Odfjell : SLB Investor Presentation 2021

January 08, 2021 at 09:32 am

Odfjell SE - Investor presentation

8 January 2021

Agenda

Odfjell at a glance
Odfjell Tankers
Odfjell Terminals
Capital Allocation
Summary
Risk factors
Appendix 1 - ESG & Decarbonization journey
Appendix 2 - Financials & Covid-19 impact

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

World leading chemical tanker & storage company

A global platform with a fleet of 91 sophisticated chemical tankers

Our vessels can carry "anything liquid"

Mix of CoA and spot exposure with average contract coverage of 50-60 %

Five tank terminals in key petrochemical hubs worldwide

Storage and handling of high-margin petrochemicals on long-term contracts

High margins and stable returns supported by long term contracts

Key figures

USD mill	USD bn	USD mill	NIBD/EBITDA	USD mill
279	2.2	25	4.2x	0
Annual	Total	+/- for every 1k/d	2020	Odfjell Tankers Capex
EBITDA	Balance sheet	change in rates	Annualized	Beyond 2020 3

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

The company has been transformed during the past few years and is today standing on a solid platform ahead of an expected cyclical upturn in our markets

Sample of company specific achievements the last years…

			Sold non-strategic terminals
Significantly reduced our opex/day
	Reduced our G&A
		with healthy gains

…which has been important

achievements in a 10-year low cycle

12 000	-32%			100
10 000			USDm	90

8 000			80
11 053		70


6 000		7 528		60
4 000	2012	2019		50

-26%			400
		USDm	300
93		200

	68		100

2012	2019		0

392
	107
Cash gain	Equity gain

100

% 85

Global chemical tanker fleet utilisation

		Significantly improved the
Brought Odfjell Terminals	Concluded the largest fleet
back to profit	renewal in the Odfjell's history	efficiency of our fleet

	30				40			22		-26%

ROIC	20			Vessels	30		Tonnes/day	20
				18

	10
		11%		20		40	16	21.0

	0				24		14
				10			15.4
		-13%					12
	-10
				0			10
		2012	2019		Redeliveries	Additions	2009	2019

									4

1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

					Mid/high
					cycle

Low cycle								Low cycle

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Our results have therefore improved as we can start to measure the effects of our increased competitiveness

316

286

182

242109

EBITDA per division, USD million (excluding IFRS 16 effects)*:

			238
		191	47

169	157	40	166

		117	38
110
	96

Recent years achievements:

229

Major changes in our

31cost base and the Odfjell

Tankers fleet

167

135 27

191

	96	93	22		188
		27		147
			125

			98	97
		66
59	61

109

196	Restructured Odfjell
Termianls

137

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020**

LPG/Ethylene Tank terminals* Chemical tankers

Source: Odfjell

2017 and 2018 EBITDA reduced by USD 8 mill and USD 10 mill, respectively due to sale of Oman and Singapore. Figures excludes IFRS16 effects for FY2019 and FY2020 and 2020 EBITDA is annualized 5

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Our fleet renewal program has been completed at an attractive time, and our growth is now mostly capital light which reduces risk

1		200							Clarksons newbuilding index
													Newbuilds	Long-term TC

	Acquisition	180												Acquisitions	Long-term BB
	160
concluded at
140
bottom of the
	asset cycle	120
		100 jan-jan-	jan- jan- jan-	jan- jan- jan-	jan- jan- jan-	jan- jan- jan-	jan- jan- jan-
				04 05	06	07	08	09	10	11	12	13	14	15	16	17	18	19	20
2	Older			30											21
			20
	inefficient										8
	vessels	Vessels		10		6			5
	replaced by		0

	mix of
		-10
	newbuilds,
acquisitions,		-20
pools & long-
	-30														-24
term charters
		Newbuildings	2nd hand			TC/BB		Pool vessels		Re-

3								transactions							deliveries/sales
										POOL P&L		TC P&L
Established 4
&ProfitLoss (USD/day)
	pools with
	new and

	efficient
	spezialised
	tonnage
										TCE rate (USD/day)
																		6

Our various fleet initiatives will impact Odfjell positively through:

Low investment cost to ensure attractive returns even in low cycles

Lower unit costs through lower bunker consumption and more cargo space

Modern tonnage adapted to the evolution of the super-segregator trade

Lowered our timecharter/bareboat expenses by more than 20% due to timing

Lower bunker consumption through redelivery of older less efficient tonnage

Timechartered fleet is reduced but still offer flexibility for cyclical swings

Pool establishments has offered growth in a capital efficient way

No economic downside, but upside through profit splits plus fixed fees

Consolidation and secured Odfjell control of modern and efficient tonnage

Source: Clarksons Platou, Odfjell

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Our Fleet initiatives means the environmental footprint of our fleet is among the lowest in the industry - 3rd party sources gives us top ranking among our chemical and product tanker peers

Chemical tankers: Fleet average EVDI rating vs 2008 baseline (% above/below)

Odfjell			21%
Operator 2		20%
Operator 3		14%
Operator 4		11%
Operator 5		8%
Operator 6		8%
Operator 7		8%
Operator 8		7%
Operator 9		5%
Operator 10		4%
Operator 11		3%
Operator 12		1%
Operator 13		0%
Operator 14	-2%

Operator 15	-3%

The 2030 and 2050 targets are 40% and 70% improvement vs. The 2008 baseline

The above highlights the share of the operators fleet average that is above/below the 2008 baseline

Chemical/product tankers: Share of fleet w/EEDI improvement

Operator 1	64%		100%
Odfjell	39%		100%
Operator 3	28%		100%
Operator 4	25%		100%
Operator 5	25%		100%
Operator 6	23%		100%
Operator 7	23%		100%
Operator 8		92%	100%
Operator 9		93%	100%
Operator 10		93%	100%
Operator 11		94%	100%
Operator 12		97%	100%
Operator 13		97%	100%
Operator 14		97%	100%
Operator 15		99%	100%
	Retrofitted	Non-retrofit

			100%

The above measures how actively operators are retrofitting vessels within the product/chemical tanker peer group

Source: Rightship, * EVDI= Existing vessel design index, EEDI= Energy Efficiency Design Index

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

We have recently launched new and ambitious climate targets which goes further than IMO targets - this is the foundation for our SL Framework

Odfjell will cut greenhouse gas emission by 50% by 2030 compared to 2008*

Odfjell is dedicated to pursuing a zero-emission strategy and will only order vessels with zero-emission technology from 2030

Odfjell will have a climate neutral fleet from 2050

Odfjell will actively support initiatives to develop technology and infrastructure for zero emissions and support international regulation to drive zero emission for our industry

"At Odfjell, we build for the future, and act today for a better tomorrow"

* Emissions based on transport work and Annual Efficiency Ratio (AER)	8

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

We have implemented a comprehensive Fleet Transition Plan demonstrating how we will reduce our carbon intensity by 50% by 2030 and carbon neutral by 2050

Historical and projected AER trajectory, indexed		Projected AER trajectory, 2019-2024

120										8,8
100										8,6	8,75
80										8,4
										8,56				8,18
									8,2

60												8,35	8,30
									8,0			8,20	Bond	8,16
40	Carbon intensity (AER), Odfjell
					7,8
										SPT
20	IMO Trajectory
							7,6
0										7,4
2005	2010	2015	2020	2025	2030	2035	2040	2045	2050	2019	2020	2021	2022	2023	Jun-24	2024

2019: 26% reduction

2024: 31% reduction

2030: 50% reduction

2050: Carbon Neutrality

As per 2019, we have reduced our intensity-based emissions by 26% relative to 2008

The reduction is a result of significant investments in energy saving devices on existing vessels, as well as a fleet renewal program that was finalized in 2020

No significant changes are expected to our fleet composition through 2024, partly due to uncertainty regarding choice of technology

We are however committed to further reduce our carbon intensity in the period by executing more than 100 investments in energy saving devices across our existing fleet

By 2030, we are committed to reduce our carbon intensity by 50% relative to 2008

To be achieved through a combination of retrofitting of existing vessels, phasing out of old vessels and inclusion of new and more efficient vessels

Odfjell is dedicated to pursuing a zero- emission strategy and will only order vessels with zero-emission technology from 2030

Odfjell will actively support initiatives to develop technology and infrastructure for zero emissions and support international regulation to drive zero emisssion for our industry

The Fleet Transition Plan has been verified by DNV GL, who will also conduct an annual assessment as to whether the plan continues to be viable

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Odfjell's sustainability-linked finance framework is testament to our commitment to deliver on the ambitions set out in the Fleet Transition Plan

KPIs & SPTs

BOND CHARACTERISTICS

REPORTING

VERIFICATION

CO2

KPIs1;

Actual carbon intensity for the Odfjell Controlled Fleet2
An assessment of the Fleet Transition Plan and its viability on the relevant Target Observation Date

SPTs

AER3 Performance of 8.18 or lower at 30 June 2024

Reduce carbon intensity by 50% by 2030 compared to 2008

The KPI performance versus the SPTs will be linked to the redemption price of the contemplated bonds

Redemption price to increase by 150 bps if Odfjell fails to meet the SPT at the Target Observation Date (30 June 2024), and provide the necessary reporting

Redemption price to remain unchanged if the SPTs are met

The performance under the AER KPI will be measured on an annual basis throughout the tenor of the bonds

Further, an external reviewer will provide an annual opinion on whether or not Odfjell is on track to meet its ambitions under the Fleet Transition Plan

Reporting to be provided in a progress report to be published no later than 90 days post the applicable Target Observation Date

2nd opinion of the SLF framework

We have obtained a second party opinion from DNV GL, confirming alignment of the framework with the principles set out by ICMA and LMA

Verification of performance by a qualified third-party verifier

Annual verification of actual AER performance relative to to the SPTs

Annual review of the Fleet Transition Plan and confirmation that it remains viable and possible to reach at that point in time

The 2nd party opinion from DNV GL confirms alignment with the ICMA principles and the credibility of Odfjell's strategy to achieve the SPTs

The definition of the KPI and SPT in the Framework is limited to the AER Performance at the Target Observation Date. For illustrative purposes, we have included the assessment of the Fleet Transition Plan and its viability in the above table as both targets must be met in order for the redemption price to remain unchanged at par. Please refer to the Sustainability-Linked Finance Framework and Bond Term Sheet for further details
The Odfjell Controlled Fleet consists of owned and bareboat chartered tonnage (financial and operational leased)
Average Efficiency Ratio will be applied as the measure on Carbon intensity. AER has become the industry standard on carbon intensity, and the metric is recognized as consistent with the policies and regulations of IMO-DCS.

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Demand growth has been strong in the years, and has been resilient despite the pandemic - outlook continues to be promising…

Chemical tanker tonne-mile demand development

6%6%

2%		2%			2%

					1%



2014	2015	2016	2017	2018	2019 1H-203Q-20

(Jul-Aug)

Chemical tanker demand has remained in positive territory through 2020 except for the month of March and May

The third quarter has reflected a recovery in demand in the Atlantic hemisphere and a slowdown in the eastern hemisphere

The trend has been less volumes trading over materially longer distances as a consequence of regional differences stimulating long-haul shipments

+4%	+7%	+1%
p.a.	p.a.	p.a.

Source: Odfjell SE	11

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

…as low-cost producers keeps gaining market share which stimulates tonne-mile demand

Feedstock prices…

US Ethane	Asia Naphtha	US Naphtha
600
550
500
450
400
350
300
250
200
150
100
50
0
01/20	04/20	07/20	10/20

Source: Odfjell

…Has ensured US producers have the most competitive producer margins

	USA	Europe	NEA
300	Methanol
200
100
0
-100	Jan-20	May-20	Sep-20

600	Eth.Glycol
400
200
0
-200	Jan-20	May-20	Sep-20

200	Styrene

0
-200
-400	Jan-20	May-20	Sep-20

…Chinese Imports replacing Domestic

production

Seaborne imports

	2.3		Average utilsation domestic capacity	85

	2.2							80
	2.1							75
	2.0							70
	1.9							65
							60
	1.8
							55
	1.7
tonnes							50
1.6
						45
1.5
						40
Mill	1.4
						35
	1.3							30
	1.2
							25
	1.1
							20
	1.0							15
	0.9							10
	0.8							5
	0.7	jan-	jun-	jan-	jun-	jan-	Sep-	0
		18	18	19	19	20	20
	12

Observations

Less US & AG export capacity coming online going forward. However, last years new capacity to gain market share from high cost domestic producers is estimated to support continued higher shipping demand relative to end-user demand both in a tonne and a tonne-mile perspective

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

The supply side continues to look strong, with reduced swing tonnage, a limited orderbook and generally a low appetite for new orders

800

fleet

12M rolling new orders

Historical average

Kdwt

600

Orderbook to ratio

400

200

Jan-97

Sep-97

May-98

Jan-99

Sep-99

May-00

Jan-01

Sep-01

May-02

Jan-03

Sep-03

May-04Jan-05Sep-05May-06Jan-07Sep-07May-08Jan-09

Sep-09

May-10

Jan-11

Sep-11May-12Jan-13Sep-13May-14Jan-15

Sep-15

May-16

Jan-17

Sep-17

May-18

Jan-19

Sep-19

May-20

tonnage	100%	Trading chemicals/Vegoil	Trading CPP/Crude	19,6%	20,7%



80%

	60%

Swing	40%

20%

	0%

3		jan-17feb-17mar-17apr-17mai-17jun-17jul-17aug-17sep-17okt-17nov-17des-17jan-18feb-18mar-18apr-18mai-18jun-18jul-18aug-18sep-18okt-18nov-18des-18jan-19feb-19mar-19apr-19mai-19jun-19jul-19aug-19sep-19Oct-19nov-19Dec-19jan-20feb-20mar-20apr-20mai-20jun-20jul-20aug-20sep-20
	20				Product tankers	% share of fleet	10%
storageFloating	dwtMill
15							fleetofShare

		10						5%
		5
		0							0%

		Dec-19Jan-20	Feb-20Mar-20Apr-20May-20Jun-20	Jul-20Aug-20Sep-20Oct-20	Nov-20

Comments

The orderbook to fleet ratio for chemical tankers remains close to all-time low of 5.6%

Uncertainty surrounding new future propulsion system and environmental regulations keeps reducing the orderbook…

Low supply growth the next years is encouraging

Swing tonnage players has reduced its exposure in the chemical/Vegoil market so far in 2020

We are experiencing increased competition from swing players in the Middle East especially

We therefore expect some increased swing tonnage into our markets, but not to the same extent as seen in 2018/19

The CPP market is currently weak and adds risk for increased swing tonnage going forward

The vast majority of floating storage of CPP has been unwinded…

… A recovery in demand to improve utilisation of the product tanker fleet is key to avoid accelerated competition in chemicals/vegoils

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Future market balance looks favourable, but short term depends on how the "restart" of the global economy will develop post covid-19

Market drivers

Covid-19

GDP

Swing

tonnage

Reduced

fleet

growth

Risk

factors

Demand has continued to grow despite Covid19, albeit at a lower rate. Recovery in volumes are depending on duration of the ongoing pandemic

GDP growth expected to be weak but to recover in 2H20 and to rebound in 2021 by 5.2% (IMF)

Some influx of swing tonnage re-emerging on selected routes, but is not expected to reach previous peaks

Very limited growth in supply with an orderbook of only 5.6% which means a likely quick recovery when demand normalize

Prolonged global economic slowdown - More influx of swing tonnage

3%	Dependent on outcome of covid-
p.a.	19 for the global economy

+1%

p.a. +/- Swing tonnage

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Our terminal division has become smaller but healthier and we got clear strategic priorities for the future…

						Cash proceeds (USD mill)
				400				100	21	27	392
Corporate
		300			153
measures
		200
				85	6
				100

New JV	New JV	Closure of	New HQ in	0	Oman	Exir	Spore	Rdam	Jgyin	Dalian	Total
structure	partner in US	Rotterdam HQ	Bergen

						Equity gains (USD mill)

Oct-16

May-17

Oct-17

Jul-18

Aug-18

Apr-19

Jun-19

Jul-19

Aug-19

Sep-19

May-20

				Increased	Sale of Jiangyin	Sale of Dalian
Sale of	Sale of	Sale of	Sale of
Oman	Exir	Singapore	Rotterdam	stake in	Terminal	terminal
terminal	terminal	terminal	terminal	Antwerp


				terminal

Corporate

transactions

200				135

150								14	13	107

100
	44	1
50			-100


0
	Oman	Exir	Spore		Rdam	Jgyin	Dalian	Total

EBITDA & EBITDA margin (USD mill)

	EBITDA margin	EBITDA	%
50	50

40					40
30
				30
20
				20
10

0	2017	2018	2019	2020	10
2016

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

…Where a key focus would be to optimize and grow our current footprint after the conclusion of the Lindsay Goldberg exit…

Long-term target

Have a meaningful network of terminals, where we either have operational synergies with Odfjell Tankers or another clear angle for value creation. Terminals should ideally represent a third of our activity

Strategic objectives

Odfjell Terminals portfolio overview*

Terminal	EBITDA	ROIC	Capacity (cbm)
Houston	USD 19.5m	14%	379,658
Charleston	USD 2.5m	6%	79,400
Antwerp	USD 5.0m	15%	382,061
Korea	USD 2.2m	5%	313,700

Total	USD 30m	11%	1,154,819

Expansion

Conclude Lindsay Goldberg exit
Optimize current footprint
Prepare for future growth
Expand within current footprint
Expand outside current footprint (2nd priority)

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Following our various cost and operational achievements - We have clear capital allocation priorities for the future…

Odfjell Tankers

Zero capex outstanding and any growth needs to be capital light

Odfjell Terminals	Ongoing expansion and efficiency improvements at the terminal in Houston
All capex is funded locally in the JV and no equity injections are needed from Odfjell SE

Odfjell SE	De-leveraging
Establish a sustainable and predictable dividend policy

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

…Where a key target is to de-lever our balance sheet and reduce our daily break- even levels to ensure a positive cash flow in any market cycle…

1 400
1 200
1 000
800
600	1 256	1 081

		933
400			791

200
0
-200
-400	2020	2021	2022	2023

		Repayment	Ending balance year-end
		Planned vessel financing	Long-term target range
			18

Leverage

target range

Current

repayment

schedule

Break-even

USD 750 - USD 900 mill range

Limited refinancing needs going forward Current schedule implies debt reductions of USD 465 mill by 2023 to USD 791 mill

Together with more favorable amortisation profiles, this will lower our break-even levels to a target range of USD 18,000- USD19,500 per day

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

…And ensure we have a strong balance sheet at all times and strong cash flow generating capabilities

EBITDA and current debt repayment schedule

4.2x

NIBD/EBITDA	Debt target range
3.5x

3.0x

2.5x

2020

2021

2022

2023

Free cash flow to equity after debt and interest cost in various TCE and cycle scenarios

	350														327


	300													300
												273


	250											245
										218

mill	200								164	191


USD
150		All-time low			109	136

	100
					82


	50				55
			27


	0		0

		18,000	19,000	20,000	21,000	22,000	23,000	24,000	25,000	26,000	27,000	28,000	29,000	30,000

			Target B/E			TCE rate per day (USD)

					2020 ytd	2016

We believe this strategy will make us succeed in reducing our cost of debt and cost of equity and improve our competitiveness

Odfjell at a glance

Odfjell Tankers

Odfjell Terminals

Capital Allocation

Summary

Our results

Capital

Allocation

Odfjell Tankers

Odfjell

Terminals

ESG &

Sustainability

Linked Bond

Our results has continued to improve throughout 2020 driven by company specific improvements and stronger markets

Focus on de-leveraging to ensure we can establish a sustainable and predictable dividend policy and reduce our cost of capital

Concluded the largest fleet renewal programme in the company's history and we are positioned to benefit from strong underlying fundamentals post covid-19

Restructuring is close to completed with focus turning to growing and optimizing our terminal footprint

Our dedicated work on ESG related matters has positioned us to set ambitious environmental targets exceeding upcoming regulations by IMO

Why an SLB? We want to contribute to further development of the key role that debt markets can play to encourage companies that contribute to sustainability

Risk factors - 1.1 General and Industry specific risks

1.1.1 General

Investing in bonds issued by Odfjell SE involves inherent risks, and an investment in the bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. Prospective investors should consider, among other things, the risk factors set out herein. These risks and uncertainties are risks of which Odfjell SE considers to be most material (in each category) to our business. If any of these risks were to occur, the Company's business, financial position, operating results or cash flows could be materially adversely affected, and the Company could be unable to pay interest, principal or other amounts on or in connection with the bonds.

1.1.2 Industry and market risks of the Group

Odfjell's operations may be adversely affected by downturns in the general economic and market conditions in the countries and regions to and from which the Group transports cargos or operates terminals. For example, any significant and extended downturns in the U.S. or in the Asia Pacific region could result in less demand for chemicals being consumed or used in productions, and thus less demand for the transportation of bulk chemicals of which a vast majority is seaborne transportation. This would have a negative effect on the Group's business, financial condition and results of operations. Unforeseen events such as the COVID-19 pandemic could have a significant effect on the world economy and thus also adversely impact the demand for the Group's services for a period, which again would adversely impact the Group's financial position, operating results and cash flows. Odfjell is at the time of this document publication experiencing limited operational impact from COVID-19. The pandemic has hit Asia, Europe and US at different times and soft demand has been met by increased exports from especially China and Europe. The sharp reduction in oil prices has also kept chemical production high as Asian producers has taken advantage of lower feedstock costs and increased their utilization. Nevertheless, the situation is dynamic and could change quickly, particularly with regards to crew and logistical challenges. Uncertainty is high, and a further escalation or prolonged lockdowns of important ports and markets will eventually adversely impact the Group's earnings. Changes in the trading patterns of customers can also have a negative impact on results if not anticipated.

1.1.3 Cyclical nature of the shipping industry

Odfjell is exposed to the natural cyclicality of the shipping industry, which may lead to reductions and volatility in freight rates, volumes shipped and ship values. Prolonged down cycles may materially adversely affect the Group's financial condition. Fluctuations in the rates that Odfjell can charge results from changes in the supply of and demand for ship capacity and changes in the supply of and demand for the products carried, particularly the bulk liquids, chemicals, edible oils, acids and other specialty liquids that constitute the majority of the products carried by the Group. Sensitivity analyses show that a change in spot time charter earnings of 5% for the Group's chemical tankers in freight rates after voyage costs, will impact pre-tax net result by approximately USD 18 million. Factors influencing demand include among others supply of products shipped, industrial production, economic growth, environmental developments and the distances that products are moved by sea. Factors influencing supply include among others the number of new ships being built, the number of old ships being recycled, changes in regulations and availability of shipyards.

1.1.3 Political and geopolitical risk

The Group has international operations, and its business, financial condition and results of operations may be adversely affected by changing economic, political and government conditions in the countries and regions where the Group's ships are employed. The Group is also exposed to geopolitical risks where territorial and other disputes between countries could lead to the outbreak of war or the existence of international hostilities that could damage the world economy, adversely affect the availability of and demand for petroleum and chemical products and adversely affect the Group's ability to operate ships. The increased tension in the Straits of Hormuz in 2019 lead to an increase in risk and higher costs associated with port calls in the Arabian Gulf.

Risk factors - 1.2 Risks related to the Group's business

1.2.1 Safety risk

The operations of parcel tankers, gas carriers and storage facilities carry an inherent risk of personal injury or death, damage to or loss of property and business interruptions. These risks can arise from among others; marine disasters, such as collisions or other problems involving the ships or other equipment, pollution caused by leaks or spills of oils, chemicals or other products transported by the parcel tankers or stored at the terminals, injuries, death or property damage caused by mechanical failures involving equipment or human error involving employees, terrorism, war or other hostilities affecting operations, piracy or hijackings involving ships, explosions and fires involving the chemical or other liquid products that are transported or stored at the terminals or involving equipment, and other similar circumstances or events.

These risks are exacerbated because a significant portion of the cargo transported and stored involves hazardous chemicals. All the products carried must be handled with extreme care and require significant expertise. Customary levels of insurance for liability arising from operations have been obtained, including loss of or damage to third party property, death or injury to employees or third parties and statutory workers' compensation protection. There can be no assurance, however, that the amount of insurance carried is sufficient to protect the companies in the Group fully in all events and that any claim will be paid or that adequate insurance coverage at commercially reasonable rates can be procured in the future. A successful liability claims for which the Group is underinsured or uninsured could have a material adverse effect. Litigation arising from any such event may result in any of the Group companies being named a defendant in lawsuits asserting large claims. Any such event may result in loss of revenue, increased costs or future increased insurance costs. While the Group's ships are currently insured against property loss due to a catastrophic marine disaster, mechanical failure or collision, the loss of any ship because of such an event could result in a substantial loss of revenues, increased costs and other liabilities in excess of available insurance and could have a material adverse effect on the Group's operating performance.

1.2.2 Environmental risk

The Group's operations involve the use, storage and disposal of chemicals and other hazardous materials and wastes, all of which could pose a potential threat to the environment if not handled properly. There are many rules and regulations surrounding shipping and the handling of hazardous materials, which are all aimed at ensuring safer operations and better preparedness in the event of spills and accidents. Even so, there could be incidents not caused by the Group where the Group could be involved in environmental damage in the form of spills, damage to marine life or animal habitat. The consequence of such environmental damage could be significant costs related to the clean-up of spills, salvage costs and fines, as well as costs related to reputational damage. Although the Group carries insurance against such eventualities, the full cost could exceed the coverage afforded by the insurance.

Risk factors - 1.2 Risks related to the Group's business (cont'd)

1.2.4 Sea staff availability and retention risk

The Group is dependent upon attracting and retaining key personnel and management personnel in its various business areas. There is a shortage of qualified and trained ship officers. Ship officer selection, training, competitive remuneration package and promotions are considered essential for Odfjell's future success. Moreover, there is always a risk that key employees may decide to leave the Group. The loss of the services of some of the seafaring personnel or the inability to successfully attract and retain qualified personnel in general, including ships' officers, in the future could have a material adverse effect on the Group's business, financial condition and operating results.

1.2.5 Contracts of affreightment risk

Contracts of affreightment tend to be less volatile than spot business in terms of both rates and volumes, and Odfjell maintains a relatively high percentage of contract business. However, this can result in lower revenues when spot rates are rising.

1.2.6 Emerging market risk

Each of the Issuer and members of the Group has operations in emerging market countries, including China, Brazil, Chile and South Africa. Economic instability in these countries could have a negative effect on the financial condition or results of operations of the Issuer or the Group. Changes in laws, such as the imposition of restrictions on foreign ownership or repatriation of earnings, could also have a negative effect on the ability of the Issuer or members of the Group to continue operations in these countries or to earn a profit from its operations in these countries. In addition, political unrest in these countries could restrict the ability of the Issuer or members of the Group to carry on operations.

Risk factors - 1.3 Financial risks

1.3.1 Credit risk

Credit risk includes the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities, primarily trade receivables in the form of gross freight and demurrage (waiting time paid for by the charterer/customer). and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. At the time of this registration document, the Group has seen a build-up of outstanding amounts on demurrage, many of which are explained by COVID-19 implemented port restrictions and the sharp reduction in oil prices causing charterers/customers wanting to delay discharge.

1.3.2 Funding availability risk

Due to the capital-intensive nature of the industries in which the Group operates, it is dependent on steady access to funding. Part of this funding comes from its ongoing cash from operations. However, as operating cash flow fluctuates with the markets in which the Group operates, and the investments in fixed assets often happen in stages rather than being evenly spread, the Group is also dependent on external funding from the financial debt markets. Per 30 September 2020, the Group had total nominal interest-bearing debt of USD 1,213 million with a weighted average maturity of 4.6 years. The Group will need to refinance some or all of its indebtedness, and may also incur additional debt, in the future. To a great extent, access to external financing is dependent on the Group's overall financial performance including its cash flow, balance sheet, expected future return on investments, and the risk perception of the industries in which the Group operates at any given time. Global economic and political factors could impact the availability of funding and the Group's ability to finance its investments and ongoing operations. External financing is often secured by collateral assets, whose values fluctuate in line with the volatility in the markets in which the Group operates. During periods of market weakness, when the assets have a lower market value, the Group will be restricted in the amount of funding that can be obtained. This could lead to lower liquidity for the Group. No assurances can be made that the Group will always be able to secure additional funding on satisfactory items, and the Group's activities may be adversely affected if it's unable to secure external financing.

1.3.3 Interest rate risk

All interest-bearing debt, except bonds in the Norwegian bond market and debt borne by tank terminals outside the USA, is denominated in USD. Most of these loans are floating rate with USD LIBOR as a benchmark. The USD LIBOR has the past 10 years varied extensively and can affect the financial results for the Group significantly. As a best estimate example, a 1% increase in USD LIBOR will reduce the Group's net result by approximately USD 11 million.

1.3.4 Currency risk

The Group's revenues are primarily denominated in USD. Currency risk relates mainly to the net result and cash flow from voyage related expenses, ship operating expenses, general and administrative expenses and financial expenses denominated in non-USD currencies, mainly NOK and EUR. For the annualized year 2020, the Group's total recurring NOK and EUR exposure is approximately NOK 570 million and EUR 28 million. Where there is a mismatch between revenue and expense currencies, any depreciation of the revenue currency relative to the expense currency may decrease the Group's profits. As a best estimate example, a 10% decrease in the USD versus the NOK will reduce the Group's net result by approximately USD 5.4 million.

Risk factors - 1.3 Financial risks (cont'd)

1.3.5 Bunker risk

Bunker is the single largest component of voyage related expenses, and the Group makes physical purchases of bunker worldwide. A certain part of the Group's exposure is hedged in some form through bunker adjustment clauses in contracts of affreightments. Bunker adjustment clauses are typically structured as caps and floors where there is a surcharge on the freight if the bunkers price is higher than the cap and vice versa if the bunkers price is lower than the floor. Bunker adjustment clauses are not perfect or 100% efficient hedges due to the difference between actual and projected consumption per metric ton, wide price ranges and the timing of determining the strike price. For the budgeted year 2021, total bunker consumption in compliant fuel equivalent is approximately 400 thousand metric tons, of which approximately 50% is hedged through bunker adjustment clauses. The price of bunker fuel has the past 10 years varied extensively and can affect the financial results for the Group significantly.

As a best estimate example, an increase of USD 50 per ton will increase the Group's voyage expenses by approximately USD 20 million, before adjusting for bunker adjustment clauses in freight contracts.

1.3.6 Tax risk

The Odfjell Group operates within a number of jurisdictions and tax regimes, including the Norwegian tonnage tax system and the Approved International Shipping system in Singapore. In addition, we operate under the local tax systems in Brazil. Changes in any of these tax regimes could have a material adverse impact on the Issuer's business by amongst other things increased costs. Our tank terminal activities are generally subject to the ordinary corporate tax rates within the country in which the activity is located.

Risk factors - 1.4 Risk factors related to the Securities

1.4.1 General

All investments in interest bearing securities have risk associated with such investment. The risk is related to the general volatility in the market for such securities, varying liquidity in a single bond issue as well as company specific risk factors. There are four main risk factors that sum up the investors' total risk exposure when investing in interest bearing securities with a floating interest rate: liquidity risk, interest rate risk, settlement risk and market risk (both in general and issuer specific).

1.4.2 Market risk

There is no existing market for the Bonds, and although the intention is to apply for a listing of the Bonds on the Oslo Stock Exchange, there can be no assurance given regarding the future development of a trading market for the Bonds. It may be difficult or even impossible to trade and sell the Bonds in the secondary market due to a limited market for the Bonds as well as the market for the Bonds may also have limited liquidity. As the Bonds are not rated this may also have a negative effect on the market for the Bonds as they may be considered an unsecure investment.

1.4.3 Ranking of the Bonds

The Bonds constitute senior unsecured obligations of the Issuer. As such, the Bonds are effectively subordinated to the secured debt of the Issuer and any debt of the Issuer's subsidiaries outstanding from time to time. The Bonds rank equally in right of payment with the Issuer's senior unsecured debt outstanding from time to time and senior in right of payment to the Issuer's subordinated debt (if any) outstanding from time to time. The secured creditors of the Issuer will have priority over the assets securing their debt. In the event that such secured debt becomes due or a secured lender proceeds against the assets that secure the debt, the assets would be available to satisfy obligations under the secured debt before any payment would be made on the Bonds. Any assets remaining after repayment of its secured debt may not be sufficient to repay all amounts owing under the Bonds.

1.4.4 Price risk

The Bonds are floating rate. The coupon payments depend on NIBOR interest rate and the Margin and will vary in accordance with the variability of the NIBOR interest rate. The primary price risk for the Bonds is ultimately related to the market view of the correct trading level for the credit spread related to the Bonds at a certain time during the tenor, compared with the credit margin the Bonds are carrying. General changes in the market conditions and/or Issuer specific circumstances may increase the credit spread trading level relative to the coupon defined credit margin of the Bonds.

Thank you

Appendix 1

ESG & Decarbonization journey

Shipping is a global industry and a backbone for global economic activity and prosperity - While being the most environmental form of trade, the industry needs to play an active role to reduce its share of global emissions

The global shipping fleet performs 80% of global trade

Shipping is the most environmentally friendly transportation method to carry goods

The shipping industry has played and will play a key role in global economic prosperity

The shipping industry carries cargoes that in large is essential in everyday life across the globe

The shipping industry emits 2.6% of global CO2 surpassing Germany if treated as a country. In a status quo scenario, share of CO2 emissions would rise to 17% by 2050…

Source: Odfjell	29

ESG has always been a focus in Odfjell and we have consistently delivered improvements. ESG will continue to be a vital part of our strategy

• Our 106-year history show a focus on long term perspective on the way we do business. Sustainability is rooted in our DNA

• In 2018, we launched our sustainability strategy, "Global Operations - Our responsibility". This is the first time Odfjell has presented a separate document on sustainability.

• Our Sustainability strategy is based on the United Nations Global Compact's ten principles and activities to achieve the UN Sustainable Development Goals.

• Odfjell is also a signatory to the UN Sustainable Ocean Principles.

• Sustainability in Odfjell encompasses the way we do business, how we handle our people and external stakeholders, the environment and local communities, our anti-corruption work, and our work to comply with regulations

In 2020, Odfjell appointed its first Chief Sustainability Officer, as part of Executive Management

Available onhttps://www.odfjell.com/sustainability/

In 2020 was Sustainability included in our strategy, we significantly increased our ESG reporting and will continue to do so going forward

From 2020, was Sustainability included as an integral part of the Odfjell Strategy, with a clear statement of «Our Impact» together with Vision, Mission and Commitment
Our reporting for 2019 followed the new guidelines from Norwegian Shipowner Association and also in line with the new Euronext guidance for ESG Reporting
Our annual report was rated* A- of ESG reporting among top 100 listed companies in Norway
The reporting is aligned with relevant frameworks like SDGs, GRI, TCFD, SASB etc.
Odfjell continue reporting to Global Compact, CDP, EcoVadis, MACN and various other reporting initiatives on ESG and are in dialogue with rating agencies like Sustainalytics, ISS and others
Odfjell report emission data through DNV to EU and IMO in accordance with MRV and DCS Framework
Odfjell Rated B on latest CDP scoring (Dec 2020)

* Rated by The Governance Group and the framework used in "ESG 100 - The Oslo Stock Exchange" 2020

Social and Governance - integrated part of our business

Social

Governance

Odfjell does not compromise on safety - with a target of zero incidents
All vendors to Odfjell, including yards, have signed our corporate supplier conduct principles where we have clear expectancies to vendors on safety, ethics, human rights etc.
Odfjell initiated a gender diversity program in 2019 - with good results
Odfjell has now set a clear diversity target of 30% females on all levels by 2030
Odfjell is implementing a framework and principles for Human Rights in collaboration with IHBR, Rafto Foundation and Danish Institute for Human Rights
All ships carry certificate of compliance with Maritime Labour Convention (MLC)
Odfjell has a clear policy on Anti-corruption, and an anti-corruption program with framework, training and reporting built on UK Bribery Act
We track and monitor all requests to all our vessels. In 2019, we had 17 requests for facilitation on our vessels. Odfjell is an active participant in Maritime Anti-Corruption Network
Odfjell is rated nr 1 of 98 in the industry on Business Ethics by Sustainalytics

Why focus on climate and decarbonization?

Global Mean Surface Temperature

COP PARIS The Paris Agreement was adopted by all 196 Parties to the United

Nations Framework Convention on Climate Change at COP21 in Paris on 12

December 2015.

CO2 in the atmosphere and annual emissions

The initial GHG strategy was adopted by IMO's Marine Environment Protection Committee (MEPC), during its 72nd session at IMO Headquarters in London 2018.The meeting was attended by more than 100 IMO Member States.

Source: Above: NASA figure adapted from Goddard Institute for Space Studies, Below: NOAA Climate.gov, Data: NOAA, ETHZ, 33

IMO Vision and GHG measures

IMO is committed to reducing GHG emissions from international shipping and, as a matter of urgency, aims to phase them out as soon as possible in this century

The Initial GHG Strategy contains a list of "candidate GHG measures" with the following timelines for finalization and agreement:

• Short-term measures -between 2018 and 2023

• Mid-term measures -between 2023 and 2030

• Long-term measures -beyond 2030

Successfully realizing IMO's long-term strategy requires the adoption of low-carbon and eventually zero-carbon propulsion technology and fuels

In a business-as-usual scenario, emissions from international shipping are set to double by 2050 driven by continued trade growth.
Achieving the targets is a huge industry challenge that will require both transition fuel and new technology that is not commercially available

The Fourth IMO GHG Study 2020:	Emissions from shipping
Indexed

• GHG emission inventories for the period 2012-2018	200	IMO target to reduce
		EEXI with 20%
• Total emissions in 2018 were up 9.6% from 2012
	(Tankers) from 2023
•	Shipping's share of global emissions in 2018: 2.89 % ( 2.76 %in 2012)	150							IMO target to reduce

								Carbon Intensity with
										40%
		100							IMO target to reduce
								Absolute emission
										with 50%
		50
		0
		2000	2010	2020	2030	2040	2050	2060	2070	2080	2090	2100

International shipping emissions and trade metrics, indexed in 2008, for the period 1990-2018, according to the voyage-based allocation of international emissions

2008		Intensity

	Absolute
Base year

		Business as usual emissions
		Odfjell

Source: IMO, UNCTAD = United Nations Conference on Trade and Development	35

We have recently launched new and ambitious climate targets which goes further than IMO targets - this is the foundation for our SL Framework

1	Odfjell will cut greenhouse gas emission by 50% by 2030 compared to 2008*

Odfjell is dedicated to pursuing a zero-emission strategy and will only order vessels with zero-emission technology from 2030

Odfjell will have a climate neutral fleet from 2050

Odfjell will actively support initiatives to develop technology and infrastructure for zero emissions and support international regulation to drive zero emission for our industry

"At Odfjell, we build for the future, and act today for a better tomorrow"

* Emissions based on transport work and Annual Efficiency Ratio (AER)	36

We have implemented a comprehensive Fleet Transition Plan where we commit to reduce our carbon intensity by 50% by 2030, and become carbon neutral by 2050

Historical and projected AER trajectory, indexed		Projected AER trajectory, 2019-2024

120										8,8
100										8,6	8,75
80										8,4
										8,56				8,18
									8,2

60												8,35	8,30
									8,0			8,20	Bond	8,16
40	Carbon intensity (AER), Odfjell
					7,8
										SPT
20	IMO Trajectory
							7,6
0										7,4
2005	2010	2015	2020	2025	2030	2035	2040	2045	2050	2019	2020	2021	2022	2023	Jun-24	2024