CMB.TECH NV (CMBT) 2017 Q2 法說會逐字稿

Good day, and welcome to the Q2 2017 Euronav earnings call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Paddy Rodgers, CEO of Euronav. Please go ahead.

Thank you. Good morning and afternoon to everyone and, thanks for joining Euronav's Q2 2017 Earnings Call. Before I start, I would like to say a few words.

The information discussed on this call is based on information as of today, Thursday, August 10, 2017, and may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements reflect current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events, performance, underlying assumptions and other statements which are not statements of historical facts. All forward-looking statements attributable to the company or to persons acting on its behalf are expressly qualified in their entirety by reference to the risks, uncertainties and other factors discussed in the company's filings with the SEC, which are available free of charge on the SEC's website at www.sec.gov and on our own company's website at www.euronav.com. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the company undertakes no obligation to publicly update or revise any forward-looking statements. Actual results may differ materially from these forward-looking statements. Please take a moment to read our Safe Harbor statement on Page 2 of the slide presentation.

I will now pass over to Euronav's CFO, Hugo De Stoop, to run through the first part of the presentation.

Thank you, Paddy, and good morning or afternoon, wherever you are, and thanks for joining our second quarter 2017 earnings call.

Turning to the agenda slide, I would like to take you through the highlights of our first quarter, followed by a full review of our key financial figures, before handing over to Paddy to take you through the latest market themes as we see them at Euronav. We will then turn over to the operator for a Q&A session.

Moving on to Slide 4. We would like to underline the following highlights. Q2 was a very challenging quarter, with 2 key headwinds for tanker operators to contend with. Firstly, cargo volumes have decreased in line with seasonal pattern but are nevertheless higher when compared to last year. Secondly, there has been a sustained delivery of newbuildings -- newbuilding vessels of both VLCC and Suezmax during the second quarter. These 2 factors have combined to drive consistent downward pressure on freight rates. That said, our VLCC rate performance was, we believe, very [creditable], above our P&L breakeven despite a challenging market structure. The Suezmax's spot performance was far more challenging.

Away from the spot market during the second quarter, we significantly bolstered our fixed income profile with the extension of our FSO contract for 5 years and 2 additional 7-year time charter to Valero to add to the 2 agreed last year. This base of fixed income has allowed us to update and, we believe, upgrade our distribution policy to shareholders today, something Paddy will speak in more detail later on in this presentation. So far in third quarter, difficult environment has continued, with 61% of our VLCC book covered at around $20,000 per day and 60% of our Suezmax fleet covered around $14,700 per day.

I would now like to move on to the income statement on Slide 5. This slide shows the income statement for the second quarter, with 2 key points to focus on. First, the second quarter result was affected by the capital loss the company took for the disposal of TI Topaz, a 15-year old VLCC about to go into its third special survey in drydock. Euronav continues to believe the useful life of a large tanker is 20 years, hence, we depreciate on a straight line basis over 20 years to 0, as we strongly believe this is the correct and most accurate depreciation policy applicable. In such capital intensive and volatile industry as tankers, the capital within the business should be protected as much as possible, hence, for the calculation of any dividend, we include capital losses and we exclude capital gains. This remains part of the return the shareholders policy at Euronav. Talking about dividends, the interim dividend and the previous payout policy would most likely have been close to 0, against a new fixed minimum $0.06 per share that we have announced today. As can be seen from Slide 5, net income was $0.06 per share for the 6 months to end June 2017.

As a reminder, and in order to assess the value of the new dividend policy, last year at the interim stage, the board decided to pay out 60% of the net income as part of the company policy to pay out 80% of full year net income. The reason for 60% at that time for the interim dividend was a concern over freight rates in the second half and the potential for part of the second half to be loss making in 2016. This year, the outlook for the second half 2017 is even more challenging in the view of management and the board. Therefore, it was probable that no dividend or a very small dividend would have been paid out of net income for interim dividend had the previous policy being applied. Indeed, current consensus for Euronav on Bloomberg is for a loss for the full year, implying indeed 0 dividend had the previous policy been applied in full. Otherwise, the second quarter was a fairly regular quarter, with all metrics in line with previous guidance.

Turning now to the balance sheet on Slide 6. The key highlights during the second quarter was a successful issuance of $150 million of unsecured bonds in May. This is an important development for Euronav, as it simultaneously achieves a number of key objectives. Firstly, it bolsters our already-strong balance sheet with a further $150 million of liquidity. Secondly, it diversifies our funding into a new capital source. Indeed, we believe strongly that commercial and regulatory pressures, particularly coming from the application of Basel IV, will continue to reduce bank lending to all shipping companies, regardless of past relationships and company structure. Having access to as many source of funding is, therefore, critical in our view of -- in our view for success. Thirdly, a coupon of 7.5% compares very favorably with the cost of attracting $150 million of capital from other sources. We also signed a 12-year $110 million ECA financing, with commercial banks and Ksure of Korea for financing of 2 VLCC newbuildings, the Aquitaine and the Ardeche we took delivery of in January. After the balance sheet close on 30 June, the FSO joint ventures also fully repaid all the outstanding debt related to them in an amount of $60 million or $30 million for each partner.

Finally, the company started in June a treasury note program, also called Commercial Paper, and placed approximately EUR 50 million in the market for various short-term maturities at a pricing of 60 basis points over Euribor. This is not additional debt but rather an opportunity to decrease the cost of borrowing by systematically using the proceeds to repay part of the company's revolving loan facilities. Our mark-to-market leverage at the end of the second quarter was 44%, and we had $211 million of outstanding CapEx for the 4 new building Suezmax that we order and that are currently under construction. We expect to be able to finance those vessels, with bank debt up to $173 million. The available liquidity at the quarter end was almost $800 million. I will now hand over to our CEO, Paddy Rodgers, to give you an update on current tanker market themes and the outlook. Paddy, over to you.

Thank you, Hugo. Let's turn to dividends. We will pay an annual minimum fixed cash dividend of $0.12 per share, payable $0.06 per share in each half no matter what the conditions in the freight market. We believe this is a more accurate reflection of Euronav business now that we have secured longer term visible income from, a, our FSO contract extension; b, 4 7-year Suezmax contracts with a bluechip U.S. refiner; and c, our sustained track record in maintaining a visible income stream from our other time charter relationships, particularly our French flag business. In addition to building a solid fixed income platform, we have also constructed a very strong balance sheet over the past 18 months, with which to navigate the current tanker cycle and, indeed, to take opportunities for fleet renewal or addition if accretive to do so.

In addition to the minimum fixed cash dividend, Euronav will look to distribute or utilize excess cash with either, a, additional cash dividends depending on our earnings and outlook on the cycle; and/or b, in buying back our own stock should there be a material disconnect between the share price and our estimate of the intrinsic value of our shares. This is something we believe is in Euronav's DNA, both at the board and the management level, where we take our responsibility of good stewards of capital seriously.

The chart on Slide 7 is instructive on this. Firstly, it shows how central dividends have been with in the investment case at Euronav since our listing on Euronext in 2004. Investors have benefited from nearly $1 billion returned in cash dividends over that period. Secondly, this has been done in a prudent and responsible manner, as the chart illustrates. Dividends were not paid when freight rates endured a sustained low period between 2010 and 2014. During this downturn, Euronav did not default on any debt or credit lines nor compromise creditors and continued to expand its fleet. Thirdly, since freight rates returned to higher levels in 2015, Euronav has returned nearly $400 million in excess cash to shareholders, largely in the form of dividends.

I will now move on to an important feature of our Q2 results, the confirmation of our FSO contract extension on Slide 8. During May, we announced that our JV partner International Seaways, the confirmed signing of a 5-year extension to our current FSO contract to 2022. This was an important milestone for Euronav. It provides us with a quality recurring income stream for the next 5 years whilst we retain 50% ownership of a world-class asset with an operational life through to 2032. Our FSO capability may not be fully understood or fully appreciated, the 2 vessels, the FSO Africa and the FSO Asia, are not basic tankers serving as floating offshore units, but very sophisticated, highly engineered operational units, which process all oil produced from the Al Shaheen field, eliminating the water content within it to create a high-quality, export-grade crude oil. This value-added procedure is highlighted in a simple format on Slide 8, and we look forward to bringing it to the market's attention as time goes by in the future.

The decision by the IMO to defer the implementation of ballast water treatment directive from September of this year to 2019 was regarded by some as a negative development for the market, as it removed a potential catalyst for accelerated scrapping. Euronav did not subscribe to the view there would be an immediate uptick in scrapping as a result of this directive coming into force. The current age of the global VLCC and Suezmax fleets are both around 9.5 years, which is relatively young compared to the other shipping segments. But the large tanker fleet, however, is entering normal scrapping range for the older part of the world fleet, which will add to the pressure to scrap, as we highlight in Slide 9. This analysis focuses on vessels over 20 years of age only and those due to go through their fifth or sixth survey dry-dockings between now and the end of 2020.

With further regulation, in addition to ballast water treatment, due to come into force on sulphur content in fuel in 2020, we would expect to see the vessels highlighted on Slide 10 to come under both regulatory and commercial pressure to scrap between now and the end of 2020, representing around 6% of both the VLCC and Suezmax global fleet. Some scrapping activity has returned, with 6 Suezmaxes, and 4 VLCCs removed from the world fleet so far in 2017, according to recent data from [Pareto]. Further momentum in this will bring a positive driver for tanker operators.

Now moving into the summary slide. Our traffic lights continues to look reasonably positive, but the key metric of vessel supply remains amber. Demand has continued to improve. The IEA has upgraded demand for both 2017 and 2018. OPEC production cuts have been offset by the return of Nigerian and Libyan barrels, with U.S. shale continuing to grow. According to Petrofin Research, a further 40 billion bank lending left the shipping sector in 2016, so financing continues to be restricted. And finally, ton miles remains changeable but positive as crude exports continue to be a dynamic area. However, these positives are overshadowed by the order book in 2 ways. Firstly, the nature of its concentrated delivery schedule for both VLCCs and Suezmax sectors over the next 12 to 18 months means a new VLCC and Suezmax is entering the global fleet nearly every week until the end of 2018. Secondly, shipyards have, by aggressively discounting newbuilding prices, been able to attract new orders, which whilst the majority have come from existing rational industrial owners, has nevertheless meant the balance between supply and demand remains in favor of the charterers.

So to conclude, if the illness is flow -- is low freight rates, then the cure appears to be sustained low freight rates, as this should drive scrapping activity, so bringing the market back into balance. Until this inflection point is reached, Euronav retains substantial balance sheet capacity and fixed income visibility to navigate through such a period of lower freight rates and/or take advantage of any expansion opportunities.

This concludes the formal part of the presentation. Thank you for listening. I will pass you back to the operator.

(Operator Instructions) The first question comes from Noah Parquette with JPMorgan.

I just wanted to get your thoughts. I know in the past you've talked about the new orders and the VLCCs kind of a function of heavy discounting by the shipyards for their good customers. We've seen a bit of a slowdown in that. How do you assess that risk in terms of future orders now?

Well, I think the -- I think first of all, it was interesting to see how it was done. I think there is limited capacity within the shipping -- shipbuilding industry, both in terms of the tolerance of their own banking systems to continue to support them at the same time as recognizing that they're actually pricing at a cash loss. So I think that what was the most telling sign about this was that they had limited gunpowder this year, and they were very targeted at the people that they approached. So there wasn't sort of a wholesale marketing of trying to sell as much volume as possible and anybody was welcome. They were very, very owner specific, and you saw that in the people eventually who ordered. But I can assure you in the ones who didn't, it was, of course, people like us, but on a limited basis. So I think that is telling. And I think that is encouraging, and we're beginning to see a little bit of return in some other sectors to ordering.

The next question comes from Gregory Lewis with Crédit Suisse.

Paddy, I'd be curious on your thoughts. It sounds like in some of your prepared remarks, you talked about the increase in U.S. oil production providing ton miles into the market, and at the same time, really just trying to understand the balance between what's going on in terms of ton miles as we have seen, U.S. volumes come onstream but, at the same time, OPEC volumes being held back. And just trying to, as we think about OPEC coming online over the next, let's say, 12 to 24 months from now, coming back online, how should we think about that impacting the market?

Well, I think the timing of it is critical. And there's no question, Greg, that there's a lot of uncertainty in the marketplace, because whilst we think this is relevant for ton miles and for our industry, clearly it is the big elephant as far as the pricing of oil is concerned. The more the Saudis cut, the more that they can bring up the prompt price, but ultimately the more they depress the forward price, because everybody says that oil price has got to come to market at some time. So it's is a very cat-and-mouse situation. I think as far as we're concerned, let's be clear. The U.S. has exported oil for some considerable time. Their ban was on the export of crude oil, and I think at the peak of the discounting of shale into the refinery system, when oil was $100 a barrel, we were seeing 3 million barrels a day of product export from U.S. into Europe. Now since crude oil was permitted to be exported as of January, we've seen that from a standing start of 0 barrels being exported, we've gone to 750,000 a day, about half of which, we think, is going to China, with some great ton mile impact. The IEA's outlook for demand growth for crude is adding about 1.3 million to 1.4 million barrels per day per year, which means that if that Saudi volume comes back on in 2 years' time, you will be able to have your cake and eat it. Essentially, you will be able to have the additional Saudi volumes and you'll still keep the American oil in place.

The next question comes from Jon Chappell with Evercore.

Paddy, you've accomplished a lot in the last couple of quarters, whether it be kind of disposing of some of the older ships, sale and leasebacks, buying some new ships with long-terms contracts, the FSOs, changing the dividend policy. And now amidst this kind of may be more cautious outlook over the next 12 months or so, how do you kind of foresee yourself proceeding, both with the fleet, operationally, and whether that -- and what I'm getting at is, would you be offensive with buying ships here? Would be more defensive with kind of just status quo, selling maybe the older ships, but also the capital structure. Hugo's also accomplished a lot during that time period. What are the kind of next steps for Euronav over the next 12 months?

Well, I think the approach that we've taken was to put money in our purse. We could see that the environment was changing, that there was going to be a lot of opportunity. At the same time -- so our concentration, really, was making sure that we were in a position for one, so that when things become disrupted or a little bit shaky or volatile that that's an opportunity when Euronav would have a lot of choices. And I think that, really, it's been our ambition to make sure -- of course, you saw our policy the last few years making absolutely certain -- and I say the last few years, but also for the last decade, as our slide show demonstrated. Shareholders need to be rewarded for supporting you by buying the share, but the company has to have a long-term vision, and the company has to be ready to act countercyclically. So I think that, really, we've just been trying to make sure all the way along that we can achieve all of those goals. And for the sake of clarification, I think that we've been waiting for the FSO contract conclusion to be able to make use of highlighting the value of fixed income into the company to demonstrate Euronav's not just a derivative on the tanker market but also is an organization which provides a huge range of services from high-quality people embedded in the organization, clearly, I'm not talking about management, and being able to get the fixed income from that and being able to serve the shareholders by allowing them to have access to some of that through our fixed dividend policy.

The next question comes from Amit Mehrotra with Deutsche Bank.

Just one on the change in the dividend policy. It seems to make a lot of sense to me. But I just wanted to get a sense, Paddy, on what you're looking for in terms of deciding what to do with the surplus earnings? Because whenever that does occur, I guess, hopefully next year, but it seems like you guys have given yourself a little bit of a room there to sort of have some discretion, which makes sense. But if you can just give us a sense of what financial objectives you are looking for on prospective acquisitions so that we can get a sense of the parameters around how those decisions will be made.

Yes, well, thanks, Amit. I think that the critical thing for all of us, because we understand the business very well, is -- and I know that all of you as analysts understand the business very well, is that we see many times that people get a bit obsessed with size in terms of just [glomming] Businesses together in the hope that somehow it will stick and work. And that's certainly never been our approach. Our view is that when there is the right timing, and the timing means that we can say whatever the shareholders own through Euronav today can be enhanced by additional -- not just made a bigger part, but actually enhanced to those existing shareholders, then we're ready to act and act with a certain amount of decisiveness. I think it's always difficult to keep reading the runes to try and make sure you've got the right moment and the right timing, but I think you can rest assured that we do that and do it continually. In the meantime, we want to make sure that people can recognize the full value of the breadth of skills in Euronav, that it is not a proxy for the market, it is a real company with many different business units, that, that can be recognized. And really, that determination to put in a minimum fixed dividend is to underline that point. But of course, in the event that we start to see -- either we get suddenly surprised by the market taking off, if it's taking off and assets become more expensive, and there won't be quite right metrics for us to do an acquisition, cash will get returned to shareholders. If we suddenly see that there are some great opportunities, I'm sure that shareholders will be only too pleased, and we'll be able to demonstrate to them that it was the right opportunity to be using either our stock or cash as a currency for accretion and growth.

The next question comes from Ben Nolan with Stifel.

So, Paddy, obviously, the market and rates have weakened a bit. I'm curious if you might be able to sort of frame in how you think of how long it takes for a market to be weak like this before you really start to see some weaker hands been shaken out in terms of forced sellers or the really, really attractive value opportunities that sometimes materialize in a weaker market. How far out would you say that would need to be if the market were to remain weak?

Well, I think that it's complicated, isn't it? Because there are a lot of different aspects to it. I think that one of the things -- I might have had a view on that 10 years ago, but I think the advent into Chapter 11 into shipping has meant that it's often quite difficult to access massively discounted opportunities through somebody else's crisis. I think that plenty of people will be going significantly cash flow negative. If some of the reported numbers -- I mean, you've seen that our numbers were pretty solid as a result of our strategy, and I think that, certainly, the numbers we've got in Q2 are quite praiseworthy, and I'm certainly doing that for the commercial team that have worked here. Our Q3 is, obviously, significantly weaker, but we understand that there are others in the marketplace yet weaker than that, and if the index is being reported by the shipowners -- sorry, but by the ship brokers are anything like right, and that some people are enduring numbers below $10,000 a day, people are going significantly cash flow negative. So that has 2 impacts. Some people will, of course, be close to saying, "Actually, I can't carry the burden. The fleet's for sale. It's the only way to stop the loss." Other people will have noticed that our older ships, and this goes to the scrapping point, that all of a sudden they're in the situation where, if their NAV now is essentially scrap on an old ship, their NAV at the end of the year will be less than scrap, and their NAV at the end of 2018 will be significantly less than scrap. And that would be a clear marker that they should be throwing the hand in early rather than late. And on top of that, as we've often mentioned, you have potential obligation to made capital expenditure through dry-docking. So I think this goes quite fast. And I think the fact that we've already seen some scrapping is a good sign, but also the way that people are pricing older ships is indicating to us that we're really getting down to the gravy strokes.

The next question comes Chris Wetherbee with Citi.

This is [Pershant] on for Chris. Paddy, you've given a lot of great commentary on how you're thinking about the market and this renewed outlook and appreciate that. Just wanted to drill down a little bit on the shareholder return, the dividend versus the buyback. On the buyback part, when you think about the share price and particularly any of your any other metrics, could you give us some -- maybe some guidelines around how you think about share valuation and where you think that it's not been appreciated by the market enough that you step in with a buyback. And then also could you remind us if there's a buyback program in place or how you think about the pace of buybacks versus a dividend, what sort of capital is available and how big that could be if you wanted to pull that lever.

Well, I mean, look, the buyback program has plenty of room in it. And the -- but the point that I would like to make is that we've been -- we can buy back up to 20%. We have certain restrictions on the way that you can buy back. But this isn't a target that we've sort of set out, and there's no program to acquire the stock today. But we watch the stock closely. My complaint about it, I suppose, and you'll say that we've heard this before, it's just that the stock is massively undervalued. And I think that it's massively undervalued for all tanker companies but I think in particular for Euronav and that Euronav can be differentiated, because we're not just a collection of assets with outsourced management on shipping, with a lack of expertise within the core of the business. We have 3,000 seafaring staff. We have 170 people shoreside. They've all demonstrated through their experience and skill and the ability to deliver elements of added value fixed business, whether it's through the FSOs, French flag business or whether it's through our ice captains working on the Valero contracts in Québec. These are all areas where we are being significantly undervalued. And it has always been this way. But if we see exceptional differentials not only between our evaluation view but at a timing when it makes sense vis-à-vis our market outlook, then we have the capacity to act quickly and decisively. And we will be looking for that all the time. Just one thing that I'd like to say about the expression of lack of value attributed. If Euronav goes back to 2015 earnings capacity, so just -- and that wasn't a stellar year. That was a good year, we're close to EBITDA being 1x market cap. Now for a company which has good fixed income, a strong balance sheet and good available cash liquidity, this is incredible bargain. And particularly when you look at what the exposure to the upside is in terms of the ability to generate cash.

The next question comes from Magnus Fyhr with Seaport Global.

Just on crude exports from the U.S. You guys have been participating in some projects down in Corpus Christi and going into port there. Maybe you could share some -- provide some color on what's going on there and how feasible it is to go into U.S. ports currently. And how much capacity could you go into ports? I think it could about half laden, but maybe you can shed some light on that.

Yes, certainly. So most of the VLCC -- all the VLCC business at the moment has been done out of the Galveston lighterage area with reverse lightering. We know of 2 projects. One, of course, is the one that Occidental hired one of our ships to, if you like, showcase, which is that actually, to go to into Corpus, to do at least a part loading, you would only need a relatively short piece of channel to be dredged. And that's an ongoing discussion between them and Corps of Engineers or whoever is responsible for that work. So that's something that could come on relatively quickly and would speed up turnaround times. And then of course, the other project that has been much written about, which is the possibility for the [Loop] terminal to reverse at least one of its pipelines and facilities to ensure that VLCCs could load at Loop . I think all of these projects look like they would get developed, because they should make it quicker to turn a VLCC around and potentially a little bit cheaper. There's no question that, as I said earlier on, the flow is demonstrably there, because the U.S. has exported up to 3 million barrels a day of product. Now that the oil is down on the Atlantic Coast, I'm sure that the Atlantic owners of that oil would like to have a market put and the ability to sell that oil into the international market rather than to be captive to the American refiners. So we would expect it to grow and to be a very strong market.

(Operator Instructions) The next question comes from Fotis Giannakoulis with Morgan Stanley.

Paddy, I want to ask you how these -- the U.S. exports have changed the trading patterns between VLCCs and Suezmaxes and if we've seen any notable pressure on the Suezmax rate and the utilization of these vessels vis-à-vis VLCCs and any other changes, if you can comment, in the flows that you have seen since the previous quarter.

Look, Fotis, I think one of the things that we've really noticed, and it goes a little bit beyond just the U.S. position, is that during the last 2, 3 years, we've seen the standard, what we would call the market expectation of a standard differential between Suezmax and VLCC rates has actually come apart. The Suezmaxes used to be priced off an almost fixed differential to a VLCC on the basis that both of them were engaged in one trade, which was the West African -- West Africa to U.S. Gulf trade, where they were effectively -- you could either have 2 V -- 1 V or 2 Suezmaxes, and so there was kind of [arb] between the 2. I don't think we've really seen that arb present, and I don't see that VLCCs are eating the Suezmaxes lunch, because the critical point about the exports from the U.S. Gulf is that, to a large degree, they're going to the Far East. And the economy of scale on shipping is not only economy of the bunker consumption, but it's also the ability to take it and turnaround in the Chinese ports. So I think that some -- this is not a benefit for VLCCs at the expense of Suezmaxes. I think that it's simply a trade for VLCCs. The Suezmaxes, of course, have been split up into being a real worldwide trader and then having to live off specific routes. So it's a much more dysfunctional world than it was in the correlation between the 2 asset classes.

The next question is a follow-up from Amit Mehrotra with Deutsche Bank.

I just had one, kind of a piggyback on Ben's earlier question. You've put in the presentation previously a very helpful slide on net growth in terms of number of ships, net of nondeliveries and then scrapping. I didn't see it in this presentation. Maybe I missed it, but I don't think it was there. Obviously, that equation is not that great this year. But if you could just help us fast forward next year. Where do you see the relationship between net new deliveries compared to normal or slightly above normal scrapping level, so we can get a sense of when that tipping point or inflection would occur in the crude tanker market?

Well, I think it's -- I don't think it's quite as mathematical as that, Amit. And I think that you give me the scrapping number. I'll give you -- and the rate at which it happens, and I'll give you the balance point. What I think is very important is the acceleration or the speed at which new buildings have delivered compared to the world fleet steady. Because if you bring on the new buildings slowly, the world fleet can absorb a lot of the capacity through slowing down. And I expect that we will see some of that. So you have to -- you're going to have to do supply and demand calculation, and with your demand, adding your ton mile positive or negative and then looking at your speeds and then looking at your scrapping. And I'm afraid I don't mean to be so tedious as to lay out a process like that. But I think all of us have to try and do it for our own account and take a view on it. But you have to give us the scrapping number and the ton mile number before we get the balance points.

This concludes our question-and-answer session. And the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.