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Awilco LNG
Earnings Release • Feb 18, 2022
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Earnings Release
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FOURTH QUARTER AND PRELIMINARY 2021 RESULTS
HIGHLIGHTS FOURTH QUARTER 1)
- Awilco LNG achieved a net result of USD 5.8 million and earnings per share of USD 0.04 for fourth quarter, up from net result of USD 5.1 million and earnings per share of USD 0.04 in third quarter 2021.
- Net freight income of USD 14.5 million in fourth quarter 2021, up from USD 14.3 million in third quarter 2021.
- EBITDA for fourth quarter ended at USD 10.7 million, down from USD 10.8 million in third quarter 2021.
- Vessel utilization for the quarter was 100% with a net TCE of USD 78,600 per day.
HIGHLIGHTS FOR THE YEAR 2021 1)
- Net result of USD 21.1 million and earnings per share of USD 0.16 for the full year 2021 compared to a loss of USD 7.9 million for the previous year.
- Net freight income was USD 57.1 million in 2021, up from USD 30.7 million in 2020.
- EBITDA for the year ended at USD 43.3 million, up from USD 18.1 million in 2020.
- Vessel utilization for the year was 100% with a net TCE of USD 78,200 per day.
- In January Awilco LNG invested USD 7 million in Cool Company Limited, a company set up to buy and own 8 TFDE vessels purchased from Golar LNG
KEY FINANCIAL FIGURES 1)
| In USD millions, unless stated otherwise | Q4 2021 | Q3 2021 | 2021 | 2020 |
|---|---|---|---|---|
| Freight income | 14.6 | 14.7 | 59.6 | 35.6 |
| Voyage related expenses | 0.1 | 0.3 | 2.5 | 5.0 |
| EBITDA | 10.7 | 10.8 | 43.3 | 18.1 |
| Net profit/(loss) | 5.8 | 5.1 | 21.1 | (7.9) |
| Total assets | 356.7 | 355.3 | 356.7 | 352.6 |
| Total equity | 120.6 | 114.8 | 120.6 | 99.5 |
| Gross interest-bearing debt | 229.9 | 234.6 | 229.9 | 248.7 |
| Cash and cash equivalents | 23.6 | 23.1 | 23.6 | 12.6 |
| Book equity ratio (in %) | 33.8% | 32.3% | 33.8% | 28.2% |
1 Please refer to definitions in Appendix A for descriptions of alternative performance measures
Jon Skule Storheill, Chief Executive Officer, commented:
"We are pleased to report a full year profit of USD 21.1 million with a net TCE of 78,200 per day. Throughout fourth quarter we continued to deliver strong results on the back of our fixed rate contracts for both vessels. This is set to continue until the start of second quarter 2022 and earnings can be expected to remain at this level through the first quarter 2022. The market has experienced a seasonal downturn earlier than normal, mostly on the back of negative arbitrage between European and Asian gas prices, leading to shorter sailing distances and more open freight capacity in our market. We expect this to turn later in the quarter and focus on securing the next employment for the vessels."
FINANCIAL REVIEW
Income statement fourth quarter 2021
As for last quarter both WilForce and WilPride traded on their fixed rate time charter contracts during the entire quarter and fleet utilisation for the period was 100%, compared to 99% in third quarter. TCE earnings for fourth quarter 2021 was USD 78,600 per day compared to USD 78,000 per day in third quarter 2021.
Freight income for the quarter totaled USD 14.6 million, down from USD 14.7 million in third quarter 2021. Obtained rates continue to be stable as they have been since the vessels entered into the current charter contracts. Voyage related expenses amounted to USD 0.1 million, down from USD 0.3 million in third quarter 2021 leading to a net freight income for the quarter of USD 14.5 million compared to USD 14.3 million in third quarter 2021.
Operating expenses came in at USD 2.5 million in fourth quarter which is slightly lower than the USD 2.7 million in third quarter. Administration expenses were USD 1.3 million in fourth quarter 2021, up from USD 0.8 million in third quarter 2021. EBITDA for the quarter ended at USD 10.7 million, marginally down from USD 10.8 million in third quarter 2021. Depreciation charges for the quarter were USD 3.2 million, same as for third quarter 2021.
Net financial expenses were USD 1.8 million in fourth quarter 2021, down from USD 2.5 million third quarter. The reduction is mainly related to received dividend from The Norwegian Shipowners' Mutual War Risks Insurance Association ("DNK") in fourth quarter 2021. The interest expense on the vessels' leases in fourth quarter 2021 amounted to USD 2.2 million, down from USD 2.4 million in the previous quarter.
Profit for the quarter ended at USD 5.8 million with an earnings per share of USD 0.04, up from a net result of USD 5.1 million and earnings per share of USD 0.04 in third quarter 2021.
Income statement full year 2021
Freight income for the full year amounted to USD 59.6 million compared to USD 35.6 million in 2020. Fleet utilisation ended at 100 %, the same as in 2020, as none of the vessels had significant offhire during any of these years. Voyage related expenses decreased from USD 5.0 million in 2020 to USD 2.4 million in 2021 mainly due to the trading pattern of the vessels where they went on consecutive time charter contracts throughout the full year.
Operating expenses for the year were USD 10.0 million, up from USD 9.1 million in 2020. The increase is mainly related to additional cost for crew changes due to the Covid-19 pandemic and higher cost for regular maintenance than last year.
WilForce was involved in a collision with another vessel in second quarter 2019. Based on an assessment of facts and legal advice Awilco LNG holds the other vessel fully and completely liable for the collision and the Group expects to recover costs, expenses, and losses from the other vessel, including insurance deductibles, off-hire and lost time charter hire, in due course. The Company's claim was presented to the counterparty in February 2021 and the legal procedure is slowly moving forward with a trial date set at the end of March 2022. No effects of the claim will be reflected in Awilco LNG's financial statements until the awarded compensation is determined.
Administration expenses were USD 3.9 million in 2021, up from USD 3.0 in 2020 among others due to less favorable development of USD/NOK exchange rate compared to previous year.
Net financial expenses were USD 9.6 million in 2021, a significant decrease from USD 13.5 million in 2020. The full effect of the refinancing of both vessels in early January 2020 and the continuing low floating USD interest rates contributed to this reduction.
Liquidity and financial position
Cash and cash equivalents increased from USD 23.1 million to USD 23.6 million during the quarter. The Group paid the quarterly lease on WilPride, that was due on January 3, 2022, prior to December 31, 2021 due to bank holiday. The Company is in compliance with all financial covenants on its lease obligations.
Interest-bearing debt net of capitalized and amortizing transaction costs was reduced by USD 4.7 million in the quarter to USD 225.6 million on December 31, 2021 in accordance with the repayment profile of the leases. The current portion of the interest-bearing debt constituted USD 18.9 million at quarter-end and represents the scheduled amortization for the 12 months after December 31, 2021.
Total book value of WilForce and WilPride was on December 31, 2021, USD 326.9 million after depreciation of USD 3.2 million in fourth quarter.
Book equity on December 31, 2021 was USD 120.6 million and total assets was USD 356.7 million, giving an equity ratio of 33.8% at quarter-end, up from 32.3% as of September 30, 2021.
MARKET UPDATE
Spot freight rates rallied at the start of fourth quarter on the back of a widening spread between European and Asian gas prices where the spread between the Asian Japan/Korea Marker ("JKM") and the Dutch European Title Transfer Facility ("TTF") peaked at around 7 \$/mmbtu. This was driven by Asian restocking demand ahead of an expected cold winter. Spot freight rates fell dramatically towards the end of the year when the unusually tight European gas balance led to record high prices in Europe together with reduced demand from Asia. The ton-mile effect of shorter voyages has led to oversupply of vessels and the normal seasonal downturn we normally see later in the first quarter started already late December and is still ongoing.
The political turmoil between Russia and EU/USA continues with very low flow of natural gas from Russia into EU as a result. The startup of Nord Stream 2 may lead to higher inflow, and by that lower price, but this is not expected to happen until second half 2022. Throughout the spring a seasonally lower demand for gas in Europe is expected to be offset by increased demand from Asia and we can expect to see increased volumes of gas going from US to Asia, leading to longer sailing distances and higher fleet utilization.
As the weak spot market is assumed a temporary situation the multi-month time charter market has held up during the start of the year although the market has come off from the heights in fourth quarter, when a 1 year TC for TFDE vessel was quoted at USD 102,000 per day to the current level of USD 75,000 per day.
Looking at LNG trade flow year-over-year the numbers show that global LNG export grew by approximately 14 million tonnes (MT) with the addition of more than 20 MT annual liquification capacity. The US is the main source for growth with 23.2 MT while we saw reduced export from most other regions, except North Africa. The increased US export volumes are supportive for LNG freight as the ton-mile effect is larger than the historic average. The recent massive flow into Europe with corresponding reduced volumes to Asia has altered the expected positive tonmile effect somewhat. The market expects that this trend will turn later in the year, and we are already seeing signs that this is happening as the arbitrage for gas prices between Europe and Asia closing in. The extremely high gas prices cause some uncertainty for demand growth going forward, however with expected increased export capacity and likely return of Russian pipeline gas to Europe prices should normalize and support the ongoing and wanted transition from coal to gas.
An all-time high 53 newbuildings were delivered and absorbed by the market in 2021 and 86 newbuilding orders were made according to Fearnleys LNG. Over the next two years the pace of delivery will be significantly reduced to 27 and 43 in 2022 and 2023 respectively as most of the recent orders are placed for delivery later. The ordering
activity has continued into 2022, mostly from owners firming up options at the yards at attractive prices. According to Poten & Partners the total order book for LNGCs (excluding built ARC-7 vessels) currently stands at 142 vessels, of which only 31 are uncommitted. Newbuilding prices have increased significantly during the year and market sources estimate current yard prices to be close to USD 220 million, and possibly higher for early slots, this is up from around USD 180 million at the start of 2021.
The all-time high demand for gas and LNG is also leading to renewed interest in new liquefaction projects where the announcement from TotalEnergies that they will restart the Mozambique project within 2022 is noteworthy, as is Tellurians decision to start construction at their 27.6 MTPA Driftwood LNG plant in the USA. Further projects can be expected to take FID going forward ensuring continued strong demand for LNG transportation.
ORGANISATION
The principal activity of Awilco LNG ASA and its subsidiaries is to invest in and operate LNG transportation vessels. Technical and commercial management of the fleet is performed from the Group's office in Oslo, Norway. The Group has seven employees and Awilco LNG purchases certain administrative and sub-management technical services from companies in the Awilhelmsen Group, see note 5 for further details.
VESSEL STATUS
Both WilForce and WilPride trade on fixed term charterparties until the start of second quarter 2022. During 2022 the Company will perform overhaul of two of the main engines on each vessel at a total cost of approximately USD 2.9 million. The overhauls will have a limited effect on P&L as the cost will be capitalized and amortized over the next four years.
OUTLOOK
The current winter, with record high gas prices in Europe and lower demand from Asia, has led to the seasonal downturn in the marked coming earlier than usual. As USA is the main source of available LNG this has led to shorter ton-mile with corresponding reduced demand for freight. Despite the current weakness the longer-term trend for LNG shipping looks promising with the expected return of demand from Asia and with far less newbuildings being delivered this year compared to 2021. This is also supported by the quoted rates for 1 year TC at USD 80,000 according to Fearnleys. In the short term Awilco LNG is focusing on our next fixtures as both vessels come open at the start of second quarter 2022. The Board is also determined to return capital to our shareholders and intend to propose a dividend in the Annual General Meeting in May 2022.
| Oslo, February 17, 2022 | ||
|---|---|---|
| Synne Syrrist | Jon-Aksel Torgersen | Steve Christy |
| Chairman of the Board | Board member | Board member |
| Annette Malm Justad | Jens-Julius R. Nygaard | Jon Skule Storheill |
| Board member | Board member | CEO |
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
| INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT | ||||||
|---|---|---|---|---|---|---|
| Q4 2021 |
Q3 2021 |
Q4 2020 |
2021 | 2020 | ||
| In USD thousands, except per share figures | Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) |
| Freight income | 2 | 14 636 | 14 664 | 12 804 | 59 552 | 35 619 |
| Voyage related expenses | 5 | 150 | 329 | 1 632 | 2 446 | 4 958 |
| Net freight income | 14 486 | 14 335 | 11 172 | 57 106 | 30 661 | |
| Other income | 54 | - | (625) | 54 | (625) | |
| Operating expenses | 2 486 | 2 708 | 2 669 | 10 036 | 9 127 | |
| Vessel repair expenses | - | - | (261) | - | (261) | |
| Administration expenses Earnings before interest, taxes, depr. and amort. (EBITDA) |
5 | 1 325 10 728 |
821 10 807 |
880 7 259 |
3 874 43 250 |
3 049 18 121 |
| Depreciation and amortisation | 3 162 | 3 162 | 3 120 | 12 564 | 12 506 | |
| Earnings before interest and taxes (EBIT) | 7 567 | 7 645 | 4 139 | 30 686 | 5 615 | |
| Finance income | 669 | 28 | 8 | 639 | 123 | |
| Finance expenses | 2 458 | 2 532 | 2 930 | 10 211 | 13 591 | |
| Net finance income/(expense) | (1 789) | (2 504) | (2 922) | (9 571) | (13 468) | |
| Profit/(loss) before taxes | 5 777 | 5 140 | 1 217 | 21 115 | (7 853) | |
| Income tax expense | - | - | - | - | - | |
| Profit/(loss) for the period | 5 777 | 5 140 | 1 217 | 21 115 | (7 853) | |
| Earnings per share in USD attributable to ordinary equity holders of Awilco LNG ASA: Basic, profit/(loss) for the period |
0,04 | 0,04 | 0.01 | 0,16 | (0.06) | |
| Diluted, profit/(loss) for the period | 0,04 | 0,04 | 0.01 | 0,16 | (0.06) | |
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||
| Profit/(loss) for the period | 5 777 | 5 140 | 1 217 | 21 115 | (7 853) | |
| - | - | - | - | - | ||
| Other comprehensive income: | ||||||
| Other comprehensive income items |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Profit/(loss) for the period | 5 777 | 5 140 | 1 217 | 21 115 | (7 853) |
|---|---|---|---|---|---|
| Other comprehensive income: Other comprehensive income items |
|||||
| Total comprehensive income/(loss) for the period | 5 777 | 5 140 | 1 217 | 21 115 | (7 853) |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
|---|---|---|---|---|
| In USD thousands | Note | 31.12.2021 (unaudited) |
30.9.2021 (unaudited) |
31.12.2020 (audited) |
| ASSETS | ||||
| Non-current assets Deferred tax assets |
6 | |||
| Vessels | 326 875 | 330 004 | 338 284 | |
| Pension assets | 511 | 473 | 429 | |
| Other fixed assets incl right-of-use assets Total non-current assets |
165 327 551 |
198 330 675 |
295 339 007 |
|
| Current assets | ||||
| Trade receivables | 993 | 997 | 61 | |
| Inventory | 182 | 78 | 354 | |
| Other short term assets | 4 384 | 458 | 590 | |
| Cash and cash equivalents | 23 637 | 23 060 | 12 637 | |
| Total current assets | 29 196 | 24 593 | 13 642 | |
| TOTAL ASSETS | 356 746 | 355 268 | 352 649 | |
| EQUITY AND LIABILITIES Equity |
||||
| Share capital | 3 | 1 976 | 1 976 | 1 976 |
| Share premium | 3 | 133 384 | 133 384 | 133 384 |
| Other paid-in capital | 65 588 | 65 588 | 65 588 | |
| Retained earnings Total equity |
(80 362) 120 586 |
(86 139) 114 809 |
(101 477) 99 472 |
|
| Non-current liabilities Pension liabilities |
583 | 533 | 494 | |
| Long-term interest bearing debt | 4 | 206 906 | 211 437 | 225 004 |
| Total non-current liabilities | 207 490 | 211 970 | 225 498 | |
| Current liabilities | ||||
| Short-term interest bearing debt | 4 | 18 890 | 18 889 | 18 843 |
| Trade payables | 516 | 634 | 348 | |
| Provisions and accruals | 6 | 9 265 | 8 965 | 8 490 |
| Total current liabilities | 28 670 | 28 488 | 27 680 | |
| TOTAL EQUITY AND LIABILITIES | 356 746 | 355 268 | 352 649 |
INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT
| INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT | |||||
|---|---|---|---|---|---|
| Q4 2021 | Q3 2021 | 2021 | 2020 | ||
| In USD thousands | (unaudited) | (unaudited) | (unaudited) | (audited) | |
| Cash Flows from Operating Activities: | |||||
| Profit/(loss) before taxes | 5 777 | 5 140 | 21 115 | (7 853) | |
| Interest and borrowing costs expensed | 2 443 | 2 502 | 10 157 | 13 208 | |
| Items included in profit/(loss) not affecting cash flows: | |||||
| Depreciation and amortisation | 3 162 | 3 162 | 12 564 | 12 506 | |
| Changes in pension assets, operating assets and liabilities: | |||||
| Trade receivables, inventory and other short term assets | (4 064) | 1 907 | (4 635) | 2 359 | |
| Trade payables, provisions and accruals | 279 | 337 | 1 272 | (3 016) | |
| i) Net cash provided by/(used in) operating activities | 7 597 | 13 047 | 40 472 | 17 205 | |
| Cash Flows from Investing Activities: Investment in vessels / sale of vessels |
(0) | (15) | (1 025) | (682) | |
| ii) Net cash provided by/(used in) investing activities | (0) | (15) | (1 025) | (682) | |
| Cash Flows from Financing Activities: | |||||
| Proceeds from borrowings | - | 262 500 | |||
| Repayment of borrowings | (4 720) | (4 723) | (18 880) | (270 428) | |
| Interest and borrowing costs paid | (2 301) | (2 355) | (9 566) | (19 506) | |
| iii) Net cash provided by/(used in) financing activities | (7 021) | (7 078) | (28 446) | (27 435) | |
| Net change in cash and cash equivalents (i+ii+iii) | 577 | 5 955 | 11 000 | (10 912) | |
| Cash and cash equivalents at start of period | 23 060 | 17 105 | 12 637 | 23 547 | |
| Cash and cash equivalents at end of period | 23 637 | 23 060 | 23 637 | 12 637 | |
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||
| For the period ended December 31, 2021 | |||||
| Share | Share | Other | Retained | Total | |
| In USD thousands | capital | premium | paid-in capital | earnings | equity |
| Equity at 1 January 2021 | 1 976 | 133 384 | 65 588 | (101 477) | 99 471 |
| Profit/(loss) for the period | - | - | - | 21 115 | 21 115 |
| Other comprehensive income for the period | - | - | - | - | - |
| Total comprehensive income | - | - | - | 21 115 | 21 115 |
| Balance as at Desember 31, 2021 (unaudited) | 1 976 | 133 384 | 65 588 | (80 362) | 120 587 |
| For the period ended December 31, 2020 | |||||
| In USD thousands | Share capital |
Share premium |
Other paid-in capital |
Retained earnings |
Total equity |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended December 31, 2021
| Share | Share | Other | Retained | Total | |
|---|---|---|---|---|---|
| In USD thousands | capital | premium | paid-in capital | earnings | equity |
For the period ended December 31, 2020
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||
|---|---|---|---|---|---|
| For the period ended December 31, 2021 | |||||
| In USD thousands | Share capital |
Share premium |
Other paid-in capital |
Retained earnings |
Total equity |
| For the period ended December 31, 2020 | Share | Share | Other | Retained | Total |
| In USD thousands Equity at 1 January 2020 |
capital 49 407 |
premium 133 384 |
paid-in capital 18 157 |
earnings (93 624) |
equity 107 324 |
| Profit/(loss) for the period | - | - | - | (7 853) | (7 853) |
| Other comprehensive income for the period | - | - | - | - | - |
| Total comprehensive income | - | - | - | (7 853) | (7 853) |
| Share capital reduction | (47 431) | - | 47 431 | - | - |
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Corporate information, basis for preparation and accounting policies
Corporate information
Awilco LNG ASA (the Parent Company) is a public limited liability company incorporated and domiciled in Norway. The Parent Company's registered office is Beddingen 8, 0250 Oslo, Norway.
The interim consolidated financial statements (the Statements) comprise the Parent Company and its subsidiaries, together referred to as the Group. The principal activity of the Group is the investment in and operation of LNG transportation vessels. The Group owns and operates two modern TFDE LNG carriers.
Basis of preparation
The Statements for the three months period ended December 31, 2021 are prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The interim consolidated financial statements are unaudited. The consolidated financial statements are presented in US Dollars (USD) rounded off to the nearest thousands, except as otherwise indicated.
The accounting policies adopted in the preparation of the Statements are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2020. The Statements do however not include all the information and disclosures required by International Financial Reporting Standards (IFRS) for a complete set of financial statements, and the Statements should be read in conjunction with the Group's annual consolidated financial statements for the period ended December 31, 2020, which includes a detailed description of the applied accounting policies.
Note 2 – Segment information
Operating segments
Awilco LNG owns and operates two LNG vessels. For internal reporting and management purposes the Group's business is organised into one operating segment, LNG transportation. Performance is not evaluated by geographical region as the vessels trade globally and revenue is not dependent on any specific country. Revenue from the Group's country of domicile, Norway, was NIL in fourth quarter 2021, same as in third quarter 2021.
Information about major customers
The Group had two customers contributing with more than 10 per cent of the Group's freight income in fourth quarter 2021, at 44 and 56% of total revenue, same number of customers as in third quarter when they contributed 43 and 57% of total revenue respectively.
Note 3 – Share capital
There were no changes in the number of issued shares during fourth quarter 2021. The number of issued shares was 132,548,611 on December 31, 2021.The share capital is denominated in NOK and all issued shares are of equal rights.
Note 4 – Financing and liquidity
Under the sale/leaseback arrangements with CCB Financial Leasing Co. Ltd. (CCBFL), commenced in January 2020, WilForce and WilPride are chartered back on bareboat basis to wholly owned subsidiaries of the Company for a period of up to 10 years. The bareboat hire is payable quarterly in arrears and has a 14-year straight line amortisation profile. The Group has rolling repurchase options starting after three years, repurchase obligations upon termination of the arrangements and same at maturity of the facilities at USD 37.5 million per vessel.
The sale/leaseback facilities provided by CCBFL contains a minimum value clause in addition to financial covenants that require the Group to maintain consolidated minimum cash and cash equivalents of USD 10.0 million and positive consolidated working capital. The positive working capital financial covenant excludes the short-term portion of long-term debt including lease liabilities. The Company is restricted from declaring or paying dividends if the consolidated cash position of the Group is lower than USD 20.0 million.
At December 31, 2021 the Group had cash and cash equivalents of USD 23.6 million, compared to USD 23.1 million on September 30, 2021 as the Group paid the quarterly lease on WilPride that was due on January 3, 2022 prior to December 31, 2021. The Group was in compliance with all financial covenants in the lease facilities.
Note 5 – Related party transactions
Contracts with related parties
Awilco LNG has service contracts and transactions with the following related parties:
- 1) Awilco Technical Services AS (ATS) Technical sub-management services
- 2) Awilhelmsen Management AS (AWM) Administrative services
- 3) Fearnleys AS Ship brokering services
1) Awilco LNG's in-house technical manager, ALNG TM, has entered into a sub-management agreement with ATS, whereby ATS assists ALNG TM in management of the Group's fleet. ALNG TM pays ATS a management fee based on ATS' costs plus a margin of 7%, cost being time accrued for the sub-manager's employees involved. The fee is subject to quarterly evaluation and is regulated according to the consumer price index in Norway. The agreement can be terminated by both parties with three months' notice. ATS is 100% owned by Awilco AS.
2) AWM provides the Group with administrative and general services including accounting, payroll, legal, secretary function and IT. The Group pays AWM NOK 2.1 million in yearly management fee (approx. USD 0.2 million) based on AWM's costs plus a margin of 5%. The fee is subject to semi-annual evaluation and is regulated according to the consumer price index in Norway. The agreement can be terminated by both parties with three months' notice. AWM is 100% owned by Awilhelmsen AS, which owns 100% of Awilco AS.
3) One of the Parent Company's Board Members is employed by Astrup Fearnley AS. Fearnleys AS, a subsidiary of Astrup Fearnley AS, delivers ship brokering services on regular market terms to the Group.
Purchases from related parties
| In USD thousands | Q4 2021 | Q3 2021 | 2021 | 2020 |
|---|---|---|---|---|
| Awilco Technical Services AS | 131 | 131 | 519 | 480 |
| Awilhelmsen Management AS | 60 | 62 | 250 | 229 |
| Fearnleys AS | 0 | 0 | 7 | 76 |
Purchases from related parties are included as part of Administration expenses in the income statement, except commissions paid to Fearnleys AS, which are included in Voyage related expenses.
Note 6 – Provisions and accruals
Provisions and accruals as of December 31, 2021, were USD 9.3 million (USD 9.0 million as of September 30, 2021), of which deferred income constituted USD 4.9 million (USD 6.3 million as of September 30, 2021), accrued interest towards the CCBFL lease obligations was USD 2.1 million (USD 2.2 million as of September 30, 2021) and provisions for inventory USD 1.4 million.
Note 7 – Events after the balance sheet date
Investment
In January the Company purchased 700,000 shares in Cool Company Limited at a total cost of USD 7 million representing an ownership of approximately 1.75% when the transaction to acquire eight TFDE vessels from Golar LNG is completed.
APPENDIX 1 – ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures (APMs), i.e. financial performance measures not within the applicable financial reporting framework, are used by Awilco LNG to provide supplemental information. Financial APMs are intended to enhance comparability of the results and cash flows from period to period, and it is Awilco LNG's experience that these are frequently used by analysts and investors.
These measures are adjusted IFRS measures defined, calculated, and used consistently. Operational measures such as, but not limited to, volumes, utilisation and prices per MMBTU are not defined as financial APMs. Financial APMs should not be considered as a substitute for measures of performance in accordance with IFRS. Disclosures of APMs are subject to established internal control procedures.
Awilco LNG's financial APMs:
- Net freight income 1): Freight income Voyage related expenses
- EBIT: Net freight income Operating expenses Administration expenses Vessel repair expenses Depreciation and amortisation – Impairments
- EBITDA: EBIT + Depreciation and amortisation + Impairments
- Interest bearing debt: Long-term interest-bearing debt + Short-term interest-bearing debt + Pension liabilities + Other non-current liabilities
- Gross interest-bearing debt: Interest-bearing debt before deduction for unamortized transaction costs
- Book equity ratio: Total equity / Total assets
- TCE (time charter equivalent): Net freight income including loss of hire insurance divided by the number of calendar days less off-hire days not covered by loss of hire insurance
The reconciliation of Net freight income, EBIT and EBITDA with IFRS figures can be derived directly from the Group's consolidated Income Statement.
1) When vessels operate in the spot market, freight income includes bunkers compensation and the fuel element of ballast bonuses, whereas voyage related expenses include the corresponding bunkers costs and other repositioning costs. The APM net freight income adjusts for this grossing up and provides improved comparability of the Group's performance between periods.