Welcome to today's Pacific Basin 2021 annual results announcement call. I am pleased to present Chief Executive Officer, Mr. Martin Fruergaard, for the first part of this call. All participants will be in listen-only mode, and afterwards, there will be a question and answer session. Mr. Fruergaard, please begin. Thank you. Welcome, ladies and gentlemen, and thank you for attending Pacific Basin's 2021 annual results earnings call. My name is Martin Fruergaard. I'm CEO of Pacific Basin, and I'm joined on the line by our CFO, Peter Schulz, who is currently in London. Please turn to slide three. In 2021, we saw the strongest dry bulk freight market since 2008 and generated our best result in our company's 34-year history. We made an underlying profit of $698 million and a net profit of $845 million, yielding an exceptionally strong return on equity of 58%. Our results were positively impacted by a $152 million reversal of the Handysize vessel impairment provision we took in 2020. The reversal was required because of the significantly improved dry bulk market, which had driven up the market value of dry bulk vessels. The reversal does not impact our underlying profit, operating cash flow, EBITDA, or available committed liquidity. By the end of the year, we significantly strengthened our financial position with available committed liquidity increased to $668 million and net gearing reduced to 7% compared to 37% a year before. In light of the extraordinary cash flow of last year and our robust balance sheet and positive outlook, the board recommends a final basic dividend of HKD 0.42 a share and an additional special dividend of HKD 0.18 per share. Combined with the HKD 0.14 interim dividend distributed in August, the basic dividend represents 50% of our underlying profit consistent with our dividend policy. Combined with the proposed special dividend of HKD 0.18, the total dividends for 2021 amounts to HKD 0.74 per share, around $458 million in total, representing 66% of our underlying profit for the full year. Our 2021 daily time charter equivalent earnings averaged $20,460 net for Handysize and $29,350 net for Supramax, which is considerably higher than 2020. Our strong results were also driven by our large core fleet, with which we are well-positioned for what we expect will be a continued strong dry bulk shipping market in 2022 and beyond. Please turn to slide four. On the left of this slide, the dark blue line shows a strong upwards trend in freight market earnings for most of 2021. The annual average Handysize and Supramax freight market for 2021 were the highest ever apart from the extraordinary year of 2007 and 2008. Rates corrected downwards in the fourth quarter due to weaker industrial output in China and uncertainty over China's real estate market, steel production, and energy curbs, as well as the usual seasonal softening towards the end of the year. However, rates were still at a strong level of around $25,000 per day for both Handysize and Supramax at the end of the year. On a ton-mile basis, Clarksons estimates total dry bulk demand in 2021 was up 4% a year. On the right of the slide, we show Oceanbolt indicative cargo loading volume data for each of the main dry bulk cargo sectors for a sense of what drove the market last year. The volume of selected key minor bulk expanded 15%, due mainly to strong demand for construction materials such as cement and timbers, steels, aggregates, and forest products. The market also benefited from stable, strong grain volumes, which matched the exceptionally strong activity of the previous years. It recovered strongly at 7% following a weak 2020 when coal exports were hard hit by lockdowns in key economies. Finally, iron ore volumes growth at 2% was limited by cargo availability in Brazil and Australia and also by Chinese steel output quotas in the second half of the year. Please turn to slide five. We quadrupled the carrying capacity of our own fleet over the nine years prior to 2021, and we continued to grow our own fleet last year. We added 11 modern secondhand ships to our fleet during the year, including six large Supramaxes, also commonly called Ultramax, and five large Handysize ships, and we sold five of our smallest and oldest Handysize ships. We have since taken delivery of another modern Ultramax in January 2022. We currently own 121 quality Handysize and Supramax ships that are well suited for our customers and trades and are generating very attractive returns. Including chartered ships we currently have around 250 ships on the water. Buying secondhand ships with prompt delivery in today's strong market remains a more attractive investment than contracting new buildings from shipyards. Our vessel purchasing has slowed in recent months and is expected to continue to be very selective as asset prices approach new historical highs. However, we remain committed to our fleet growth and renewal strategy longer term. Please turn to slide six. Our average Supramax daily time charter equivalent earnings outperformed the Supramax spot market index by about $3,900 per day, partly due to well-timed commercial positioning and to successful management of our 32 scrubber ships. Our scrubber benefit is still at $1,200 per day, and we have so far recovered 67% of our original scrubber investment, including realized bunker price spread hedges. Our core Handysize time charter equivalent earnings in the first three quarters of 2021 is typical in a strong, strongly rising freight market due to the lag between spot market fixtures and execution of voyages, and also due to the effect of cargo contracts secured in earlier weaker markets. However, we outperformed the Handysize index in the fourth quarter with the market correction in November allowed us to catch up. Complementing our core business is our short-term operating activity, which generated significantly increased margins, partly due to our decision to take in tonnage, particularly Supramax ships early in the market recovery, and partly by leveraging our global network to combine ships and cargoes for high laden utilization. Please turn to slide seven. Our core fleet P&L breakeven level, including G&A, was $9,030 per day for Handysize and $10,250 per day for Supramax in 2021. Our overheads, financing costs and vessel operating expenses remain well controlled and competitive. However, ship operating expenses have increased for the entire shipping industry, due mainly to more expensive crew travel, quarantine and other pandemic-related manning costs. This is reflected in the 13% increase in the Handysize OpEx. The reversal of the vessel impairment provision will result in additional depreciation in 2022 and beyond, increasing blended vessel costs by approximately $500 per vessel per day. Please turn to slide eight. Our Supramax core vessel blended costs were substantially unchanged year-on-year, with slight reduction in long-term charter costs, finance costs and depreciation, largely offset by increased OpEx due to the industry's higher manning cost. We remain cost conscious, but our main focus in today's strong rate environment is, as always, on safety and ensuring maximum utilization of our vessels. I'll now hand over to Peter, who will present the financials, and I will be back afterwards with outlook and strategic summaries. Peter? Thank you very much, Martin. Good afternoon, ladies and gentlemen. Can you please turn to the next slide which sets out our P&L in summary. You can see how in the robust market of 2021, we generated significantly stronger performances from both our core business and operating activity to deliver our best underlying results ever. You can also see how net profit in 2021 is positively impacted by the write back of the impairment we took in 2020. Now please turn to slide 11. The operating cash flow for 2021 was $813 million, and that's inclusive of all long and short-term charter hire payments. This was significantly higher than 2020, and the second half of 2021 cash flow was markedly stronger than the first half due to the rising market throughout most of the year. Our borrowings decreased due to net repayments of $333 million, partly offset by drawing down $45 million on committed facilities. CapEx consisted of $224 million paid for six secondhand Ultramax and five secondhand Handysize vessels, which delivered into our fleet in 2021, plus one more Ultramax that delivered in January 2020. It also included $37 million for dry dockings and ballast water treatment systems. In total, we docked 26 vessels in the year. Now, if you please turn to slide 12. As Martin mentioned, our net profit was positively impacted by $152 million of the vessel impairment we took on our Handysize core fleet in June 2020. The reversal was required because of the significantly improved dry bulk markets and the increase in ship values. It doesn't impact our underlying profits, operating cash flows, EBITDA, or liquidity, but it does strengthen our balance sheet. Our operating cash flow significantly enhanced our financial position further, driving down our net gearing to 7%, which is compared to 37%, the year before. We had an available committed liquidity of $668 million by the end of the year. We have the capital resources to continue our strategy of growing and renewing our fleet when we see attractive opportunities. Our priorities for capital allocation are really to deleveraging in line with our amortization profile, maintaining a strong available liquidity position, and distributing dividends to our shareholders in line with our stated policy with special dividends possible should our liquidity merit it. I now hand you back to Martin for his outlook and strategy slides. Thank you, Peter. Please turn to slide 14. We expect a continued strong bulk, dry bulk shipping market in 2022 and beyond, in part due to broad-based demand, especially for minor bulks and grains, supported by healthy economic growth with continued stimulus in many countries. In January 2022, the IMF moderated its global GDP growth forecast to 4.4% in 2022, and also 3.8% in 2023, largely reflecting markdowns in the U.S. and Chinese economies, due mainly to increasing U.S. inflation and the retracement in China's real estate sector. Despite this moderated GDP growth forecast, dry bulk demand growth is still expected to outpace supply growth in 2022 and more so in 2023. Please turn to slide 15. Despite some new ordering in a very strong market, we are optimistic that dry bulk supply will remain under control, giving further support to the dry bulk freight market in the longer term. The dry bulk order book stands at 6.8% of the existing fleet, which is the smallest it has been in decades. The combined Handysize and Supramax order book is even lower at 5.6%, presenting the basis for continued low supply growth in the next few years. We expect that new ship ordering will remain restrained, discouraged by, first of all, uncertainty about the future fuel and technologies required to meet coming decarbonization regulations. Also, the expectation that zero emission ships will not be commercially viable for several years. The high cost of newbuildings with a two to three year wait for delivery, when secondhand ships with prompt delivery represents more attractive investments. Finally, the shortage of shipyard capacity when berths are fully booked with orders for non-dry bulk ship types. Based on Draka's data, the global combined Handysize and Supramax fleet is estimated to grow by 2.5% in 2022, with very little scrapping taking place and possibly start to shrink in 2023. It is also worth noting that IMO and EU fuel efficiency rules are likely to start forcing slower speeds from 2024 and even accelerate the scrapping of the least efficient ships, which will further reduce supply. Please turn to slide 15. Despite the usual seasonal weakness from November to the Lunar New Year, rates have been much higher than usual over the winter, and market activity has resumed with freight rates recovering as expected since early February, particularly in the Pacific. Beneficial during the seasonal weaker start of the year, we commenced 2022 with a good level of cover for the first quarter. In January 2022, we achieved actual Handysize and Supramax time charter, time charter equivalent rates of $24,800 and $30,600 per day net respectively, significantly outperforming market index rates of $18,050 and also $19,430 per day net respectively. We have covered 48% and 64% of our Handysize and Supramax vessel days currently contracted for full year 2022 at $19,550 and $25,210 per day net respectively. That leaves us with significant opportunity to add cargo fixes to our book at what we expect will be strong market spot rates in the months ahead. Please turn to slide 18. Our established strategies remain substantially unchanged for 2022, although with some adjustments in how we execute them in the current strong market and for greater effectiveness. We want to stay specialized in minor bulk and the ship types that we know so well and want to maintain our customer and cargo-focused business model and grow our scale. At our core, we will remain asset heavy and will continue our strategy over the longer long term of growing our Supramax fleet and renewing our Handysize fleet with quality secondhand ships. We will continue to complement our core fleet with mainly short-term charter parties. We will also continue to gradually sell our smaller, older Handysize ships when the time is right, thereby crystallizing value and further optimizing our fleet to more easily meet tightening environmental regulations. We will not contract newbuildings until zero-emission ready ships are available and commercially viable in our segment. We aim to always keep our balance sheet and liquidity strong, and we want to be the industry leader on an earnings and cost per day basis. There are also a few areas of special focus that we are tending to in the short term. I want to ensure our team are equipped and supported so that they can continue to deliver quality service to our customers while maximizing current strong market. Safety, health, and well-being are always a priority, especially during the pandemic, when crew change restrictions and related complications take their toll on seafarers. We are further enhancing our focus on optimizing our environmental performance to ensure we meet or exceed the carbon efficiency compliance requirements of the IMO and potentially also other regional governments. We are expanding our digitalization program with investments in new digital solutions to leverage our large amount of in-house data to optimize our business processes and interactions and improve our decision making ultimately delivering additional value to our business and our customers. Please turn to slide 19. The IMO adopted global regulations in June 2021 to drive improvements in the energy efficiency and carbon intensity of conventionally fueled existing ships. There will be much more about this in our sustainability report to be published in mid-March. In short, the IMO EEXI technical rules will cap maximum engine power limits for the majority of the existing ships in the world, and their CII operational rules will require ships to become increasingly carbon efficient in the way they are operated, which will lead to gradually slower speed from 2024 onwards. Renewing our fleet with younger, larger, more efficient ships is an important part of our strategy to meet these carbon intensity reduction rules and help to achieve our industry greenhouse gas reduction goals. We will continue to trade our ships efficiently for high laden-to-ballast utilization and will constantly seek, assess, and implement energy efficient operating measures, including looking for collaboration solution with our customers, tonnage providers, ports, and other stakeholders. This will ensure that our existing ships running on conventional fuel oil can maintain sound Annual Efficiency Ratio or AER rating and continue to trade for the foreseeable future. We target for our ships to achieve AER ratings of C or better from 2034 onwards. In parallel, we are collaborating and making preparations to achieve the longer term goal of complete decarbonization by transitioning to new zero emission ready ships and fuels. With that in mind, in July 2021, we set ourselves a new target of net zero emissions by 2050. To achieve that goal, we target that our fleet will comprise only zero emission vessels by 2050, and we will not contract new buildings until zero emission ready ships are available and commercially viable in our segments, and the appropriate refueling infrastructure is being built out globally. We have an outstanding in-house technical team and are actively involved in the industry-wide discussions about how shipping will decarbonize and meet the IMO long-term goals. It is comforting to know that as the world decarbonize, we will continue to carry the non-fossil fuel commodities that will be the mainstay of future trades. Finally, slide 20. We delivered our best result in our 34-year history and are recommending a full-year dividend payout of 66% of our ongoing profit. Forecast dry bulk demand growth is expected to outpace supply growth in 2022, especially in our Handysize and Supramax segment, and more so in 2023. We are well prepared to meet all fleet IMO carbon intensity reduction rules, which are likely to start forcing slower speed from 2024 and even accelerate scrapping of the least efficient ships, which will reduce supply. As always, we will be monitoring all risk and drivers of our market closely, ready to respond to change. We have optionality in our fleet, and we are nimble. The average age of our own ships is 12 years, which we consider ideal for optimizing our return on capital while minimizing residual value risk in the transition over time to zero carbon technology vessels. Our healthy balance sheet, large fleet, and competitive cost structure positions us well to thrive in the current strong market and continue to deliver high return on equity and return cash to our shareholders. We are experiencing a solid start to 2022, with seasonally low rates having bottomed in early February at much higher levels than in past years, and the freight market indexes are now recovering with the Pacific market taking the lead. The Atlantic is expected to soon benefit from the start of the South American grain season. Overall, we expect to see steady demand for commodities and tight supply. Fleet supply over much of this year. Ladies and gentlemen, I will now hand over to the operator who will open the lines for any questions you may have. Operator, over to you. Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have any questions for your speakers today, please press zero followed by one on your telephone keypad, and you will enter a queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press zero followed by two to cancel the question. Again, that's zero one on your telephone keypad now. Your first question is from Nick Harbinson from Tantallon Capital, Singapore. Your line is now open, Nick. Please go ahead. Hi, it's Nick Harbinson in Singapore. Two quick questions. I wondered if you could comment a little bit on the longevity that you see in this. You commented upon the spike in 2008. That was a spike. Do you see this sustaining for a significantly longer period? S econdly, one of you is in London, you're in Hong Kong. To what extent does the situation in Hong Kong make that your historic presence there increasingly something which you may need to consider? Various other people, as you will be aware, have been commenting publicly about the stresses of trying to run a global business out of Hong Kong. Is Hong Kong likely to continue to be the optimal place for you to be based? Thank you. Yeah, thank you very much for those questions. First about the market and how long it will last. I know, it's always difficult to predict these things. I think what we see this year and also next year, we see. When you look at the supply side, we see that it's being very low also from historical perspective, and we don't see the ordering, you know, peaking at all. You know, in that sense, we can, you know, the supply side is quite visible, at least for the next couple of years, until 2024. As long as the world economy is moving in the right direction, then we think we will have a good market for a few years more and maybe even longer, depending on what's happening on you know the ordering and of course the world economy. We're quite positive for this year and next year, and maybe also longer, but let's see. In respect to Hong Kong, we are, you know, we are a global company, and we have offices around the world. We have 10 commercial offices around nearly any continent in the world. I n that sense, we are well-positioned, and we can run our business. We have a very strong organization here in Hong Kong, also local colleagues who are doing a really good job. You can say, yeah, we have the COVID and we have the situation here that Europe and other places maybe had a little bit earlier. We are managing that, and I think we're managing it quite well. We are very pleased about being in Hong Kong and also being listed on the Hong Kong Stock Exchange. We have no plans to move. Thank you. Thank you, Nick. Your next question is from Andrew Lee, who's from Jefferies. Your line is now open, Andrew. Please go ahead. Yeah. Hi, thanks a lot for your time and good results. A very nice dividend as well. I've got a few questions. My first question is on the impairment rate. Could you give us a little bit more detail in terms of basically how many vessels is this related to? For these vessels that they were impaired, these are the older and smaller vessels. Are there plans for these vessels to be scrapped within the next one to two years? That's the first question, right? On the impairment, the follow-up is basically how much the rates need to fall before you book an impairment going forward, right? That's question one. Second question is on the Supramax fleet, right? The long-term aim is to grow the fleet. Is that via owned vessels or via chartered? Because as you mentioned earlier, the basically second-hand vessels are very expensive, right? So does that mean that you're gonna try and lock in more long-term contracts? Third question is on the dividend side. Looking ahead, how much can a special dividend be? Do you look at that as a dollar amount or is it based on a payout ratio? That's it for now. Thanks. Yeah. Thank you, Andrew. Maybe, Peter, you will take question one and two, and I can take the one about the Supramaxes. Where you wanna start, Peter? Yes. I can do that. Thank you, Andrew, for your questions. The impairment, we have three cash generating units in the company. They're the small Handys, the large Handys and Supermaxes. The small Handys, I think there are about 16 ships, something like that, and the rest of the Handy fleet is in the large Handys, right. The impairment in 2020 was on both the small and large Handy size CGU. It was not on individual ships, it was on the entire fleet. You know, the reversal of the entire impairment is of course then back on the entire fleet again, right. It was across the two CGUs, so you can't sort of point to any particular vessel. Even though maybe on a percentage basis in terms of reduction of value, when you did the impairment, there was a bit more of course, on the older, smaller ships on a relative basis. How much rates would have to fall before we take another impairment? I don't have, you know, the exact number or have a number that I would be comfortable disclosing. But you know, the value in use, the NPV calculation that decides on impairments and reversals. We also have fair values, right? The highest of those two is what you can use to underpin your book value. I don't have an exact number today what that would mean, but you know, it would mean a pretty significant reduction from what we expect for us to take another impairment down in the future. It's not something that we, you know, would expect to happen, you know, in the short term or medium term. Yeah, I think that's as much as I can say at the moment. On the dividend, Andrew, I think you know we have a policy. We're gonna distribute at least 50% of the profit, and then there might be a bit of a special extra dividend on top of that. You know, we don't have a fixed policy to say that, you know, the special dividend always has to be a certain percentage of profit. It is kind of driven by, you know, what we feel is the excess, you know, liquidity, where we see the market is going in the future. We also want to preserve certain amounts of capital for investments and other things, right? There are no rules on that at the moment. What you remember is, the policy is at least 50% of profit, and if we feel we have excess liquidity, if we feel the market is supportive, you know, there could be distributions, you know, on top of that. We'll take a view on that, you know, every earnings time. You know, every time we announce it, we'll take a view on that. No hard and fast rules on that, Andrew. Yeah. Thank you for that, Peter. Yeah, so I know you asked a little bit about the scrap value. You know, I think we're quite far from that. We do have a ship that is built in 2000. You know, the ships have a value much higher than the scrap value, so we're not even close to that at the moment, which probably also just justifies. Then you spoke, you asked about the Supramax, owned versus chartered. Yeah. Yeah, you're right. You can say the prices right now is also the secondhand is high, and we have sort of, you know, pulled back a little bit since October on buying, and we are sort of following the market closely at the moment. We... If you look at the chartering, our long-term chartering fleet, we have four Supramaxes or Ultramaxes on longer term charter, it's actually not that much. We have, of course, a lot of ships on short-term charter. Yes, you're right. The options could be both ways, both to buy secondhand or to charter some ships. I think our preference is to buy them if possible. Yeah, there could also be an option of taking a few ships on longer term charter. We also have some optionality in the fleet we have today that, of course, we can use if the market continues to be good. Okay. Thank you. I'll ask some follow-up questions later. Thank you. Thank you, Andrew. Thank you. Your next question is from Parash Jain, who's from HSBC. Your line is now open, Parash. Please go ahead. Yeah. Thank you, thanks Peter and Martin. I have three questions, maybe first time we start with where Andrew left to Peter. With respect to dividend, I mean, can you help us understand, say, I mean, hypothetically going into 2022 and 2023, assuming that you will not be as aggressive buyer of the secondhand vessels as you have been, and if time's right, you will basically get rid of one or two vessels as you did last year. At the same time, probably you used last year's cash flow to deliver to an extent that the balance sheet is very, very robust with very excess cash on it. Is that a right way to think about when we propose to the board next time on the dividend? Secondly, is there a way, if you have a belief on the cycle, to guide the dividend policy? I'm saying it from the analyst perspective. I mean, a special dividend has not been well appreciated in the sense that that only has a one-time multiple compared to a sustainable dividend policy. Secondly, is more on the spread, and that's probably Martin can discuss. It has been all over the place last quarter, and I understand it was an extraordinary cycle. How shall we think about the spread for both Handysize and Supra going into 2022 off to a great start? My last question, if I may, would be on EEXI side. The more I read, more confused I get. For the sector as a whole, we see the impact in 2023 at the start like we saw with respect to, let's say, the switching of fuel, two years back, or it will start to in 2023, and the reduction in vessels of this speed will be a 2024 story. Thank you. Okay. Thank you. Thank you, Parash. You know, on the dividend, I'll come back to this point. I mean, we've had the same policy on dividend for a long time, right? At least 50% of profit. Correct. What we're talk. Yeah. That's gonna stay, right? What we're talking about now is what do we do with, you know, any excess cash, right? Do we want to formulate a policy today about what we're going to do with that? I think the answer at the moment is no, we don't want to do that yet, right? I mean, effectively, we've had sort of nine months of good markets. You know, we're still in the early part of the cycle. You know, clearly, we will have to see what happens. I mean, you know, the development this morning, right? I'm sure we'll talk about that later in Ukraine, et cetera. There's a lot of uncertainty. Yeah. I don't, you know, we don't believe at the moment that, you know, formulating a much more rigid strategy about dividends actually makes sense. We believe that we should have some flexibility to take decisions at every sort of earnings call or earnings time to kind of judge where, you know, how did we do in the last period? Where do we think the market is going? You know, I don't believe that you should set too rigid rules for yourself in this particular market. Yes. Because what ends up happening is that you're gonna have to change it, and you lose your credibility in my mind. You know Correct. We're gonna have to ease into this market a little bit. You know, as a general principle, it is not in our interest, and I don't think it's in our shareholders' interest for us to sit with massive amounts of excess cash, you know, earning sub 0.5% return at the moment, right? Right. We are not engaging in a massive fleet expansion program at the moment with, you know, with these ship values. You know, assuming the view on the market that we have today plays out, clearly we'll be generating a lot of cash. It is not unreasonable to believe that there will be more dividends coming. But, you know- Got it. We're not going to say what the rule is yet. I mean, give us, you know, give this market a little bit more time before we feel comfortable to kind of change our view on this, right? Sure. Yeah. Yeah. Martin? Yeah. I think you spoke a little bit about the buying secondhand and so on. I just want to remind you that a Handysize ship today, a five year-old Handysize secondhand ship costs around $28 million. I think that's up around 70% in one year. A newbuilding today, a Handysize, nice new one is probably $32 million or something like that, delivering 2024. That's up, I would guess, around 33% in a year. You can say in the case last year when we bought 12 ships, it was quite clear, you know, that the secondhand ships were a lot better to go after. Now, of course, as the clarity on the market that is continuing, of course, then of course the asset values for the secondhand ship has come up closer to the newbuilding. We still like to do things. We are quite selective in what we buy, and we wanna have quality ships also because of IMO's rules coming into force and so on, and something that match our current fleet. It's not like there's a lot of those opportunities out there. Of course, we follow it. If they come along, we will be ready. As I also said in the presentation, we are also trying to sell some of our older ships, maybe also the ones that we feel might have a little bit of hard time with the new regulation coming up. Of course, also taking advantage of the increase in the secondhand. Yeah. Price. In respect to the spread, I guess you talk about our actual earnings versus the indexes. Correct. Yeah. You can say the challenges of it, the good thing is, of course, actually if we this year will just trail the index, because that actually means that the index will go up and up and up. You can say it's actually a bit of a positive thing. You can say that, of course, you can see the cover that we have taken for the year. We have some cover for the rest of the year as well, and that's of course at lower number or in line with the index today. If the index continue to increase, the cover, of course, will drag us down. We will be running after the index for a while until the market then change again, and then we will do. I think we cannot run everything spot and we also feel it's. Yeah. It's a good thing to take. We continue to do that. Also, you know, if our customers they want us to take a COA, of course, we will enter into that. So I think that is also the explanation on the Handysize, you know, existing contracts we've taken over time. Of course that tracks down on the market. As soon as you saw the market change in fourth quarter, we are beating the index again. W e have to look at it over a cycle to see how well we're doing, b ut definitely in January and February, as we took good cover coming into the year and the market came down, we will definitely beat the index in those months. Maybe rest of the year, if the market continues to go up, we will be running after it. That is actually a positive thing, funny enough. Sorry, Martin. Maybe on this operating margin, on the short-term lead, is it super normal, the kind of margin that you have made in the past two quarters? Or you think that the bar has shifted upward and you probably will continue to sustain relatively higher profitability than in the past cycles? I think clearly a year ago, the market for a Supramax was probably an Ultramax was probably low ten, and the market just increased to, I think in October we were. Okay. The margin will be successful. Of course, that is really the thing that really kicks in on this one. We still have some of those ships. We still have option on some of the ships and so on. We're still benefiting. We have a good start to the year also in the operating part. It's clear today, if you go out and take time charter ships, it is a different risk profile than compared to last year. Now the cost of rates are, of course, somewhat higher, probably in the mid-20s or so. You know- Sure. There's also a bigger risk in that market and of course the margins will probably be less. Okay. Of course, unless the market really increases a lot more. But we have had a good start to the year, also the operating part, but we'll have to see how it goes over the year. We will continue to sort of optimize our earnings with the customers that we, you know, continue to say, can we leverage the relationship and the business we're doing to also do the operating linked to our core business. Okay. In respect to the EEXI and yeah, I understand that there's a lot of opinion about that. You know, the way we see it, we also showed you the ranking we have from A to E, I think it is. As you can see in 2021, our rating goes down a little bit, and that's of course due to we going full speed. That will probably also do this year, even though of course now oil price and bunker price have come up, but as the market is at the moment, I think there's a need that you know. In 2023, there's 47 of our 121 ships, they have to get a power limitation installed. We are already about to do that. So that would actually reduce power somewhat. As we see it will not impact speed consumption that much. You have to remember that half the time we are in port and half the time we are sailing, so already there's a limit to it. But actually what we see is that every year from 2023 onwards, the CII will kick in and ask you to reduce again with 2%, 2%, 2%. From 2026, the rules are actually not set yet, but we don't believe it's gonna be less than 2% requirement. When that starts, that would definitely take supply out of the market. Over time, also make some of the ships, I think, will have a hard time trading in the market to comply with the rules. I think 2023, or we think 2023 will be sort of a transition year, where everybody will get it on and then so on and so on. Then by 2024, you will have to comply with things. That's how we look at it. I hope that clarified it a little bit. Thank you, Martin. Parash's line got cut a little while ago, but we will get back to him and try and get him back on the call if he has further questions. Thank you. All right. As a reminder to everyone, if you have any questions for your speakers today, that's zero one on your telephone keypad now. Your next question is from Yang, who's from Pinpoint. Please go ahead, Yang. Good evening. Thank you for taking my questions. Actually I have three. Number one, regarding your forward cargo covers, can you please remind us how much of this is backhaul during booking, and what's the approximate rates of those backhaul booking respectively for Handysize and the Supramax? That's question one. Number two, I noticed that your mortgaged vessel number decreased from the interim report, I think. Can I presume, you know, of course you paid down some ship financing, I suppose, that you're going to unmortgage more pledged vessels in the coming quarters? Question three, for the operating activities, I didn't catch what the. I don't know if the other participants already asked that question. The operating activities that generated over $3,700 per day. That's super high. Do you think that's something sustainable or it's just something exceptional, given the market conditions in the second half last year? Thank you. Yeah. Thank you very much. I think 90% of our sailing is 90% of the time we are actually in laden conditions, so a lot of our business is actually also backhaul or front haul. It's all a combination thing. I do actually not have the numbers on exactly how much of the contract is backhaul, but we will look into that. Of course, we will have it somewhere, but I don't have it right here. Peter, would you talk about the mortgage? Yeah. The reason for the increased number of unmortgaged ships is mainly twofold. One reason is the vessels we have acquired in recent years, we've not mortgaged. We've bought them outright for cash, you know, because we didn't really need to. They joined our fleet unmortgaged, and they remain unmortgaged. We also last year took some of the older ships out of one of our particular facilities, which. That had the effect of reducing the average age of the asset pool of that facility, which enabled us to extend the facility. The bank's obviously happy to lend on a longer basis on, against a slightly younger fleet. Those two are the reasons why the number of unmortgaged ships have increased. You know, if we buy more ships in the future, we will keep them. We probably will not mortgage them at the moment. You know, keep them as a reserve for the future. We are not planning to take any more ships out of existing facility, you know, at least in the medium term. New ships that we buy will add to the unmortgaged pool. Otherwise, I wouldn't expect any big changes to that number. Yeah. The final questions about the operating activities and the margins there. Because I mean, I think we have to remember that the earnings on the operating part in 2021 was about 10% of our net profit. You know, but of course it's a lot of money. But still, it's our core business is still the own ships and the long-term charters. That being said, I would say that our chartering team have done quite well in timing our position last year. When I look back at it, I would say they did very, very well in reading the market early and taking ships on charter, and that's of course why we also have this high margin on the operating business on the Super Ultramax fleet. Can we repeat that this year? I would say we have actually had a very good start to the year, but as I also said earlier, I think now the rate level is high, so the risks are different. Definitely if you wanna take that risk, there should also be a good upside. I hope, but of course, we'll probably be a little bit more cautious this year due to the very high time charter levels. Let's see. Cool. Thank you. Thank you. Your next question is from Anthony Ma from Capital for Business. Your line is now open, Anthony. Please go ahead. Yes, I have two questions. One thing which was mentioned at your previous discussion was the possibility of quarterly dividends. Now your cash flow is clearer. Is that something you plan to do, or are you going to stay on a two dividend policy? The second question is, based on your acquisitions of larger Handysize and Supramax ships, is your policy to gradually phase out the smaller Handysize ships? Thank you. Maybe I'll start on the dividend. There are currently no plans to go to quarterly dividends. At the moment, we only announce results twice a year. We do a trading update without net results, you know, in for the first and the third quarter. So there's no plans to change that. At the moment, we will stick with the bi-yearly dividend. Thank you. Anthony, on the Handysize, the smaller ones, you know, I would actually say we have a number of those in our chartering team. They do quite well in employing these ships, so they're actually very good earners for us. It's clear that when you buy secondhand ships and you want to have a little bit more modern ships, they will always be bigger. That's 38,000 or even bigger. Of course, the smaller ones, they will age, and of course, they will disappear. If you go a little bit ahead, yes, our fleet will grow in size and become 38,000, 40,000, more of that and less of the others for natural reasons. It's not an aim in itself. That's just how it works out. Yeah. Thank you. I thought that was the trend that seemed to be becoming clear. Even then with the Supramaxes, you're also trending a little bit larger, more to Ultramaxes? Yeah. I think that it makes sense to go for the larger ones. Yeah, we would prefer to go for the larger ones. I also think every time we buy second-hand, as you saw the 12 ships that we acquired last year. They are a little bit more modern, and therefore they are Ultramaxes or large Handysizes. Thank you. Thank you, Anthony. Your next question is from Lisa Lin, from Huatai Securities. Your line is now open. Please go ahead. Thank you. You're welcome. I have two questions. First, Peter, could you please give the CapEx guidance for this year and next year? Second question, could you please talk about more on you think the potential impact from the current Russian conflict to the industry and also to PBS, to what extent the PBS business relate to the Russian customers and, or the Black Sea area? Thank you. Okay. On CapEx, first of all, we have a very busy dry docking schedule next year. We're docking over 50 ships. Whereas, you know, under normal circumstances, I would say we would have about $50 million of maintenance CapEx, dry docking CapEx. Next year will be a little bit higher than that, probably more up towards $65-$70 million. Yeah. The other question finally came in respect to Russia and Ukraine. It's a good question, of course. Yeah. Something we followed quite closely as well. Well, let me first say that, you know, in a bigger picture of Pacific Basin, it's not a major trading area for us. I think it's less than 3% of our business has to do with Russia and Ukraine. We currently do not have any ships in the Black Sea. We do have some business with Russian accounts, but it's, I must say. The impact of it, of course, that we also look at what will it do to us and what will it do to the market. You know, I'm sure that, you know, it all depends on how things are developing and how long it will take all these things. When you look at Ukraine, Russia, you look at mainly the commodities, wheat and grain. The wheat they do is 30%, and the grain is 14% of the world total export. On fertilizer, it's 8% of the world. So it's quite big volumes. Normally out of the Black Sea, it's quite short haul, the transport of grain. You could also say possibly the world has to replace the grain and things we get out of the Black Sea from other places, and then it will be longer ton-mile. That might actually be positive for our market. That market is normally what I would expect is a Panamax market. More Panamax than the smaller sizes. I think what we of course also look a little bit into is that Russia is 10% of the world's oil production, and I think it's nearly 20% of the world's gas production. That might have an impact on the coal volumes into different areas where we will be lacking gas and oil. It's a little bit on speculation. We just have to see how it goes. I don't necessarily think it's gonna be bad for our market. Of course, I also think it has to do with how long will it take, what will it do to the global economy. Normally the volumes out of the Black Sea, Ukraine and Russia normally is mainly July onwards, so it's not right now that's the peak season for this. It's a good question, and I'm sure we all sit and follow this and have to see how the world reacts and what are the next steps and how long it will take. I think it could be good for us, if you can say it like that. Of course, I don't think it might actually be good for the world. We'll see. That's great. Thank you. I've no questions. Thank you. Thank you, Lisa Lee. Due to time constraints, we'll be taking our last question from Nelson Garrett from Archon. Please go ahead, Nelson. Hey. Yeah, that was amazing. It's actually Nelson Garrett from Archon. I'm not sure what happened there, but all my questions have been answered. Thank you very much. Thank you. As there are no further questions, we will now begin our closing comment. Please go ahead, Mr. Fruergaard. Thank you. I'd like to thank you again for joining us today and for your continued support of Pacific Basin. Thank you very much for calling in. Bye-bye. Thank you. Ladies and gentlemen, this concludes our conference call for today. Thank you all for your participation. You may all now disconnect.