Chairman's Statement

2016 was a year of surprises on the political front. For the LPG market, the softening of rates was less of a surprise given the number of new ships entering the market, although earnings declined with unexpected speed and ferocity.

In addition to a large influx of new vessels, the demand for large LPG ships came under pressure as a result of the shrinking price spread between U.S. and Asian LPG. Shipping demand was also impacted by the opening of the new Panama Canal extension, shortening distances for cargoes travelling from America to Asia. In sum, this resulted in significantly reduced charter rates and falling asset prices.

The longer term outlook for LPG as a sector remains positive. Notwithstanding the shorter distances, U.S. exports continued to increase significantly in 2016. Asian demand for LPG continued to grow at a healthy pace, not least in China. Taking a long term view of the business, and on the back of our strong balance sheet, we made a decision to acquire Aurora LPG towards the end of the year.

With this acquisition, we added nine VLGCs to our fleet. In combination with the delivery of six VLGC newbuildings recently, we now have a fleet of 55 vessels, with which we will continue to support our customers to deliver this important energy source to world markets.

In addition to fleet growth, we continue to focus on operational improvements, cost efficiency, and a responsive commercial organisation. While working towards better financial returns for our shareholders, we know that running a safe and dependable service underpins our reputation and future success.

ANDREAS SOHMEN-PAO
CHAIRMAN