Prepare for the future in a challenging but improving environment

Michael JorgensenChief Financial OfficerAbu DhabiNovember 6, 2018

CONTENT

▪ Company profile

▪ Sultanate of Oman Logistics Strategy (SOLS 2040)

▪ Market outlook

▪ Investment plans

▪ Synergies with Ports

▪ Financing: Challenges & Opportunities

▪ Q & A

CORPORATE STRUCTURE AND HIGHLIGHTSOSC group and its subsidiaries

Oman Shipping Company

Owned by OGLG, OOC & ORC

Oman Charter Company

(OCC)

Ship chartering activities & broking of own & 3rd party

ships

Oman Ship Management Company (OSMC)

Technical Ship management of own and

3rd party ships

Oman Container Lines

(OCL)

Management of Container & General

Cargo Business

3

▪ Established in 2003

▪ 270 employees

▪ Head office in Muscat

▪ Full scale operational set-up –direct customer contact

▪ High standards: ISO 9001:2015 certified

Shareholders

Corporate Structure

Highlights

4

FLEET PROFILERapid fleet expansion across several sectors

▪ Total fleet of around 50 vessels

▪ Carrying capacity DWT 8m

▪ Total investment in vessels of USD 3bn

▪ Modern fleet with average age of 7 years

▪ Large part of the fleet deployed on long-term contracts

▪ Strong portfolio of customers

No

. of

Ves

sels

0

10

20

30

40

50

60

2003 2005 2007 2009 2011 2013 2015 2017

No

of

ship

s

LNG VLCC LPG VLGC Products

VLOC MPV LR2 Supramax Container

SULTANATE OF OMAN LOGISTICS STRATEGY (SOLS 2040)

5

▪ Use of Oman’s strategic location

▪ Capturing volume growth

▪ Offer integrated logistics services and logistics competitiveness

▪ Higher GDP contribution and diversification of the economy

▪ Job creation in Logistics sector

▪ Oman is benefitting from 3 major hubs (Sohar, Duqm & Salalah)

▪ Growth across all sectors e.g. Oil, Gas, Chemicals, Dry Cargoand Logistics:

⁻ Refining capacity expected to double by 2023

⁻ New gas discoveries supported by LNG production capacity

⁻ Consolidation of the mining sector and increasing exports of aggregates and building material

⁻ Expansion of logistics services, increasing port connectivity

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PROMISING LOCAL MARKET

Source: Maritime Strategies International

GCC IMPORTS/EXPORTS QUANTITIES

183 MnT Products Exports

27.8 MnT

Products Imports

594.5 MnT

Crude Exports

13 MnT Crude

Imports

93.8 MnT LNG

Exports

6.2 MnT LNG

Imports

63 MnT Dry Bulk Exports

120 MnT

Dry Bulk Imports

1.8 b/d incremental

increasein refining capacity

36 Mill TEUs

through-put

+

7

PROMISING REGIONAL MARKETStrategic location

Owning Chartering

LNG Crude Tanker Product Tankers Dry Bulk Container

➢ Maintain position as key player in Oman’s LNG Value chain

➢ Optimize VLCC’s fleet performance

➢ Cater to growing local & regional products trade

➢ Cater to Oman’s growing Mining sector

➢ Offer increased connectivity to Omani ports

Optimize Optimize Expand Expand Expand

Wet Dry

OSC’s Business Sectors

DEGREE OF ASSET OWNERSHIP

Stra

tegi

cO

bje

ctiv

e

Higher contribution to SOLS 2040 & Asyad Strategy

STRATEGIC OBJECTIVES Multi-segment owner offering solutions to all sectors

8

9

Become a profitable key player in the

regional container trade

Offer Omani Ports regional connectivity

Attract volume growth and contribute to

SOLS 2040

Objectives Why?

OCL is well positioned to expand its

feedering network and product

offering

Capture opportunities in growing

ME/ISC/East Africa markets

Take advantage of Oman’s strategic

location as a hub (i.e. reach of more

than 2 billion consumers within 3-4

days of sailing from Oman)

Meets OSC’s diversification objective

Improves OCL’s business (yield

optimization and product flexibility)

Next steps

Extend OCL’s network

Increase commercial offering with

logistics focus

EXAMPLE: OMAN CONTAINER LINESCommercial offering with logistics focus

Shipowning Chartering Operational Excellence

Cargo control

Synergies with ports/VAS (3PL/4PL)

▪ Access to cheap tonnage (right time of entry)

▪ Modern and well maintained fleet

▪ ECO and environmental friendly fleet

▪ Proper Financing sturucture ▪ Agile S&P

▪ High safety, quality & technical standards

▪ Oil majors trust (Oil vettings)

▪ Ensure tradiabilty and compliance with industry regulations

▪ Cost efficiency (smart OPEX)

▪ Technical inspections for new acquired tonnage

▪ Ability to acquire tonnage/offer capacity to other vessel operators

▪ Right chartering decisions ▪ Efficient chartering

process ▪ Strong counterparts and

reputable clients

▪ Access to captive cargo Large cargo potential

▪ Strong counter-parts

▪ Provide logistical and value added services to customers

▪ Preferential rates and priority access to Asyad ports and service providers

▪ Logistics/Supply Chain capabilities

Synergies with Asyad Group/Ports

EXAMPLE: SYNERGIES WITH PORTSValue proposition

Agility People Brand

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SHIP FINANCE MARKET

Main challenges facing the ship finance market

▪ In general weak shipping markets post “Lehman Brothers”

▪ Banks facing significant losses from non-performance of shipping loans (some sectors more than others)

▪ Need for higher capital requirements from “bad loans”, new standards and regulations

Impact for shipowners

▪ Increasing loan margins and more strict financial covenants

▪ Traditional shipping banks have moved out or reduced exposure towards Shipping

▪ Credit evaluation and KYC requirements much more important

▪ Bigger spread between a strong and weak credit

▪ More focus on governance, risk management, performance track record and quality of management

▪ New financing options (ECA financing, high yield bonds, convertible bonds, private equity)

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SHIP FINANCE MARKET

How to overcome the challenges

▪ Diversification (use local, regional and international banks)

▪ Use ECA financing when attractive (example MR deal)

▪ Explore new financing opportunities including bareboat financing and bonds

▪ Make security packages that are more attractive to the banks

▪ Have closer dialogue with the banks about strategy, governance, risk management

▪ Have interest rate hedging policy and hedging in place!

12

Increasing interest costs %

Thank you

Q & A