit and loss (CCIRS)	(72)		211
Net movement fair value on interest rate swaps	(423)	161	(692)	651	368
Net movement fair value FX hedge	30		(14)		(35)
Net movement fair value bunker hedge	(323)	-	647		(918)
Net movement fair value FFA hedge	(774)		212		970
Income tax effect
Net other comprehensive income to be reclassified to profit or loss	(1 575)	161	470	651	385
Other comprehensive income/(loss) for the period, net of tax	(1 575)	161	470	651	385
Total comprehensive income/(loss) for the period, net of tax	(3 452)	333	(2 210)	7 278	9 221
Attributable to:
Equity holders of the parent company	(3 452)	2560	(2 210)	6 086	8 029
Non-controlling interests		774		1 192	1 192
Total	(3 452)	333	(2 210)	7 278	9 221

Consolidated financial statements Q2-2019 (unaudited) Enclosures

	Unaudited	Audited
ASSETS Notes	30 Jun 2019	31 Dec 2018
Non-current assets
Deferred tax asset 11	15	15
Vessels 4	213 844	167 037
5 Newbuilding contracts	64342	59 877
4 Right of-use assets	1613
Long-term receivables from related parties
б Long-term financial assets	1075	1 855
Total non-current assets	280 889	228 786
Current assets
Short-term financial assets 6	1073	464
Inventories	5112	5 883
Trade receivables and other current assets	15 729	9870
Short-term receivables from related parties	49	594
7 Cash and cash equivalents	127 996	88 263
Total current assets	149 958	105 074
TOTAL ASSETS	430 847	333 859

	Unaudited	Audited
EQUITY AND LIABILITIES	30 Jun 2019	31 Dec 2018
Equity
9 Share capital	5725	4 863
Share premium	130 232	92 271
Other reserves	521	51
Retained earnings	75 367	80 901
Total equity	211 845	178 086
Non-current liabilities
б Mortgage debt	147 471	95 746
б Long-term liabilities to related parties		36 000
б Long-term financial liabilities	2541	450
Long-term lease liabilities	1297
Bond loan 6.10	34 994
Total non-current liabilities	186 303	132 196
Current liabilities
Short-term mortgage debt	15 902	12 200
6
6 Other interest bearing liabilities	7851	2172
ნ Short-term financial liabilities	271	918
Short-term lease liabilities	332
Trade and other payables	7 656	7601
Short-term debt to related parties	570	563
Tax liabilities 11	115	123
Total current liabilities	32 698	23 577
	430 847	333 859
TOTAL EQUITY AND LIABILITIES

Consolidated financial statements Q2-2019 (unaudited) Enclosures

			Quarter ended	YTD	Year ended
		Unaudited	Unaudited	Unaudited	Unaudited	Audited
	Notes	30 Jun 2019	30 Jun 2018	30 Jun 2019	30 Jun 2018	31 Dec 2018
Profit before tax		(1 876)	3 313	(2 680)	6 600	8777
Tonnage tax expensed	10	38	32	74	76	119
Ordinary depreciation	4	3 142	4 102	5 920	8 273	16 840
Amortization of upfront fees bank loans		77	58	154	109	228
Financial derivatives unrealised loss / gain (-)	6	660	(୧୧୮)	1119	(2 517)	(1 163)
Gain/loss on foreign exchange		473		473
Interest income	1	(554)	(152)	(1 095)	(445)	(1 071)
Interest expenses	7	2 272	1717	4 566	3 043	6 972
Taxes paid for the period	10			(45)
Change in current assets		(4 937)	5 732	(4 525)	2 369	(2 070)
Change in current liabilities		583	(6816)	(537)	(3 814)	(1 782)
Interest received	1	554	152	1 095	445	1 071
A: Net cash flow from operating activities		432	7 482	4 520	14 139	27 920
Acquisition of tangible assets	4	(466)	(2 093)	(986)	(2 386)	(2 817)
Installments and other cost on newbuilding contracts	5	(9 971)	(10 280)	(56 026)	(15 752)	(22 126)
Acquisition of subsidiaries, net of cash					863	863
B: Net cash flow from investment activities		(10 437)	(12 373)	(57 013)	(17 275)	(24 080)

Proceeds from mortgage debt	б 31 000		62 000		3 000
Net proceeds from bond loan and settlement shareholder
loan	6		(630)
Transaction costs on issuance of loans	б		(454)
Repayment of mortgage debt	б (3 481)	(4 303)	(6 531)	(5 774)	(10 528)
Interest paid	7 (2 147)	(1 674)	(3 865)	(3 000)	(7 103)
Repayment of financial lease liabilities	(90)		(179)
Capital increase April 30, 2018		12 000		12 000	12 000
Capital increase October 10, 2018					45 000
Capital increase	40 096		40 096
Transaction costs on capital increase	(1 035)	-	(1 035)		(581)
Acquisition of non-controlling interests					(622)
Group contribution/dividend	(2 854)		(2 854)	(9 958)	(a ac8)
Dividends to non-controlling interests				(495)	(495)
C: Net cash flow from financing activities	61 490	6 022	86 248	(7 227)	30 713
Net change in liquidity in the period (A + B + C)	51 485	1 131	34 055	(10 364)	34 552
Cash and cash equivalents at beginning of period*	68 660	41 175	86 090	51 538	51 538
Cash and cash equivalents at end of period*	120 145	42 306	120 145	41 175	86 090
Net change in cash and cash equivalents in the period	51 485	1131	34 055	(10 364)	34 552

Enclosures

CLEANBU Estimated deliveries

CLEANBU delivery schedule¹

			2019		2020			2021				2022
Name	Contract price		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Baru – 1222	USD 48.5m	Delivered		January 2019
Barracuda – 1223	USD 48.5m	Delivered		July 2019
Barramundi – 1224	USD 48.2m					September 2019
Baleen – 1226	USD 46.5m			February 2020
Bangus – 1227	USD 46.5m				Q3 2020
Baiaco – 1228	USD 46.5m					Q4 2020
1229	USD 46.5m						Q1 2021
1247	USD 46.5m						Q1 2021

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

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