‘D’Amico International Shipping Offsets Soft Product Tanker Market In The Second Quarter Of The Year, With 19.2% Margin On TCE

The Board of Directors of d’Amico International Shipping S.A. (Borsa Italiana S.p.A.: DIS) (the Company or the Group), a leading international marine transportation company operating in the product tanker market, today examined and approved the half-year and second quarter 2017 financial results.

MANAGEMENT COMMENTARY

Marco Fiori, Chief Executive Officer of d’Amico International Shipping commented: ‘The product tanker industry experienced a challenging freight market in the second quarter of 2017. This was mainly due to the relatively high level of newbuilding deliveries, together with the refining maintenance season and a still high level of product inventories. In this context, I am rather satisfied about the results achieved by our Company in H1’17. I think that once again DIS’ prudent commercial strategy, based on an efficient mix of spot activity and time-charter coverage, allowed us to mitigate the negative effect produced by the soft markets in Q2’17, also due to seasonal factors. In H1’17, our daily spot average TCE was US$ 12,492 whilst our total total daily average rate (which includes both spot and time-charter contracts) was US$ 13,614. This together with our cost-efficient operating platform, allowed us to generate an EBITDA of US$ 24.7 million and an EBITDA margin of 19.2%, which I think is an achievement given the challenging market we have experienced. At the same time, the factors that drove our TCE earnings performance down in Q2 are only temporary and partly linked to the seasonality of our market.

All the medium/long-term fundamentals of the industry are pointing to a proper market rebound starting probably from the end of 2017/beginning of 2018. On the one side, demand for seaborne transportation of refined products is expected to continue on its growing pattern in the years to come, given the dislocation trend of refineries away from some of the key consuming regions. On the other end, the estimated supply of new vessels for the next two years is projected to reach its lowest levels in almost 15 years. This should lead to a tighter market and increasing freight rates. In DIS, we are constantly working to make sure our Company is perfectly positioned to benefit from the expected market recovery. In this regard, DIS will face the next two years with a very young owned fleet, a very flexible TC-IN portfolio (with a proper mix of short-term and long-term TC-IN commitments), a cost-efficient operating platform and with a solid and stable financial structure. To summarize I am still confident, and there is ample support to this feeling among the analyst community, that we are on the verge of a very positive market since the fundamentals have not changed but it is just a matter of time.’ Carlos Balestra di Mottola, Chief Financial Officer of d’Amico International Shipping, commented: ‘During H1’17, we focused on strengthening DIS’ balance sheet and liquidity position. I am particularly satisfied about the positive outcome of the share capital increase we launched in Q2’17.

We issued preferential subscription rights for up to 140,250,109 new shares with 140,250,109 warrants attached, at an issuance price of EUR 0.249 per new share. The rights exercised during the subscription period represented a take-up of around 99.2% of the shares on offer. Following a private placement of the remaining shares, the offering was fully subscribed and generated proceeds of US$ 37.9 million in May 2017. If the warrants are fully exercised this would result in the issuance of an additional 140,250,109 warrants shares and an increase in the share capital of the company of up to a maximum of the USD equivalent of Euro EUR 59.6 million. At the same time, we completed the outright sale of two of our MRs in Q1’17 and the sale and lease back of one additional MR in Q2’17, generating a total net gain on disposal of US$ 2.6 million and a positive net cash effect of US$ 16.4 million. Three further vessels are currently under advanced sale negotiations and their disposal should generate net cash proceeds of approximately US$ 15 million. After implementing a significant newbuilding investment plan of US$ 755 million in the last few years and due for completion by the end of 2018, we are now focusing on strengthening our balance sheet and on ensuring DIS will face the future with a solid financial structure, while maximising returns for its shareholders.’