Hafnia : Q1 2024 Investor Presentation

Hafnia Limited

Q1 2024 Investor Presentation

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Agenda

Q1 2024 Overview

Financial Summary

Industry Review & Outlook

ESG Overview

INTRODUCTION TO HAFNIA

Fully integrated shipping platform with 100% alignment of interests and no fee leakage

ACTIVE MANAGEMENT

Proactively reviewing market for opportunities that create stronger shareholder value

Vessels Owned1 /	SHAREHOLDER VALUE
Time Chartered-in
▪	LR2:	10x	Consistent dividend payout since
IPO. Recently updated dividend
▪	LR1:	31x/4x
policy, with up to 90% payout ratio
▪	MR2:	52x/10x

• Handy2: 24x
• Total: 117x/14x

UNPARALLELED SCALE

Commercially managing a fleet of over 200 vessels with pool platforms covering every product segment and chemical

STRONG MARKET OUTLOOK

Strong market fundamentals on both demand and supply outlook, representing good earnings pathway

Net Asset Value3

USD ~4.3b

Stock Exchange Ticker

OSE: "HAFNI"

NYSE: "HAFN"

DIVERSIFIED REVENUE STREAMS

Commercially managing third-party vessels in Pools and buying bunkers for over 1,400 pool and third-party vessels

FOCUS ON ESG

Highly reputable board of directors, constantly seeking initiatives on vessels that minimizes environmental impact

1 As of 31 March 2024, Including bareboat chartered in vessels; 6 LR1s and 4 LR2s owned through 50% ownership in the Vista Joint Venture and 2 MRs owned through 50% ownership in the Andromeda Joint Venture

2	Inclusive of IMO II vessels	4
3	NAV is calculated using the fair value of Hafnia's owned vessels

ACTIVE MANAGEMENT & STRONG SHAREHOLDER RETURNS

Strategic Acquisitions and Joint Ventures

2018 Vista Joint Venture

Joint venture with CSSC (Hong Kong) Shipping Company Limited with joint control of 50% ownership interest each. Vista entity comprises of 6 LR1 vessels and 4 dual-fuel LNG LR2 vessels.

2021	Andromeda Joint Venture

Joint venture with Andromeda Shipholdings Ltd with joint control of 50% ownership interest each. Andromeda entity comprises of 2 MR vessels.

Transparent and Sustainable Dividend Policy

• In April 2024, Hafnia announced an increase to its dividend payout ratio. Hafnia now targets a quarterly payout ratio of net profit, adjusted for extraordinary items, of:

Net loan-to-value	Payout of net profit
Above 40 %	50 %
Above 30 % but equal to or below 40 %	60 %
Above 20 % but equal to or below 30 %	80 %
Equal to or below 20 %	90 %

• Decision stems from a commitment to deliver strong shareholder value while safeguarding financial stability.

2022	Acquisition of Chemical Tankers Inc

Acquired 32 modern chemical and product tankers through the acquisition of Chemical Tankers Inc and its subsidiaries. 8 vessels were divested while remaining 24 are within Hafnia Pools.

2022	Acquisition of 12 LR1s

Acquired 12 LR1 product tankers from Scorpio. These vessels were built in South Korea 2015-2016.

2023	Ecomar Joint Venture
	Joint venture with Socatra in Ecomar Shipholding SAS with joint control
	of 50% ownership interest each. 4 dual-fuel methanol MR newbuilds
	have been ordered, with expected delivery in 2025-2026.

Asset Value Appreciation

• Within Hafnia's time chartered-in vessels, we hold 8 purchase options.
• With the current strong asset price environment, the value of the purchase options amounts to ~USD 120m at the end of the reporting period.

	Average purchase option price
	Vessel Segment
	(USDm)
LR1	40.8
MR	29.1

• This underscores our ability to renew our fleet below market value and capitalise on the value appreciation.

5

Agenda

Q1 2024 Overview

Financial Summary

Industry Review & Outlook

ESG Overview

STRONG FIRST QUARTER AND SHAREHOLDER RETURN

Q1 2024 Financial Highlights

TCE Income1

USD 378.8M

Q1 2023 of USD 377.2M

Adjusted EBITDA1

USD 287.1M

Q1 2023 of USD 296.0M

Pool & Bunker Income

USD 9.8M

Q1 2023 of USD 11.1M

Net Profit

USD 219.6M

Q1 2023 of USD 256.6M

TCE / Day

USD 36,230

Q1 2023 of USD 36,312

Strong Shareholder Returns

USDm
600				80%
		70%	70%	80%
500	60%
400				50%
	30.1%	27.4%	26.3%	24.2%
300				20%
	213.3			219.6
200		146.9	176.4	175.7
	128.0	123.5
	102.9	-10%
100
0				-40%
	Q2 2023	Q3 2023	Q4 2023	Q1 2024

Net profit		Declared dividend		Payout ratio (RHS)		Net LTV (RHS)

• Net LTV ratio at the end of Q1 2024 decreased to 24.2%, adjusted downwards from Q4 2023 mainly due to reduction in debt.
• For the quarter, we will pay a dividend of USD 0.3443 (~NOK 3.79652) per share. This brings the total dividend amount for the quarter to USD 175.7m, representing an 80% payout ratio.
• This is Hafnia's highest dividend payout to date, and we continue to have potential for further upside as we strengthen our balance sheet in this strong freight environment.

1 Refer to our quarterly report for more information on non-IFRS financial measures.	7
2 Based on exchange rate of 11.0274 on 29 April 2024

Q1 2024 FINANCIAL SUMMARY

Income Statement	Q1 2023	Q1 2024
USDm

TCE income2				377.2		378.8
Other operating income				11.1		9.8
Vessel operating & technical management expenses				(70.7)		(75.3)
Charter hire expenses				(6.9)		(9.5)
General and administrative expenses				(14.7)		(16.7)
Adjusted EBITDA2				296.0		287.1
Depreciation and amortisation charges				(52.0)		(54.1)
Gain on disposal of assets				36.7		0.0
EBIT				280.7		232.9
Net financial expense				(28.0)		(18.9)
Share of profit from joint venture				5.8		7.3
Profit before income tax				258.6		221.3
Income tax expense				(1.9)		(1.7)
Profit for the financial period				256.6		219.6
Balance Sheet Items		Q2 2023	Q3 2023	Q4 20231	Q1 2024
USDm
Total assets		4,087	3,822	3,914	3,897
Cash at bank and on hand		241.5	124.8	141.6	128.9
Total liabilities		1,911	1,623	1,686	1,542
		2,176	2,198	2,228	2,355
Total equity
Gross debt		1,436	1,230	1,252	1,167
Net LTV4 - %		30.1	27.4	26.3	24.2

Total Liquidity & Hedge Ratio

USDm								Weighted average		120%
500
			283		~412	hedged rate of 1.70%
400									100%
								81.8%			80%
300
													60%
200
	129												40%
100
													20%
0														0%
		Cash at bank		Undrawn		Total liquidity		Hedge Ratio
		and on hand		facilities 3

Return on Equity (Annualised)

60%
40.8%			38.3%
40%		33.3%
27.9%
20%
0%
Q2 2023	Q3 2023	Q4 2023	Q1 2024

Return on Invested Capital5 (Annualised)

40%
30%	26.4%			27.6%
20%		19.2%	19.3%
10%
0%
	Q2 2023	Q3 2023	Q4 2023	Q1 2024

1. Q4 2023 figures onwards include IFRS 15 load to discharge adjustments; while previous quarters were not adjusted.
2. Refer to our quarterly report for more information on non-IFRS financial measures.

3Excludes pool working capital facilities.

4 Net loan-to-value is calculated as vessel bank and finance lease debt (excluding debt for vessels sold but pending legal completion), debt from the pool borrowing base facilities less cash at bank and on hand, divided by broker vessel values

(100% owned vessels).	8
5 ROIC is calculated using annualised EBIT less tax.

OPERATING SUMMARY AND FLEET COVERAGE

Q1 2024 saw average TCE of USD 36,230 per day; 68% of fleet covered for Q2 2024 at USD 37,896 per day

TCE Segment Breakdown

Coverage as of 10 May 2024

	Q1 2023		Q1 2024
	Operating	TCE2	Operating	TCE2
	days1	(USD/day)	days1	(USD/day)
LR2	540	40,791	483	52,813
LR1	2,746	43,268	2,545	46,749
MR3	5,004	34,223	5,243	32,888
Handy3	2,099	31,144	2,184	28,307
Total	10,389	36,312	10,455	36,230

OPEX Segment Breakdown

	Q1 2023		Q1 2024
	Calendar	OPEX4	Calendar	OPEX4
	days	(USD/day)	days	(USD/day)
LR2	540	7,492	546	8,550
LR1	2,540	7,717	2,275	8,178
MR3	4,230	7,330	4,550	7,812
Handy3	2,160	7,418	2,184	7,569
Total4	9,470	7,468	9,555	7,886

		Q2 2024	Q2 - Q4 2024
	Covered		Covered rates	Covered	Covered rates
	(%)		(USD/day)	(%)	(USD/day)
LR2	85%		40,814	55%	33,483
LR1	54%		48,681	18%	48,621
MR3	67%		34,900	34%	30,785
Handy3	83%		32,602	37%	31,043
Total	68%		37,896	32%	33,901

USD/day	Average Daily TCE by Vessel Type
60,000
	54%
50,000
	85%
40,000	67%
	83%
30,000
20,000
10,000

0

LR2				LR1		MR		Handy
	Q2	2023		Q3 2023			Q4 2023		Q1 2024		Covered Q2 2024
											(As of 10 May 2024)

1. Total operating days include operating days for vessels that are time chartered-in. Operating days are defined as the total number of days (including waiting time) in a period during which each vessel is owned, partly owned, operated under a bareboat arrangement (including sale and lease-back) or time chartered-in, net of technical off-hire days. Total operating days stated in the quarterly financial information include operating days for TC Vessels.
2. Refer to our quarterly report for more information on non-IFRS financial measures.

3	Inclusive of IMO II vessels	9
4	OPEX includes vessel running costs and technical management fees

POOL AND BUNKER ECONOMICS

Fee-generating adjacent revenue streams contributed USD 9.8m to our performance in Q1 2024

Pool Commission Structure		Bunker Commission Structure

Commission Structure:

	All excl Specialized and Chemical pools:
	▪ USD 271.5 per calendar day
Fixed Fee	Specialized and Chemical pools:
(USD)	▪ USD 296.5 per calendar day
	Increased USD 21.5 per calendar day beginning 2024 for EU ETS
	management except for Panamax pool (not trading in EU)
	All excl Specialized and Chemical pools:
Variable	▪ 2.25% of TCE rate/day
Commission
(%)	Specialized and Chemical pools:
	▪ 2.75% of TCE rate/day

Calculation Example:

• Annual earnings per vessel is calculated based:
• • (# Calendar days * Fixed Fee) + (# On-hire days * TCE rate * Variable Commission)
• E.g. in LR1 Pool where a vessel is on-hire for 330 days in a year and earns an average of USD 40,000, Hafnia will receive:
• • (365 * 271.5) + (330 * 40,000 * 2.25%)
  • = ~USD 396,000 annually

Hafnia's eight commercial pools:

LR2	LR1	MR	HANDY
CHEMICAL-MR	CHEMICAL-	SPECIALIZED	PANAMAX
HANDY

Commission Structure:

3rd party vessels	▪	USD 2.00 / metric ton
in Hafnia pools
3rd party clients	▪	USD 3.00 / metric ton

Calculation Example:

• Bunker commission is calculated based:
• • Bunker quantity lifted (mts) * Agreed commission rate per mt
  • Quantity lifted is defined as quantity delivered to the vessel where Hafnia Bunker acted as broker.
• E.g. within a period where Hafnia bunker has delivered 500,000 mts for 3rd party vessels in Hafnia pools and 2,000,000 mts for 3rd party clients, Hafnia will receive:
• • (500,000 * 2) + (2,000,000 * 3)
  • = ~USD 7,000,000

10