Current Report by Foreign Issuer (Form 6-K)

Table of Contents

Table of Contents

NAVIGATOR HOLDINGS LTD.

REPORT ON FORM FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

INDEX

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Management's Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references in this report to "Navigator Holdings," "our," "we," "us" and the "Company" refer to Navigator Holdings Ltd., a Marshall Islands corporation. All references in this report to our wholly-owned subsidiary "Navigator Gas L.L.C." refer to Navigator Gas L.L.C., a Marshall Islands limited liability company. As used in this report, unless the context indicates or otherwise requires, references to "our fleet" or "our vessels" refers to the 38 vessels we owned and operated as of June 30, 2021.

This section should be read in conjunction with the interim financial statements and notes thereto presented elsewhere in this report, as well as the audited historical consolidated financial statements and notes thereto of Navigator Holdings Ltd. included in our Annual Report on Form filed with the United States Securities and Exchange Commission, or the SEC, on May 17, 2021 (the "2020 Annual Report"). Among other things, those financial statements include more detailed information regarding the basis of presentation for the following information. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and are presented in U.S. Dollars unless otherwise indicated.

Overview

We are the owner and operator of the world's largest fleet of handysize liquefied gas carriers. We also own a 50% share in an ethylene export marine terminal at Morgan's Point, Texas on the Houston Ship Channel (the "Marine Export Terminal") through a joint venture (the "Export Terminal Joint Venture").

On August 4, 2021, we announced that we acquired the fleet and business activities of Ultragas ApS ("Ultragas"), adding an additional 18 vessels to our fleet. The transaction united two leading gas shipping companies. Navigator's combined fleet now consists of 56 semi- or fully-refrigerated liquefied gas carriers, 22 of which are ethylene and ethane capable.

Following the acquisition, our handysize liquefied gas carrier fleet now consists of 40 semi- or fully-refrigerated vessels. We define handysize liquefied gas carriers as those liquefied gas carriers with capabilities between 15,000 and 24,999 cubic meters, or "cbm". In addition, we have five larger 37,300 - 38,000 cbm midsize liquefied gas carriers, four of which are ethylene/ ethane-capable semi-refrigerated liquefied gas carriers and 11 smaller liquefied gas carriers, ranging in size from 3,770 to 12,000 cbm which are operated through a independently managed pool. Since April 2020, we collaborated with Pacific Gas Pte. Ltd. and Greater Bay Gas Co. Ltd. to form and manage the Luna Pool, which includes nine of the Company's ethylene capable handysize vessels and five ethylene capable handysize vessels from Greater Bay Gas Co. Ltd.

Our handysize liquefied gas carriers typically transport LPG on short- or medium-haul routes that may be uneconomical for smaller vessels and can call at ports that are unable to support larger vessels due to limited onshore capacity, absence of fully-refrigerated loading infrastructure and/or vessel size restrictions. These handysize liquefied gas carriers are amongst the largest semi-refrigerated vessels in the world, which also makes them capable of transporting petrochemicals on long routes, typically intercontinental. Our midsize ethylene/ethane-capable semi-refrigerated gas carriers enable long-haul transportation of ethylene/ethane that may be uneconomical for smaller vessels.

The construction of the Marine Export Terminal was completed in December 2020 with the commissioning of the 30,000 ton cryogenic storage tank and its entering into operations. The Marine Export Terminal has the capacity to export approximately one million tons of ethylene per year and provides the capability to load ethylene at rates of 1,000 tons per hour. A number of offtake agreements have been entered into effective on January 1, 2021, which have minimum terms of five years and commit the counterparties to export a minimum of 938,000 tons of ethylene through the terminal annually.

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Our Fleet

The following table sets forth information, as of November 24, 2021 for the vessels that we owned as of June 30, 2021:

*denotes our owned vessels that operate within the Luna Pool

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Recent Developments

Ultragas Transaction

On August 4, 2021, the Company entered into the previously announced transaction with Naviera Ultranav Limitada ("Ultranav") to combine the Ultragas fleet and business activities with Navigator by acquiring two entities, Othello Shipping Company S.A. with its 18 wholly owned vessels owning entities and Ultragas ApS, (the vessels' operator) with its subsidiary (Ultraship, the technical manager), and associated entities UltraShip Crewing and Unigas Intl B.V.(the pool in which 11 of the 18 vessels operate). The acquired fleet of 18 vessels, which has a provisional book value of approx. $377.0 million, comprises:

The combined fleet of 56 vessels will enhance our capability to provide flexibility, choice and support to our customers.

In line with the original terms of the transaction, announced on April 12, 2021, the acquisition price of the entities acquired comprised of approximately 21.2 million new shares of the Company's common stock issued to Ultranav as well as the Company assuming the acquired entities $175.2 million of net debt.

On September 28, 2021, the Company agreed to sell one of the older acquired vessels, the Happy Bride, a 1999 built 6,400 cbm LPG carrier to a third party for $4.75 million. The sale completed on October 12, 2021.

Market Trends

The Texas-freeze closed the ethylene arbitrage between the U.S. and the rest of the world during March and April of 2021 resulting in minimal ethylene exports from North America. During this period the vast majority of ethylene crackers in Texas and Louisiana that were impacted quickly commenced the necessary repairs and started ramping up production, albeit at less than maximum capacity. The available production was however sufficient to satisfy strong domestic demand and export opportunities. Consequently, the domestic ethylene price fell from a high of $0.64 per gallon to $0.26 per gallon, resulting in very healthy international ethylene arbitrage. Exports again began to flow from the Morgan's Point Marine Export Terminal and the nearby Targa-owned terminal, which combined exported approximately 80,000mts during each month of June and July, and half of August. Towards the end of the quarter both the delayed of Baystar's new 600,000mts ethylene cracker, together with unplanned stoppages at Westlake, Sasol and Lyondell crackers, coupled with already low ethylene inventory levels post Texas Freeze, pushed U.S. ethylene prices higher to $0.55 per gallon, leading to a reduction in U.S. ethylene exports. U.S. domestic prices have since reverted to about $0.40 per gallon with more exports flowing to Europe. The pricing forecast for U.S. ethylene remains in backwardation due to the continued price advantage of domestic ethane cracker feedstock, which has remained very competitive within a band of $0.10 to $0.11 per gallon throughout 2021. While North American ethylene export volumes have been volatile throughout the year, ethane demand has increased providing employment opportunities for our ethane capable fleet. With rising oil prices comes more substitution of naphtha as a cracker feedstock by ethane. The North American propylene deficit has in parallel provided increased demand for propylene transportation to the U.S. and the Navigator Gas fleet has capitalized on this surge of imports and has experienced record high propylene volumes. The vessels are currently utilizing backhaul opportunities by transporting propylene from Asia to the U.S. Gulf.

Four Navigator handysize semi-refrigerated vessels have now been delivered to service the Pembina Canadian West Coast LPG export terminal. These vessels have safely, reliably and efficiently provided a means for the Canadian producers to deliver their cargo to Asian customers, without the need or cost of a Panama Canal transit. This new Transpacific handysize LPG trade is set to expand in October when a fifth vessel is scheduled to enter service on this route. U.S. LPG pricing remains at a high level of around $1.00 per gallon, which is double the price compared to the same period in 2020. The high cost of U.S. propane has dampened North American LPG exports during the last few months according to EIA despite an increasing level of natural gas liquids production within the continent. The forecasted strong oil price environment will continue to support gas production and use.

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Results of Operations for the Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2021

The following table compares our operating results for the three months ended June 30, 2020 and 2021:

. Operating revenue increased by $0.3 million or 0.4% to $80.2 million for the three months ended June 30, 2021, from $79.9 million for the three months ended June 30, 2020. This increase was principally due to:

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The following table presents selected operating data for the three months ended June 30, 2020 and 2021, which we believe are useful in understanding the basis for movement in our operating revenues.

Reconciliation of Operating Revenue to TCE rate

The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.

. Operating revenue - Luna Pool collaborative arrangement, which was our share of the other Luna Pool participants revenue increased by $3.0 million to $5.6 million for the three months ended June 30, 2021, compared to $2.6 million for the three months ended June 30, 2020. This increase relates, in part, to having all fourteen vessels in the Luna Pool for the quarter ended June 30, 2021, compared to an average of 10 vessels for the quarter ended June 30, 2020 and in part to improved utilization and time charter rates for the Luna Pool vessels for the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

. Brokerage commissions, which typically vary between 0.625% and 2.5% of operating revenue, decreased by 25.4%, to $1.0 million for the three months ended June 30, 2021, from $1.3 million for the three months ended June 30, 2020, primarily due to a charter negotiation direct with the charterer where no broker commission is payable.

Voyage expenses increased by 20.1% to $17.7 million for the three months ended June 30, 2021, from $14.7 million for the three months ended June 30, 2020. This was primarily due to an increase in the price of bunkers used by our vessels, despite a reduction in the number of voyage charter days which decreased by approximately 12.0% during the three months ended June 30, 2021, as compared to the three months ended June 30, 2020. These increased voyage costs are typically pass through costs, corresponding to an increase in operating revenue of the same amount.

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. . Voyage expenses - Luna Pool collaborative arrangement, which was our other Luna Pool participants share of our revenue, was $5.7 million for the three months ended June 30, 2021 compared to $3.0 million for the three months ended June 30, 2020. The Luna Pool became operational during the quarter ended June 30, 2020, and this $2.6 million increase was due to having all fourteen vessels in the Luna Pool for the quarter ended June 30, 2021, compared to an average of 10 vessels for the quarter ended June 30, 2020, as well as improved utilization and time charter rates for the Luna Pool vessels for the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

. Vessel operating expenses increased by 8.8% to $28.8 million for the three months ended June 30, 2021, from $26.5 million for the three months ended June 30, 2020. Average daily vessel operating expenses increased by $674 per vessel per day, or 8.8%, to $8,336 per vessel per day for the three months ended June 30, 2021, compared to $7,662 per vessel per day for the three months ended June 30, 2020. This was primarily due to a general reduction in vessel operating expenses across the fleet in the three months ended June 30, 2020, as a result of which resulted in operating costs being deferred to subsequent quarters.

. Depreciation and amortization expense increased by 1.7% to $19.5 million for the three months ended June 30, 2021, from $19.2 million for the three months ended June 30, 2020. Depreciation and amortization expense included amortization of capitalized drydocking costs of $2.4 million and $2.0 million for the three months ended June 30, 2021, and 2020 respectively.

During June 2021, a fire on Navigator Neptune caused extensive damage in the engine room to power cables and the auxiliary engines. The estimated impairment to the vessel relating to parts that were damaged in the fire is expected to be $5.4 million. The costs of the repairs are the subject of an insurance claim, subject to a $100,000 deductible, and therefore the impairment is offset by the insurance receivable.

. General and administrative costs increased by $1.3 million or 29.8% to $5.8 million for the three months ended June 30, 2021, from $4.5 million for the three months ended June 30, 2020. The increase in general and administrative costs was primarily as a result of a gain on a revaluation of an Indonesian Rupiah bank account last year, for the three months ended June 30, 2020, as well as an increase of $0.4 million on D&O insurances for the three months ended June 30, 2021.

Other income was $0.1 million for both the three months ended June 30, 2021, and June 30, 2020, and consists of management fees for commercial and administrative activities performed by the Company for the Luna Pool.

Results

. Exchange gains and losses relate to movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollar at the prevailing exchange rate as of June 30, 2021. The foreign currency exchange gain of $0.3 million for the three months ended June 30, 2021, was as a result of the Norwegian Kroner weakening against the U.S. dollar, being NOK 8.6 to USD 1.0 as of June 30, 2021, compared to NOK 8.5 to USD 1.0 as of March 31, 2021. The foreign currency exchange loss of $4.9 million for the three months ended June 30, 2020, was as a result of the Norwegian Kroner strengthening against the U.S. dollar, being NOK 9.7 to USD 1.0 as of June 30, 2020, compared to NOK 10.5 to USD 1.0 as of March 31, 2020.

. The unrealized loss on derivative instruments of $0.3 million for the three months ended June 30, 2021, relates to the fair value movement in our interest rate swaps and cross-currency interest rate swap and is primarily due to the weakening of the Norwegian Kroner against the U.S. dollar. We entered into the interest rate swaps in July 2020. The unrealized gain on the cross-currency interest rate swap for the three months ended June 30, 2020, was $6.4 million.

. Interest expense decreased by $2.5 million, or 22.3%, to $8.6 million for the three months ended June 30, 2021, from $11.1 million for the three months ended June 30, 2020. This is primarily as a result of a reduction in US LIBOR interest rates.

. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity ("VIE"), incorporated in Malta. For the three months ended June 30, 2021, we had a tax charge of $190,000 compared to taxes of $168,000 for the three months ended June 30, 2020.

. The share of result of the Company's 50% ownership in the Export Terminal Joint Venture was a profit of $2.0 million for the three months ended June 30, 2021, primarily as a result of increased volumes through the Marine Export Terminal, compared to a loss of $0.2 million for the three months ended June 30, 2020, as a result of initial startup volumes following the operational commencement of the Marine Export Terminal in January 2020.

We have entered into a sale and leaseback arrangement with a wholly-owned special purpose vehicle ("lessor SPV") of a financial institution. While we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the net income attributable to the financial institution of $0.4 million and $0.5 million is presented as the interest in our financial results for the three months ended June 30, 2021 and 2020 respectively.

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Results of Operations for the Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2021

The following table compares our operating results for the six months ended June 30, 2020 and 2021:

. Operating revenue, net of address commission, decreased by $0.5 million or 0.3% to $160.7 million for the six months ended June 30, 2021, from $161.1 million for the six months ended June 30, 2020. This decrease was principally due to:

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The following table presents selected operating data for the six months ended June 30, 2020 and 2021, which we believe are useful in understanding the basis for movement in our operating revenues.

Reconciliation of Operating Revenue to TCE rate

The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.

. Operating revenue - Luna Pool collaborative arrangement, which was our share of the other Luna Pool participants revenue, was $10.8 million for the six months ended June 30, 2021 compared to $2.6 million for the six months ended June 30, 2020. The Luna Pool became operational during the quarter ended June 30, 2020 and consequently there was no Operating Revenue - Luna Pool collaborative arrangement during the first three months ended March 31, 2020 and a reduced share of the other Luna Pool participants revenue during the initial quarter of its operations.

. Brokerage commissions, which typically vary between 0.625% and 2.5% of operating revenue, reduced by 15.4%, to $2.2 million for the six months ended June 30, 2021, from $2.6 million for the six months ended June 30, 2020, primarily due to a charter negotiation direct with the charterer where no broker commission is payable.

Voyage expenses increased by 3.2% to $33.3 million for the six months ended June 30, 2021, from $32.3 million for the six months ended June 30, 2020. This was primarily due to an increase in the price of bunkers used by our vessels. These increased voyage costs are pass through costs, corresponding to an increase in operating revenue of the same amount.

. . Voyage expenses - Luna Pool collaborative arrangement, which was our other Luna Pool participants share of our revenue, was $9.8 million for the six months ended June 30, 2021, an increase of $6.8 million compared to the $3.0 million for the six months ended June 30, 2020. The Luna Pool became operational during the quarter ended June 30, 2020 and consequently there were no Voyage Expenses - Luna Pool collaborative arrangement during the first three months ended March 31, 2020 and a reduced share of the other Luna Pool participants share of our revenue during the initial quarter of its operations.

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. Vessel operating expenses increased by 3.6% to $55.8 million for the six months ended June 30, 2021, from $53.9 million for the six months ended June 30, 2020. Average daily vessel operating expenses increased by $322 per vessel per day, or 4.1%, to $8,115 per vessel per day for the six months ended June 30, 2021, compared to $7,793 per vessel per day for the six months ended June 30, 2020. This was primarily due to a general reduction in vessel operating expenses across the fleet in the six months ended June 30, 2020 as a result of which resulted in operating costs being deferred to subsequent quarters.

. Depreciation and amortization expense increased by 1.0% to $38.7 million for the six months ended June 30, 2021, from $38.4 million for the six months ended June 30, 2020. Depreciation and amortization expense included amortization of capitalized drydocking costs of $4.5 million and $4.1 million for the six months ended June 30, 2021 and 2020 respectively.

During June 2021, a fire on Navigator Neptune caused extensive damage in the engine room to power cables and the auxiliary engines. The estimated impairment to the vessel relating to parts that were damaged in the fire is expected to be $5.4 million. The costs of the repairs are the subject of an insurance claim, subject to a $100,000 deductible, and therefore the impairment is offset by the insurance receivable.

. General and administrative costs increased by $1.1 million or 10.4% to $12.1 million for the six months ended June 30, 2021, from $11.0 million for the six months ended June 30, 2020. This increase in general and administrative costs was primarily due to additional insurance costs of $0.9 million for D&O insurances.

Results

. Exchange gains and losses relate to movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollars at the prevailing exchange rate as of June 30, 2021. The foreign currency exchange gain of $0.3 million for the six months ended June 30, 2021 was as a result of the Norwegian Kroner weakening against the U.S. dollar, being NOK 8.6 to USD 1.0 as of June 30, 2021 compared to NOK 8.5 to USD 1.0 as of December 31, 2020. The foreign currency exchange gain of $6.6 million for the six months ended June 30, 2020 was as a result of the Norwegian Kroner weakening against the U.S. dollar, being NOK 9.7 to USD 1.0 as of June 30, 2020 compared to NOK 8.8 to USD 1.0 as of December 31, 2019.

. The unrealized gain on derivative instruments of $0.3 million for the six months ended June 30, 2021 relates to the fair value movement in our interest rate swaps and cross-currency interest rate swap and is primarily due to the weakening of the Norwegian Kroner against the U.S. dollar. We entered into the interest rate swaps in July 2020. The unrealized loss on the cross-currency interest rate swap for the six months ended June 30, 2020 was $7.6 million as a result of the significant volatility between the Norwegian Kroner and the U.S. dollar due to uncertainties surrounding during the six months ended June 30, 2020.

. Interest expense decreased by $5.1 million, or 22.3%, to $17.6 million for the six months ended June 30, 2021, from $22.7 million for the six months ended June 30, 2020. This is primarily as a result of a reduction in US LIBOR interest rates.

. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity ("VIE"), incorporated in Malta. For the six months ended June 30, 2021, we had a tax charge of $335,000, similar to taxes of $336,000 for the six months ended June 30, 2020.

. The share of result of the Company's 50% ownership in the Export Terminal Joint Venture was a profit of $1.4 million for the six months ended June 30, 2021 compared to a loss of $3.2 million for the six months ended June 30, 2020, primarily as a result of increased volumes of product through the Marine Export Terminal during the six months ended June 30, 2021, compared to the initial volumes for the six months ended June 30, 2020, following the terminal becoming operational in December 2019.

We have entered into a sale and leaseback arrangement with a wholly-owned special purpose vehicle ("lessor SPV") of a financial institution. While we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the net income attributable to the financial institution of $0.8 million and $0.9 million is presented as the interest in our financial results for the six months ended June 30, 2021 and 2020 respectively.

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Liquidity and Capital Resources

Liquidity and Cash Needs

Our primary sources of funds are cash and cash equivalents, cash from operations, undrawn bank borrowings and proceeds from bond issuances. As of June 30, 2021, we had cash, cash equivalents and restricted cash of $96.4 million along with $30.2 million available to be drawn down on two of our secured revolving credit facilities and a $7.5 million unused letter of credit available to be drawn on the Terminal Facility to be used solely to make capital repayments on that facility. As of June 30, 2021, our secured term loan facilities and revolving credit facilities require that the borrowers have liquidity (including undrawn available lines of credit with a maturity exceeding 12 months) of no less than (i) $25.0 million or $35.0 million, or (ii) 5% of Net Debt or total debt as applicable, whichever is greater, which was $41.9 million, as of June 30, 2021. We are required to maintain certain minimum liquidity amounts in order to comply with our various debt instruments. Please see "-Secured Term Loan Facilities and Revolving Credit Facilities" and "-2020 Senior Unsecured Bonds" and "-2018 Senior Secured Bonds" below.

On August 4, 2021, we assumed additional debt of $192.7 million associated with the acquisition of the various entities from Ultranav, along with $17.5 million in cash. The debt consists of five bank loans, secured on a total of 13 of the 18 vessels acquired, the other five vessels are unencumbered. The bank loans, which in aggregate have half yearly repayment of approximately $13.5 million, mature from June 2026 and attract interest at U.S. Libor plus a margin of between 1.9% and 2.65%. In each case U.S. Libor has been fixed by an interest rate swap of approximately 2.0%. The financial covenants on these five bank loans were modified to be consistent with those of Navigator, as detailed below.

Included within cash, cash equivalents as of June 30, 2021, is an amount of $0.1 million relating to the cash belonging to the lessor VIE that is unavailable to the Company, but which we are required to consolidate under U.S. GAAP (December 31, 2020: $0.2 million). Please read Note 16-Variable Interest Entities to the unaudited condensed consolidated financial statements for additional information.

Our primary uses of funds are drydocking expenditures, voyage expenses, vessel operating expenses, general and administrative costs, expenditures incurred in connection with ensuring that our vessels comply with international and regulatory standards, financing expenses and repayment of bank loans. Capital contributions for the investment in the Export Terminal Joint Venture were a primary uses of funds, but these have now been completed. In addition to operating expenses, our medium-term and long-term liquidity needs relate to debt repayments, potential future newbuildings or acquisitions and any further development of the Marine Export Terminal or other projects.

As of June 30, 2021, we had made total capital contributions to the Export Terminal Joint Venture of $146.5 million for our 50% share of the capital cost for the construction of the Marine Export Terminal. This includes a final capital contribution of $4.0 million made on January 21, 2021, funded by drawing down on the Terminal Facility. During the six months ended June 30, 2021, we received dividend distributions from the Export Terminal Joint Venture of $6.9 million, of which $6.0 million is presented as cash flows from investing activities and $0.9 million is presented as cash flows from operating activities within the unaudited condensed consolidated statements of cash flows. Please read Note 5- Investment in Equity Accounted Joint Ventures to the unaudited condensed consolidated financial statements for additional information.

We believe, given our current cash holdings, that if market conditions remain relatively stable throughout 2021 and 2022, our financial resources, including the cash expected to be generated within the year, will be sufficient to meet our liquidity and working capital needs for the next twelve months, taking into account any existing capital commitments and debt service requirements. If market conditions worsen significantly due to the current pandemic of then our cash resources may decline to a level that may put at risk our ability to service timely our debt and capital expenditure commitments.

Capital Expenditures

Liquefied gas transportation is a capital-intensive business, requiring significant investment to maintain an efficient fleet and to stay in regulatory compliance.

We currently have no newbuildings on order. However, we may place newbuilding orders or acquire additional vessels as part of our growth strategy, or may invest further in terminal infrastructures, such as expanding our existing Marine Export Terminal or other import or export terminals.

Cash Flows

The following table summarizes our cash, cash equivalents and restricted cash provided by (used in) operating, investing and financing activities for the six months ended June 30, 2020 and 2021:

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. Net cash provided by operating activities for the six months ended June 30, 2021 increased to $54.7 million, from $32.7 million for the six months ended June 30, 2020, an increase of $22.0 million. This increase was primarily due to an improvement in net income, and changes in working capital, which were partially offset by increased payments for drydocking costs during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Net cash flow from operating activities depends upon charter rates attainable, fleet utilization, fluctuations in working capital balances, repairs and maintenance activity, amount and duration of drydocks, changes in interest rates and foreign currency rates.

We are required to drydock each vessel once every five years until it reaches 15 years of age, after which we drydock vessels every two and a half to three years. Drydocking each vessel takes approximately 30 days in total. Drydocking days generally include approximately 5-10 days of voyage time to and from the drydocking shipyard and approximately days of actual drydocking time. Seven of our vessels completed their respective drydockings during the six months ended June 30, 2021, with a further seven vessels scheduled for drydocking during the remainder of 2021.

We spend significant amounts of funds for scheduled drydocking (including the cost of classification society surveys) of each of our vessels. As our vessels age and our fleet expands, our drydocking expenses will increase. We estimate the current cost of the five-year drydocking of one of our vessels is approximately $1.0 million, the drydocking cost is approximately $1.3 million, and the 15 year and 17 year drydocking costs are approximately $1.5 million each. Ongoing costs for compliance with environmental regulations are primarily included as part of our drydocking, such as the requirement to install ballast water treatment plants, and classification society survey costs, with a balance included as a component of our operating expenses.

. Net cash provided by investing activities of $1.9 million for the six months ended June 30, 2021 primarily consisted of $6.0 million in distributions received from equity accounted joint ventures exceeding our cumulative equity in earnings (please read Note 5- Investment in Equity Accounted Joint Ventures to the unaudited condensed consolidated financial statements for additional information) and insurance recoveries on existing damage claims of $0.4 million, offset by our investment of $4.0 million in capital contributions made to our Export Terminal Joint Venture and investment of $0.3 million in ballast water treatment systems which are being retrofitted on our vessels during dry dock to comply with the requirements of the Ballast Water Management Convention.

Net cash used in investing activities of $7.9 million for the six months ended June 30, 2020 primarily consisted of an increase of $7.5 million in our investment in the Marine Export Terminal Joint Venture and our investment of $1.0 million in ballast water treatment systems which are being retrofitted on our vessels during drydock to comply with the requirements of the Ballast Water Management Convention, offset by insurance recoveries of $0.6 million.

. Net cash used in financing activities of $19.5 million for the six months ended June 30, 2021, relates to regular quarterly repayments on our secured term loan facilities of $34.1 million and an extemporaneous repayment of $3.3 million on the Navigator Aurora Facility held within our consolidated lessor VIE, offset by a final draw down of $18.0 million from the Terminal Facility.

Net cash used in financing activities of $29.7 million for the six months ended June 30, 2020, relates to regular quarterly repayments on our secured term loan facilities of $33.3 million and an extemporaneous repayment of $3.7 million on the Navigator Aurora Facility held with our consolidated lessor VIE, offset by a draw down of $7.5 million on the Terminal Facility in April 2020.

Terminal Facility

. On March 29, 2019, Navigator Ethylene Terminals LLC ("Marine Terminal Borrower"), our wholly-owned subsidiary, entered into a Credit Agreement (the "Terminal Facility") with ING Capital LLC and SG Americas Securities, LLC for a maximum principal amount of $75.0 million, to be used first for the payment of project costs relating to our Marine Export Terminal, as summarized in the table below. For additional information regarding the Terminal Facility, please read "Item 5-Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Terminal Facility" in the 2020 Annual Report.

The table below summarizes the Terminal Facility as of June 30, 2021:

Under the Terminal Facility, the Marine Terminal Borrower must maintain a minimum debt service coverage ratio (as defined in the Terminal Facility) for the prior four calendar fiscal quarters (or shorter period of time if data for the prior four fiscal quarters is not available) of no less than 1.10 to 1.00 from the beginning of the second full fiscal quarter of the term loan, being September 30, 2021.

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Following completion of the Marine Export Terminal, the Marine Terminal Borrower can only pay dividends if the Marine Terminal Borrower satisfies certain customary conditions to paying a dividend, including maintaining a debt service coverage ratio for the immediately preceding four consecutive fiscal quarters and the projected immediately succeeding four consecutive fiscal quarters of not less than 1.20 to 1.00 and no default or event of default has occurred or is continuing. The Terminal Facility also limits the Marine Terminal Borrower from, among other things, incurring indebtedness or entering into mergers and divestitures. The Terminal Facility also contains general covenants that will require the Marine Terminal Borrower to vote its interest in the Export Terminal Joint Venture to cause the Export Terminal Joint Venture to maintain adequate insurance coverage and maintain its property (but only to the extent the Marine Terminal Borrower has the power under the organizational documents of the Export Terminal Joint Venture to so cause such actions).

On May 6, 2021, the Company obtained a waiver from the lenders under the Terminal Facility, which is retrospective with effect from the date of its inception, to correct a technical inconsistency in the Terminal Facility, involving a restrictive covenant relating to taking affirmative action regarding the treatment of tax status of the borrower as a corporation for U.S. federal, state or local income tax purposes. The waiver required among other things, an amendment to the credit agreement and other loan documentation to remediate the inconsistency and to set aside and fund a tax reserve, based on the subsequent three months' tax liabilities. The terms of the waiver were complied with and the amendment entered into on August 4, 2021.

Secured Term Loan Facilities and Revolving Credit Facilities

. Navigator Gas L.L.C., our wholly-owned subsidiary, and certain of our vessel-owning subsidiaries have entered into various secured term loan facilities and revolving credit facilities as summarized in the table below. For additional information regarding our secured term loan facilities and revolving credit facilities, please read "Item 5-Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Secured Term Loan Facilities and Revolving Credit Facilities" in the 2020 Annual Report.

The table below summarizes our secured term loan and revolving credit facilities as of June 30, 2021:

The secured term loan facilities and revolving credit facilities contain financial covenants requiring the borrowers, among other things, to ensure that:

The secured facilities provide that the borrowers may not declare or pay dividends to shareholders out of operating revenues generated by the vessels securing the indebtedness if an event of default has occurred and is continuing. The secured term loan facilities and revolving credit facilities also limit the borrowers from, among other things, incurring indebtedness or entering into mergers and divestitures. The secured facilities also contain general covenants that will require the borrowers to maintain adequate insurance coverage and to maintain their vessels. In addition, the secured term loan facilities include customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and warranty, a cross-default to other indebtedness and with security documents.

The borrowers are also required to deliver semi-annual compliance certificates, which include valuations of the vessels securing the applicable facility from an independent ship broker. Upon delivery of the valuation, if the market value of the collateral vessels is less than 125% to 135% of the outstanding indebtedness under the applicable facilities, the borrowers must either provide additional collateral or repay any amount in excess of 125% to 135% of the market value of the collateral vessels, as applicable. This covenant is measured semi-annually on June 30 and December 31. As of June 30, 2021, we had an aggregate excess of $429.7 million, between 22% and 53% above the levels required by these covenants, in addition to four additional vessels that are unsecured.

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Other than as stated, our compliance with the financial covenants listed above is measured as of the end of each fiscal quarter. As of June 30, 2021, we were in compliance with all covenants under the secured term loan facilities and revolving credit facilities.

2018 Senior Secured Bonds

. On November 2, 2018, we issued senior secured bonds in an aggregate principal amount of 600 million Norwegian Kroner ("NOK") (approximately $71.7 million) with Nordic Trustee AS, as bond trustee and security agent (the "2018 Bonds"). The net proceeds were used to partially finance our portion of the capital cost for the construction of the Marine Export Terminal. The 2018 Bonds are governed by Norwegian law and are listed on the Nordic ABM which is operated and organized by Oslo Børs ASA. Please read Note 7-Senior Secured Bond to the unaudited condensed consolidated financial statements for additional information.

. The 2018 Bonds are secured by four of the Company's ethylene capable semi-refrigerated liquefied gas carriers.

. Interest on the 2018 Bonds is payable quarterly at a rate equal to the NIBOR plus 6.0% per annum, calculated on a 360-day year basis. We have entered into a cross-currency interest rate swap agreement whereby interest is payable at a rate equal to the 3-month LIBOR plus 6.608% throughout the life of the bond. Please read Note 9-Derivative Instruments Accounted for at Fair Value to the unaudited condensed consolidated financial statements for additional information.

The 2018 Bonds will mature in full on November 2, 2023.

. We may redeem the 2018 Bonds, in whole or in part, at any time beginning on or after November 2, 2021. Any 2018 Bonds redeemed from November 2, 2021 until November 1, 2022, are redeemable at 102.4% of par, from November 2, 2022 until May 1, 2023, are redeemable at 101.5% of par, and from May 2, 2023 to the maturity date are redeemable at 100% of par, in each case, in cash plus accrued interest. Additionally, upon the occurrence of a "Change of Control Event" (as defined in the bond agreement governing the 2018 Bonds (the "2018 Bond Agreement")), the holders of 2018 Bonds have an option to require us to repay such holders' outstanding principal amount of 2018 Bonds at 101% of par, plus accrued interest.

. The 2018 Bond Agreement contains financial covenants requiring us, among other things, to ensure that:

Our compliance with the covenants listed above is measured as of the end of each fiscal quarter. As of June 30, 2021, we were in compliance with all covenants under the 2018 Bonds.

The 2018 Bond Agreement provides that we may declare dividends so long as such dividends do not exceed 50% of our cumulative consolidated net profits after taxes since January 1, 2020. The 2018 Bond Agreement also limits us and our subsidiaries from, among other things, entering into mergers and divestitures, engaging in transactions with affiliates or incurring any additional liens which would have a material adverse effect. In addition, the 2018 Bond Agreement includes a put option exercisable following a change in control and customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, false representation and warranty, a cross-default to other indebtedness, the occurrence of a material adverse effect, or our insolvency or dissolution.

2020 Senior Unsecured Bonds

. On September 10, 2020, we issued senior unsecured bonds in an aggregate principal amount of $100.0 million with Nordic Trustee AS as the bond trustee (the "2020 Bonds"). The net proceeds of the issuance of the 2020 Bonds were used to redeem in full all of our outstanding 2017 Bonds. The 2020 Bonds are governed by Norwegian law and listed on the Nordic ABM which is operated and organized by Oslo Børs ASA.

. Interest on the 2020 Bonds is payable at a fixed rate of 8.0% per annum, calculated on a year basis. Interest is payable semi- annually on March 10 and September 10 of each year.

The 2020 Bonds mature in full on September 10, 2025 and become repayable on that date.

. We may redeem the 2020 Bonds, in whole or in part at any time. Any 2020 Bonds redeemed; up until September 9, 2023 will be priced at the aggregate of the net present value (based on the Norwegian government bond rate plus 50 basis points) of 103.2% of par and interest payable up to September 9, 2023; from September 10, 2023 up until September 9, 2024, are redeemable at 103.2% of par, from September 10, 2024 up until March 9, 2025, are redeemable at 101.6% of par, and from March 10, 2025 to the maturity date are redeemable at 100% of par, in each case, in cash plus accrued interest.

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Additionally, upon the occurrence of a "Change of Control Event" (as defined in the bond agreement for the 2020 Bonds, (the "2020 Bond Agreement")), the holders of 2020 Bonds have an option to require us to repay such holders' outstanding principal amount of 2020 Bonds at 101% of par, plus accrued interest.

. The 2020 Bond Agreement contains financial covenants requiring us, among other things, to ensure that:

Our compliance with the covenants listed above is measured as of the end of each fiscal quarter. As of June 30, 2021, we were in compliance with all covenants under the 2020 Bonds.

The 2020 Bonds provide that we may declare or pay dividends to shareholders provided the Company maintains a minimum liquidity of $60.0 million, unless an event of default has occurred and is continuing. The 2020 Bond Agreement also limits us and our subsidiaries from, among other things, entering into mergers and divestitures, engaging in transactions with affiliates or incurring any additional liens which would have a material adverse effect. In addition, the 2020 Bond Agreement includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, false representation and warranty, a cross-default to other indebtedness, the occurrence of a material adverse effect, or our insolvency or dissolution.

Lessor VIE Debt

In October 2019, we entered into a sale and leaseback transaction to refinance one of our vessels, ¸ with a lessor, OCY Aurora Ltd, which was a newly formed special purpose vehicle ("SPV") and wholly owned subsidiary of Ocean Yield Malta Limited. The SPV was determined to be a variable interest entity ("VIE"). We are deemed to be the primary beneficiary of the VIE, and as a result, we are required by U.S. GAAP to consolidate the SPV into our results. The loan described below under "-Navigator Aurora Facility" relates to the VIE. Although we have no control over the funding arrangements of this entity, we are required to consolidate this loan facility into our financial results. Please read Note 16-Variable Interest Entities to the unaudited condensed consolidated financial statements for additional information.

Upon the occurrence of a "Change of Control Event" (as defined in the sale and leaseback agreement), the lessor has an option to require us to repurchase at 103% of the outstanding lease amount, plus costs and expenses directly attributable to the termination of the lessor's financing arrangements, such as break costs for swap arrangements.

Navigator Aurora Facility

In October 2019, the SPV, which owns , entered into secured financing agreements for $69.1 million consisting of a USD denominated loan facility, the "Navigator Aurora Facility". The Navigator Aurora Facility is a seven year unsecured loan provided by OCY Malta Limited, the parent of OCY Aurora Ltd., The Navigator Aurora Facility is subordinated to a further bank loan where OCY Aurora Ltd is the guarantor and the vessel, is pledged as security. Please read Note 6-Secured Term Loan Facilities and Revolving Credit Facilities to the unaudited condensed consolidated financial statements for additional information. The Navigator Aurora Facility bears interest at U.S. LIBOR plus a margin of 185 basis points and is repayable by the SPV with a balloon payment on maturity. During the six months ended June 30, 2021 extemporaneous repayments of $3.3 million were made and as of June 30, 2021, there was $58.0 million in borrowings outstanding under the Navigator Aurora Facility (December 31, 2020, $61.4 million.).

Tabular Disclosure of Contractual Obligations

The contractual obligations schedule set forth below summarizes our contractual obligations as of June 30, 2021:

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As part of our growth strategy, we will continue to consider strategic opportunities, including the acquisition of additional vessels. We may choose to pursue such opportunities through internal growth or joint ventures or business acquisitions. We intend to finance any future acquisitions through various sources of capital, including credit facilities, debt borrowings, sale and leaseback of vessels and the issuance of additional shares of common stock.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For a description of our material accounting policies, please read Note 2-Summary of Significant Accounting Policies to the 2020 Annual Report.

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Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates and foreign currency fluctuations, as well as inflation. We use interest rate swaps to manage interest rate risks but do not use these financial instruments for trading or speculative purposes.

Interest Rate Risk

The Company and certain of our vessel-owning subsidiaries are parties to secured term loan and revolving credit facilities that bear interest at an interest rate of U.S. LIBOR plus 185 to 270 basis points. A variation in U.S. LIBOR of 100 basis points would result in a variation of $6.7 million in annual interest paid on our indebtedness outstanding as of June 30, 2021, under the secured term loan and revolving credit facilities.

In July 2020, we entered into interest rate swap agreements with ING Capital Markets LLC ("ING") and Societe Generale ("SocGen"). Under these agreements, the notional amounts of the swaps are approximately 80% of the amounts drawn under the Terminal Facility. The interest rate receivable by the Company under these interest rate swap agreements is U.S. LIBOR, calculated on a year basis, which resets every three months in line with the dates of interest payments on the Terminal Facility. The interest rate payable by the Company under these interest rate swap agreements is 0.369% and 0.3615% per annum to ING and SocGen respectively, calculated on a year basis.

In September 2020, we issued senior unsecured bonds in an aggregate principal amount of $100.0 million with interest payable at a fixed rate of 8.0% per annum, calculated on a year basis.

Foreign Currency Exchange Rate Risk

Our primary economic environment is the international shipping market. This market utilizes the U.S. Dollar as its functional currency. Consequently, virtually all of our revenues are in U.S. Dollars. Our expenses, however, are in the currency invoiced by each supplier and we remit funds in the various currencies invoiced. We incur some vessel operating expenses and general and administrative costs in foreign currencies, primarily the Euro, Pound Sterling and Polish Zloty; and there is a risk that currency fluctuations could have an adverse effect on the value of our cash flows. We believe that any adverse effect on these costs would not be material and we have not entered into any derivative contracts to mitigate our exposure to foreign currency exchange rate risk.

In November 2018, we issued senior secured bonds in an aggregate amount of NOK 600 million. Please read "2018 Senior Secured Bonds". We have entered into a cross currency interest rate swap to mitigate the risk of currency movements for both interest payments during the five-year tenor of the 2018 Bonds and for the principal repayment at maturity in November 2023. However, if the Norwegian Kroner weakens relative to the U.S. Dollar beyond a certain threshold, we are required to place cash collateral with our swap providers for the forecast future liability on the cross-currency interest rate swap. In the event the depreciation of the Norwegian Kroner relative to the U.S. Dollar is significant, the cash collateral requirements could adversely affect our liquidity and financial position. Please read Note 9-Derivative Instruments Accounted for at Fair Value to the unaudited condensed consolidated financial statements for additional information.

In addition, at each quarterly interest payment date, the cross-currency interest rate swap exchanges a receipt of floating interest of 6.0% plus NIBOR on NOK 600 million for a U.S. Dollar payment of floating interest of 6.608% plus U.S. LIBOR on the approximate $71.7 million principal amount. The purpose of the cross-currency interest rate swap is to economically hedge the foreign currency exposure on the payments of interest and principal of the Company's 2018 Bonds due in 2023.

The cross-currency interest rate swap is remeasured to fair value at each reporting date. Please read Note 9-Derivative Instruments Accounted for at Fair Value to the unaudited condensed consolidated financial statements for additional information.

Inflation

Certain of our operating expenses, including crewing, insurance and drydocking costs, are subject to fluctuations as a result of market forces. Increases in bunker costs could have a material effect on our future operations if the number and duration of our voyage charters or COAs increases. In the case of the 38 vessels owned as of June 30, 2021, 20 were employed on time charter and as such it is the charterers who pay for the fuel on those vessels. If our vessels are employed under voyage charters or COAs, freight rates are generally sensitive to the price of fuel. However, a sharp rise in bunker prices may have a temporary negative effect on our results since freight rates generally adjust only after prices settle at a higher level.

Credit Risk

We may be exposed to credit risks in relation to vessel employment and at times may have multiple vessels employed by one charterer. We consider and evaluate concentration of credit risk continuously and perform ongoing evaluations of these charterers for credit risk. At June 30, 2021, no more than four of our vessels were employed by the same charterer.

We invest our surplus funds with reputable financial institutions, with original maturities of no more than three months, in order to provide the Company with flexibility to meet all requirements for working capital and for capital investments.

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IMPORTANT INFORMATION REGARDING STATEMENTS

This report on Form for the quarter ended June 30, 2021 contains certain forward-looking statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including trends or forecasts and statements concerning the transaction with Ultragas and the anticipated benefits thereof. In addition, we and our representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate as described in this report. In some cases, you can identify the forward-looking statements by the use of words such as "may," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue," "scheduled," or the negative of these terms or other comparable terminology. Forward-looking statements appear in a number of places in this report. These risks and uncertainties include but are not limited to:

All forward-looking statements included in this report on Form are made only as of the date of this report. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common stock.

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NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Balance Sheets

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

F-1

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Operations

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

F-2

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

F-3

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

For the six months ended June 30, 2020:

For the three months ended June 30, 2020:

For the six months ended June 30, 2021:

For the three months June 30, 2021:

See accompanying notes to condensed consolidated financial statements.

F-4

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

F-5

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The accompanying Navigator Holdings Ltd. (the "Company"), unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the financial position of the Company and its subsidiaries as of June 30, 2021; the results of operations for the three and six months ended June 30, 2020 and 2021, the statement of stockholders' equity for the three and six months ended June 30, 2020 and 2021, and cash flows for the six months ended June 30, 2020 and 2021. Unless the context otherwise requires, all references in the unaudited condensed consolidated financial statements to "our," "we," and "us" refer to the Company.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its subsidiaries and Variable Interest Entities ("VIE") for which the Company is a primary beneficiary and are also consolidated (please read Note 16-Variable Interest Entities for additional information). All intercompany accounts and transactions have been eliminated in consolidation.

A discussion of the Company's significant accounting policies can be found in the Company's consolidated financial statements included in the 2020 Annual Report. There have been no material changes to these policies in the six months ended June 30, 2021, apart from the below:

On December 18, 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") which modifies ASC 740 - Income Taxes ("Topic 740") to simplify the accounting for income taxes, by removing certain exceptions to the general principles in Topic 740 and improve consistent application by clarifying and amending existing guidance. The amendments to this standard are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. We adopted the new standard with effect from January 1, 2021, and the adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures for the three and six months ended June 30, 2021.

In January 2020, the FASB issued ASU Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The amendments in ASU make improvements related to the accounting for (1) an equity security under the measurement alternative before application or after discontinuation of the equity method of accounting and (2) forward contracts and purchased options to acquire an equity instrument that will be accounted for under Topic 323. The guidance is effective for annual and interim periods beginning after December 15, 2020, for public business entities and an entity may early adopt the guidance in any annual or interim period after issuance. We adopted the new standard with effect from January 1, 2021, and the adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures for the three and six months ended June 30, 2021.

These unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with U.S. GAAP for interim reporting. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. It is recommended that these financial statements be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2020, included in the 2020 Annual Report. The results for the three and six months ended June 30, 2021, are not necessarily indicative of results for the year ended December 31, 2021 or any other future periods.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU Reference Rate Reform (Topic 848)-Reference Rate Reform on Financial Reporting. The amendments provide temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU applies to contracts that reference LIBOR or another reference rate expected to be terminated because of reference rate reform. This optional guidance may be applied prospectively from any date beginning March 12, 2020 but cannot be applied to modifications that occur after December 31, 2022. We do not currently have any contracts that have been changed to a new reference rate, but we will continue to evaluate our contracts and the effects of this standard on our consolidated financial position, results of operations, and cash flows prior to adoption.

In August 2020, the FASB issued ASU "Debt-Debt with Conversion and Other Options (Subtopic and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic which provides guidance to simplify the issuer's accounting for convertible debt instruments and, among other changes, eliminates some of the conditions for equity classification in for contracts in an entity's own equity and requires enhanced disclosures surrounding the terms and features of convertible instruments. The guidance is effective for annual periods beginning after December 15, 2021, and interim periods within that annual period for public business entities and an entity may early adopt the guidance for annual periods beginning after December 15, 2020. We plan to adopt these amendments on January 1, 2022, and we do not expect this ASU to have a significant impact on our consolidated financial statements and disclosures, as we currently have no convertible debt instruments.

F-6

The Company receives its revenue streams from three different sources; vessels on time charters (which are accounted for as leases under Topic 842); voyage charters; and contracts of affreightment ("COA") accounted for under Topic 606. Revenues from the Luna Pool collaborative arrangement are accounted for under ASC 808. Time charter revenue is payable monthly in advance whilst revenue from voyage charters and COAs is due upon discharge of the cargo at the discharge port.

In the case of voyage charters, the vessel is contracted for a voyage, or a series of voyages, between two or more ports and the Company is paid for the cargo transported. Revenue from COAs is recognized on the same basis as revenue from voyage charters, as they are essentially a series of consecutive voyage charters. Payment from voyage charters and COAs is due upon discharge of the cargo at the discharge port. Since January 1, 2018, following adoption of ASU Revenue from Contracts with Customers, ("Topic 606"), our basis for revenue recognition for voyage charters and COAs has changed to recognize revenue on a load port to discharge port basis and determined percentage of completion for all voyage charters and COAs on a time elapsed basis. The Company believes that the performance obligation towards the customer starts to become satisfied once the cargo is loaded and the obligation becomes completely satisfied once the cargo has been discharged at the discharge port.

Under this revenue recognition standard, the Company has identified certain costs incurred to fulfill a contract with a charterer, which are costs incurred following the commencement of a contract or charter party but before the loading of the cargo commences. These directly related costs are generally fuel or any canal or port costs incurred to get the vessel from its position at inception of the contract to the load port to commence loading of the cargo. These costs are deferred and amortized over the duration of the performance obligation on a time basis. Voyage charters and COAs have an expected duration of one year or less. The Company has applied optional exemptions on adoption of the revenue standard, as set out in Topic to 14A, exempting the Company from disclosing the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as at the balance sheet date and the expectation of when the Company expects to recognize these amounts.

In addition, accrued income relates to our conditional right to consideration for our completed performance under contracts and is recognized according to our performance. Contract liabilities or deferred income includes payments received in advance of performance under contracts and is recognized when performance under the respective contract has been completed.

For vessels contracted under time charters, the arrangements are for a specified period of time. The Company receives a fixed charter rate per day which is payable monthly in advance and revenue is recognized ratably over the term of the charter. Within our time charter arrangements key decisions concerning the use of the vessel during the duration of the time charter period reside with the charterer. We are responsible for the crewing, maintenance and insurance of the vessel, and the charterer is generally responsible for voyage specific costs, which typically include bunkers and port/canal costs. As the charterer holds rights to determine how and when the vessel is used and is also responsible for voyage specific costs incurred during the voyage, the charterer derives the economic benefits from the use of the vessel, as control over the use of the vessel is transferred to the charterer during the specified time charter period. Time charters are therefore considered operating leases and since January 1, 2019 we apply the lease income recognition guidance in ASC 842 - Leases following the adoption of that standard. In addition, the Company has performed a qualitative analysis of each of its time charter contracts and concluded that the lease component is the predominant component as the charterer would attribute most value to the ability to direct the use of the vessel rather than to the technical and crewing services to operate the vessel which are services. Accordingly, revenue from vessels under time charter arrangements is presented as a single lease component.

Operating revenues

The following table compares our operating revenues by the source of revenue stream for the three and six months ended June 30, 2020 and 2021: