Global Risk Management profile brochure

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1 to 1 Fuel Price Risk Management You, and your own oil risk manager – turning volatility into opportunity.

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1 to 1 You, and your own oil risk manager

When you work with Global, you only ever have to talk to one person, and one person only. Your very own oil risk manager.

Your own oil risk manager with deep and broad knowledge of both oil and finance. A listener who will take the time to sit down with you and understand your needs and goals. A patient partner who will make fuel price risk management easier to understand. An advisor who will help you design a fuel risk strategy that fits both your business circumstances and your tolerance for risk. A discreet, experienced manager of a unique, customised hedging solution that works for you.

Your own oil risk manager. Imagine that.

Turning volatility into opportunity

Now imagine this. Your own oil risk manager, always tuned-in to the world’s volatile oil markets. A decision-maker acting rapidly on your behalf whenever market opportunities arise. A team player able to call upon a powerful network of resources — from within Global Risk Management itself, but also across a financially strong group of companies with offices worldwide.

A customer-focused expert offering information, advice, or action — no matter where you are, no matter when you need it.

Imagine no more.

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to manage your fuel price risk

Protect Keeping fuel costs within a predictable range protects you from unexpected changes in the

price of fuel — changes that could otherwise seriously impact your budget and profit margin

Stabilise Efficient risk management strategies help stabilise your cash flow and help steady prices along

your supply chain

Focus Fuel price hedging can be complex. Employing the expertise of a fuel price risk management

partner allows you more time to focus on your core business, rather than information gathering

Compete Proactive fuel price risk management allows you to react quickly to market changes. By turning

volatility into opportunity, you gain a competitive edge — a potentially critical factor for marginal businesses

Shine Investors and bankers place high value on effective risk management, which can put you in a

better position to negotiate improved financial conditions

5 good reasons

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Focus on your core business while we monitor the market for youOnce you and your own oil risk manager have developed strategies to quickly react to market changes, our suite of knowledge sharing services will help you keep up with the latest market information with a minimal time investment.

By shortening the period between market changes and your awareness of them, you will be able to seize opportunities as they arise. In the instant that your target is reached, we can even execute the trade for you.

Target alerts Get a personal call when your fuel price targets are reached, and we can trade for you in the instant that your product, location and price are aligned.

Price indicationsGet customised daily price updates on the types of fuel and locations you prefer, and we’ll E-mail you our forward price indications.

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Charts and analyses See how oil price changes can impact your cash flow and margins with our range of charts. Integrate our customised analyses into your fuel procurement reports.

Timing Reports Discover the most opportune time to hedge with on-demand trading charts, a market backgrounder, and our opinion on where oil prices are currently trading.

Statement of accountA quick, on-demand overview of your open positions that can easily be integrated with your monthly financial and fuel procurement reports.

Oil Inventory Reports Follow the oil market’s most important event every week with an overview of the supply and demand situation and how we think the inventory figures will impact the market.

Oil market intelligence Daily market briefings delivered to your E-mail inbox every single business day, plus quarterly and annual oil market reports.

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We keep it simple, every step of the wayChoosing the best risk management strategy for your organisation can be a complex and time-consuming exercise. That’s because it demands careful, professional judgement in finding a balance between your business circumstances, your financial strategy, and your attitude to risk.

Your oil risk manager will help you identify and balance all the unique variables involved, culminating in a unique risk management strategy tailored specifically to your financial objectives.

One hedging tool alone may suit your financial objectives. Alternatively, a hybrid solution – possibly involving only a portion of your fuel needs – may be the best way to reinforce your financial strategy. You, and your own oil risk manager, will be the careful judges of that.

Over the next several pages, we outline – in the simplest terms possible – the hedging tools most commonly employed to mitigate fuel price risk. It’s a beginner’s guide, a first step. Keeping it simple is a part of what we do – every step of the way.

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Fixed Price Agreement

100% price certainty

Guaranteed fuel supply

Same procedure as spot deliveries

You are committed to the Fixed Price

Possible security deposits (margin calls)

Maximum Price

Agreement

Benefit from decreasing prices


No security deposits

Upfront insurance premium

Price certainty without physical supply

Flexibility in physical supply

Standardised products and terms

Exposed to local matters (e.g. product availability)

Possible security deposits (margin calls)Swap

Insurance against price increases


No security deposits


Upfront insurance premiumCap

Price certainty and some benefit from decreasing prices


No upfront insurance premium


Possible security deposits (margin calls)

Limited downside participation

Zero Cost Collar

Pros Cons

Exposed to local matters (e.g. product availability)Possible security deposits (margin calls)

Limited upside protectionNo downside participation

Capped Swaps

Attractive swap price

Flexibility in fuel supply

Customised protection from rising prices

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Fix your fuel prices at any place of your choice

How it worksYou and Global agree upon:

contract period volume per month place of delivery fuel specification a Fixed Price

Thereafter, you simply notify Global about locations, volumes and times of delivery. The fuel is then supplied and invoiced according to the agreed terms.

Extra flexibilityWith five working days’ notice, the agreed volume per calendar month can be raised in one or several deliveries.

An Optional Port Clause offers you maximum flexibility in your operation. It allows you to:

take delivery wherever you need the product change fuel specification move volume to another period

The Fixed Price for each delivery would, of course, be adjusted with the price difference between the contractual and the actual place of delivery at the time of nomination.

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Price Index

TimeMonth 1 Month 2

Your Fixed Price

Spot price

Fixed Price Agreements (FPA)

3 good reasons to use this strategy Know your future fuel

costs


Easy implementation

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Protect yourself from rising fuel prices, yet benefit from falling fuel prices

How it worksIf the spot price is below the agreed Maximum Price, you simply pay the spot price. If the spot price is above the Maximum Price, you still only pay the Maximum Price.

You and Global agree upon:

contract period volume per month place of delivery fuel specification a Maximum Price insurance premium to be paid

Thereafter, you simply notify Global about locations, volumes and times of delivery. The fuel is then supplied and invoiced according to the agreed terms.

Extra flexibilityWith five working days’ notice, the agreed volume per calendar month can be raised in one or several deliveries.

An Optional Port Clause offers you maximum flexibility in your operation. It allows you to:

take delivery wherever you need the product change fuel specification

The Maximum or spot price for each delivery would, of course, be adjusted with the price difference between the contractual and the actual place of delivery at the time of nomination.

Your Maximum Price

Your price

Price Index

TimeMonth 1 Month 2

Fixed Price Agreements (FPA) Maximum Price Agreements (MPA)

3 good reasons to use this strategy Know your future fuel

costs

Take advantage of decreasing fuel prices


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Swaps

Fix your price on an official fuel index with a financial settlement

Here’s an example of how it worksTo begin, you and Global agree upon:

the monthly volume an official fuel price index (Platts/Argus) a hedging period (e.g. 2 months) a Fixed Price (e.g. 100 per tonne)

Month 1Monthly average settles at 120 per metric tonne (20 above the Fixed Price). Global pays you 20 per tonne in cash, compensating you against the increase in spot prices.

Month 2The monthly average price was 90 per metric tonne (10 below the Fixed Price).You pay Global 10 per tonne in cash, which counterbalances the lower spot prices.

ResultA fixed predictable fuel cost, as the changes in the spot prices are offset by the payments of the Swap agreement. At the end of each calendar month, the settlement amount is based on the difference between the monthly average of the price index and the Fixed Price.

3 good reasons to use this strategy You obtain stability in

your fuel costs



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Your Swap Price

Monthly average

Global pays you

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Price Index

TimeMonth 1 Month 2

You pay Global

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Caps

Cap your price on an official fuel index, yet benefit from falling prices


the monthly volume an official fuel price index (Platts/Argus) a hedging period (e.g. 2 months) a Cap Price (e.g. 110 per tonne). an upfront payable insurance premium Month 1Monthly average settles at 95 per metric tonne (15 below the cap level).There is no settlement of the Cap, so you will take advantage of the lower spot prices.

Month 2Monthly average settles at 125 per metric tonne (15 above the cap level). Global pays you 15 per metric tonne in cash, compensating you for the increase in spot prices.

ResultProtection against increasing prices, yet benefit from falling prices. Maximum payment from you to Global is the insurance premium.At the end of each calendar month, the settlement amount is based on the difference between the monthly average of the price index and the Cap Price.

3 good reasons to use this strategy Protection against

increasing fuel prices

Benefit from decreasing fuel prices

Not subject to security deposits (Margin Calls)

Your Cap Price

No settlement

Monthly average

Global pays you

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Price Index

TimeMonth 1 Month 2

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Zero Cost Collars

Keep your fuel prices within an agreed price range without paying an upfront premium


the monthly volume an appropriate fuel price index (Platts/Argus) a hedging period (e.g. 3 months) a Cap Price (e.g. 100 per tonne) a Floor Price (e.g. 90 per tonne)

Month 1Monthly average settles at 110 per metric tonne (10 above the Cap Price).Global pays you 10 per tonne in cash, compensating you for the increase in spot prices.

Month 2Monthly average settles at 95 per metric tonne – i.e. between the Cap and Floor Prices. There is no settlement, and you will be exposed to the changes in spot prices within this range.

Month 3Monthly average settles at 85 per metric tonne (5 below the Cap Price). You pay Global 5 per tonne in cash, which counterbalances the lower spot prices.

ResultProtection against increasing prices, yet benefit from some decline in fuel prices until the Floor Price is exceeded.At the end of each calendar month, the settlement amount is based on the difference between the monthly average of the price index and the Cap or Floor Price.

3 good reasons to use this strategy Protection against

sharply increasing fuel prices

Taking advantage of some decline in fuel prices


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Monthly average

Global pays you

You pay Global

No settlement

Your Floor Price

Your Cap Price

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Price Index

TimeMonth 1 Month 2 Month 3

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Fix your price below the market price in exchange for setting an upper protection limit


the monthly volume an official fuel price index a hedging period (e.g. 3 months) the (reduced) Fixed Price the Cap Price

Month 1Monthly average settles at 115 (20 above the Fixed Price, but below Cap level). Global pays you in full, 20 x volume.

Month 2Monthly average settles at 90 (5 below the Fixed Price). You pay Global 5 x volume.

Month 3Monthly average settles at 130 (35 above the Fixed Price and 10 above the Cap). Global pays you up to Cap level; 25 x volume.

ResultProtection against increasing prices – from a below-market starting point – up to a level where you do not need the protection anymore.At the end of each calendar month, the settlement amount is based on the difference between the monthly average of the price index and the reduced Fixed Price, up to the point where the Cap level is exceeded.

3 good reasons to use this strategy You do not need full

upside protection

Attractive swap price


Global pays you Global pays you

Monthly average

You pay Global

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Price Index

TimeMonth 1 Month 2 Month 3

Your (reduced) Swap price

No compensation

Capped Swaps

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Taking control of your fuel price risk is easy with GlobalOur simple, yet flexible 3-step process kick starts your fuel risk strategy and keeps it fine-tuned to the market. Together, we’ll create a mutually agreed plan that outlines – from A to Z – the steps we’ll go through. Should a change in your circumstances arise, we can refine the plan at any point in the entire process.

Gathering data and identifying goals Your oil risk manager will start by working with you to gain an understanding of where you are exposed to fuel price fluctuations. Discussion points may include:

your current and future business environment current financial position and budgets stakeholder objectives and needs your attitude to risk required fuel consumption, and fuel cost calculations

Naturally, all of this information is regarded in the strictest confidence.

Step 1

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Preparing and implementing your Fuel Price Risk Plan Your oil risk manager will then suggest a range of tools to reduce your fuel pricing exposure, and work with you to formulate an overall fuel risk strategy. You will get:

a full exposure analysis of your business an independent outline of the implications of various strategies help packaging and presenting your case to senior management, and a customised manual to help you trade with confidence

Step 2

Reviewing your plan An important part of the process is to regularly review the performance of your Fuel Price Risk Plan with your advisor. Your ongoing relationship with your oil risk manager may involve:

tracking your account valuing and reviewing your positions informing you of new opportunities as they emerge, and consultations as required

Going forward, we will continue to keep you updated on the latest developments in the oil market throughout the duration of your contract.

Step 3

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Our company

A leading provider of customised hedging solutions of your fuel price risk

Combining in-depth knowledge of the oil market, finance and transport

Headquartered in Middelfart, Denmark

Additional branch offices in Copenhagen and Singapore

Key market segments are shipping, aviation, oil supply, land transport and industry

Member of various worldwide shipping, supplier, airline and industry trade bodies

Owner is the United Shipping and Trading Company, a financially strong shipping group with a heritage going back to 1876. (www.ustc.dk)

Our 8 company values Entrepreneurial thinking. We work hard to create long-term value

for our clients and suppliers

Solution oriented. We are innovative, creating individual and flexible solutions for our clients. We show initiative and determination

Trust. We keep our promises – we are truthfull. We walk the talk – we do what we say and say what we do

Communication. We communicate in a clear, honest and direct manner. We align expectations

Quality. We do the right things right – the first time. We strive to deliver more than expected

Respect. We respect our clients, our suppliers, and each other as individuals. We respect work-life balance

Pride. We are proud, yet humble. We act professionally

One Global team. We work and act as one team. We create strong solutions that combine our individual strengths

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Our company

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Trust — the raw stuff of our businessIf the only things we provided were hedging solutions for fuel price risk management, we would be no different from our competitors — large financial institutions selling standardised products to companies, or energy majors tying customers to specific products at particular locations.

But we are different, and uniquely so for 3 reasons.

We provide unique customised hedging solutions, each one geared solely towards the needs of one individual customer — because no two Global customers are the same.

Our truly unique set of knowledge sharing services help customers carve out opportunities from oil market volatility.

And because we maintain 100% customer focus at all times, we are unique in our attitude. By being open and responsive, we earn the raw stuff upon which our business is based — we earn our customers’ trust.

85% of our customers are repeat customers.

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Head Office

A/S Global Risk Management Ltd.Strandvejen 7 5500 Middelfart, Denmark

Phone: +45 8838 [email protected]

Copenhagen Branch

A/S Global Risk Management Ltd.Strandgade 4a 1401 Copenhagen, Denmark


Singapore Branch

A/S Global Risk Management Ltd.8 Shenton Way, #49-01 AXA TowerSingapore 068811


www.global-riskmanagement.com

Documents

Global Risk Management profile brochure