Hafnia Limited

“Strong refining margins, increased refinery throughput and the underlying shifts in refinery capacity, combined with record high Russian and Chinese export volumes, have been the main drivers supporting trade volumes and ton-mile gains.”

Annual report 2022A · The company itself

“2010-built Earnings 1Q19 2Q19 3Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 m barrels/d Global Oil Supply Global Oil Demand Seaborne products trade volumes increased by an estimated 2% in 2022 to reach 22.2m barrels/day, with growth supported by underlying gains in global oil demand and refinery throughput, as well as expansion in refinery capacity in key regions. Middle Eastern exports rose by 9% in 2022 to 4.3m barrels/day, on the back of several refinery start-ups, whilst US exports rose by around 10% to 2.7m barrels/ day, largely on the back of strategic inventory releases, rebounding refinery throughput and stronger demand in Latin America.”

Annual report 2022A · The company itself

“Currently, Hafnia is well positioned to take advantage of the elevated spot market.”

Annual report 2022A · The company itself

“Product imports into Europe and Australia are expected to rise further following recent refinery closures. Inventories for clean products in the West remain below the long-term average, while levels in the East are on par.”

Annual report 2022A · The company itself

“2022 has laid very strong fundamentals entering into 2023.”

Annual report 2022A · The company itself

“Increased demand for clean petroleum products paved the way for a rebound in product trade and was coupled with the effect of longer ton-miles due to sanctions on Russian trade.”

Annual report 2022A · The company itself

“The Group is also exposed to risk in respect to fuel oil costs. Fuel oil prices are affected by the global political and economic environment.”

Annual report 2022A · The company itself

“Hafnia Bunkers Alliance on the Rise CHW Collaboration Hafnia: A Year in Review / The Product Tanker Market The Product Tanker Market Product & Chemical transportation Hafnia primarily operates in the worldwide transportation of refined oil products and chemicals, which is shown in the simplified tanker market overview below.”

Annual report 2022A · The company itself

“Crude tankers transport crude oil from points of production to oil refineries or storage locations. Product tankers, which have a special lining in the tank, can carry both refined and unrefined products, including crude oil, fuel oil, vacuum gas oil (dirty products), and gas oil, gasoline, jet fuel, kerosene and naphtha (clean products) as well as edible oils and very light chemical cargo grades.”

Annual report 2022A · The company itself

“In 2022, Hafnia launched three more Pools across the Chemical and LR2 segments, thus extending our Pool offering across all product tanker segments.”

Annual report 2022A · The company itself

“With the strength of our team and coverage globally, I believe Hafnia is in a unique position to maintain and even strengthen our relative TCE performance over time.”

Annual report 2022A · The company itself

“Hafnia is the market leader in the tanker sector because of our active management. We maintain a balance of navigating cautiously through the volatile global environment and decisiveness in appropriate market situations.”

Annual report 2022A · The company itself

“Hafnia Bunkers Alliance on the Rise CHW Collaboration Hafnia: A Year in Review / The Product Tanker Market The Product Tanker Market Product & Chemical transportation Hafnia primarily operates in the worldwide transportation of refined oil products and chemicals, which is shown in the simplified tanker market overview below.”

Annual report 2022A · The company itself

“The Hafnia Bunker Alliance serviced more than 1,250 vessels, demonstrating the strength of its business model.”

Annual report 2022A · The company itself

“The Group’s results are largely dependent on the worldwide market for transportation of refined oil products. Market conditions for shipping activities are typically volatile, and as a consequence the results may vary considerably from year to year. The market in broad terms is dependent upon two factors: the supply of vessels and the demand for oil products.”

Annual report 2022A · The company itself

“Time Charter Equivalent (TCE) earnings for Hafnia in 2022 increased to USD 1,346.7 million from USD 402.9 million in 2021 due to stronger freight rates and bigger fleet size following the strategic acquisitions of 44 modern chemical and product tanker vessels, Hafnia reported strong TCE earnings of USD 23,351/ day for its Handy fleet, USD 30,113/day for its MR fleet, USD 35,826/day for its LR1 fleet, USD 33,563/ day for its LR2 fleet, USD 24,910/day for its Chemical – Handy fleet, USD 31,481/day for its Chemical – MR fleet and USD 18,446/day for its Chemical – Stainless fleet. Hafnia’s net TCE in 2022 was USD 30,274/day based on vessel utilisation of 98%, as compared to 2021, where net TCE was USD 12,141/day based on vessel utilisation of 98%.”

Annual report 2022A · The company itself

“The total fleet of the Group comprised of 132 vessels, with six LR2s, six Handy vessels, 40 LR1s (including four bareboat chartered-in and four time chartered-in), 52 MRs (including nine time chartered-in), six Chemical – MRs, and 18 Chemical – Handy vessels.”

Annual report 2022A · The company itself

“The Hafnia Bunkers Alliance now procures and supplies bunkers to over 1,250 vessels worldwide. The team includes 18 members across Singapore, Copenhagen and Houston.”

Annual report 2022A · The company itself

“We are opportunistic about taking contracts of affreightment at levels supporting our long-term strategy. The operational synergies of our product and new chemical fleet allows us to broaden our cargo carrying capabilities and secure our positioning in the market, and thus reinforce our long-standing relationships with our customers and brokers.”

Annual report 2022A · The company itself

“Why Hafnia / Testimonials A Growing Pool… Over 30 owners and operators from all corners of the world entrust Hafnia as a global leader in the Tanker sector to take care of their vessels. It is exciting to be part of a team that manages these multicultural relationships, and a privilege to represent an organization that promotes such a uniquely versatile and dynamic culture, servicing the diverse needs of our esteemed pool partners.”

Annual report 2022A · The company itself

“Uncertainty remains and scenarios vary, but Clarksons Research estimates suggest that compliance with the Energy Efficiency eXisting ship Index (EEXI) and the Carbon Intensity Indicator (CII) could reduce available supply across the tanker sector by an average of 1.5-2.0% annually across 2023-24, through slower speeds and retrofit time. other products may limit the increase in longerhaul imports into Europe in the immediate term, a trend towards increased longer-haul European imports from areas further away such as the Middle East, U.S. and Asia is still expected through 2023.”

Annual report 2022A · The company itself

“In 2022, 108 of our 113 vessels were at or did better than the requisite performance levels and were provisionally graded A, B, or C.”

Annual report 2022A · The company itself

“Further, all vessels will be required to comply with the CII regulation in 2023. The CII measures the vessel’s efficiency in transporting cargo in terms of CO2 emissions. As per the guidelines set by the IMO, the CII of a ship will be rated from A (major superior) to E (inferior performance level), and thus determines the effective operational utilisation of a ship.”

Annual report 2022A · The company itself

“The product tanker market is cyclical and volatile, and the charter rates and product tanker capacities depend on several factors: • Number of newbuilds and the number of vessels being scrapped • Oil demand and refinery throughput • Price of oil • Oil inventories • Environmental regulations • Geopolitics and sanctions • Location of refineries The charter market is also highly competitive and based primarily on the offered charter rate, vessel’s location, technical specification, and the reputation of its manager.”

Annual report 2022A · The company itself

“Despite our sailed distances increasing in 2022 by 26.3%, Hafnia managed to reduce our NOx intensity by 21.5%, and our SOx intensity by 20.0%.”

Annual report 2022A · The company itself

“Zero by 2050, Hafnia has set out a clear path to navigate successfully, and is taking immediate and concrete action via dedicated investment in new technologies, innovation, cross-industry collaboration as well as supporting regulations. In 2022, Hafnia introduced five strategic climate pillars, including more ambitious commitments and emissions targets to accelerate the achievement of its climate change goals.”

Annual report 2022A · The company itself

“2010-built Earnings 1Q19 2Q19 3Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 m barrels/d Global Oil Supply Global Oil Demand Seaborne products trade volumes increased by an estimated 2% in 2022 to reach 22.2m barrels/day, with growth supported by underlying gains in global oil demand and refinery throughput, as well as expansion in refinery capacity in key regions. Middle Eastern exports rose by 9% in 2022 to 4.3m barrels/day, on the back of several refinery start-ups, whilst US exports rose by around 10% to 2.7m barrels/ day, largely on the back of strategic inventory releases, rebounding refinery throughput and stronger demand in Latin America.”

Annual report 2022A · The company itself

“In the Middle East, further expansion in refinery capacity and ramp-up of throughput at recent start-ups is expected (e.g. in Kuwait, Saudi Arabia, Oman, Bahrain, Iraq). This will support the clean product segment due to increased export volumes, and long-haul transport and demand from end users.”

Annual report 2022A · The company itself

“Product tankers, which have a special lining in the tank, can carry both refined and unrefined products, including crude oil, fuel oil, vacuum gas oil (dirty products), and gas oil, gasoline, jet fuel, kerosene and naphtha (clean products) as well as edible oils and very light chemical cargo grades.”

Annual report 2022A · The company itself

“The global trading of Hafnia´s Chemical Fleet is overseen from its Dubai office, encompassing a full Chemical Operations, Chartering and Technical team. Team objectives lie in engaging with leading producers, traders, and pool partners to establish further long-term partnerships.”

Annual report 2022A · The company itself

“Human rights risks we are exposed to across the supply chain have been identified as: • Our suppliers and business partners across the globe with a different appreciation of human rights • Our crew and employee working conditions Our policies and actions Hafnia prohibits every form of modern slavery, human trafficking, forced labour, child labour, torture, personnel required to pay recruitment fees or deposits, destroy, confiscate, or conceal identity or immigration documents. Hafnia suppliers are required to strictly comply with the Suppliers Code of Conduct, and are expected to follow regulations prohibiting human trafficking, complying with all applicable laws in the countries from which they operate.”

Annual report 2022A · The company itself

“As a leader in the industry, we have an obligation to address and act as a role model in creating a fair, safe, and inclusive work environment, where everyone is encouraged and supported to achieve their full potential. We do this through extensive training at all levels, implementing our CARE (Collaborative, Ambitious, Reliable, Enduring) values to ensure our employees’ physical and mental health and safety, and by helping underrepresented individuals overcome the challenges they face in our sector.”

Annual report 2022A · The company itself

“We are working on improving gender diversity among our seafarers by designing an environment that everyone can thrive in. This includes • A strict code of conduct and anti-harassment policy implementation • Unconscious bias training onboard • Paid maternity leave • PPE equipment tailored especially to women • Provision of hygiene products Hafnia continues to be a committed signatory of the Charter for More Women in Shipping.”

Annual report 2022A · The company itself

“Our onshore employ - ees are communicating with people around the world digitally, while our vessels have installed several technological initi - atives such as live data collection to optimise perfor - mance • Heavy reliance on technology will cause us to be prone to cy - bersecurity attacks and data breaches • Continually enhance our cyber defence across our people and processes, through identifying potential vulnerabilities and con - ducting training for employees to raise their awareness • Since the onset of the Covid-19 pandemic, we have adopted a flexible working arrangement.”

Annual report 2022A · The company itself

“We have recently revamped our corporate website to allow a more intuitive and friendly interface. The new website has a dedicated ‘Investor Relations’ segment designed by a specialist company, which features (but is not limited to) key financial informa - tion, including: • Hafnia investment overview • Latest and historical financial results • Investor presentations • Share price data • Financial calendar • Analyst coverage • Top 20 shareholders (automated) • Investor news Interested parties can sign up to relevant information on both the corporate site and the investor relations site.”

Annual report 2022A · The company itself

“Hafnia also strives to build trust and confidence within its stakeholder community and incorporate a strong ESG profile. We focus our efforts not only on topics that are material, but also on the ones that are meaningful for the company and our stakeholders.”

Annual report 2022A · The company itself

“In line with the increasing expectations of stakeholders and society – and in doing the right thing for the good of the maritime industry– Hafnia is committed to its role as a responsible industry leader. In 2022, Hafnia has consolidated its material issues and strengthened its ESG governance, strategy, and targets.”

Annual report 2022A · The company itself

“These chemical vessels transport both clean petroleum products and chemicals, allowing us to switch between cargoes and limit ballast time. 17% of the cargo carried on these tankers in 2022 were bioproducts – further underpinning our commitment to a more sustainable world in the shipment of renewable energy.”

Annual report 2022A · The company itself

“Achieved AER Projected AER Past trajectory values IMO Trajectory based on 2022 fleet Driving the Business towards Net Zero by 2050 / Reducing our Emissions Physical energy-reducing devices installed on Hafnia Vessels in 2022 Premium hull coating Based coating with controlled biocide release keeps fouling at bay when the vessel is underway and during extended idle periods. Low hull roughness equates to better fuel performance Mewis duct Cylindrical ducts fitted ahead of the propeller, change the inflow angle and speed of water to the propeller, thereby improving propulsion efficiency Propeller boss cap fins Made of the same material as the propeller. and installed at its rear, propeller boss cap fins break the hub vortex that forms behind the propeller to improve propeller efficiency Biofilm protection Biofilm protection prevents the formation of biofilm and the growth of algae, barnacles and other organisms, which makes underwater cleaning of the propeller obsolete. This simultaneously reduces fuel consumption.”

Annual report 2022A · The company itself

“In 2022, Hafnia announced its collaboration with Clean Hydrogen Works (CHW) to explore the development of a new, global-scale, clean hydrogen ammonia production and export project, Ascension Clean Energy (ACE), located on the west bank of the Mississippi River in Ascension Parish, Louisiana. This project aims to capture up to 98 percent of CO2 emissions from its processes and will provide a cost-effective, scalable pathway to supply carbon-free energy.”

Annual report 2022A · The company itself

“Management presents the financials and commercial updates, followed by a Q&A session • A conference call recording is later published on the Hafnia website together with the ac companying PDF • Hafnia values strong shareholder value and strives to pay dividends over time • Hafnia has consistently paid out dividends and had a total shareholder return of 209% in 2022 • With a strong market reputation, Hafnia further benefits from solid industry partner relationships and enjoys a firm foothold in the investor community • Through active management, (where the market is proactively reviewed for opportunities that create stronger shareholder value), and a keen understanding of shareholders, Hafnia has grown significantly and is now the world’s leading product and chemical tanker company • The acquisitions of Chemical Tankers Inc with a fleet of 32 vessels and 12 LR1s from Scorpio in early 2022 increased Hafnia’s overall leverage and breakeven levels.”

Annual report 2022A · The company itself

“The product tanker market is cyclical and volatile, and the charter rates and product tanker capacities depend on several factors: • Number of newbuilds and the number of vessels being scrapped • Oil demand and refinery throughput • Price of oil • Oil inventories • Environmental regulations • Geopolitics and sanctions • Location of refineries The charter market is also highly competitive and based primarily on the offered charter rate, vessel’s location, technical specification, and the reputation of its manager.”

Annual report 2022A · The company itself

“Freight rates for a vessel trading under spot charters are susceptible to fluctuating demand and supply of vessels, resulting in high volatility. Rates are also strongly affected by seasonal fluctuations in demand from end consumers, global oil demand and inventories.”

Annual report 2022A · The company itself

“Clarksons Research’s product tanker spot earnings series averaged USD 38,053/day across full year 2022, the highest annual average on record stretching back 25 years, and directly following on from the lowest level on record of USD 7,092/ day in 2021 – a year where markets continued to experience pressure from enduring impacts on global oil demand and seaborne oil trade due to the Covid-19 pandemic. Product tanker earnings strengthened considerably in the second quarter of 2022 after the start of the Ukraine conflict which led to shifts in product trade patterns, improving product tanker utilisation and longer transport distances.”

Annual report 2022A · The company itself

“Strong refining margins, increased refinery throughput and the underlying shifts in refinery capacity, combined with record high Russian and Chinese export volumes, have been the main drivers supporting trade volumes and ton-mile gains.”

Annual report 2022A · The company itself

“We expect continued growth in oil transportation demand, driven primarily by the changes to oil trade flows due to EU sanctions on Russian oil effective from 5th February 2023. The continued dislocation between refinery production growth in the East and oil consumption in the West will also lead to longer transport distances.”

Annual report 2022A · The company itself

“Overall, initial estimates suggest potential for strong growth in global products tonne-mile trade of over 10% in 2023.”

Annual report 2022A · The company itself

“The market in broad terms is dependent upon two factors: the supply of vessels and the demand for oil products. The supply of vessels depends on the number of newbuilds entering the market, the demolition of older tonnage and legislation that limits the use of older vessels or sets new standards for vessels used in specific trades. The demand side depends mainly on developments in global economic activity.”

Annual report 2022A · The company itself

“Increased demand for clean petroleum products paved the way for a rebound in product trade and was coupled with the effect of longer ton-miles due to sanctions on Russian trade.”

Annual report 2022A · The company itself

“The product tanker market is cyclical and volatile, and the charter rates and product tanker capacities depend on several factors: • Number of newbuilds and the number of vessels being scrapped • Oil demand and refinery throughput • Price of oil • Oil inventories • Environmental regulations • Geopolitics and sanctions • Location of refineries The charter market is also highly competitive and based primarily on the offered charter rate, vessel’s location, technical specification, and the reputation of its manager.”

Annual report 2022A · The company itself

“Clarksons Research’s product tanker spot earnings series averaged USD 38,053/day across full year 2022, the highest annual average on record stretching back 25 years, and directly following on from the lowest level on record of USD 7,092/ day in 2021 – a year where markets continued to experience pressure from enduring impacts on global oil demand and seaborne oil trade due to the Covid-19 pandemic. Product tanker earnings strengthened considerably in the second quarter of 2022 after the start of the Ukraine conflict which led to shifts in product trade patterns, improving product tanker utilisation and longer transport distances.”

Annual report 2022A · The company itself

“We expect continued growth in oil transportation demand, driven primarily by the changes to oil trade flows due to EU sanctions on Russian oil effective from 5th February 2023. The continued dislocation between refinery production growth in the East and oil consumption in the West will also lead to longer transport distances.”

Annual report 2022A · The company itself

“Overall, while there remain some risks to the outlook, including global economic headwinds and uncertainty over the outlook for Russian exports, underlying trends in refinery capacity and expected shifts towards longer-haul routes suggest that product tanker markets are likely to remain tight through 2023, even if some volatility continues to be seen.”

Annual report 2022A · The company itself

“Integrity & Business Ethics / Our Compliance Program As a global business, Hafnia inevitably operates in parts of the world where corruption and sanctions are prevalent. Strong corporate governance and compliance measures, with applicable laws and regulations, as well as commitment to the highest ethical standards are essential to our success.”

Annual report 2022A · The company itself

“Hafnia conducts business in accordance with applicable sanctions laws and regulations. Our sanctions policy identifies risks that faced in undertaking of business activities and sets out internal controls that must be followed to mitigate and remove the threat of such risks. Before entering into business with a new party, we screen the party to ensure adherence to sanctions laws.”

Annual report 2022A · The company itself

“Overall, while there remain some risks to the outlook, including global economic headwinds and uncertainty over the outlook for Russian exports, underlying trends in refinery capacity and expected shifts towards longer-haul routes suggest that product tanker markets are likely to remain tight through 2023, even if some volatility continues to be seen.”

Annual report 2022A · The company itself

“The market in broad terms is dependent upon two factors: the supply of vessels and the demand for oil products. The supply of vessels depends on the number of newbuilds entering the market, the demolition of older tonnage and legislation that limits the use of older vessels or sets new standards for vessels used in specific trades. The demand side depends mainly on developments in global economic activity.”

Annual report 2022A · The company itself

“On the imports side, volume gains were generally driven by rebounding oil demand in Latin America, Africa, and Australia, where the recent further closure of approximately 0.25m barrels/day of domestic refinery capacity has boosted products import requirements.”

Annual report 2022A · The company itself

“Hafnia Snapshot / A Global Business Hafnia: a Global Business Houston, USA India Monaco Bermuda Denmark Singapore Dubai Global Offices Nationalities 35% Women Onshore 5,095 Total Employees Mikael Skov is Chief Executive Officer at Hafnia.”

Annual report 2022A · The company itself

“Hafnia’s headquarters is in Singapore, with its main offices in Copenhagen, Houston, Monaco and Dubai, with people working from Mumbai.”

Annual report 2022A · The company itself

“In 2022, Hafnia examined physical and transitional risks, and potential related impact and opportunities in the short and long-term.”

Annual report 2022A · The company itself

“Our CEO actively takes part in speaking engagements with relevant audiences. This allows us to actively convey our investment proposition and obtain feedback on its expectations • Following the quarterly release of financials, we subsequently hold an investor call to present the results.”

Annual report 2022A · The company itself

“Hafnia is exposed to various commercial, operational, financial, and climate-related risks. Hafnia’s activities expose the company to a variety of financial risks: market risk (including price risk and currency risk), interest rate risk, credit risk, liquidity risk and capital risk.”

Annual report 2022A · The company itself

“Our onshore employ - ees are communicating with people around the world digitally, while our vessels have installed several technological initi - atives such as live data collection to optimise perfor - mance • Heavy reliance on technology will cause us to be prone to cy - bersecurity attacks and data breaches • Continually enhance our cyber defence across our people and processes, through identifying potential vulnerabilities and con - ducting training for employees to raise their awareness • Since the onset of the Covid-19 pandemic, we have adopted a flexible working arrangement.”

Annual report 2022A · The company itself

“The surge in European natural gas price led to a widening gas premium over oil products, causing fuel switching from natural gas to oil products for power generation in Europe, leading to increased oil consumption.”

Annual report 2022A · The company itself

“Given the Company’s business’s dynamic and cyclical nature, the Board regularly reviews and monitors the Company’s capital structure to ensure it is in line with the Company’s objective, strategy, and risk profile. This ensures that the business’ activities and growth are funded sensibly and prudently by achieving a more efficient capital structure that seeks to reduce the Company’s overall cost of capital.”

Annual report 2022A · The company itself

“To evolve with Hafnia’s steep growth curve and the multitude of skills required to navigate the industry of tomorrow, we are proud that in 2022, 62 people joined Hafnia’s onshore team, and that our retention rate is 94%.”

Annual report 2022A · The company itself

“On the imports side, volume gains were generally driven by rebounding oil demand in Latin America, Africa, and Australia, where the recent further closure of approximately 0.25m barrels/day of domestic refinery capacity has boosted products import requirements.”

Annual report 2022A · The company itself

“The surge in European natural gas price led to a widening gas premium over oil products, causing fuel switching from natural gas to oil products for power generation in Europe, leading to increased oil consumption.”

Annual report 2022A · The company itself

“Hafnia Snapshot / A Global Business Hafnia: a Global Business Houston, USA India Monaco Bermuda Denmark Singapore Dubai Global Offices Nationalities 35% Women Onshore 5,095 Total Employees Mikael Skov is Chief Executive Officer at Hafnia.”

Annual report 2022A · The company itself

“Hafnia’s headquarters is in Singapore, with its main offices in Copenhagen, Houston, Monaco and Dubai, with people working from Mumbai.”

Annual report 2022A · The company itself

“Hafnia Snapshot / A Global Business Hafnia: a Global Business Houston, USA India Monaco Bermuda Denmark Singapore Dubai Global Offices Nationalities 35% Women Onshore 5,095 Total Employees Mikael Skov is Chief Executive Officer at Hafnia.”

Annual report 2022A · The company itself

“Hafnia’s headquarters is in Singapore, with its main offices in Copenhagen, Houston, Monaco and Dubai, with people working from Mumbai.”

Annual report 2022A · The company itself

“Hafnia Snapshot / A Global Business Hafnia: a Global Business Houston, USA India Monaco Bermuda Denmark Singapore Dubai Global Offices Nationalities 35% Women Onshore 5,095 Total Employees Mikael Skov is Chief Executive Officer at Hafnia.”

Annual report 2022A · The company itself

“This muted product fleet development is largely attributed to a low level of deliveries in 2022, with total product tanker deliveries falling by 29% yearon-year to a limited 5.1m DWT.”

Annual report 2022A · The company itself