Letter from our CEO

Dear Shareholders,

2022 was a very challenging year marked by the Russian invasion of Ukraine and the important repercussions it generated at a global level. Our prayers are with the Ukrainian population, and we yearn for the invasion to end soonest. One of the war's unintended consequences was that of stimulating the product tanker market, which already benefitted from strong fundamentals and was ripe for recovery.  In 2022, d'Amico International Shipping was therefore finally able to reap some of the fruits of the key investment, financing, and commercial decisions taken in recent years. Last year we seized some attractive investment opportunities and further strengthened our balance sheet. We also reacted rapidly to the fast-changing environment by adapting our contract coverage strategy, to fully benefit from the rapidly strengthening freight markets. It is my pleasure to report on the remarkable results achieved by d'Amico International Shipping in 2022.

In 2022, DIS delivered the best financial result in the Group's history, with a Net profit of US$ 134.9 million, compared with a Net loss of US$ (37.3) million posted in 2021. We achieved a daily spot rate of US$ 31,758 in 2022 vs. US$ 11,004 in 2021. At the same time, DIS had 34.0% of its employment days covered at an average daily rate of US$ 15,925 in 2022 (2021: 47.5% coverage at an average daily rate of US$ 15,194). Thus, the Group achieved a total blended daily TCE (spot and time-charter) of US$ 26,376 in 2022 compared with US$ 12,996 achieved in 2021. During the year, DIS intentionally refrained from increasing its contract coverage to increase its spot exposure in a rapidly rising market with strong fundamentals. DIS' results in the last quarter of the year were therefore exceptionally strong, with the Group achieving a blended rate on spot and time-charter contracts of US$ 38,294 during the period (Q4 2021: US$ 13,165), resulting in a Net profit of US$ 72.1 million (Q4 2021: Net loss of US$ (8.3) million). 

Thanks to the strong freight markets of 2022 and in the first half of 2020, as well as to the deleveraging plan implemented in the last few years, through vessel disposals and equity capital increases, DIS can now benefit from the strategic and operational flexibility deriving from a strong balance sheet, a comfortable liquidity position and a very modern fleet. As at the end of 2022, DIS had a Net Financial Position (NFP) of US$ 409.9 million and Cash and cash equivalents of US$ 117.9 million vs. a NFP of US$ 520.3 million at the end of 2021. DIS' NFP (excluding IFRS16 effects) to FMV ratio was of 36.0% at the end of 2022 vs. 60.4% at the end of 2021 (65.9% at the end of 2020, 64.0% at the end of 2019 and 72.9% at the end of 2018). In addition, given the strong market conditions and the positive medium-term outlook for our industry, vessel values rose markedly last year. In fact, DIS' fleet market value increased by ~33% in 2022 (adjusted for vessels sold) and according to the valuation report provided by a primary broker, the estimated market value of DIS' owned and bareboat fleet as at 31 December 2022 was of US$ 1,027.5 million. 

During 2022 and at the very beginning of 2023, DIS has been very active in the sale and purchase market, through: i) the disposal of the two oldest vessels of our fleet, in line with DIS' strategic goal of owning and operating a very modern and 'eco' fleet; ii) the acquisition of the full control of Glenda International Shipping d.a.c, a JV with one of our long-term business partners which owned four MR vessels, at very attractive terms; iii) the exercise of our purchase options on two top-quality time chartered-in vessels at a price significantly lower than their current market value; iv) the exercise of purchase options on two modern bareboat chartered-in vessels, further reducing DIS' financial leverage and breakeven costs. 

We intend to take the opportunity arising from the current strong markets to further de-lever our balance sheet and lower our breakeven costs, to increase DIS' future competitiveness. In fact, DIS has very flexible purchase options on all its remaining bareboat-in vessels, which we plan to gradually exercise in the next coming quarters.

Looking at the product tanker market, after a rather weak start of the year, due to a temporary increase in Covid cases and the consequent restrictions to mobility implemented by several countries around the world, the product tanker market began to rapidly improve towards the end of Q1, as economies gradually reopened following the lifting of such restrictions. In addition, starting from the end of the first quarter, the outbreak of the war in Ukraine has been having a significant impact on the tanker markets, mostly due to inefficiencies, arising from suboptimal trading patterns and an increase in activities such as transhipments, as well as an increase in average distances sailed, as Europe sources from further away oil and refined products previously imported from Russia, which in turn finds buyers in more distant locations in Asia, mainly China and India.  According to the IEA, EU imports of Russian oil declined from 4.1 million b/d in February 2022 to 2.2 million b/d in December 22 and 1.3 million b/d in January 2023 and the EU's share of Russian oil exports slipped to 16% in January 2023, compared to 50% in February 2022. In addition, the EU embargo on Russian product imports that came into force on February 5, 2023, is expected to result in much deeper declines and an additional ~1 mb/d of products will have to find new homes. In this scenario, it is reasonable to expect the EU will increase in 2023 its product imports from refineries in Asia and the Middle East, boosting product tankers' ton-mile demand. Despite the uncertain macroeconomic scenario and the current recessionary risks, especially in Europe and the US, the product tanker market is expected to remain strong in the coming months and quarters. In fact, any potential decrease in demand in these regions should be more than outweighed by an increase in consumption in Asia and especially in China, as it reopens its economy.

We remain very positive also on the longer-term outlook for our industry, as we see very positive fundamentals both on the demand and the supply side. The secular dislocation of refinery capacity further away from key consuming centres (Europe, USA, Australia) to mainly the Far East and the Middle East, will be extremely beneficial for product tankers' ton-mile demand. In addition, tonnage supply growth is expected to be very limited in the coming years and currently estimated at only 0.6% for 2023 (after a very modest 1.4% increase in 2022), amongst the lowest levels ever recorded. The orderbook to fleet ratio of the vessel segments we operate in (MRs and LR1s) currently stands at 3.2% and more than 35.5% of the existing tonnage is older than 15 years (measured in dwt)². However, there is very limited ordering activity today, as market players are extremely reluctant to order given high newbuilding costs, emissions-regulation uncertainty, and limited yard availability for deliveries over the next two years (orders placed now would be delivered only in 2025). In addition, the increasing number and scope of environmental regulations imposed by international bodies, such as the IMO and the EU, could lead to a further acceleration in the scrapping of old, less efficient tankers and might force some of these vessels to slow-steam to reduce emissions.

After the establishment of a dedicated department in the previous year, during 2022 we continued to strengthen our commitment to ESG. Our modern fleet and our constant focus on efficient fuel management led to a significant reduction in CO₂ emissions relative to the previous year. Furthermore, in 2022 we reached once again our health and safety goal of 'zero' injuries and environmental goal of 'zero' accidents and spills. On the social front, the high levels of employee satisfaction allowed us to achieve a high retention rate of 92% for both DIS' onshore and seagoing personnel. We are proud of the cultural diversity in our workforce with 19 nationalities represented as at the end of the year, including a balanced gender mix, with women representing 41.7% of our onshore employees. On the governance front, DIS is listed since 2007 on the Star segment, the most demanding of the Milan stock exchange, and has therefore adopted a first-class corporate governance framework. In detail, DIS has a nomination and remuneration committee and a control and risk committee, entirely composed by independent directors with a major influence on the Board of Directors' decisions, a supervisory committee, a constantly updated code of ethics, an organizational management and control model, a regularly updated anticorruption policy, a whistleblowing policy, a diversity policy, an internal auditor, a long-term incentive-based remuneration scheme, and we have recently approved a policy for managing the dialogue with our Shareholders.

I am proud of the excellent results we have achieved in 2022 and I am confident DIS is extremely well positioned to take full advantage of the current strong markets, thanks to our very modern, top-quality and fuel-efficient fleet; our well-balanced, adaptable and proven commercial strategy; and our low financial leverage and strong balance sheet. I am very grateful to our remarkably talented teams onshore and ashore for their strong commitment to DIS. Their tireless efforts and dedication through the last very challenging years, resulted in the strong and successful Group we are all proud to be part of. 

On behalf of the Board of Directors, I would also like to thank our Shareholders for their trust, and I am confident we will continue to achieve attractive returns for many years to come, generating lasting value for all of you.

Paolo d'Amico

Chairman of the Board of Directors and Chief Executive Officer

² Estimates from Clarksons as at February 2022.

Key non-financial figures

Group profile

d'Amico International Shipping S.A.  (individually the "Company" or "d'Amico International Shipping", and when together with its subsidiaries "DIS", "DIS Group" or "the Group") is an international marine transportation company, part of the d'Amico Società di Navigazione SpA group (the "d'Amico Group"), which traces its origins to 1936. As at 31 December 2022, d'Amico International Shipping controls - mainly through d'Amico Tankers d.a.c. (Ireland), its fully owned subsidiary - a fleet of 36.0 vessels, of which 28.0 owned and bareboat vessels (with purchase obligations), with an average age of approximately 7.6 years, compared to an average in the product tankers industry of 12.8 years for MRs and LR1s (25,000 - 84,999 dwt). All DIS' vessels are double-hulled and are primarily engaged in the transportation of refined oil products, providing worldwide shipping services to the major oil companies and trading houses. All the vessels are compliant with IMO (International Maritime Organization) regulations, including MARPOL (the International Convention for the Prevention of Pollution from Ships), with the requirements of oil-majors and energy-related companies and other relevant international standards. Based on MARPOL/IMO rules, cargoes such as palm oil, vegetable oil and other chemicals can only be transported by vessels that meet certain requirements (IMO Classed). As at 31 December 2022, 77.8% of DIS' controlled fleet was IMO Classed, allowing the Group to transport a large range of products.

DIS' mission, vision and values are presented below.

Global presence and group structure

GRI 2-1 (2021); GRI 2-2 

DIS has a presence in Luxembourg, Dublin (Ireland), London (U.K.), Monte Carlo (Monaco), Singapore, New York (USA) and Rome (Italy). These offices are located in the key maritime centres around the world. DIS provides transportation services employing all its vessels worldwide, rather than in specific geographical areas. DIS believes that its international presence allows it to meet the needs of its international clients in different geographical areas, strengthening the Company's recognition and its brand name worldwide. In addition, through the different opening hours of offices located in several time zones, DIS can continuously monitor its operations and assist its customers.

As at 31 December 2022, DIS employed 593 seagoing personnel and 24 onshore personnel. In addition, through related party contracts, DIS benefits from the services of employees of the d'Amico Group working in the administrative, chartering, operations, sale and purchase and technical departments of d'Amico Shipping Singapore, d'Amico Shipping USA d'Amico Società di Navigazione SpA, Rudder SAM and d'Amico Shipping UK.

d'Amico International Shipping S.A. is a public limited company (Société anonyme). The Company, which has been duly incorporated on 9 February 2007 in Luxembourg is organized and governed in compliance with the Luxembourg laws and since its listing on 3 May 2007 on the STAR segment of the Italian Stock Exchange (Euronext Milan). As at 31 December 2022, d'Amico International S.A, which is fully-owned by Società di Navigazione S.p.A, controlled 65.65% of the capital (voting shares) of d'Amico International Shipping.

Our business

GRI 2-6 (2021)

DIS' business purpose is to operate, through its main subsidiary d'Amico Tankers d.a.c., a fleet of owned and chartered-in vessels, engaged in the transportation of refined petroleum products and vegetable oils. 

DIS Group's revenue, amounting to US$ 334.8 million in 2022 (+91.3% from 2021) (please refer to DIS' Consolidated financial statements), is mainly generated from the employment, either directly or through its partnerships, of the vessels of its fleet under spot contracts and time charters, for the marine transportation of refined petroleum products. Vessels operating under fixed rate contracts, including time charters, usually provide more steady and predictable cash flows than vessels operating on the spot market. Spot contracts offer the opportunity to maximise DIS Group's revenue during periods of increasing market rates, although they may result in lower earnings than time charters during periods of decreasing rates. This employment mix varies according to prevailing and forecasted market conditions. Gains or losses can also arise from the sale of the vessels in DIS Group's fleet.

DIS Group believes that it benefits from a strong brand name and an established reputation in the international market due to its long operating history and that such a reputation is important in maintaining and strengthening its long-term relationships with its partners and existing customers and in developing relationships with new customers. Its partners and customers appreciate the transparency and accountability, which have been priorities for the DIS Group from its early days. Accountability, transparency and a focus on quality are pillars of its operations and key to DIS Group's success.

The quality of DIS Group's fleet is preserved through scheduled maintenance programmes, by aiming for exacting standards on owned vessels and by chartering-in vessels from owners who meet high-quality standards.

Fleet

The DIS Group controlled as at 31 December 2022, either through ownership or charter arrangements, a modern fleet of 36.0 product tankers (31 December 2021: 37.0 product tankers). DIS Group's product tanker vessels range from approximately 36,000 to 75,000 dwt.

Since 2012, the DIS Group has ordered 22 newbuildings, the last of which was delivered in October 2019. All these newbuildings are fuel-efficient and in compliance with recent environmental legislation. They cater therefore to the high standards required by the Group's oil major customers, in addition to being highly cost effective.

Operating a large fleet enhances the generation of earnings and operating efficiencies. A large fleet strengthens the Group's ability to advantageously position vessels and improves the fleet's availability and scheduling flexibility, providing DIS with a competitive advantage in securing spot voyages. In particular, the scale of DIS' operations provides it with the flexibility necessary to enable it to capitalise on favourable spot market conditions to maximise earnings and negotiate favourable contracts with suppliers.

As at 31 December 2022, DIS directly employed 36.0 Vessels: 2 LR1s ('Long Range 1'), 5 MRs ('Medium Range') vessels on term contracts at fixed rates, whilst 4 LR, 19 MR and 6 Handy-size vessels were at the same date employed on the spot market.

The following table sets forth information about DIS' fleet on the water as at 31 December 2022.

Fleet Employment 

Some of DIS' vessels are employed through its joint venture GLENDA International Shipping d.a.c., a jointly controlled entity with the Glencore Group, in which d'Amico Tankers d.a.c. has a 50% interest. However, in August 2022 d'Amico Tankers d.a.c. gained control of 100% of Glenda International Shipping d.a.c. through the redemption of the shares owned by Topley Corporation in the JV. Subsequently, in September 2022, the four MR vessels owned by GLENDA International Shipping d.a.c. and built between February 2010 and February 2011, were acquired by d'Amico Tankers d.a.c.

d'Amico International Shipping is part of the d'Amico Group, one of the world's leading privately-owned marine transportation companies, with over 80 years of experience in the shipping business, whose ultimate parent company is d'Amico Società di Navigazione S.p.A. (Italy). As at 31 December 2022, the d'Amico Group controlled a wide fleet of owned and chartered-in vessels, of which 36.0 were part of the DIS fleet, operating in the product tanker market. 
d'Amico International Shipping also benefits from the expertise of the d'Amico Group, which provides technical management services, including crewing and insurance arrangements, as well as safety, quality and environmental services for DIS' vessels.

The product tankers industry

Product tankers have coated tanks and primarily carry a range of refined petroleum products, typically gasoline, jet fuel, kerosene, fuel oil, and naphtha. Provided they are classified as IMO II/III they can also carry easy chemicals and edible oils. The seaborne movement of refined oil products between different world regions addresses demand and supply imbalances, mainly caused by the lack of resources or refining capacity in consuming countries. Additional 'arbitrage' also occurs, taking advantage of differences in price and specific product demand between refining centres. 

Within the product tankers industry, d'Amico International Shipping operates primarily Medium Range vessels, which comprises sizes ranging from 25,000 dwt to 55,000 dwt. This specific vessel size provides the greatest flexibility in terms of trade routes and port access. In addition, DIS had as at year-end 2022, six Long Range 1 (LR1 - 75,000 dwt) vessels which also offer a degree of flexibility, whilst providing better economies of scale on longer voyages.

Corporate governance

GRI 2-9 (2021); ESRS G1-1; ESRS G1-2; ESRS G1-5

The Company, incorporated on 9 February 2007 in Luxembourg, is organized and governed in compliance with Luxembourg laws. Since its listing on 3 May 2007 on the STAR segment of the Italian Stock Exchange (Euronext Milan), it is also subject to disclosure obligations related to corporate actions and periodic information as established by Luxembourg and Italian laws, as applicable from time to time. Moreover, the Company has decided to generally comply with the principles and recommendations of the Borsa Italiana Corporate Governance Code (the "Corporate Governance Code" available in its latest version at www.borsaitaliana.it), as the implementation of some of its principles and recommendations is essential to remain listed on the Euronext STAR Milan segment.

The legal provisions applicable as a result of the Company's incorporation in Luxembourg may affect its corporate governance structure. If the Company's system of corporate governance deviates from the recommendations and practices mentioned above with respect to a specific matter, it will provide the specific reasons for each deviation, as well as all relevant information, in the Corporate Governance Report available on the Company's website.

The Company has adopted a corporate governance system based on the active role of the Board of Directors (hereinafter referred also as the "Board"), currently comprising six members, three of whom are executives and three are non-executives and independent. In addition, the Company has established a Nomination and Remuneration Committee and a Control and Risk Committee (following the "Committees"), both of which are within the Board of Directors and made up of the same three members, all of whom are qualified as independent. These committees are not responsible for decision-making on economic, environmental, and social topics, but the Control and Risk Committee is entrusted with the task of providing support and assistance to the Board of Directors in assessing the suitable and correct representation of the Company's business model, its strategies, the impact of its business and the performance achieved in the periodic financial and non-financial information as well as in the examination of the content of the periodic non-financial information relevant to the internal control and risk management system. The Company's annual consolidated accounts are duly audited by an External Auditor, in accordance with the laws and regulations in force in Luxembourg. Furthermore, the Company has appointed a Supervisory Committee under the terms of Decree 231. 

The Company has also identified:

• a Chief Risk Officer, who is also the Chairman of the Board of Directors and Chief Executive Officer;

• an Internal Audit Manager who is an employee of the ultimate parent company of the d'Amico Group, d'Amico Società di Navigazione S.p.A.;

• a Chief Financial Officer, who is the manager in charge of the preparation of the Company's financial reports;

• an Investor Relations Manager, who reports directly to the Chief Financial Officer.

The functioning, size and composition of the Board of Directors and its Committees are the subject of a self-assessment to be carried out (pursuant to the Borsa Italiana Corporate Governance Code) by the Board of Directors itself at least every three years, before its renewal. Such assessment is coordinated by the Chairman of the Board of Directors and supported by the Nomination and Remuneration Committee with the purpose of proposing an optimal list of candidates - in case of renewals - and, in general, of improving the performance and effectiveness of the Board of Directors itself and of its Committees. This self-assessment must also include an evaluation of the Board's active involvement in the definition of the Company's strategy and in monitoring the Company's business as well as of the appropriateness of its internal control and risk management system.

The Board of Directors' self-evaluation process is going to be formalised in a written procedure during 2023 but it is already mentioned in the Board of Directors' Regulation available on the Company's website.

The following are the roles, functions and working methods of the various Bodies and Committees.

Board of directors

GRI 2-10 (2021); GRI 2-11; ESRS G1-3; ESRS G1-10; ESRS 2-GOV-1

The Company's system of corporate governance centers on the active role of the Board of Directors, which is vested with broad powers to perform any action necessary or useful for accomplishing the Company's objectives, values, and mission with the ultimate purpose of creating sustainable success and value for its shareholders, providing strategic guidance for the Company, and controlling operations. The Board of Directors has the power to direct the business as a whole and intervene in any decision necessary to promote the Company's purpose and the transparency of operational decisions within the Company and in relation to the market.

The main task of the Board of Directors is to define the nature and level of risk that is compatible with the Company's strategic objectives, particularly with regards to medium/long-term sustainability and the assessment of the effective functioning of the Internal Control and Risk Management System. It is assisted in this task by the activities of the internal control bodies, particularly by the Internal Audit Division, the Control and Risk Committee, and the Chief Risk Officer.

Appointment and replacement

Regarding the appointment procedure, the Company complies with the provisions of the Luxembourg laws and regulations, the Articles of Association, and the recommendations of the Corporate Governance Code. The appointment of directors is regulated by a transparent procedure which, among other things, ensures timely and adequate information on the personal and professional qualifications of candidates. The Nomination and Remuneration Committee performs a useful coordinating, consultative, and advisory role, supporting the Board of Directors in defining the Board's optimal size and identifying its best composition, indicating the professional skills whose presence may favour a correct and effective function, in accordance with the recommendations of the Corporate Governance Code. The Nomination and Remuneration Committee also performs a role in case any member of the Board of Directors needs to be co-opted.

Nomination process

The Articles of Association establish that the annual general meeting of Shareholders elects the members of the Board of Directors for a period not exceeding six consecutive years and does not specify any requirements of independence, honorability, and professionalism. However, when appointed, each director signs and provides the Company with a declaration in which they declare the absence of causes of incompatibility or causes that might prevent their appointment to the position of director of a listed company and to fulfil the requirements of honourability and professionalism established by the applicable legislation and best practice for the position of director of a listed company. In addition, directors who are classified as independent sign a declaration of independence in accordance with the requirements of Article 3 of the Corporate Governance Code.

Members are eligible for re-election and may be removed at any time, with or without cause, by means of a resolution of a general meeting of Shareholders. In case of a vacancy on the Board of Directors, the Board of Directors itself may appoint a new director, provided that the next following general Shareholders' meeting confirm such appointment (co-optation). According to Luxembourg companies' law, the Board of Directors itself proposes a list of candidates upon specific advice received by the Nomination and Remuneration Committee, by virtue of the Company's internal regulations. 

Due to the highly concentrated ownership of the Company and since the Company already benefits from the services of the Nomination and Remuneration Committee, which plays a key advisory role in identifying the optimal composition of the administrative body, for the time being the Board of Directors has not adopted a plan for the succession of its executive directors, who were lastly nominated for a three-year period in 2021. The Company confirms its intention to continue following this approach. To ensure the continuity of the work of the Board of Directors, including in case a member needs to be replaced before the end of his term, the Board of Directors constantly monitors potential internal and external candidates.

Chairman of the Board of Directors 

The Board of Directors, at their meeting on 6 May 2021, resolved to confirm the appointment of Mr. Paolo d'Amico as Chairman of the Board of Directors. The Chairman exercises final indirect joint control over the Company, defines business and financial strategies, and is involved in the day-to-day management of the Company, also serving as the Chief Executive Officer and Chief Risk Officer. This choice guarantees a continuity in the Company's management, which has been led since 2007 by Mr Paolo d'Amico.

Managing Directors 

At the Board of Directors meeting held on 6 May 2021, Mr. Paolo d'Amico was assigned the position of Chief Executive Officer in charge of the Company's daily management with the power to bind the Company under his single signature up to amounts of US$ 5,000,000 for single transactions, and the power to establish an internal control and risk management system in his capacity as Chief Risk Officer. 

At the same meeting, Mr. Antonio Carlos Balestra di Mottola was re-appointed as the Company's Chief Financial Officer, and was granted a special power of attorney with power of substitution to:

• prepare draft quarterly, half-yearly, and annual reports and budget forecasts to be further submitted to the Board of Directors;

• choose and adopt financial, accounting, and tax policies deemed appropriate for the Company in accordance with the relevant applicable law and regulation, coordinate these policies with its subsidiaries and if required, submit them for approval to the Board of Directors and the Control and Risk Committee.

Within the Board of Directors, Mr. Cesare d'Amico, although not having any delegated power within the Company, must also be considered an executive director, since, as the Chairman, he exercises final indirect joint control over the Company and has a specific role in defining its operating strategies. He is systematically involved in the ordinary running of the Company and manages roles in the Company's controlling entity.

Independent Directors

The three non-executive and independent members of the Board of Directors are Marcel C. Saucy, Tom Loesch, and Monique I.A. Maller. Non-executive directors bring their specific expertise to the Board of Directors' discussions and contribute to decision-making that is consistent with the shareholders' interests. The number and standing of the non-executive directors are such that their views carry significant weight in Board of Directors decisions. An adequate number of independent directors is essential to protect the Shareholders' interests, particularly minority and third-party interests, ensuring that potential conflicts between the Company's interests and those of the controlling Shareholder are assessed impartially. 

Furthermore, the contribution of independent directors is fundamental to the composition and functioning of the advisory committees tasked with preliminarily examining and formulating proposals regarding risks. These Committees represent one of the most effective means of combating potential conflicts of interest. Finally, independent directors contribute their specific professional expertise to the Board of Directors, helping it to adopt resolutions that are consistent with the Company's interests. All the independent directors have committed to maintaining the independence requisites during their entire period in office and to resigning in the event of a lack of one of these requisites.

In accordance with the Corporate Governance Code, the Board of Directors in its meeting of 6 May 2021, appointed Mr. Marcel C. Saucy as Lead Independent Director in charge of coordinating the activity and requests of the independent directors. This position is intended to provide a point of reference and coordination for the needs and inputs of the independent directors. The Lead Independent Director calls special meetings of the independent directors to discuss issues related to the functioning of the Board of Directors or to the management of the business.

The following scheme shows the composition of the Board of Directors as well as the number of relevant offices held by each of the directors in other companies, that - in accordance with the recommendations of the Corporate Governance Code of Conduct and pursuant to the Articles of Associations - may not be more than fifteen.

Induction activities

During the first year of appointment of the current Board members (2021) the following specific inductions for independent Directors were organized: 

• on the duties and responsibilities inherent in the office of member of the administrative body and of the internal committees of a company listed in Italy. The training session - with the participation of the HR Director, DIS' Group CFO and its Internal Auditor Director - was aimed at providing, in line with the recommendations of the Corporate Governance Code, an overview of DIS' corporate governance policies as well as on specific topics relating to the Borsa Italiana Corporate Governance Code, the duties and responsibilities of directors, especially those independent, transactions with related parties, remuneration policy, internal dealing transactions and management of privileged information, including the corporate disclosure of such information, as well as risk mapping and internal control issues relating to the Italian Legislative Decree 231/2001;

• on DIS' commercial management of vessels, held by the Chief Operating Officer;

• on DIS' operational management of vessels, held by the head of the Operations Department;

• on DIS' Long-Term Incentive Plan, held by the CFO and the Human Resources Director;

• on shipping disputes and insurance matters, held by the Legal and Insurance Department;

• on intercompany contracts, from a related parties and transfer pricing perspective, held by the CFO;

• on the compliance of the Company with the Decree 231, held by the Supervisory Committee.

Other governance bodies

Other governance bodies include:

• Nomination and Remuneration Committee;

• Control and Risk Committee;

• Supervisory Committee.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee has the duty to assist, express opinions, and make proposals to the Board of Directors with regards to: 

• the identification of candidates in case of co-optation of a member of the Board of Directors;

• the definition of the optimal size and composition (in terms of professional skills deemed necessary) of the Board of Directors;

• the coordination of the process of overall evaluation of the Board of Directors and its internal Committees;

• the proposal of candidates to the role of directors by the outgoing board, ensuring the transparency of the process that led to its structure and proposition;

• the development of the general policy for the remuneration of members of the Board of Directors and of DIS Group's Key Managers and periodical monitoring and assessment of its adequacy and overall consistency;

• the identification of the performance targets related to the variable component of the remuneration of the executive members of the Board of Directors and of DIS Group's Key Managers;

• the allocation of the fixed component of the executive members of the Board of Directors' remuneration;

• the periodical monitoring of the actual application of the general remuneration policy of members of the Board of Directors and Key Managers with regards to, in particular, the remuneration of executive members of the Board of Directors, ensuring that it complies with the provisions of the General Remuneration policy adopted by the Company, and to the achievement of the performance targets related to the variable component of the remuneration of executive members of the Board of Directors and of Key Managers. 

Furthermore, the Nomination and Remuneration Committee reports on its activity to the Board of Directors once a year, upon the approval of the annual financial report.

Control and Risk Committee

The Control and Risk Committee has the duty to assist, express opinions and make proposals to the Board of Directors with regards to: 

• the appointment and revocation of the Internal Audit Manager, constantly monitoring the autonomy, adequacy, efficiency, and effectiveness of the Internal Audit function;

• the definition of the Internal Audit Manager's remuneration as well as in the annual approval of the Internal Audit work plan, also by asking the Internal Audit manager to include specific controls on defined operational areas:

• the examination of the Internal Audit periodic or particularly significant reports;

• the definition of the guidelines of the internal control and risk management system assessing the adequacy of the system with respect to the Company's risk strategy at least twice a year, upon the approval of the annual and half-year financial report, while reporting to the Board of Directors also on the activities carried out; 

• the evaluation of the Company's risk strategy and management policy with regards to the identification of its main risks;

• monitoring the independence of the external auditor and their selection process according to what is established by the Luxembourg law of 23 July 2016 on the audit profession;

• the evaluation of the correct application of the accounting principles and their homogeneity for the purpose of preparing the consolidated financial statements with the assistance of the external auditors and of the manager in charge of the preparation of the DIS Group's financial reports;

• the evaluation of the findings reported in the external auditor's report and in any of their written observations.

• the assessment of the suitable and correct representation of DIS Group's business model, its strategies, the impact of its business and the performance achieved, in its periodic financial and non-financial information;

• examining the content of the periodic non-financial information relevant to the internal control and risk management system;

• the process of assignment of the supervisory functions pursuant to article 6 of Italian Legislative Decree 231/2001 to a body established specifically for this purpose (the Supervisory Committee);

• the process for approval of major transactions and significant transactions with related parties in which the Company or its subsidiaries are involved in accordance with the internal rules governing such transactions.

Furthermore, the Committee reports to the Board of Directors twice a year, upon the approval of the Company's annual and half-year financial report, on its activity and on the adequacy of its internal control and risk management system. 

Supervisory Committee 

The Supervisory Committee has the function of monitoring the effective implementation and constant updating of the 231 Model. Its appointment was approved by the Board of Directors upon the proposal of the Nomination and Remuneration Committee in 2008, pursuant to the Italian Legislative Decree No. 231 of 8 June 2001 (the "Decree 231"). Its specific duties include the supervision of the implementation, application, adequacy, and effectiveness of the 231 Model. In greater detail, among the Committee's other duties, it must:

• supervise the effectiveness of the 231 Model by promoting the implementation of control procedures for specific actions or acts identified as sensitive;

• periodically check its efficiency and adequacy;

• assess whether it needs to be updated;

• ensure necessary information flows with other Company functions, also by promoting appropriate initiatives for raising awareness and understanding of the 231 Model in the Company.

The Supervisory Committee is collegial in form and currently consists of three members appointed by the Board of Directors on 7 May 2020 for a further three-year period ending on the ordinary general meeting approving the 2022 financial statements. The Committee's members are identified following a due assessment and consideration of the requirements established for such function by the Decree 231, which are those of autonomous initiative, independence, professionalism, continuity of action, absence of conflicts of interest, and integrity. The said members are Mr. Nicola Pisani (the Chairman of the Supervisory Committee, lawyer, and professor of criminal law external to the Company and its Group), Mr. Maurizio Andrea Bergamaschi (the former Head of the d'Amico Group's Legal Department), and Mrs. Anna Alberti (a member of d'Amico Group's Legal Department).

Diversity 

GRI 405-1 (2016); ESRS G1-4

On 31 July 2018, the Board of Directors of the Company decided to adopt a Diversity Policy to acknowledge the benefits of encouraging and managing diversity at all levels of the organization, starting from the composition of the Board of Directors. The Company believes that diversity in professional and personal backgrounds can foster ideas, innovation, understanding, and solutions, thus contributing to its sustainable economic success. Through the promotion of diversity, the DIS Group aims to create value for stakeholders in the medium to long term. The definition of diversity included in the Policy refers, without limitation, to age, cultural background, ethnicity, gender, physical attributes, beliefs, language, sexual orientation, education, nationality, social background, and culture or other personal characteristics. 

Therefore, and with the recommendations of the Corporate Governance Code and the subsequent and consequent amendments introduced to the Borsa Italiana Rules and Instructions, the Company, which is Luxembourg-based and not subject to any law nor statutory provisions related to diversity, following a careful self-assessment carried out by the Board of Directors, which accepted the opinion of the Nomination and Remuneration Committee on the matter, decided to propose for the 2021 renewal of the Board of Directors a "shortlist" of six candidates that included among the non-executive and independent candidates one member of the gender less represented. The current Board members are professionals of international calibre with specific skills in legal, financial, accounting, and risk management. The Board of Directors and the Company's Committees are currently composed of members of different backgrounds, ages, genders, and seniorities, guaranteeing a variety of skills. The diversity of professional knowledge and experience ensures that the Board of Directors and the Company's Committees are well-balanced, contributing to good corporate governance.

The Company does not respect the exact proportion of one third (1/3) for female participation in the Board, indicated by the eight recommendation of article 2 of the Corporate Governance Code.  This is due to the Company's small to medium size and concentrated ownership, limiting the preferred composition of the Board to six members. Furthermore, for strategic and business continuity considerations, arising from the industry-specific skills and knowledge sought in Board Members, it was considered preferable not to change the composition of the Executive Board members.

Notwithstanding the above, the Company, having appointed an independent representative of the less represented gender, complies with the seventh principle of article 2 of the Corporate Governance Code and therefore also with article 2.2.3. paragraph 3 clause m) of the Borsa Italiana Rules for companies admitted to the STAR segment, which explicitly excludes the 1/3 parameter.

Moreover, each committee is composed of three non-executive and independent directors, the majority of whom have adequate experience in accounting and finance and one of them having specific experience in payroll and remuneration policies, as assessed by the Board of Directors when resolving upon their appointment. The number of independent directors was previously evaluated and considered adequate to permit the constitution of the aforementioned committees in relation to the total number of Board members.

Remuneration

The Company's 2022 Remuneration Policy for the governance bodies consists of four elements: 

• fixed remuneration;

• variable short-term remuneration;

• variable long-term remuneration (please refer to notes n.1 and n.8 of DIS' consolidated financial statements, which relate respectively to DIS' accounting policies -"Long Term Incentive Plan including Equity compensation" section, and general and administrative costs);

• benefits.

Each element has a different purpose for the beneficiaries, relating to their role and responsibilities. In particular, the fixed remuneration is intended to reward the competencies, experience, and contribution required by each specific role. The variable short-term remuneration is intended to reward performance and contribution to business results, taking into account prevailing market conditions. The variable long-term remuneration aims to align the medium-to long-term interests of management and shareholders and to increase the commitment and retention of key resources. The benefits are intended to complete the beneficiaries' compensation package, aligning it with market benchmarks.

DIS' stakeholders

GRI 2-29 (2021)

DIS' main categories of stakeholders are detailed as follows.

Ethics and integrity

GRI 2-23 (2021); GRI 2-26 

DIS, also driven by its strong sense of social responsibility, has always believed that it is important to conduct business and professional negotiations, at different organisational levels, with integrity and transparency, acting in a professional, fair and honest manner. The anti-corruption policy implemented by DIS seeks to prevent all forms of corruption within its entity by promoting a "zero-tolerance" approach, including in relation to any form of corruption arising from the behaviour of consultants, agents or contractors.

Code of ethics 

ESRS G2-1

Since 2008, DIS has approved and adopted its own Code of Ethics, which includes the main rules of good behaviour that the Company, its directors, statutory auditors, employees, consultants and partners, and in general all of those who act in the Company's name and on its behalf, are required to comply with to materially reduce and prevent, the risk of committing different types of crimes, including fraud. 

The Company decided to adopt the main principles of ethics of its ultimate parent company, d'Amico Società di Navigazione S.p.A., but tailored these to satisfy the applicable Luxembourg legislation. On the Supervisory Committee's initiative, an updated version of the Code was approved by the Board of Directors of the Company on 7 May 2014, following a revision performed by the Control and Risk Committee. On 26 November 2018, following the entry into force of EU Regulation 679/2016 ("GDPR"), the Company issued a new version of the Code, adjusting the section relating to "Data Protection". The Code of Ethics was subsequently amended on 17 December 2019, following the entry into force of Law 179/2017, regarding "provisions for the protection of those that have reported crimes or irregularities which came to light during a public or private employment relationship", adding a reference to the whistleblowing platform for addressing reports of violations of the Code itself. 

Please find below a brief summary of the Code of Ethics' main principles.

The Code of Ethics is distributed to DIS' personnel, which is informed of the general obligation to be familiar with its contents and to comply with it and contribute to its implementation. The message also indicates that observance of the Code of Ethics is a requirement for the execution of the rules of work pursuant to applicable legislation as laid down in the Disciplinary Code. This clause is included in the individual employment contracts of newly hired personnel. 

Communication activities ensure that:

• the Code of Ethics and the Disciplinary Code are made available to all personnel through publication on the corporate intranet and dispatch on board vessels;

• the Code of Ethics is made available to all recipients (including external staff and suppliers) through publication on the Company's website (www.damicointernationalshipping.com);

• the newly hired personnel is informed of and acknowledge the Code of Ethics of the Company through the delivery of an employee handbook;

• the adoption of and subsequent amendments to Code of Ethics are communicated by email to all personnel. 

Ongoing training activities are provided to the Group's employees and to those employed by other d'Amico Group companies providing services to DIS. Training activities are differentiated in terms of content and delivery method, depending on the qualifications of recipients, the risks to which they are exposed, and the powers and duties assigned to them. 

General training on the Code of Ethics based on training plans from time to time issued by DIS' Human Resources department with the assistance of the Supervisory Committee, is provided to the Company's members of the Board of Directors, employees holding top management positions, including heads of department, and to personnel involved in areas entailing sensitive activities. 

Specific training is directed exclusively to personnel working in risk areas and is aimed at mapping the risk of irregularity, defining the key risk factors of each area and illustrating the procedures adopted by the Group to prevent irregularities. A specific register will be set up by the Group's HR Department for each general and/or specific training course, indicating the number of persons attending and the training material received.

Moreover, the Group encourages all recipients to include a contractual clause in each contract negotiated and signed on behalf of the Group, referring to the acknowledgment of the Code of Ethics and the undertaking to respect, with the utmost diligence and professionalism, all the ethical guidelines included within the contract, as well as to ensure their senior and junior staff do likewise. The clause also requires the acknowledgement of the adoption by DIS of a system, accessible from the "whistleblowing" section of the DIS' website, for reporting any act, fact, or behaviour of which one becomes aware in the execution of the contract, which could lead to non-compliance with the principles foreseen by DIS' Code of Ethics.

Anticorruption 

GRI 205-2 (2016); GRI 205-3 (2016); GRI 206-1 (2016); ESRS G2-3; ESRS G2-4

Acting professionally, in a fair, honest, and ethical manner in all business dealings and relationships wherever the Group operates (or considers to operate), implementing and enforcing effective systems to counter bribery and corruption, is of utmost importance for DIS. The anti-corruption policy implemented by DIS seeks to prevent all forms of corruption, including bribery, and to comply with the anti-corruption laws of every country in which the Group operates, also by promoting a "zero tolerance" approach to acts of bribery, including by advisors, agents, or contractors. 

Essentially, all DIS' employees are responsible for the prevention, detection, and reporting of bribery and other forms of corruption; they are required to avoid any activity that might lead to, or suggest, a breach of the anti-corruption policy. The Group ensures through the implementation of specific measures that all cases of suspected corruption are dealt with consistently and that, irrespective of whether an investigation proves such acts, there will be no retaliation against or adverse consequences for the person reporting the possible case of breach: an anti-corruption reporting system using a dedicated email address has been implemented through d'Amico Group's HR department.

Likewise, no DIS employee would suffer any retaliation or adverse consequences for refusing to adopt illegal conduct and for reporting in good faith violations of the anti-corruption rules and regulations, as applicable. 

Compliance with the anti-corruption policy is verified through various methods, including but not limited to, active monitoring of the expense reimbursement and gift tracking systems, internal and external audits, and self-assessment reports of potential violations. All reports must be submitted via the d'Amico Group's whistleblowing platform identified and publicized for the entire d'Amico Group.

In the period 2020-2022 there were no cases of corruption, bribery or anti-competitive behavior.

Organisation, management and control model - 231 model

GRI 404-1 (2016); GRI 2-26; GRI 2-23 

Since 2008, the Company has adopted the Organization, Management and Control Model ("Organization Model 231" or "231 Model"), a compliance program that led to the implementation and development of an organic and structured system of procedures, rules, and controls aimed at preventing and systematically reducing, during the performance of so-called sensitive activities, the risk of the offenses (corruption and bribery included) cited in the Italian Legislative Decree No. 231 of 8 June 2001 (the "Decree 231"), being committed. 

The Decree 231, which DIS complies with due to its listing on the STAR segment of the Italian Stock Exchange, introduced the corporate liability of legal entities in case of crimes committed by subjects that act on behalf of the Company, such as representatives, executives, directors, subordinates, and persons who even de facto carry out management or control activities. Under the Decree 231, corporations may be held liable for a specific list of offenses committed, or even attempted, in the interest and/or for the benefit of the Company. 

Companies shall not be considered liable if the individual committed the crime in their own interest, or in the interest of third parties (not linked to the Company) or for their own benefit. Moreover, liability of the Company could be excluded where it is proven that: 

• the Board of Directors of the Company had not only adopted preventively (ex-ante adoption) but also efficiently implemented the 231 Model;

• the Company had appointed a Supervisory Committee that did not omit to exercise its control duties; 

• the offence was committed by an individual with the fraudulent intention of avoiding the 231 Model efficiently implemented by the Company.

Furthermore, the timely adoption and implementation of some controls and procedures as part of the 231 Model after the commission of the offence (ex-post adoption), could mitigate the sanctions deriving from the ascertained liability. 

For these reasons, the Company has decided to adhere to the Integrated Management System of its ultimate parent company - d'Amico Società di Navigazione S.p.A. - whose procedures are constantly updated with reference to the additional controls specifically required by the 231 Model as amended from time to time. 

Specifically, the Company's 231 Model: 

• identifies the areas of activity where there is a chance of perpetration of the crimes mentioned in the Decree 231 ("Risk Areas");

• identifies appropriate procedures aimed at preventing the crimes mentioned in the Decree 231;

• provides for specific procedures concerning the Supervisory Committee's decision-making process and the implementation of its decisions;

• provides for appropriate financial management, to prevent the perpetration of financial crimes;

• provides for the specific duty to inform the Supervisory Committee in case a violation of the 231 Model occurs (both the Supervisory Committee e-mail's account as publicized on DIS' website and the d'Amico Group's whistleblowing platform identified and publicised for the entire d'Amico Group are a direct channel to be used for reports);

• provides for a disciplinary sanctions system to punish each violation of the procedures;

• provides for training, to be performed by all DIS' employees and service providers within the d'Amico Group.

The Company's 231 Model is constantly updated in accordance with both internal organizational restructurings and changes in the legislative environment regarding the scope of application of the Decree 231. On May 9, 2019, the Board of Directors approved an update to the 231 Model following the regulatory updates made by the regulator in 2017. Additionally, at the end of 2019, the Company decided to proceed with a new update of the Risk Plan and a general review of the 231 Model. The decision was driven by the changes that have taken place with respect both to the reference organizational framework and to the regulatory framework due to the introduction of new crimes in the Decree 231 and in particular the following new types of offenses: influence peddling; sports fraud and abusive exercise of gambling and betting activities; cybersecurity offenses; tax offenses; crimes introduced in the Decree by Legislative Decree 75/2020 relating to the fight against fraud that damages financial interests of the European Union. 

The Control & Risk Self-Assessment (hereinafter also "CRSA") performed by the Company with the assistance of the Supervisory Committee was carried out through the following activities:

• detection and mapping of Company activities at potential risk of commission of the offenses in scope;

• analysis of the existing control system and gap analysis with respect to an "optimal" control system;

• definition of the actions to adapt the existing control system. 

Since the Company is linked to the Italian territory exclusively by virtue of its listing on the Italian Stock Exchange, only those offenses envisaged by the Decree 231, relating to DIS' activities in Italy were identified as in scope and in particular: 

• crimes of embezzlement, extortion, undue inducement to give or promise benefits, corruption and abuse of office towards the Public Administrations;

• corporate crimes, including corruption between private individuals;

• market abuse crimes;

• organized crime offenses;

• inducement not to make statements or to make false statements to the judicial authorities. 

The control measures deemed relevant for the purposes of the analysis of the Internal Control System (ICS), consistently with the best practices with respect to the Sensitive Activities identified are the following: 

• existence of a Model 231, updated, disseminated and implemented;

• appointment of the Supervisory Committee and monitoring of its activities;

• formalization and dissemination of the Company's organization charts and their changes to all employees;

• existence of a formalized, updated and widespread system of powers and delegations, job description system, Code of Ethics, system of policies and procedures within the organization;

• existence of internal communication channels aimed at disseminating the organizational rules and regulations in place and of a periodic, systematic and specific information and training program addressed to the employees / contractors of the Company, as well as the adoption and updating of specific training programs on the "231 subject";

• existence and implementation of a disciplinary system;

• existence and implementation of a reporting system (whistleblowing);

• existence of contracts regulating existing relationships with third parties.

The main findings of the CRSA evidenced an overall adequacy of the internal control system. As a result of the CRSA, the 231 Model was given a new structure and is now divided into seven parts, as follows:

1. Relations with the Public Administration;

2. Management of litigations;

3. Human resources management;

4. Purchase of goods and services;

5. Management of financial flows, gifts, and donations;

6. Management of accounts, balance sheets, and transaction on shares;

7.  Management of inside information.

Lastly, during 2022, due to the changes that have taken place with respect to the reference regulatory framework - in particular, regarding the introduction of the following new types of offenses: crimes relating to payment instruments other than cash, crimes against cultural heritage, laundering of cultural assets and devastation and looting of cultural and landscape assets - the Company's Board of Directors, in its meeting of July 2022, resolved to launch an update of the CRSA, to evaluate the level of risk and the necessity to update the Model 231. 

From the CRSA analysis of the documentation collected with regards to the activities carried out by the Company, and from the interviews conducted with the key officers potentially involved in the activities referable to the crimes in scope of the CRSA, it appeared that there wasn't a level of potential risk of commission of the considered offenses, to allow the identification of one or more sensitive activities associated with them; a review and update of the Special Parts of the Company's Model 231 was therefore not required. Moreover, the control measures already adopted by the Company and the general principles contained in DIS' Code of Ethics remain valid and applicable. Based on the above, it was deemed necessary to only formally update the General Part of the Company's Model 231, on November 2022, in line with the CRSA activities performed. 

Whistleblowing 

On March 2021, a platform was implemented with the aim of guaranteeing the confidentiality of identity and the anonymity of whistle-blowers, which may include third parties. The platform allows for the reporting of any irregularities and/or unlawful behaviours, acts, or omissions that could constitute violations or attempted violations, even suspected, of: 

• the legislative provisions referred to in Italian Legislative Decree 231/2001;

• the principles ratified in the Code of Ethics and in the 231 Organisation Models of d'Amico International Shipping S.A.;

• the procedures, policies, and rules included in the Integrated Management System;

• the Anti-Corruption Policy;

that may constitute fraud or damage, even potentially, to colleagues, shareholders, and stakeholders, or unlawful acts detrimental to the interests and reputation of the Company. 

For example, the reports may refer to circumstances of alleged violations of environmental and workplace safety rules, corruption in fulfilling responsibilities, corruption due to an act contrary to official duties, abuse of powers granted to obtain private benefits, accounting irregularities, false declarations, deskilling, and non-transparent recruitments. The reports may also refer to cases, even suspected or attempted, of "bullying", sexual harassment, violations of privacy legislation, and situations of real, potential, and apparent conflicts of interest for which adequate disclosure has not been made by the parties involved and which may have consequences on the impartiality and good performance of the Company.

This platform replaces the pre-existing Open Reporting System and can therefore also be used for reporting events occurring on board a vessel or any events related to a vessel. The new whistleblowing platform is available at https://openreportingsystem.damicoship.com/ - with access from the intranet portal and DIS' websites. It should be noted that during 2022, no reports of violations of the 231 Model or of the Code of Ethics were received by the Supervisory Committee, neither directly nor through the Whistleblowing platform.

In 2022, the Company launched a new training program, supported by the Supervisory Committee, through the Group's Human Resources function. This program was aimed at all DIS' ashore employees and top management, to explain the new restructured 231 Model and the Whistleblowing system.

Management system

ESRS G1-7; ESRS G1-8

Internal control and risk management system 

The Board of Directors, as the body responsible for the Internal Control and Risk Management System, performs its duties based on a model inspired by the recommendations established by the Corporate Governance Code and the national and international best practices. The Company's Board of Directors, evaluates the functioning of the Internal Control and Risk Management System, on the basis of the reports received by the Internal Auditor, by the Control and Risk Committee and by the Supervisory Committee.

The timely identification of risks and the commitment to eliminate, reduce and consciously manage them is truly perceived by the managers as one of their direct responsibilities, both from a strategic and operational point of view, and it is an integral part of the management of the business processes. Particular attention is paid to the inherent risks of the critical sustainability success factors.

The Group is continuing to implement and refine the necessary steps to maintain an efficient and adequate System of Internal Control and Risk Management, by reviewing the existing policies, processes, and procedures periodically and, where necessary, establishing a new set of rules, processes, and organizational structures to monitor the efficiency of the Group's operations, the reliability of all the information (including the financial information) supplied to the Group's bodies and to the market, and the compliance with law and regulation for the safeguard of the Group's assets.

The Internal Audit Division conducts, among other things, independent audits of the efficiency of the controls identified for each of the processes for DIS Group's companies required to prepare financial reports. The areas of improvement identified through such audits are presented to the Company's Chief Risk Officer and the Control and Risk Committee. In conjunction with each process owner or company required to prepare financial reports, shared action plans are established with the aim of strengthening the existing control system or remedying specific shortcomings. With specific regard to the management and internal control system for existing risks associated with the financial reporting process for the consolidated and statutory accounts, the Group has implemented a system of administrative and accounting procedures aimed at ensuring that the reporting is accurate, correct, reliable and timely. The implementation of the agreed measures is constantly monitored by the Internal Audit Division, which reports on this matter to the Chief Risk Officer and the Control and Risk Committee. The Chief Risk Officer is responsible for maintaining an adequate internal control system, which includes periodic reviews of the functioning of the key controls identified and audited, with the support of the Internal Audit Division during the implementation phase, with the aim of confirming that they continue to operate effectively. The Internal Audit Division may select some operating companies or processes for thorough follow-ups or audits and is provided with the authority to drive the preparation of the audit plan based on its risk analysis. The results of such audits, together with the results of the risk analysis and assessment, are presented in a report. 

The Company believes that the assessment system and related certification process, considering the number of relevant processes and companies required to carry out financial reporting, can ensure and maintain reliable controls in relation to the financial reporting process.

Risk Assessment 

The Risk Assessment is an ongoing iterative process, to evaluate risks that could jeopardise the Group's objectives. It considers risks and control practices, at various levels of the organizational structure, in addition to the Group's control environment. 

The Group believes that the complete adoption of an integrated Internal Control System is a prerequisite to ensure an effective risk policy. Pursuant to the best national and international practices, the Group's integrated approach to the Internal Control System is based on the following key concepts:

1. uniqueness and centrality of the Internal Control System;

2. the completeness and versatility of the risk assessment;

3. the independence and the segregation between operational and control responsibilities.

For this purpose, the Risk Assessment includes the analysis approved by the Company's Board on July 2021, according to the Supervisory Committee's guidelines and the 231 Italian Legislative Decree. 

The integration of the analysis relating to emergency, energy efficiency, environment, security, and health and safety matters is ongoing.

The framework adopted by the Group is compliant with the most widely used framework around the world (the COSO framework) and follows four steps:

• Identification of organizational objectives: the Group's objectives for each activity are defined by the process owners and classified according to the following three categories:

• • Compliance - the objectives consist of the minimum standard of conduct established by laws and regulation;

  • Operations - the objectives relate to improving financial performance, productivity, quality, environmental practices, innovation, safeguarding of assets and customer and employee satisfaction;

  • Reporting to internal and external stakeholders - the objectives relate to the true and fair reporting of financial and non-financial information;

• Identification of risks able to jeopardise the objectives: for each objective, risks - events or conditions - and related consequences are identified by those in charge of each process and evaluated following specific guidelines;

• Assessment of the risks: to define the inherent risk, the evaluation of the likelihood of each event and the impact of its consequences are combined following the criteria established by the Internal Auditor;

• Identification and assessment of control environment and control activities: an assessment of the residual risk is performed, accounting for specific control activities and how they affect the likelihood of events and their impacts.

Following the process outlined above, the Internal Auditor provides a qualified and systematic support to the process owners' self-assessment, assisting them in the identification of:

• the Inherent risk, which represents the risk before any control activities implemented by the Group;

• the Control environment, which is the set of standards, processes and structures, adopted by the Group, that provides the basis for carrying out internal control across the organization;

• the Control activities, which are the specific controls, defined and implemented by the Group, that contribute to the mitigation of risks to acceptable levels;

• the Residual risk, which represents the risk which remains after the control activities implemented by the Group.

The following table shows the main risk categories and the associated intrinsic and residual risk levels.

The main inherent risks classified as high by DIS' Risk Assessment are the following:

• Macro-economic environment risk, which has been assessed high as inherent risk and medium-high as residual risk after internal controls. It mainly refers to financial risks related to the product tanker market's volatility and cyclicality. It is driven by:

• • Freight rates: the Group is exposed to significant changes in freight rates due to changes in the supply and demand for the seaborne transportation of refined products, resulting from the cyclical nature of our sector. The Company mitigates this risk by employing part of its fleet through period contracts at fixed rates, as well as by hedging of some of the spot market exposure through Freight Future Agreements. Strong corrections in freight rates can lead to losses and affect our cash balances, as well as our ability to respect contracts and could lead to defaults on our loans' financial covenants.

  • Vessel prices: the same factors that influence freight rates also impact vessel prices. Furthermore, in severe market downturns, the secondhand market liquidity for vessels can drop significantly, affecting the Group's ability to sell these assets. Strong corrections in vessel prices, can lead to potential defaults on loans' financial covenants.

  • Interest rates and exchange rates: which affect respectively the Group's financing cost on variable rate loans, and general administrative and operating costs. The Group hedges these risks through interest rate swaps and forwards contracts.

• Reputation risk, which has been assessed high as inherent risk but medium as residual risk after internal controls. It mainly regards negative media communication. The Group mitigates this risk through press monitoring, active and reactive communication and enforcing employees' accountability. 

• Asset risk, which has been assessed high as inherent risk but medium-low as residual risk after internal controls. It mainly refers to failures risks, and is mitigated through vessels inspections, a planned maintenance system and critical items monitoring.

Ship collision and grounding are serious casualties which could lead to the total loss of the vessel. Damages to the ship as well as the total loss or constructive total loss of the vessel are covered by the Hull & Machinery Policy, up to the agreed insured value of the vessel, less the agreed deductible. Salvage charges are covered by the H&M cover as well. Business Interruption following a collision, or a grounding event, is covered by the Loss of Hire and/or Strike Shipboard cover. The Company adopts a planned maintenance system (PMS), to reduce vessel failure risk. The management of dry-docks and repairs is coordinated through the d'Amico Group, providing economies of scale and a proper benchmarking for the cost and quality of such services. DIS' objective of always controlling a young fleet also helps to minimize such risks. The PMS includes scheduled technical inspections and the appropriate management of critical spare parts (engines). The d'Amico Group has established preferred yards in key trade areas based on criteria such as the quality of jobs performed, ISO certifications and other volunteer or mandatory certifications, compliance with ethical principles, past experience of the d'Amico Group and a list of references. The dry-docks are planned in advance, to secure the required slots and the dry-dock specification is finalized through a pre-docking inspection. A Company representative is always onsite to monitor the quality of the work performed and the progress of the whole project, and ready to promptly address any issues. DIS has established as a key performance indicator, the "Dry-dock planning performance", to monitor and control costs and delays. When selecting dry-docks all the costs are considered, including the repair cost, the cost of the deviation, that of bunkers consumed, and the time required for the repairs. 

• Fraud risk, which has been assessed medium-high as inherent risk but medium-low as residual risk after internal controls. It mainly refers to market abuse, fraudulent reporting and cybercrime. DIS' Supervisory Committee is focused on evaluating the measures adopted to prevent this risk.

Cybercrime was previously reported in the Natural and Geopolitical risks. It could affect security and business continuity. It could influence ICT services availability (system; network; data centre) and data confidentiality. A cyber security contingency plan, a disaster recovery and business continuity plan, a crisis management team and an emergency plan have been shared with employees, together with a training program and a periodical bulletin.

Market abuse includes the insider trading risk. It could generate administrative responsibilities for the Company. The Organizational Model (L.D. 231), the management of an insider register, staff training on market abuse regulation, the use of non-disclosure agreements for third parties and the maintenance of records of third parties receiving financial forecasts, reduce the risk to an acceptable level.

Regarding the Fraudulent reporting risk, DIS has implemented a system of administrative and accounting procedures aimed at ensuring that financial reporting is accurate, correct, reliable and timely.

Other risks which DIS' Risk Assessment did not classify as having a high inherent risk, but which the Group deems should be closely monitored and disclosed, are the following:

• Political risk, which could involve sanctions and extra costs. The mitigation strategies include procedures, and the establishment of a sanctions department.

• Meteorological risk, which can lead to delays, damages to vessels and extra costs. The mitigating strategies include guidelines, technical support, adoption of technology for vessel performance monitoring, double communication systems (different bands), use of technological providers of weather-news and adoption of an optimum-ship-routing system.

• Piracy risk, which can entail security and economic risks for the vessel and/or risks to complete the vessel voyage as planned. Piracy risk is a major issue in the Southern Red Sea/ Gulf of Aden, and in the Gulf of Guinea. 

In this respect, DIS has taken measures to: 

• minimize the risk during transit in the Gulf of Aden, to promote safer navigation; 

• check the suitability of the insurance policies currently in force to ensure such risks are adequately covered.

A detailed analysis of the situation has allowed the DIS Group, together with the d'Amico Group, to prepare guidelines to be followed by any vessel while in the risk zone. Moreover, to obtain as much information as possible and to stay updated on all issues, DIS through the d'Amico Group monitors websites dedicated to piracy issues regularly. 

Regarding insurance, based on a risk assessment, DIS ascertained that the main piracy risks are adequately covered through: 

• loss of hire insurance, which covers the Group for the loss of income resulting from physical damages to the vessel caused by a piracy attack (risk covered under the Hull & Machinery policy); 

• kidnap and ransom insurance, which covers the perils of kidnap, wrongful detention, and hijacking; 

• piracy loss of hire, which covers the payment of hire during the period of detention by pirates (a physical damage of the vessel is not required to be covered under this policy); 

• third parties' liabilities - included in the P&I cover. 

In addition to the above-mentioned security measures the Company adopts armed guards to reduce the risk to an acceptable level.

• The people availability risk relates to the Company's ability to both attract and retain employees. The risk is mitigated through external and internal communication plans, together with proper compensation and professional development programs, including through training. 

• Risks linked to voyage management. Voyage planning and control is managed by DIS to ensure a high-quality service to charterers, through constant attention to the fulfilment of contractual requirements, with the objective of reducing costs and minimizing delays. Port agencies and towage are managed by DIS through general agreements and are based on a reliable network of agents operating at high standards, with the aim of maximizing the efficiency of DIS' vessels turnaround during port stays, providing qualified husbandry services to owned vessels and taking advantage of economies of scale. DIS Group's insurance plan provides coverage for a wide range of risks which may arise from ship ownership and management and which may expose the Group to financial losses.  With regards to the vessels' operation and transportation of cargoes, the coverage includes personal injury, environmental damage and pollution, third-party casualty and liability, hull and engine damage, total loss, war risks and piracy risks. 

• Risks linked to bunker management. When bunkering its vessels, the DIS Group has several objectives, including reducing direct purchase costs, minimizing vessel deviations and ensuring supplies are in line with the most recent ISO standards in force. Bunkering is managed by DIS with the support of a d'Amico Group company, Rudder SAM, which has an in-depth knowledge of the market and uses a network of reliable suppliers with high-quality standards (please refer also to the Related party transaction note to the consolidated financial statements). A constant supervision of physical deliveries (as per planned timing and quantities) and analysis of the quality of bunker samples, ensures quality and quantity issues are kept under control.

• Misappropriation of ICT assets could imply data confidentiality breaches. The Company's encryption policy reduces this risk to an acceptable level. Misappropriation could also result from the payment to a wrong counterparty. The Group's procedures, including the segregation of duties in the management of the ledgers and chart of accounts and in the approval, recording and payment of invoices, reduce this risk to an acceptable level.

Please refer to DIS' consolidated financial statements, in particular to note 1 on accounting policies and note 12 on property plant and equipment and right-of-use assets, for a discussion about how some of the above risks affect management's accounting estimates.

Integrated management system

The implementation of an Integrated Management System (IMS), is the result of a corporate choice that focuses on the quality of the services provided to customers, occupational health and safety, energy efficiency, environmental protection and corporate social responsibility, through the adoption of recognized international standards and certifications. 

DIS formally decided to adhere to the Integrated Management System of the d'Amico Group. This alignment improves the Internal Control and Risk Management System adopted by the DIS Group and enhances the processes' efficacy. Moreover, the integration has strengthened the coordination among the bodies responsible for internal control, in particular in their development of audit plans, resulting in a rationalization of the controls. This level of coordination has been achieved by the application of a simple defined protocol, so as not to interfere with the autonomy and independence of the individual management systems. The cooperation among the control bodies allows audit reports to be shared and allows each control body to acknowledge the remarks already raised by the others. 

The IMS allows the d'Amico Group, and in turn, d'Amico International Shipping, to identify, maintain and improve a dynamic organization and management model. Its unified perspective meets the needs and specificities of different shipping sectors and makes best use of available strategies, in accordance with the many national and international laws and regulations DIS is committed to comply with.

Continuous monitoring, adequate measurement of performance indicators, strict internal inspections, detailed analysis of collected data, and prompt implementation of corrective and improvement actions, allow DIS to continuously increase its performance and that of its stakeholders, in terms of safety, environmental protection and customer satisfaction.

The IMS, already compliant with the International Safety Management Code, was extended to the following standards certified by RINA (Italian Maritime Register): ISO 9001 (quality), ISO 14001 (environment), ISO 45001 (safety) and ISO 50001 (energy efficiency).

Material ESG topics

GRI 3-1 (2021); GRI 3-2 

DIS has adopted the material sustainability topics identified by the d'Amico Group. The following are DIS' material sustainability issues, organized according to the three ESG dimensions and related to the 17 Objectives of the UN 2030 Agenda. 

ESG risks and effects

ESRS G1-7

Since 2022, in line with the evolution of regulatory requirements, DIS has also launched a first Risk Assessment, measuring the inherent and residual risks associated with its organisational objectives, also from an ESG perspective. This has allowed DIS to better identify the control activities already in place and that could be adopted in the future, to reduce these risks.

A first analysis revealed the high transversal nature of most business risks in relation to the three ESG dimensions. All risk categories, in fact, as can be seen from the table below, comprise some element of ESG related risks for at least one dimension, and in most cases for at least two dimensions.

The second important outcome of this first ESG risk assessment is the identification of the level of inherent and residual risk of the main sustainability topics for DIS, for each of the three dimensions. Additional details regarding the policies and the measures adopted to manage ESG risks can be found in the rest of this report.

EU taxonomy for sustainable activities 

As of the date of publication of DIS' Non-financial statements as at 31 December 2022, the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 ("Climate Delegated Act") supplementing the Regulation (EU) 2020/852 ("Taxonomy Regulation") has set the list of eligible economic activities and the technical screening criteria for determining the conditions under which they qualify as making a substantial contribution to climate change mitigation and climate change adaptation - two of the six environmental objectives set by the Taxonomy Regulation. The Climate Delegated Act is applicable from 1 January 2022.

DIS falls under the scope of the Directive 2014/95/EU on the disclosure of non-financial information (the Non-Financial Reporting Directive or NFRD). Hence, to comply with the reporting obligations for non-financial undertakings established in the Commission Delegated Regulation 2021/2178 of 6 July 2021 ("Disclosures Delegated Act") supplementing the Taxonomy Regulation, DIS reports the share of Taxonomy-eligible and non-eligible and Taxonomy aligned and non-aligned activities out of Revenue, CapEx and OpEx for 2022 alongside DIS' consolidated financial statements as of 31 December 2022.

Given that at the moment of publication of DIS' Non-financial statements as at 31 December 2022, the technical screening criteria for all six environmental objectives of the EU Taxonomy Regulation are not yet published, DIS reports the Taxonomy eligibility and Taxonomy alignment of its activities as required by the Disclosures Delegated Act based under the first two environmental objectives for which final technical screening criteria are already set in legislation - climate change mitigation and climate change adaptation (Climate Delegated Act).

eligibility under the first two environmental objectives (climate change mitigation and climate change adaptation)

This approach assesses the Taxonomy eligibility of DIS' activities strictly following the initial NACE classification system applied to define the activities that are eligible under the environmental objectives of climate change mitigation and climate change adaptation. 

DIS' economic activities were attributed to the single NACE code "H50.20 - Sea and coastal freight water transport, vessels for port operations and auxiliary activities", described in the Climate Delegated Act as: "Purchase, financing, chartering (with or without crew) and operation of vessels designed and equipped for transport of freight or for the combined transport of freight and passengers on sea or coastal waters, whether scheduled or not. Purchase, financing, renting and operation of vessels required for port operations and auxiliary activities, such as tugboats, mooring vessels, pilot vessels, salvage vessels and icebreakers". 

The resulting analysis shows that 100% of Revenue, CapEx and OpEx of DIS' operations in 2022 are EU Taxonomy-eligible. Detailed Taxonomy-eligibility disclosures following this approach are presented on Tables 1 to 3 of this section. The financial information disclosed in those tables have been extracted from DIS' financial statements as of 31 December 2022, prepared in accordance with International Financial Reporting Standards ("IFRS").

alignment under the first two environmental objectives (climate change mitigation and climate change adaptation)

DIS' economic activities are considered 100% EU-Taxonomy eligible. However, a part of the activities consists of transport of fossil fuels (refined petroleum products), which do not align with the EU's Taxonomy criteria. Therefore, only the transportation of vegetable oils has been considered for the determination of alignment with the climate change mitigation and climate change adaptation objectives of the EU Taxonomy. 

The alignment of DIS' economic activity has been assessed through the review of the technical screening criteria defined by the legislation with respect to:

• Its substantial contribution to either climate change mitigation, climate change adaptation or both;

• The Do Not Significant Harm criteria to any of the six environmental objectives; and

• The Minimum Safeguards criteria.

The resulting analysis shows that 0% of Revenue, CapEx and OpEx of DIS' operations in 2022 are EU Taxonomy-aligned. Detailed Taxonomy-alignment disclosures following this approach are presented on Tables 1 to 3 of this section.

Table 1. Proportion of Revenue from products or services associated with Taxonomy-aligned economic activities

The turnover disclosed in the above table represents the freight and time-charter revenue amounting to US$ 479,619 (thousand) plus the bareboat charter revenue amounting to US$ 4,812 (thousand), reported under DIS' Consolidated Income Statement in the financial statements as of 31 December 2022 (p.99).

Table 2. Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities

The CapEx disclosed in the above table represents the acquisition of fixed assets reported under DIS' Consolidated Statement of Cash Flows in the financial statements as of 31 December 2022 (p.101).

This CapEx amount is not:

• related to assets or processes associated with economic activities that qualify as environmentally sustainable under Article 3 and 9 of the Taxonomy Regulation, or 

• part of a plan to expand Taxonomy-aligned economic activities or to allow Taxonomy-eligible economic activities to become Taxonomy-aligned, or

• related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions.

 Hence, the proportion was determined at 0%.

Table 3. Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities

The OpEx disclosed in the above table represent the other direct operating costs reported under DIS' Consolidated Income Statement in the financial statements as of 31 December 2022 (p.99).

This OpEx amount is not:

• related to assets or processes associated with economic activities that qualify as environmentally sustainable under Article 3 and 9 of the Taxonomy Regulation, or 

• part of a plan to expand Taxonomy-aligned economic activities or to allow Taxonomy-eligible economic activities to become Taxonomy-aligned, or

• related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions.

Hence, the proportion was determined at 0%.

Environmental responsibility

GRI 3-3 (2021)

Environmental protection and respect for the environment is a strategic priority for the Group. DIS, through the d'Amico Group, implemented programmes and procedures to ensure strict compliance with international regulations, defining higher standards where existing laws and regulations do not adequately guarantee sufficient protection of the ecosystem. Furthermore, its management systems are specifically designed to prevent activities and conditions that may pose a threat to the environment. DIS also seeks to inform its employees and stakeholders about the Group's environmental commitments, inviting them to contribute in achieving specific goals and periodically reporting the results achieved.

Environmental impact and regulatory framework 

GRI 2-27 (2021)

Since before the introduction of the TMSA programme, DIS - through the d'Amico Group - has been promoting internal HSQE management procedures and operating an integrated management system on all its vessels, in conformity with the quality and environmental standards ISO 9001 and ISO 14001, established by the International Organisation for Standardization. The Group has also implemented a certified energy efficiency management system compliant with ISO 50001.

The primary goal of all the aforementioned systems and procedures is the preservation of the marine environment. Every year DIS' product tankers are required to undergo the following external examinations:

• inspection and monitoring of compliance with international rules and regulations by the flag State;

• port-state controls, which are inspections of foreign ships in national ports to verify if the condition of the ship and its equipment comply with the requirements of international conventions, and if the ship is manned and operated in compliance with these rules;

• vetting inspections by oil major and energy-related companies.

Pursuant to a ship management agreement, DIS' ultimate parent company - d'Amico Società di Navigazione S.p.A. - is responsible for the technical management of all d'Amico Tankers d.a.c.'s owned and bareboat chartered vessels. 

The technical management activities include:

• performing general vessel maintenance;

• performing inspections and audits;

• ensuring compliance with regulatory and classification societies' requirements;

• satisfying oil majors vetting procedures;

• supervising the maintenance and promoting the efficiency of vessels;

• arranging and supervising drydocks and repairs;

• purchasing supplies and spare parts;

• appointing supervisors and technical consultants.

New environmental internal audits were introduced in 2019, along with new procedures, including instructions and best practices exceeding MARPOL requirements. Furthermore, the form used for MARPOL inspections was redesigned to include a standard checklist, allowing such inspections to be performed by the top two officers onboard without the need for a superintendent, an innovation which significantly eased the audit procedures during the pandemic-imposed travel restrictions in 2020/2021.

All managed vessels comply with the International Convention to Prevent Pollution from Ships (MARPOL), as well as all other national or international laws concerning environmental protection. Vessels are regularly inspected by a superintendent to ascertain that all procedures in-force are duly implemented, and that pollution prevention tools, such as records, seals, and soundings are in place.  

To ensure compliance and to strengthen seafarers' awareness, DIS adopted the STOP Working Card policy, a tool allowing any Seafarer working on board DIS' vessels, to order to STOP any activity in case of imminent danger for the environment or for the crew's safety. 

Furthermore, in line with d'Amico Group's commitment to promote openness in communication and with the Company's Code of Ethics, an environmental reporting procedure - "Open reporting system" - was adopted to provide all personnel with a tool to report environmental non-compliance without the fear of retaliation. Information on this reporting procedure is available on all the fleet's vessels; both onshore and seagoing personnel can anonymously report via a free web portal, or an independent email account or free phone numbers, any cases of non-compliance with the Company's environmental management system, marine environmental protection requirements or the implemented environmental compliance plan. Furthermore, understanding and awareness of environmental matters is regularly and thoroughly measured when evaluating the performance of Officers and Engineers, in particular that of the more senior ones.

In respect of ISO 50001 and ISO 14001, DIS monitors and analyses all energy consumed on its vessels, showing its commitment to protect people and the environment, seeking to promote energy efficiency while reducing emissions: increased energy efficiency is indeed one of the most effective means of protecting the environment. The vessels' performances are reported within the annual Integrated Management System Review.

The Ship Energy Efficiency Management Plan (SEEMP), in line with the IMO's guidelines on ship efficiency, has been implemented on board of the DIS' vessels since the beginning of 2013 to optimize operational processes and improve profitability through the efficient use of the assets. During 2022, DIS also completed the development and the certification of the SEEMP PART III, to document how DIS plans to achieve its Carbon Intensity Indicator (CII) targets. The CII is a rating system for ships developed by the International Maritime Organization (IMO) and effective from 2023. The plan includes a description of how each vessel will operate and maintain its fuel efficiency throughout the year in line with its CO₂ reduction commitments. SEEMP Part III shall include:

• the methodology used to calculate each ship's attained annual operational CII and the processes that will be used to report this value to the flag administration;

• the required annual operational CII for the next three years;

• a plan detailing how the required annual operational CII will be achieved during the next three years and on how the procedures for self-evaluation will be performed.

In summary, DIS' management is committed to:

• increasing energy efficiency also through investments in financially viable clean energy efficient technologies;

• reducing emissions and other environmental impacts arising from consumption of energy;

• raising staff awareness and commitment to reduce energy consumption.

The Paris Climate Agreement (2015) on greenhouse gas (GHG) emissions sets out a global action plan to limit global warming to well below 2°C. The European Union was the first major economy to submit its intended plan to reduce GHG emissions by at least 40% by 2030. In this respect, the EU issued the Regulation 2015/757 for the Monitoring Reporting and Verification (MRV) of CO2 emissions by vessels for voyages between European ports. To comply with this regulation, the d'Amico Group has prepared a specific Monitoring and Reporting Plan for each vessel, together with the procedure to provide all data needed for monitoring and reporting. The monitoring started in January 2018. At the end of each calendar year, all data must be verified and a comprehensive report has to be submitted to the EU Commission, which then issues a specific certificate for each vessel. All the Group's vessels involved in EU voyages have obtained the proper certificates.

Currently, all vessel data collected for 2022 is under review by the Performance Monitoring Department and will be transmitted pursuant to EU Regulation 2015/757. A very similar process is now implemented for all UK voyages. After Brexit the UK has established its own monitoring, reporting and verification regime; DIS has prepared an addendum to each of its vessels' Monitoring and Reporting Plans to include this new reporting requirement and has submitted the plan for assessment by the relevant Recognised Organisation.  In 2023, the report will be submitted for verification and a Document of Compliance will be issued.

At the same time, the International Maritime Organization (IMO) has amended MARPOL Annex VI (Prevention of Air Pollution from Ships), introducing through the Resolution MEPC.278(70) a data collection system for fuel oil consumption by ships. Under the amendments, ships of 5,000 gross tonnage and above are required, starting from January 2019, to collect consumption data for each type of fuel oil used, as well as other additional specified data including proxies for transport work. The aggregated data is reported to the ship's flag State after the end of each calendar year and the flag State, having determined that the data has been reported in accordance with the requirements, issues a Statement of Compliance for the ship. Flag States are required to subsequently transfer such data to an IMO Ship Fuel Oil Consumption Database. IMO will be required to produce an annual report to the Marine Environment Protection Committee (MEPC) summarizing the data collected. The d'Amico Group, during 2018, updated all its vessels SEEMP for reflect the new regulations, obtaining the Confirmation of Compliance (CoC) by the respective Flag States. Furthermore, starting from 2020 all of DIS' vessels regularly receive the Statement of Compliance relating to the data submitted covering the operation of such ships in the previous calendar year. Currently, all vessel data collected for 2022 are under review by the Performance Monitoring Department and will be transmitted to the ships' flag States.

During 2019, DIS has prepared its fleet for the use of fuels with a sulphur content lower than 0.50%, as established by Regulation 14 of IMO MARPOL Annex VI, effective from 1 January 2020. 

Sulphur oxides (SOx) are known to be harmful to human health, causing respiratory symptoms and lung disease. In the atmosphere, SOx can lead to acid rain, which can harm crops, forests and aquatic species, and contributes to the acidification of the oceans. This global sulphur cap limit - which is in addition to the existing 0.10% sulphur content limit on the use of fuels in Emission Control Areas (ECAs) effective since 1 January 2015 - has significantly reduced the amount of sulphur oxides emanating from ships and should have major health and environmental benefits, particularly for populations living close to ports and coasts. A further important drop in Sox emissions is expected from May 2025 when the Mediterranean will become an Emissions Control Area.

From 2021, DIS increased the number of indicators used to assess the efficiency of its fleet. In particular, the following new metrics were adopted:

• for energy consumption: the total fuel consumed multiplied by the average Low Calorific Value (LCV= mega joule per tonne).

• for CO2 emissions: not only the total emissions, but also the Energy Efficiency Design Index (EEDI = grams of CO2 per deadweight tonne, per theoretical nautical miles, based on vessel's speed when sailing at scantling and 75% of the maximum continuous rate), the Annual Efficiency Ratio (AER = grams of CO2 per deadweight tonne, per actual nautical miles sailed) and the Energy Efficiency Operational Index (EEOI = grams of CO2 per tonne-miles, which is the actual amount of cargo transported x actual nautical miles sailed). The EEDI value reflects how efficient the vessel's design is in terms of CO2 emissions; it aims to promote the use of efficient equipment, machineries and optimized hull and propeller designs. The smaller the EEDI, the more efficient the vessel's design. The EEOI and AER instead are operational indicators. The EEOI reflects the ship's operational efficiency; it considers the cargo effectively transported and the fuel oil actually consumed. The EEOI, therefore, is more representative of the operational efficiency than the AER which also considers the fuel actually consumed but then uses the vessel's DWT instead of the actual amount of cargo transported. However, the AER is relevant since it was adopted by the IMO as a metric to measure the carbon emissions of the ships starting from 2023.

• for SOx emissions: not only the total emissions which have been falling rapidly from the onset of the new regulations by the IMO, limiting the sulphur content in bunker fuels to 0.5%, from the beginning of 2020, but also the SOx emissions per actual tons transported and per total miles sailed.

• for NOx emissions: not only the total emissions but also the NOx per actual tons transported and per total miles sailed. The NOx calculation does not include the emissions from biofuels since the conversion factor for this type of fuel has not been agreed yet. Nonetheless, given the very small quantity of this fuel used in 2021 and 2022, its inclusion would have only a minimal effect on total emissions.  

Future environmental regulations and directives

"Fit for 55" is part of the European Commission's ambitious decarbonisation strategy, which aims to reduce greenhouse gas emissions in the EU by 55% by 2030. The directive will have a direct impact on the maritime sector through:

• The Emission Trading System (ETS), which will be extended to maritime transport. The ETS is a proposed directive that will be applied from 2024 to all vessels over 5,000 gross tonnes regardless of flag and to all voyages between ports in the European Economic Area (EEA) and which either commence or terminate in a EEA port. For voyages between EEA ports 100% of emissions will be considered, whilst for voyages only commencing or terminating in an EEA port 50% of emissions will be accounted for. According to the latest agreement reached in December 2023 by the European institutions (Parliament, Council, Commission), shipowners will have to buy emissions allowances for 40% of their emissions reported and verified in 2024, 70% of emissions reported and verified in 2025, and 100% of emissions reported and verified in 2026. According to the latest agreement, the directive will cover not only CO2 from 1 January 2024 but also Methane (CH4) and Nitrous oxide (N2O) from 1 January 2026.

The regulations require the shipowner or the entity managing the vessel on behalf of the shipowner to be liable.

It also states that any polluter pays, therefore the shipowner could pass the cost to the charterer who is responsible for deciding route, fuel and consumption through a contractual agreement between the parties. The monitoring tool will be the EU MRV (Monitoring, Reporting and Verification), which will have to be partially modified, but for which DIS' fleet is already compliant since 2017.

• Fuel EU, which sets a maximum limit on the greenhouse gas intensity of fuels used onboard. The Fuel EU is a regulation which will enter into force in 2025. It will apply to all vessels over 5000 gross tonnes calling at EEA ports with the aim of improving the GHG intensity of the fuels they use for those voyages, promoting the use of neutral emission fuels, fuels from renewable sources (such as biofuels) or low carbon fuels, while also accounting for the 'cold ironing' in ports. The requirements will account for the GHG emissions a fuel generates throughout its lifecycle, from its production to its final consumption by the ship, not just during its use by the ship. Shipowners must calculate the carbon intensity as a quantity of GHG per unit of energy and this calculation must be assessed by a verifier. Companies must provide data on the carbon intensity and sustainability characteristics of biofuels, verified by a voluntary scheme recognised under RED II (Renewable Energy Directive II); furthermore, the verifier must issue a certificate of conformity (certificate of compliance) to ships that comply with the provisions of this regulation. The Required GHG intensity improvements will start in 2025 and increase every five years until 2050 (2% improvement from 2025; 6% improvement from 2030; 13% improvement from 2035; 26% improvement from 2040; 59% improvement from 2045 and 75% improvement from 2050). Shipping companies that are not compliant with the rules by May 1 of the following year will have to pay a penalty. This money will support a green fuel fund in favour of the deployment of low-carbon and renewable fuels in the maritime sector. The projects financed by this fund should stimulate the production of more renewable and low-carbon fuel for vessels.

• Energy Taxation Directive (ETD), which will introduce a minimum tax rate on certain fuels. The ETD is the European Union's framework for the taxation of energy products, including electricity and most fuels. Unlike the ETS and the Fuel EU, the ETD will be paid by the bunker procurer, and it will apply to all bunkers sold in the EEA, by imposing a tax in the EEA for voyages within the EEA. The taxation will start on January 1, 2023, with a 10-year transition period. The tax is just 12% of what other sectors that use fossil fuels such as gasoline and diesel will be charged, to reduce the risk that shipowners and operators would source bunkers outside the EU. According to the revised directive, ammonia and advanced biofuels used in shipping would be exempt to encourage sustainable alternative fuels.

IMO's decarbonisation targets. The industry's transition towards a low-carbon economy, driven largely by the IMO's strategy on the reduction of greenhouse gas emissions from ships, comes with opportunities as well as risks. Many indicators, such as the CII and EEXI are coming into force in the next years, forcing shipping companies to report their emissions. Climate change and greenhouse gas emissions may adversely affect DIS' operating results. Therefore, in the last few years DIS, thanks to the d'Amico Group's technical department, has constantly studied and sought new technologies and innovative solutions (such as the testing of biofuels on its vessels), anticipating and when possible foreseeing new industry regulations, to guarantee DIS' commercial relevance. DIS' commitment to the decarbonisation of the shipping industry is also highlighted by projects developed with charterers, such as the "Speed optimization project" developed in 2021, which allowed the Group to identify the most efficient speed profile over the entire voyage of a vessel and to meet the required arrival time at the lowest fuel consumption. DIS thanks to its young and modern eco-fleet guarantees a commercial activity aligned and compliant with the forthcoming EU regulations (as mentioned above in the Environmental risks and compliance section).

Energy efficiency

GRI 302-1 (2016); GRI 302-3; GRI 302-4 

DIS has implemented various technologies designed to reduce the energy consumption of its own fleet at the new building stage. Specifically, the decision to install two-stroke engines with greater power than necessary, but de-rated and electronically controlled, lowers the specific consumption curve on the one hand and reduces the revolutions per minute of the engine shaft on the other, making it possible to combine it with larger and thus more efficient propellers. 

In addition, the Mewis duct and the Stator fins, which optimise the flow of water to the propeller, enable vessels to sail at the same speed with between 2% to 4% and 3% to 5% less power, respectively.

Improved hull forms, a more hydrodynamic bulb, hull paints with extremely low friction coefficients as well as more aerodynamic shapes for the vessels' accommodations have also significantly reduced ship resistance in sailing conditions. Moreover, all of DIS' "eco" vessels have been designed with the aim of optimizing speed, which is lower than in the previous generation of conventional ships. The combination of these technical measures has led to a drop in the fuel consumption of DIS' "eco" fleet of about 6 tonnes per day/ship compared to previous-generation ships.

Although bunker fuel consumption decreased in absolute terms between 2020 and 2022 (-12.8%), during the same period consumption per nautical mile increased slightly (+1%), whilst consumption per ton transported decreased by 0.5%. Unfavourable trading patterns led to an increase in these metrics from 2021 to 2022. In particular, in 2022 relative to the previous year, consumption per nautical increased by 3.1% and consumption per ton transported increased by 14.2%. Higher consumption when in port and when sailing in ballast, were the main culprits of the deterioration in these indicators.

In 2022, most of the consumption (49.5%), and consequently of emissions, came from laden voyages, while a smaller share is attributable to voyages in ballast (29%) and only 21.5% is attributable to consumption within ports. 

In the 2020-2022 period, the total energy consumption of DIS' fleet decreased by 12.9%, in line with the reduction of bunker fuel consumption (-12.8%).

Emissions

GRI 305-1 (2016); GRI 305-4; GRI 305-5; GRI 305-7; SASB TR-MT-110a.1

According to the IMO (International Maritime Organisation), the main GHG emissions from shipping that should be monitored and then reduced are those from CO₂, SOx and NOx.

In the 2020-2022 period, the value of CO₂ emissions decreased, both in absolute value 
(-14.9%) and in relation to the nautical miles travelled (-2.0%) and the tons transported (-2.9%). Important decreases in these same metrics were also observed from 2021 to 2022.

During the 2020-2022 period, SOx emissions fell in absolute terms (-12.1%), but increased when measured in relation to the nautical miles travelled (+1.2%); from 2021 to 2022 there was a slight increase in these same two metrics of 0.1% and 1.2%, respectively.

Since 2020 NOx emissions are those that decreased most in absolute terms (-14.8%), falling also when measured in relation to the nautical miles transported (-1.8%) and the tons transported (-2.8%). A reduction in the absolute level of NOx emissions (-1.0%) was also experienced from 2021 to 2022, whilst the NOx emissions per nautical mile (+0.9%) and per unit transported (+4.5%), increased slightly during this same period.

During the last three years,  the technical department of the d'Amico Group has started preparing DIS' fleet to comply with the IMO's GHG reduction measures. The revised Annex VI requires ships to calculate their Energy Efficiency Existing Ship Index (EEXI) and to measure its annual operational carbon intensity indicator (CII). The amendments to MARPOL Annex VI came into force on 1 November 2022, with the requirements for EEXI and CII certification becoming effective from 1 January 2023.  

The EEXI entails the retroactive application of the EEDI to all existing cargo and cruise ships above a certain size. This will impose a requirement equivalent to EEDI Phase 2 or 3 for all existing ships regardless of year of build and is intended as a one-off certification that will be verified no later than the first annual survey on or after 1 January 2023.

The EEDI Phases requirements are the following:

• Phase 1 (2015-2019): 10% reduction with respect to the reference value;

• Phase 2 (2020-2024): 20% reduction with respect to the reference value; 

• Phase 3 (2025 onwards): 30% reduction with respect to the reference value.

The primary method of compliance with Phase II for DIS' existing ships is to reduce the power installed with overridable power limits (OPL) rather than by fitting energy saving devices (ESD). However, to improve the efficiency while complying with the EEXI, d'Amico Group's technical management department decided to combine both methods: overridable power limits and energy saving devices.

As at the end of 2022 only 22% of DIS' fleet was not compliant with Phase II of the EEDI; for these vessels an installation of overridable power limits will be required. 

DIS established a "carbon war room", through which regular meetings occur with class representatives and original engine manufactures to identify and implement the most advanced and attractive solutions for the decarbonisation of its fleet. Solutions evaluated include transitional fuels, propulsion systems and energy saving devices, with the objective of: 

• accelerating compliance with the short-term measures adopted by the IMO (CII and EEXI);

• complying with the next Fuel EU Regulation commencing in 2025; 

• accelerating the adoption of technical solutions for ship efficiency.

In June 2021 the d'Amico Group's technical management department launched a joint industry project (JIP) to test biofuel blends (B30) derived from advanced second-generation feedstock on board one of DIS' LR1 product tankers. The trials were conducted from 19 June 2021 to 06 July 2021 with very positive results. In particular, CO2 emissions (using the lifecycle analysis, LCA) fell significantly, while NOx emissions remained stable and within the permitted limits. 

The results of the trials underline that the biofuel blend is a viable solution to comply with the Fuel EU Regulation and, provided widespread availability of feedstock, it is a possible "drop-in" solution to speed up the decarbonisation of the existing tonnage, contributing to reaching the ambitions goals set by the IMO, which currently calls for international shipping to reduce its C02 emission by 50% by 2050.

Based on the results achieved on the M/T Cielo di Rotterdam, DIS has certified with the Flag administration for all its LR1 vessels to operate permanently with the B30 biofuel blend. Following the recent outcome of the MEPC 78, DIS is allowed to use blends of up to 30% of FAME (fatty acid methyl ester) on its entire fleet without any further tests. The plan for 2023 is to test the biofuels B40 and B50, following the same methodology adopted by the pilot project.

Regarding IMO's other short terms measures, the technical management department of the d'Amico Group conducted an internal study on DIS' Fleet, using the metric adopted by the annual efficiency ratio (AER), to understand the risk profile related to the size of vessels, type of cargo (heated or not) and particularly difficult trade routes, due to severe weather conditions. Furthermore, in 2021 it launched a project to calculate and monitor in real time the attained Carbon Intensity Indicator (CII) of DIS' fleet, with the aim of taking prompt corrective actions, as deemed necessary. 

In 2021, the d'Amico Group conducted two innovative projects on route optimisation and speed optimisation.

The Route Optimisation project - developed together with a charterer - started at the end of 2020. 

During 2022 the voyages managed with the Route Optimisation procedure led to fuel saving of about 293 Mt, equivalent to a reduction in CO2 emissions of about 911 Mt.

The voyage plan was structured following five different ship priorities to save fuel and emissions, while prioritising in all circumstance the vessel's safety:

• Charter party compliance;

• Instructed speed;

• Special care cargo/vessel;

• On-time arrival;

• Minimum voyage cost (hire+fuel).

The first step of the project consisted of taking the actual route sailed and re-simulating it, by running a computational analysis on the environmental factors - including wind speed and direction, wave height and direction and currents - encountered along the vessel's path, estimating the effects of those factors on the vessel's over-ground speed and fuel consumption.

The second step consisted of simulating the route adjusting it to match the actual departure and arrival times. This simulation allowed to demonstrate that the calculated Fuel Oil Consumption for the re-simulated route closely matched the actual Fuel Oil Consumption reported during the voyage. Thus, it was possible to verify that the unbiased re-simulation accurately matched the actual voyage.

During the third and last step, there was another simulation using a similar procedure to the one detailed above. The result of this simulation, along with a comparison with the output from the actual route, provided a good estimate for how much extra fuel the vessel would have consumed had it followed the intended route. Moreover, several KPIs were measured during the project. 

The Speed optimisation project was entirely developed during 2021, in cooperation with one of d'Amico Group's most important charterers, Total Energies. The aimed to identify the most efficient speed profile over the entire voyage of a vessel and meet the required arrival time or laycan at the lowest fuel consumption and best level of carbon intensity indicator (CII).

The importance of applying Speed Optimisation has gained momentum following the global efforts to reduce Green House Gas (GHG) emissions and the strict targets set by the IMO (MEPC 74, 75, 76, 77 and 78), the Sea Cargo Charter, and other initiatives as mentioned by the IMO's (2018) initial strategy on the reduction of GHG emissions from ships. Operational measures have indeed appeared as one of the prominent short-term measures to achieve such goals.

This project involved a four-week long trans-pacific voyage, which was optimised through a cooperation amongst DIS, GreenSteam, and the charterer Total Energies. The scope of the voyage was to validate the effectiveness of the algorithm and the ship propulsion model behind it, through a real-life trial. The main result achieved was a significant saving in terms of fuel and emissions.

The optimisation involved the following steps:

• advise an "optimal" Speed Over Ground (SOG) profile;

• for each vessel, a Speed-Fuel model was established to predict the expected consumption;

• The Speed-Fuel model considered the weather conditions (forecast) and provided an accurate prediction of fuel consumption.

At the same time, in 2021, the d'Amico Group launched a project to calculate and monitor the attained CII in real time, with the aim of promptly undertaking the corrective actions deemed necessary to improve the CII rating and update in real time the risk profile of DIS' fleet.  Furthermore, after the adoption of the CII correction factors by the MEPC 78 in June 2022, the d'Amico Group has completed in December 2022 the modification of the in-house database (FRIDA) to collect, analyse and include the approved correction factors in the CII formula. 

Innovation and digitalization

The d'Amico Group's environmental and energy performance is improved mainly through the adoption of new technologies that reduce consumption, increase the fleet's energy efficiency and improve maintenance performances.

Robotics technologies

In the future, onshore fleet operators, through a continuous flow of data from the ship, will be able to monitor ships at all times and provide valuable assistance to the crew on board. Fleet managers will be able to analyse data flows received, allowing them to advise the captain and crew on navigation topics, weather routing, fuel consumption, smart maintenance, remote diagnostics, and structure stress analysis. This will help to reduce the risks of human error leading to accidents, increase efficiency and reliability and improve environmental performance. In this respect, the d'Amico Group is working on several fleet innovation and digitalisation projects. 

During 2021, the d'Amico Group's first Remotely Operated Aerial Vehicles (ROAV) (drone) inspections of a cargo oil tank, took place on board the MR tanker High Valor, followed by a ROAV inspection of the MR tanker High Courage. This type of inspection is usually conducted using either staging or by rope access technicians (RAT), with the person in charge suspended on ropes to inspect the tank structures, focusing on areas of high stress, corrugated bulkheads, upper stools and deck heads. 

The ROAV inspection needs to be conducted close-up and requires the thickness of the internal structures to be gauged according to specific guidelines and frequency. The first Ultrasonic Testing (UT) gauging using the ROAV was carried out in the second quarter of 2021 on the MR tanker High Venture, in partnership with the ABS classification society. The drone used for this inspection was specifically assembled with a UT-certified probe, capable of ensuring a strong grip against the surface to be gauged.

One of the Group's main priorities in experimenting these innovations was to reduce the risk factors for humans related to rope access, which includes working at heights for sustained periods of time as well as working in confined spaces. Inspecting the tank with a ROAV allowed the company to conduct a quick and safe inspection of the tanks, thereby allowing them to identify and more efficiently plan for any possible contact-based inspections.

For this purpose, the Technical Office mobilised an experienced two-person ROAV team, consisting of an ROAV pilot and a ROV UT specialist, along with two class surveyors and one technical superintendent.

The inspection of the close-up areas of the tanks was completed within three days, in comparison with rope access which would usually take between six days for the same work and more than 12 days using staging with the vessels in service.

The successful completion of these projects has demonstrated that now it is not only possible to conduct a visual inspection in a confined space, but also UT gauging by drone. ROAV inspection has succeeded not only in removing one of the most significant risks associated with tank inspection (working at heights), but also in producing significant cost and time savings and reducing the impact on the availability of cargo tanks for commercial purpose.

Condition Based Maintenance

DIS adopted and implemented condition-based maintenance (CBM) through specific tools, techniques, hardware and software systems, with the aim of achieving: 

• operational cost savings by increasing the average life of spare parts; 

• higher efficiency and therefore better energy performance; 

• reducing off-hire days through higher machinery and fleet reliability; 

• greater flexibility in the management of maintenance plans;

• better knowledge of machineries and of their behaviour with changing operating conditions. 

CBM involves the adoption of new technologies and techniques such as: 

• video-endoscopy for internal inspection of machinery;

• thermography of electrical equipment for early detection of potential failures by analysing their thermal images;

• vibration analysis of rotating machinery to identify failure trigger points and causes by analysing their vibrational spectrogram.

These have been integrated with more traditional techniques, such as tribology and machinery performance analysis, and are aimed at providing more flexibility in managing maintenance when there are changes in the operating conditions of the vessels and its machinery. 

Through the adoption of CBM, DIS was able to achieve the highest level required by TMSA 3 (Tanker Management and Self-Assessment programme), with respect to maintenance management. As at the end of 2022, almost all of DIS' new constructions delivered from 2013 have been certified PMS-CM (PMS-Condition monitoring) by RINA after positive audits conducted on board confirming that such strategy of maintenance is now approved by the Class. DIS' plan is to further extend the CBM and the relevant certification also to the LR1 fleet with a completion target by the end of 2023. Furthermore, during 2022, DIS vessels enrolled under the vibration monitoring program have replaced the tool to monitor the vibrations with high-performance condition monitoring solutions and DIS started evaluating the possibility of adopting a specific software for the performance analysis of the main engine and diesel generators, with the aim of improving their efficiency.

The growing trends in digitalization and mobile applications have clearly highlighted the need to modernize our fleet's management tools, to better exploit the value of data by treating them as assets. During 2020, the whole d'Amico Group including DIS selected ABS-NS to drive the digital transformation of its fleet management. The project started in September 2020 and was completed in January 2022.

Digitalisation and big data

The amount, variety and speed of information continues to grow rapidly, making data a highly valuable resource for enhancing fleet efficiency and improving environmental performances. Very accurate and reliable real-time monitoring systems have allowed the maritime sector to shift from a culture of generic data to one of accurate and reliable data.

DIS currently monitors the data of 100% of its owned and bareboat vessels. At least one report per vessel is sent every day (with manually entered data) and the average amount of data points for each of these reports is one hundred, equivalent to 6.5 million data points per year. Furthermore, for the large majority of its owned and bareboat vessels, DIS receives digitally every five minutes, data relating to machinery and navigation.

The growing trends in digitalization and mobile applications have clearly highlighted the need to modernize the fleet's management tools to better exploit the value of data by treating them as assets. Big data analysis has become therefore an important decision-making support. The availability and analysis of such data allows DIS to:

• determine the best time to clean the hull/propeller (Hull & Propeller Management ISO 19030);

• evaluate the impact of CO2-saving devices;

• evaluate the condition of low-friction anti-fouling paint;

• validate the ship's performance model by taking into account waves, wind, trim, draught and current;

• assess the hydrodynamic efficiency of its vessels.

Thanks to the adoption of the new Electronic Logbook (ELB), the technical department is now able to perform part of the inspection remotely, with specific reference to the verification of the daily sounding logs, the oil record book part I, the seals log and the production and disposal data for bilge, sludge and garbage. The environmental audit is now part of DIS' routine vessel inspection, with the aim of ensuring the highest environmental compliance while surpassing industry standards.

The digitalization of the majority of the record books (Oil record books, Garbage record book, Cargo record book, Ballast management record book), allows DIS to monitor in real time the operations performed on board for the proper handling and disposal of the bilge water, sludge and waste produced by the vessels. It also provides the technical management department with an important dashboard on the production levels of bilge and sludge by geographical area, days of navigation and season. It is not simply an electronic register, but also a tool that helps DIS to perform operations correctly, in compliance with current environmental and MARPOL regulations, also based on the ships' specifications according to its certificates and as-built drawings.

DIS started to digitise its record books well in advance of the guidelines established in May 2019 by MEPC 74. This confirms DIS' great attention to MARPOL issues and its focus on innovation. After being initially used among a limited number of vessels, at the end of 2020 DIS took the decision to extend the application to its whole fleet, with completion expected in the first quarter of 2023.

To further enhance the resourcefulness of data, the d'Amico Group developed an in-house database called FRIDA, currently employed by DIS and which can receive data directly from vessels and share it both internally, with dedicated templates for each department, and also externally with third parties. FRIDA can check each data reporting received and create an alert to validate each single data point. Recent developments included a complete system able to automatically create and manage all the reports necessary to comply with emissions regulations (IMO and EU directives) as well as internal needs. In particular, in 2022 FRIDA has been further developed to monitor in real time the Carbon Intensity Indicator (CII).

Sea and marine environmental safety 

GRI 2-9 (2021); GRI 304-2 (2016); GRI 306-3 (2016); SASB TR-MT-160a.3; SASB TR-MT-540a.1

The d'Amico Group believes that safety at sea, preventing accidents, the loss of human life, and environmental damage, especially damage to the marine environment, are top priorities that must never be jeopardised. 

The effort of captains, officers and crew members must be preventive rather than reactive. Favouring a proactive approach limits risks and any related costs. Ship captains, officers and crew members comply with the following guidelines every day during navigation and operations:

• zero spills;

• zero accidents;

• all employees are responsible for their own safety and the safety of others;

• there is no corporate goal important enough to sacrifice safety;

• work is well done only if performed safely.

In September 2017, the new IMO Ballast Water Convention entered into force. Ballast water contains a variety of organisms, such as marine and coastal plants and animals from different regions of the world. If taken up in one place and released in another, some organisms may survive and prosper in their new environment. These "non-native species" can have a serious ecological, economic and public health impact on the receiving environment.

To prevent the problem of invasive species from ballast water, the IMO adopted the first International Convention for the Control and Management of Ships' Ballast Water and Sediments in 2004.

DIS, through the d'Amico Group, has prepared and is implementing plans, record books and procedures, not only to comply with the convention's requirements, but most importantly to guarantee the prevention of this kind of pollution.

All new vessels are provided with this equipment while the installation on the remaining existing ships has been completed during 2022. Presently 100% of DIS' owned and bareboat vessels are fitted with Ballast Water Treatment System (BWTS). Furthermore, specific contingency measures are in place to prevent and respond to any failure and improper operation of these systems. During 2023, DIS plans also to complete the required retrofits to obtain the USCG certifications for all its owned and bareboat vessels. 

The d'Amico Group is now focused on improving their BWTS so that they can be used also in situations involving turbid water and the presence of mud. 

Maintenance 

DIS' ships and their machinery and equipment are maintained to always ensure full reliability and extremely high efficiency and to ensure that commercial operations in port and navigation are performed in compliance with the highest safety criteria, in accordance with applicable rules and regulations. All maintenance plans are approved by classification societies and are supported by a computerized system that exchanges data in real time with the d'Amico Group's technical management department.

DIS adopts a preventive maintenance system, not only based on the recommendations and instructions provided by the manufacturers or on recognised standards, but also on the continuous monitoring of equipment conditions, through the integration of the traditional time-based maintenance with Condition-Based maintenance (CBM), combining these different maintenance policies through a risk-analysis approach. Through this approach it possible to: 

• identify critical machinery which, if suddenly damaged, could put the ship or its crew in a situation of danger or could seriously affect safety and the protection of the environment;

• identify all critical spare parts that can immediately restore machinery to working order, should there be any failure. The d'Amico Group has also defined an "optimal inventory" for spare parts based on trading patterns for the vessel, delivery times of spare parts and their intensity of utilisation in particular trades;

• dynamically set the structural inspection frequency based on the quality of construction, trade pattern of the vessel, number of loading and unloading operations and age of the vessel. This approach is a best practise and in line with the requirements of the shipping industry (TMSA).

The maintenance system defines inputs, outputs and performance indicators for each process. The most important indicators considered are:

• fleet reliability;

• fleet availability;

• outstanding maintenance tasks on non-critical machinery;

• outstanding maintenance tasks on critical machinery;

• number of failures on critical machinery as a percentage of total failures;

• number of unplanned maintenance tasks as a percentage of total maintenance tasks;

• drydock planning performance;

• number of sailing inspections/total number of inspections.

The value of the fleet's reliability, which has been well above industry standards during 2022, confirms the excellence of the maintenance system. The value of outstanding maintenance tasks of non-critical equipment for 2022 was well below the target, confirming the growing attention of management to on-board equipment regardless of its criticality. Furthermore, in 2022 d'Amico introduced a more challenging target for the management of critical equipment - "0%" percentage of outstanding maintenance - with the aim of increasing attention to the management of critical machinery.

To further innovate the maintenance management, the development of a Fleet Operating Centre (FOC) with the aim of aggregating a set of key parameters and information selected from different applications available within a common platform, has been studied during 2022 and will be implemented as a pilot project by the end of April 2023. The main objectives of the FOC will be:

• defining a risk profile for each vessel;

• understanding how the ships are operated;

• facilitating the analysis of any triggered alarm;

• monitoring compliance with company instructions and policies.

Recently, an additional feature has been added to the FOC project: monitoring policies developed by the Group for cutting non-essential consumption during the different phases of operation (sailing, anchorage, loading, unloading and cargo handling), with the aim of improving the energy management on board as a key activity in achieving fleet decarbonisation. 

Any non-conformity detected following an inspection or test is documented, reported, reviewed, investigated and analysed to implement the necessary corrective actions. Any defect, malfunction or failure of ship machinery, systems or structure which may have an impact on the safety of personnel or of the ship or on pollution prevention, and which cannot be resolved by the personnel on board, is promptly reported to the competent departments through an electronic reporting system. Moreover, fault analysis and related implementation of preventive actions or "barriers" make the system efficient and reactive.

To verify the need for maintenance of machinery, equipment, structures and technical systems essential for safety and environmental protection, the d'Amico Group has implemented a system of planned visits and periodic inspections which are conducted during navigation by onshore personnel. After the recent implementation of the new software ABS NS, all inspection forms are now digitised.

The meticulous attention to environmental aspects has driven the company to review its MARPOL inspection form, which was completely redesigned to include detailed check-lists with specific reference to business policies, procedures, circular letters, international standards, business tools such as the electronic logbook, engineering requirements such as the oil-to-sea interface, the environmental control system and critical spare parts. Furthermore, according to DIS' policy the superintendent must be present during the tests of the critical equipment (known as "CODE 6"), which are the incinerator, OWS (oil water separator), ODME (oil discharging monitoring equipment), sewage system, BWTS (ballast water treatment system), and IBTS (integrated bilge treatment system).

Ship recycling

To prevent damaging practices when dismantling and recycling end-of-life ships, the International Maritime Organisation (IMO), in agreement with the International Labour Organisation (ILO), has established, through the Hong Kong Convention (HKC), several protocols, criteria and procedures to be adopted for the construction, demolition and eco-friendly recycling of ships and particularly for treating any hazardous waste on board ships.

On 22 October 2013, the European Parliament issued the EU Ship Recycling Regulation (EU SRR) to facilitate faster implementation of the Hong Kong Convention, through surveys of ships and land-based facilities.

The new regulation requires that new ships belonging to EU countries have a verified Inventory of Hazardous Materials (IHM) and a Statement of Compliance on board, and that existing ships belonging to EU countries and ships belonging to non-EU countries that call at EU ports have the IHM and the Statement of Compliance on board by 31 December 2020.

The d'Amico Group has completed a hazardous material inventory on all new constructions and on board its entire existing fleet, providing a complete map of all materials on board, their location and the risk levels for the health and safety of people and the environment.

A dedicated procedure to maintain the inventories, with a Responsible person and a cooperation team has been prepared and named to assure that the Group's Ship Recycling Process is continually updated during material purchase phases and during replacement and repair activities in the dock.

DIS ships are usually sold before the time of recycling, since one of the Group's objectives is to always control a young and efficient fleet.

Waste management 

GRI 306-3 (2020); GRI 306-5 

DIS is committed to reducing the production of waste through specific processes and a corporate policy that focuses on environmental pollution. Waste management on the fleet's vessels is carried out according to a detailed procedure in compliance with IMO/MARPOL 73/7838. This procedure is part of DIS' environmental policy, which uses a combination of complementary initiatives to achieve more environmentally-friendly results, including: 

• reduction of waste generation at the source;

• reuse and recycling; 

• waste treatment on board;

• discharge at the port facility.

The amount of waste produced was reduced by 12.4% from 2021 to 2022, from 1,351.07 m³ to 1,183.82 m³:

• waste discharged at sea - consisting exclusively in food waste - was reduced by 7.9% since 2021;

• ash from incinerator - produced by the incineration of materials permitted by MARPOL (paper and oily rags) - was reduced by 7.1% from 2021;

• waste disposed ashore, as per details in the table below, was reduced by 13.1% from 2021.

Water management

GRI 303-3 (2018); GRI 303-4 

Fresh water

Through a fresh water generator, DIS vessels produced fresh water from sea water at a rate of around 10-15 tons/day in sailing conditions. The fresh water produced is collected in the freshwater storage tanks and from those tanks is directly supplied to: 

• cabin, toilet, galley and laundry for human uses (after sterilization and remineralization); 

• boilers, hot well and main engine cooling jacket for technical uses. 

Rarely the fresh water is supplied by shore:

• when the freshwater generator is out of service;

• when the vessel is in idle conditions for a long time;

• when required for cargo tanks washing.

In addition, the majority of DIS vessels are equipped with an Integrated Bilge Treatment System (IBTS) which enables the vessel to separate the clean drains produced by the ME air cooler and the air conditioning units, from the bilge water. Clean drains, after being tested with a 15 ppm Detector, can be either discharged overboard or collected as technical water in the Aft peak tank to be used for tank cleaning.

The fresh water used by humans, either grey water (showers, wash basins, laundries, and galleys) or sewage (toilets, urinals and hospitals), is disposed at sea in compliance with the relevant regulations.

In 2022, the freshwater generator produced 67,962 litres (+0.3% vs 2021), equal to 93.6% of the total fresh water used.

Tank washing water

All DIS vessels are equipped with an Oil Discharge Monitoring Equipment (ODME), according Marpol Annex I, and a slop tank arrangement to process water resulting from tank washing. In fact, water used for tank cleaning is disposed at sea after being decanted, through the ODME. Recently, DIS performed an upgrading of the ODMEs which now are able to process all tank washing water coming from cargo tanks loaded with biofuel blends. Subject to the provision of regulation 4 of annex I, any discharge at sea is prohibited except when all the following condition are satisfied:

• the vessel is not within a special area;

• the vessel is more than 50 nautical miles from nearest land;

• the vessel is proceeding enroute;

• the instantaneous rate of discharge of oil content does not exceed 30 litres per nautical mile;

• the total quantity of oil discharge into sea does not exceed 1/30,000 of the total quantity of the particular cargo of which the residues formed a part of;

• the vessel has in operation an ODME and a slop tank arrangement.

The increase in the amount of washing water decanted and disposed of through the ODME is explained by the increase in the carriage of cargoes that requires, after unloading, a tank wash before loading the next cargo.

Sewage effluents

All DIS vessels are equipped with a sewage treatment plant with a holding retention tank, approved by the flag administration according to the requirements of MARPOL Annex IV. The discharging of sewage at sea is prohibited except when:

• the vessel has in operation an approved sewage treatment plant which has been certified by the flag administration to meet the operational requirements referred to in regulation 9.1.1 of the MARPOL ANNEX IV and the effluent shall not produce visible floating solids nor cause discoloration of the surrounding water;

• for non-treated sewage at a distance of more than 12 nautical miles from the nearest land, provided that in any case, the sewage that has been stored in the holding tank shall not be discharged instantaneously but at a moderate rate when the ship is sailing and proceeding at not less than 4 knots. The rate of discharge must be approved by the flag administration. 

Any local authority can add additional requirements or establish a Non-Discharge Zone (NDZ) prohibiting the discharge of sewage in their water even if the vessel is equipped with a sewage treatment plant approved by the flag administration. All chemicals used for tank washing are environmentally friendly.

Grey water effluent

All DIS' vessels are equipped with a means of retention of grey waters (grey water tank) to be used in zones where discharging is prohibited. DIS' environmental policy includes, according to the requirement of Vessel General Permits (VGP), specific analysis to verify the presence of BOD (biochemical oxygen demand) and COD (chemical oxygen demand) pollutants.

Grey water is still not regulated by international regulations but mainly by local regulations. DIS has in place a specific procedure to guide the ship's crew on how to treat grey water in the different regions.

Supplier environmental assessment

GRI 308-1 (2016)

The d'Amico Group has a register of suppliers selected based on their reliability, quality, price and delivery times. The suppliers included in this list must meet the following criteria: 

• Possession of certifications of compliance with ISO 9001 and ISO 14001 standards, obtained from a recognized third party, for products and services that have an impact on the environment;

• Compliance with d'Amico Group's requirements regarding consumption and energy efficiency.

For suppliers belonging to the Environment and Safety category, the valuation is more stringent because the final ranking includes an assessment of the suppliers' level of awareness and ability to control the environmental impacts of their activities.

Human resources

GRI 3-3 (2021)

The professional and human development of our employees is a fundamental value for DIS. DIS considers its employees as one its most important assets and therefore aims to promote an environment in which wellbeing, diversity, inclusion and teamwork are amongst the pillars of its organization. DIS' goal is to promote a workplace that stimulates high performance and guarantees an adequate work-life balance. 

People care has been an important element for DIS over the years and proven a very powerful tool for team building and corporate engagement. 

Through an attention to the individual and an assessment of his unique qualities and strengths, DIS aims to find the most suitable opportunities for each of its employees within the organization. DIS promotes meritocracy and a constant and open dialogue between managers and employees, encouraging empowerment and stimulating each of its employees to aim for and attain high goals, also by assisting them in the development of a wide range of skills. The Group believes these are all fundamental elements which allow it to attract the right candidates and retain the best talents.

People who work for the Company

GRI 2-7 (2021)

As at 31 December 2022, DIS employed 593 seagoing personnel (96% of total) and 24 onshore personnel (4% of total) Please also refer to note n.7 of the Financial Statements, Personnel. In addition, as at 31 December 2022, 8 employees working in the Chartering and Operations departments provided services exclusively to DIS through intercompany contracts with two related parties, d'Amico Shipping Singapore and d'Amico Shipping USA.

Onshore personnel

The number of onshore employees was stable over the three years 2020-2022. In 2022, women represented 41.7% of DIS' personnel, with this proportion having risen from 37.5% in 2021. Also, in 2022 30.8% of DIS' managers and top managers were women. DIS can also count on an experienced but young workforce with 54.2% of its employees in the 30 to 50 years' old age bracket.