Quarterly Report • Nov 18, 2020
Quarterly Report
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Third Quarter 2020
1
"The third quarter results demonstrate the high value generation of KCC's combination carrier business in a poor tanker market, with earnings for both CABU and CLEANBU vessels more than twice the spot earnings of standard tanker vessels. Fourth quarter results likely to be an improvement over Q3 2020".
Engebret Dahm, CEO Klaveness Combination Carriers ASA
| (USD '000) | Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 YTD | Q3 2019 YTD |
|---|---|---|---|---|---|
| Net revenues from vessel operations | 20 358 | 25 506 | 16 571 | 68 267 | 42 503 |
| EBITDA (note 11) | 9 257 | 15 720 | 7 764 | 37 802 | 16 726 |
| EBITDA adjusted (note 11) | 9 847 | 15 860 | 8 411 | 38 563 | 18 295 |
| Profit/(loss) for the period | 1 311 | 8 359 | 1 545 | 13 983 | (1 139) |
| Earnings per share1 | 0.03 | 0.17 | 0.03 | 0.29 | (0.03) |
| Total assets | 502 166 | 485 814 | 453 002 | 502 166 | 453 002 |
| Equity | 216 116 | 215 946 | 211 397 | 216 116 | 211 397 |
| Equity ratio | 43 % | 44 % | 47 % | 43 % | 47 % |
| ROCE adjusted (note 11) | 4 % | 10 % | 4 % | 7 % | 3 % |
| Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 YTD | Q3 2019 YTD | |
| Average TCE earnings (note 11) | 20 310 \$/d | 23 679 \$/d | 18 127 \$/d | 21 506 \$/d | 16 312 \$/d |
| Opex per day (note 11) | 7 990 \$/d | 7 748 \$/d | 7 138 \$/d | 7 793 \$/d | 7 233 \$/d |
| Onhire days | 984 | 1 071 | 895 | 3 138 | 2 599 |
| Off-hire days, scheduled | 72 | 9 | 65 | 82 | 91 |
| Off-hire days, unscheduled | 49 | 11 | 4 | 70 | 68 |
| % of days in main combination trades2 | 78 % | 67 % | 89 % | 77 % | 74 % |
| Utilisation3 | 87 % | 95 % | 91 % | 92 % | 92 % |
Net revenues from operations of vessels were USD 20.4 million in Q3 2020 compared to USD 16.6 million in the same quarter last year and USD 25.5 million last quarter. The fleet has increased over the last year and counts 1.5 more vessels in Q3 2020 compared to Q3 2019. A weak tanker market and low fuel prices had negative earnings effects in addition to in total 121 off-hire days mainly due to scheduled dry docking of two CABU vessels as well as COVID-19 operational effects.
The average TCE earnings per on-hire day were about \$20,300/day in average for the fleet, approximately \$2,200/day higher than in Q3 2019, mainly due to stronger average CABU TCE earnings. Compared to last quarter average TCE earnings were \$3,400/d lower on the back of weaker tanker markets.
Operating expenses for the vessels increased from USD 7.6 million in Q3 2019 and USD 8.5 million last quarter to USD 9.8 million in Q3 2020 mainly due to 1.5 more vessels in operation, additional crew costs related to delivery of newbuilds and bunkers costs related to additional off-hire.
Adjusted EBITDA for the period ended at USD 9.8 million up from USD 8.4 million in Q3 2019 and down from USD 15.9 million in previous quarter.
Net result from financial items was negative USD 3.1 million in Q3 2020 in line with Q2 2020 and up from negative USD 2.6 million in Q3 2019. The increase from last year is mainly due to lower interest income and increased debt in connection with delivery of additional newbuilds and increased bond debt.
Net profit after tax for Q3 ended at USD 1.3 million compared to USD 1.5 million for the same period last year and down from USD 8.4 million in Q2 2020. Net profit after tax amounts to USD 14.0 million Q3YTD compared to USD 8.2 million for the same period last year.
| (USD/day) / # of days | Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 YTD | Q3 2019 YTD |
|---|---|---|---|---|---|
| Average TCE earnings (note 2) | 18 840 | 21 290 \$/d | 17 287 \$/d | 20 190 \$/d | 16 137 \$/d |
| Opex per day (note 2) | 7 853 | 7 210 \$/d | 6 741 \$/d | 7 391 \$/d | 6 758 \$/d |
| Onhire days | 713 | 807 | 758 | 2 335 | 2 353 |
| Off-hire days, scheduled | 72 | 9 | 65 | 82 | 91 |
| Off-hire days, unscheduled | 43 | 2 | 3 | 50 | 12 |
| % of days in main combination trades2 | 89 % | 85 % | 87 % | 89 % | 73 % |
| Ballast days in % of total on-hire days | 13 % | 12 % | 8 % | 13 % | 11 % |
| Utilisation3 | 83 % | 94 % | 89 % | 90 % | 93 % |
Average TCE earnings per on-hire day for the CABU vessels ended at \$18,840/day for Q3 2020, a decrease of almost \$2,500/day from last quarter, but an increase of approximately \$1,900/day from Q3 2019. Earnings are impacted by lower earnings on the index linked contracts due to a considerably weaker tanker market. However, TCE earnings ended more than 2 times higher than standard MR tankers4 in Q3 and demonstrates how the combination carriers reduce earnings volatility with a diversified market exposure and high contract coverage.
2 % of days in main combination trades = number of days in combi trade from Far East/Middle East to Australia, US Gulf to Brazil and Middle East/India to South America as a percentage of total onhire days.
3 Utilization = (Operating days less waiting time less off-hire days)/operating days
4 Source: Clarksons Platou
1 Earnings per share from operations. Based on average outstanding shares for the different periods.
% of days in main combination trades ended at 89% for the quarter, marginally higher than the same quarter last year and Q2 2020.
Net revenue was affected by in total 72 scheduled off-hire days for dry docking of two CABU vessels and 43 unscheduled off-hire days of which 35 days relates to a COVID-19 incident on one CABU vessel in July as well as deviations for crew changes and port restrictions related to COVID-19.
Operating costs ended at \$7,853/day in Q3 2020, up from \$7,210/day last quarter and \$6,741/day in Q3 2019. The higher OPEX/day for Q3 2020 was mainly a result of extra costs related to the COVID-19 incident and other COVID-19 related costs.
| (USD/day) / # of days | Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 YTD | Q3 2019 YTD |
|---|---|---|---|---|---|
| Average TCE earnings (note 2) | 24 182 \$/d | 30 983 \$/d | 22 802 \$/d | 25 333 \$/d | 17 970 \$/d |
| Opex per day (note 2) | 8 330 \$/d | 9 361 \$/d | 9 126 \$/d | 8 920 \$/d | 10 705 \$/d |
| Onhire days | 271 | 264 | 136 | 803 | 246 |
| Off-hire days, scheduled | - | - | - | - | - |
| Off-hire days, unscheduled | 6 | 9 | 1 | 19 | 56 |
| % of days in main combination trades1 | 48 % | 15 % | 100 % | 42 % | 87 % |
| Ballast days in % of total on-hire days | 15 % | 29 % | 0 % | 20 % | 29 % |
| Utilisation2 | 97 % | 99 % | 99 % | 96 % | 81% |
The CLEANBU fleet outperformed the LR1 tanker vessel spot earnings by 2.4 times in Q33 . Average CLEANBU TCE earnings per on-hire day ended at \$24,182/day for the quarter, up from \$22,802/day in Q3 2019 and down from \$30,983/day in the previous quarter. Three CLEANBU vessels were fixed on tanker time charters in the strong tanker market in April 2020. Two of the vessels were redelivered to charterers during July while the charter for the third vessel expires in mid-February 2021. The combination trading patterns for the CLEANBU vessels have expanded during third quarter. MV Baru lifted jet fuel from the Middle East to Europe, returning with grains to the Middle East and MV Barramundi performed the first combination trade to Australia. The fourth CLEANBU delivered in early August loaded its first cargo in early October due to delays caused by COVID -19 restrictions related to crew.
The CLEANBUs have traded as combination carriers, except for the vessel employed on TC for the entire quarter. Hence, % of days in main combination trades increased to 48% for the quarter.
Average operating costs for the CLEANBU vessels ended at \$8,330/day for the quarter, down from \$9,361/day last quarter and \$9,126/day for Q3 2019. Costs related to standby pay and extra OPEX related to delivery of the fourth CLEANBU are not included. The CLEANBU fleet had in total six days off-hire in third quarter, whereof 0.6 days deviation related to COVID-19, down from nine unscheduled off-hire days in the previous quarter and up from one unscheduled off-hire days in Q3 2019.
KCC's capital commitments are fully funded and the refinancing risk is limited over the next year as the first mortgage debt facility falls due in March 2022. Additional bonds of NOK 200 million were issued under a tap issue to the KCC04 bond in September. The additional bonds were in October listed under the same ISIN as the initial KCC04 issue. The KCC04 bonds amount to NOK 700 million after the tap issue and matures in 2025. The call option to redeem the remaining outstanding amount of NOK 142 million under the KCC03 bonds was exercised in October and the settlement date is 1 December 2020.
The equity ratio was quite stable compared to end of second quarter and ended at 43% per end of third quarter. Cash and cash equivalents ended at USD 57.7 million, down from USD 72.2 million at end of second quarter as final installment for delivery of the fourth CLEANBU in August was paid by equity. Draw down on the bank loan tranche of USD 30.2 million related to this vessel will be made in fourth quarter 2020. Total interestbearing debt ended the quarter at USD 261.1 million, up from USD 243.6 million last quarter due to the bond tap issue.
Net cash flow from operating activities was USD 7.4 million in Q3, in line with EBITDA of USD 9.3 million offset by USD 1.9 million negative changes in working capital. Net cash flow from investments was negative USD 35.0 million and mainly consists of yard instalments related to newbuilds. Net cash flow from financing activities was positive USD 13.1 million and mainly due to the bond tap issue partly offset by scheduled repayment of mortgage debt, interest costs and dividend payment.
The fleet consists of nine CABU and five CLEANBU combination carriers, with another three CLEANBU vessels on order. KCC has two individual fixed price options with expiry in January 2021 with scheduled delivery in 2022.
The fourth and fifth CLEANBU vessels, MV Baleen and MV Bangus, were delivered respectively on 4 August and 13 October. Due to current Chinese travel restrictions related to COVID-19, it has become impossible to bring our crews into the shipyard in China. Hence, Chinese crews were employed to position the two vessels from the shipyard to Korea where crew changes were made. MV Baleen loaded its first cargo in early October, and currently MV Bangus is expected to load its first cargo in mid-November. Based on experience from MV Baleen, the take-over procedure for MV Bangus was optimized to substantially reduce time from delivery to start of trading. The three subsequent newbuilds are expected to be delivered in the period January to April 2021.
In July, two cases of COVID-19 were confirmed onboard one of the CABU vessels. After quarantine of the affected crew, consistent negative results from repetitive COVID-19 testing of the entire crew and complete cleaning and disinfection of the vessel's accommodation, the vessel recommenced trading in early August after 14 days off-hire.
1 % of days in main combination trades = number of days in combination trade from Far East/Middle East to Australia, US Gulf to Brazil and Middle East/India to South America as a percentage of total on-hire days.
It continues to be difficult to make crew changes, get ship managers, service personnel and vet inspectors on board the vessels in our fleet. It has been necessary to deviate vessels to accommodate crew changes, leading to 14 off-hire days and additional costs. In addition, one vessel experienced eight off-hire days due to port quarantine restrictions and forwarding costs for sending spare parts and other equipment to relevant ports have increased. Costs related to COVID-19 issues were approx. USD 1.3 million for the quarter. Total negative impact from COVID-19 in Q3 for vessels in operations and newbuilding delivery amounts USD 2.8 million in costs and lost earnings.
Yard guarantee issues related to three first CLEANBU vessels are targeted to be made in 2021. Total off-hire is expected to be 170-210 days. The yard guarantee items are not linked to the combination carrier concept or trading capabilities of the vessels and are not expected to materially impact the vessels performance until being rectified.
Two CABU vessels have been through periodic dry docking in the period late June - early October, one additional CABU vessel is scheduled for periodic drydocking with start in December 2020. All three vessels will have installed ballast water treatment system during the drydocking. As part of KCC's initiatives to improve the energy efficiency of its fleet and to reach its decarbonization targets, KCC will amongst others invest in fuel saving silicone antifouling coating as well as an ultrasonic system to protect propellers from marine growth.
Earnings of KCC's combination carriers are driven by the dry bulk, tanker and fuel markets. KCC is mainly influenced by the standard MR- and LRproduct tankers and Panamax/Kamsarmax dry bulk markets as the capabilities of KCC's vessels correspond to these standard vessels. Due to the significantly lower ballasting of KCC's combination vessels compared to the standard vessels, KCC's earnings are also positively impacted by increasing fuel costs. Market freight rates in both dry and tanker markets incorporate the cost of extensive ballasting which KCC's vessels to a large degree avoid.
Fig. 4: Caustic Soda prices
1 According to KCC triangular model with baltic exchange TC5 historical and FFA market levels. 2 TC7 and P5TC as per Baltic 3 Platts settled and futures curves
While dry bulk markets were volatile during third quarter and in early fourth quarter, average earnings were considerably stronger than in first half of 2020. Between early July and late October Capesize rates have been between \$18,000/day and \$35,000/day. The Capesize index averaged at \$20,700/day in Q3 (Q2 \$9,600/day). The Panamax segment also saw improvements on the back of a strong Capesize market, with Q3 averaging at \$13,100/day (Q2 \$7,400/day).
The stronger rates were in large driven by strong demand for iron ore from China and higher exports from Brazil and Australia, with Brazilian exports at all-time high levels in August. Grain trades were historically strong as well, with exceptional high US grain exports to China in September and October. The coal trade is still severely depressed due to the COVID-19 pandemic. In October, China imposed a ban on Australian thermal coal which effect on dry bulk ton-mile and rates will depend on where China directs its coal sourcing.
On the supply side, Clarksons report a total bulk carrier fleet growth of 4.7% in Q3 which is expected to be substantially reduced over the coming quarters. With historically low orderbooks, low fleet growth will likely be a positive factor for the dry bulk market going forward. In sum it looks like there is upside potential in rates with the iron ore and grain trades to be supportive of rates going forward, while the development of the coal and minor bulks trades will be at the mercy of world economic growth, where the pandemic continues to pose a significant risk.
The product tanker market remained weak for most of third quarter, with exception of a short period in August when rates improved due to shut down of refinery capacity in US Gulf in connection with the hurricane Laura. In third quarter the LR1 route from Middle East to Japan (TC5) averaged \$7,800/day, negatively impacted by continued muted oil consumption, high inventories and general low refinery runs on the back of the supply/demand disruptions caused mainly by the COVID-19 pandemic. Although product tanker rates historically have strengthened into the winter market it is expected that product tanker rates will continue to be negatively impacted by the abovementioned factors. Expectation of oil demand gradually resuming pre-COVID-19 levels coupled with low fleet growth could spur an improvement in rates during 2021/into 2022.
US caustic soda (CSS) demand continued to edge up in third quarter, while still well below normal levels. Operating rates were negatively impacted by the hurricane Laura in August, closing one of the US Gulf CSS export plants for the whole of September. Japanese and Korean producers have kept operating rates high, building inventory which has had negative effect on North Asia spot prices in September. This further widens the price spreads between US Gulf and North Asia, disincentivizing exports from US Gulf to Australia
Brent crude oil prices ended at USD 41 per barrel, flat quarter-on-quarter. Average fuel oil price (VLSFO) fell by around 6% quarter-on-quarter.
Safety is KCC's priority number one and to the Board's satisfaction there were no major or medium incidents and no navigational incidents or spills to environment in Q3 2020.
The global COVID-19 situation is again escalating and KCC and its ship manager Klaveness Ship Management have implemented a number of new measures to ensure the health and safety of our crew. A revised COVID-19 management plan with increased testing and strict quarantine procedures for onboarding crew has been implemented during third quarter. The new plan seems to work well and there have not been any new COVID-19 cases onboard our vessels since the incident on MV Barcarena in July.
The number of crew changes picked up again through Q3. Still, many of the crew have stayed onboard much longer than their initial contract tenure. Risk of crew fatigue is high and the ship manager, Klaveness Ship Management, has strong focus on the implications of the COVID-19 situation for crew and vessels and continuously considers implementing additional measures.
| HEALTH & SAFETY KPI'S | Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 YTD | Q3 2019 YTD |
|---|---|---|---|---|---|
| # of medium* injuries | - | - | 2 | 3 | 5 |
| # of major** injuries | - | - | - | - | - |
| # of navigational incidents | - | - | 2 | 1 | 3 |
| # of spills to the environment | - | 1 | - | 1 | - |
* Medium = Medical treatment and repatriation, will return to work
**Major = Severe injury or death
KCC is taking all possible technical and operational precautions to protect the environment and as a minimum complying with all requirements in the International Safety Management Code (ISM-code) and the MARPOL-convention.
KCC's combination carriers provide the most carbon efficient and environmentally friendly deep-sea transportation solution available today. Our vessels effectively combine wet and dry cargo, minimizing ballast to 10-15% of the time, whilst regular tankers and dry bulk vessels typically ballast 30-45% of the time in the same trading patterns. This gives up to 40% reduction in CO2 emissions for the same transport work, when performed by KCC's combination carriers.
In July, KCC signed a sustainability linked bank facility to part finance two newbuilds with delivery in 2021. The pricing ofthe facility is linked to the two environmental KPIs, EEOI and CO2 emissions per vessel, based on the ambitious emissions targets of the company.
CO2 emissions per ton transported cargo per nautical mile (EEOI) ended at 8.0 for third quarter, quite stable compared to second quarter, while average CO2 emissions per vessel had a negative development and ended at 21,600 mt up from 20,100 mt in second quarter.
Ballast days in % of total on-hire days2 CO2 emission per ton transported cargo per nautical mile (EEOI)1,2
1 EEOI (Energy Efficiency Operational Index) is defined by IMO and represents CO2 emitted per transported cargo per nautical mile for a period of time (both fuel consumption at sea and in port included). In theory, this index will show the good energy efficiency for the combination carriers as the combination carriers have substantially lower ballast than standard vessels. As the fleet is relatively small, the reported EEOI is sensitive to temporary trade disruptions with trading the vessels as standard vessels with "normal ballast" as well as one or two longer ballast voyages e.g. when positioning CABU vessels to/from trading in Americas. These variations are evident when we look at the historical numbers, but will most likely be more stable when we have a larger fleet. Prior to 2020, end date of a voyage is decisive for which period EEOI for a voyage is included. From 2020 and onwards, reporting system provider was changed so that we are able to calculate EEOI on a per day basis, allocated to the corresponding quarter.
2 Benchmark: The EEOI and % ballast for "Benchmark standard vessels" are calculated based on standard vessels (panamax/kamsarmax dry, MR-tankers and LR1-tankers) making the same transportation work in the same trades as performed by KCC's CABU and CLEANBU vessels. The EEOI for "Benchmark standard vessels" is calculated as the weighted average of EEOI for the individual trades performed. There is a degree of uncertainty related to the benchmark values as these are estimated using data from Baltic Exchange and AXSmarine.
3 CO2 emissions – average per vessels = total emissions/vessel years. Vessel years = days available – offhire days. Quarterly figures are annualized. When new vessels are delivered to the fleet, the vessel years are calculated from the date the vessel is delivered. Prior to 2020, end date for a voyage was decisive for which period emission was included. From 2020 and onwards, reporting system provider was changed so that we are able to calculate emissions on a per day basis, allocated to the corresponding quarter.
4 % of days in main combination trades = number of days in combi trade from Far East/Middle East to Australia, US Gulf to Brazil and Middle East/India to South America as a percentage of total onhire days.
The earnings outlook for fourth quarter 2020 is positive. The outlook is supported by a high tanker market coverage including Contracts of Affreightments (COAs) and Time Charters, partly secured during the strong tanker market in April-May 2020. In addition, a relatively strong, albeit volatile, dry bulk market underpins KCC's earnings for Q4 2020. 85% of the tanker market exposure for Q4 2020 has been secured (87% fixed rate) and 50% for 1H 2021 (35% fixed rate).
Off-hire is expected to be lower in fourth quarter compared to third quarter due to docking of only one vessel and expected lower unscheduled offhire related to deviations and quarantine restrictions as a result of COVID-19.
The situation related to the COVID-19 pandemic is uncertain. The virus has negative effects on the world economy which again negatively impacts demand in the dry bulk, tanker and fuel markets driving the earnings of KCC's fleet. The second COVID-19 wave of infections during the autumn has led to new lockdowns and economic disruptions which will have negative impact on economic development in the affected regions and likely delay the recovery in oil consumption and hence in the tanker market.
Coming into 2021 the widespread distribution of COVID-19 vaccines will likely strengthen an underlying positive economic development. With historical low tanker and dry bulk orderbooks, there should be a considerable upside potential in both the tanker and dry bulk markets once the world economy gets up to speed. KCC's contract coverage and trading pattern with exposure to three markets make KCC more resilient to demand shocks compared to many other players in the standard tanker and dry bulk market, but also KCC's earnings will be negatively impacted by continued low activity in shipping markets going forward. While the implemented improved COVID-19 management plan and more efficient take-over procedures of newbuilds work well, KCC is likely to continue experience higher than normal operating costs and off-hire over the coming quarters due to COVID-19.
Three more CLEANBU vessels will be delivered in 2021 and the CLEANBU earnings are dependent on a continued expansion of the CLEANBU combination trading pattern. Three CLEANBUs have during their TC-employments in 2020 built extensive tanker market experience and the CLEANBUs have as well expanded into new dry bulk/CPP combination trades in the third quarter.
Oslo, 17 November 2020
The Board of Directors of
Klaveness Combination Carriers ASA
Lasse Kristoffersen Chairman of the Board
Lori Wheeler Næss
Board member
Rebekka Glasser Herlofsen Board member
Magne Øvreås Board member Morten Skedsmo Board member
Engebret Dahm CEO
| Quarter ended | YTD | Year ended | ||||
|---|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | Audited | ||
| USD'000 | Notes | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Freight revenue | 3 | 29 362 | 34 467 | 105 845 | 94 548 | 130 768 |
| Charter hire revenue | 3 | 6 887 | 68 | 15 173 | 649 | 5 752 |
| Total revenues, vessels | 36 249 | 34 535 | 121 018 | 95 197 | 136 521 | |
| Voyage expenses | (15 891) | (17 964) | (52 750) | (52 694) | (75 194) | |
| Net revenues from operations of vessels | 20 358 | 16 571 | 68 267 | 42 503 | 61 327 | |
| Operating expenses, vessels | (9 753) | (7 563) | (26 499) | (21 401) | (29 913) | |
| Group commercial and administrative services | 9 | (773) | (1 041) | (2 374) | (3 369) | (4 396) |
| Salaries and social expense | (399) | - | (913) | - | - | |
| Tonnage tax | (41) | (24) | (98) | (98) | (163) | |
| Other operating and administrative expenses | (135) | (179) | (582) | (910) | (1 093) | |
| Operating profit before depreciation (EBITDA) | 9 257 | 7 764 | 37 802 | 16 726 | 25 763 | |
| Ordinary depreciation | 4 | (4 821) | (3 621) | (13 532) | (9 541) | (14 070) |
| Operating profit after depreciation (EBIT) | 4 436 | 4 143 | 24 269 | 7 185 | 11 692 | |
| Finance income | 7 | 57 | 2 561 | 344 | 3 631 | 3 024 |
| Finance costs | 7 | (3 182) | (5 159) | (10 630) | (11 955) | (14 105) |
| Profit before tax (EBT) | 1 311 | 1 545 | 13 983 | (1 139) | 612 | |
| Income tax expenses | - | - | - | - | (15) | |
| Profit after tax | 1 311 | 1 545 | 13 983 | (1 139) | 597 | |
| Attributable to: | ||||||
| Equity holders of the parent company | 1 311 | 1 545 | 13 983 | (1 139) | 597 | |
| Total | 1 311 | 1 545 | 13 983 | (1 139) | 597 | |
| Earnings per Share (EPS): | 0.03 | 0.03 | 0.29 | (0.03) | 0.01 | |
| Basic and diluted, profit for the period attributable to |
ordinary equity holders of the parent
| Quarter ended | YTD | Year ended | |||
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | Audited | |
| 30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019 31 Dec 2019 | |||||
| USD '000 | |||||
| 1 311 | 1 545 | 13 983 | (1 139) | 597 | |
| Profit/ (loss) of the period | |||||
| Other comprehensive income to be reclassified to profit or loss | |||||
| Net movement fair value on cross-currency interest rate swaps (CCIRS) | (602) | (2 692) | (8 624) | (2 587) | (1 438) |
| Reclassification to profit and loss (CCIRS) | 516 | 2 173 | 4 476 | 2 384 | 1 347 |
| Net movement fair value on interest rate swaps | 512 | (72) | (3 302) | (764) | (686) |
| Net movement fair value FX hedge | - | - | - | (14) | 38 |
| Net movement fair value bunker hedge | 254 | (77) | (155) | 570 | 918 |
| Net movement fair value FFA hedge | (262) | (798) | (660) | (586) | 85 |
| Net other comprehensive income to be reclassified to profit or loss | 418 | (1 466) | (8 265) | (997) | 265 |
| Other comprehensive income/(loss) for the period, net of tax | 418 | (1 466) | (8 265) | (997) | 265 |
| Total comprehensive income/(loss) for the period, net of tax | 1 729 | 79 | 5 718 | (2 135) | 862 |
| Attributable to: | |||||
| Equity holders of the parent company | 1 729 | 79 | 5 718 | (2 135) | 862 |
| Total | 1 729 | 79 | 5 718 | (2 135) | 862 |
(Figures in USD '000)
| Unaudited | Audited | |
|---|---|---|
| ASSETS Notes |
30 Sep 2020 | 31 Dec 2019 |
| Non-current assets | ||
| Vessels 4 |
358 027 | 315 208 |
| Newbuilding contracts 5 |
63 929 | 62 316 |
| Right of-use assets | 1 618 | 1 765 |
| Long-term financial assets 6 |
299 | 202 |
| Long-term receivables 9 |
70 | - |
| Total non-current assets | 423 943 | 379 490 |
| Current assets | ||
| Short-term financial assets 6 |
443 | 1 077 |
| Inventories | 7 228 | 7 163 |
| Trade receivables and other current assets | 12 787 | 14 313 |
| Short-term receivables from related parties | 66 | 130 |
| Cash and cash equivalents | 57 699 | 57 089 |
| Total current assets | 78 223 | 79 772 |
| TOTAL ASSETS | 502 166 | 459 262 |
| EQUITY AND LIABILITIES | Unaudited 30 Sep 2020 |
Audited 31 Dec 2019 |
|
|---|---|---|---|
| Equity | |||
| Share capital | 5 725 | 5 725 | |
| Share premium | 130 155 | 130 155 | |
| Other reserves | (8 096) | 316 | |
| Retained earnings | 88 331 | 77 681 | |
| Total equity | 216 115 | 213 878 | |
| Non-current liabilities | |||
| Mortgage debt | 6 | 156 452 | 169 304 |
| Long-term financial liabilities | 6 | 12 929 | 3 626 |
| Long-term lease liabilities | 1 219 | 1 395 | |
| Bond loan | 6 | 72 388 | 33 836 |
| Total non-current liabilities | 242 988 | 208 161 | |
| Current liabilities | |||
| Short-term mortgage debt | 6 | 17 367 | 17 367 |
| Other interest bearing liabilities | 6 | - | 1 835 |
| Short-term financial liabilities | 6 | 155 | - |
| Short-term lease liabilities | 454 | 407 | |
| Short-term bond loan | 6 | 14 932 | - |
| Trade and other payables | 9 667 | 16 841 | |
| Short-term debt to related parties | 350 | 617 | |
| Tax liabilities | 138 | 157 | |
| Total current liabilities | 43 063 | 37 223 | |
| TOTAL EQUITY AND LIABILITIES | 502 166 | 459 262 |
Oslo, 17 November 2020
The Board of Directors of
Klaveness Combination Carriers ASA
Chairman of the Board
Morten Skedsmo Board member
Lori Wheeler Næss
Board member
Rebekka Glasser Herlofsen
Board member
Engebret Dahm CEO
(Figures in USD '000)
| Attributable to equity holders of the parent | |||||||
|---|---|---|---|---|---|---|---|
| Unaudited 2020 |
Share capital |
Other paid in capital |
Treasury Shares |
Hedging reserve |
Retained earnings |
Total | |
| Equity 1 January 2020 | 5 725 | 130 155 | - | 316 | 77 681 | 213 878 | |
| Profit (loss) for the period | - | - | - | - | 13 983 | 13 983 | |
| Other comprehensive income for the period | - | - | - | (8 265) | - | (8 265) | |
| Purchase of own shares | - | - | (147) | - | - | (147) | |
| Share option program | - | - | - | - | 29 | 29 | |
| Dividends | - | - | - | - | (3 362) | (3 362) | |
| Equity at 30 September 2020 | 5 725 | 130 155 | (147) | (7 949) | 88 331 | 216 115 |
| Unaudited 2019 |
Share capital |
Other paid in capital |
Treasury Shares |
Hedging reserve |
Retained earnings |
Total |
|---|---|---|---|---|---|---|
| Equity 1 January 2019 | 4 863 | 92 271 | - | 51 | 80 901 | 178 086 |
| Profit (loss) for the period | - | - | - | - | (1 139) | (1 139) |
| Other comprehensive income for the period | - | - | - | (997) | - | (997) |
| Dividends | - | - | - | - | (3 335) | (3 335) |
| Capital increase | 862 | 37 918 | - | - | - | 38 781 |
| Equity at 30 September 2019 | 5 725 | 130 189 | - | (946) | 76 428 | 211 397 |
| Audited 2019 |
Share capital |
Other paid in capital |
Treasury Shares |
Hedging reserve |
Retained earnings |
Total |
|---|---|---|---|---|---|---|
| Equity 1 January 2019 | 4 863 | 92 271 | - | 51 | 80 901 | 178 086 |
| Profit (loss) for the period | - | - | - | - | 597 | 597 |
| Other comprehensive income for the period | - | - | - | 265 | - | 265 |
| Dividends | - | - | - | - | (3 820) | (3 820) |
| Capital increase (May 20, 2019) | 845 | 37 080 | - | - | - | 37 925 |
| Capital increase (June 21, 2019) | 17 | 805 | - | - | - | 822 |
| Share option program | - | - | - | - | 3 | 3 |
| Equity at 31 December 2019 | 5 725 | 130 155 | - | 316 | 77 681 | 213 878 |
(Figures in USD '000)
| Quarter ended YTD |
Year ended | |||||
|---|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | Audited | ||
| Notes | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 | |
| Profit before tax | 1 311 | 1 545 | 13 984 | (1 139) | 612 | |
| Tonnage tax expensed | 41 | 24 | 98 | 98 | 163 | |
| Ordinary depreciation | 4 | 4 821 | 3 621 | 13 532 | 9 541 | 14 070 |
| Amortization of upfront fees bank loans | 139 | 89 | 485 | 243 | 373 | |
| Financial derivatives unrealised loss / gain (-) | 6 | 305 | 2 478 | (428) | 3 597 | 3 681 |
| Gain/loss on foreign exchange | (20) | (1 953) | 103 | (1 480) | (1 074) | |
| Interest income | 7 | (6) | (502) | (257) | (1 597) | (1 885) |
| Interest expenses | 7 | 2 715 | 2 514 | 8 690 | 7 080 | 9 889 |
| Taxes paid for the period | - | - | - | (45) | (46) | |
| Change in current assets | (320) | 2 404 | 1 525 | (2 118) | (5 090) | |
| Change in current liabilities** | (1 551) | 278 | (7 444) | (259) | 9 294 | |
| Interest received | 7 | 6 | 502 | 257 | 1 597 | 1 885 |
| A: Net cash flow from operating activities | 7 440 | 10 999 | 30 544 | 15 517 | 31 873 | |
| Acquisition of tangible assets | 4 | (2 745) | (2 803) | (3 280) | (3 789) | (6 010) |
| Installments and other cost on newbuilding contracts** | 5 | (32 291) | (87 001) | (53 775) | (143 027) | (158 285) |
| B: Net cash flow from investment activities | (35 036) | (89 804) | (57 055) | (146 816) | (164 295) | |
| Proceeds from mortgage debt | - | 31 000 | - | 93 000 | 93 000 | |
| Net proceeds from bond loan | - | - | - | (630) | (630) | |
| Proceeds from bond loan (KCC04) | 6 | 22 362 | - | 76 390 | - | - |
| Buyback of bond loan (KCC03) | 6 | - | - | (17 879) | - | - |
| Transaction costs on issuance of loans | 6 | (335) | (949) | (1 205) | (1 403) | (1 596) |
| Repayment of mortgage debt | 6 | (4 342) | (3 481) | (13 025) | (10 012) | (13 923) |
| Terminated financial instruments | - | - | (3 101) | - | - | |
| Interest paid | 7 | (2 933) | (2 525) | (8 386) | (6 390) | (9 014) |
| Repayment of financial lease liabilities | (113) | (99) | (329) | (278) | (385) | |
| Purchase of own shares | (139) | - | (147) | - | - | |
| Capital increase May 20, 2019 | - | - | - | 40 096 | 40 096 | |
| Transaction costs on capital increase | - | - | - | (1 035) | (2 147) | |
| Dividends | (1 441) | (480) | (3 362) | (3 334) | (3 814) | |
| C: Net cash flow from financing activities | 13 060 | 23 466 | 28 956 | 110 014 | 101 587 | |
| Net change in liquidity in the period (A + B + C) | (14 526) | (55 340) | 2 446 | (21 285) | (30 836) | |
| Cash and cash equivalents at beginning of period | 72 225 | 120 145 | 55 254 | 86 090 | 86 090 | |
| Cash and cash equivalents at end of period* | 57 699 | 64 805 | 57 699 | 64 805 | 55 254 | |
| Net change in cash and cash equivalents in the period | (14 526) | (55 340) | 2 445 | (21 285) | (30 836) | |
| *Reconciliation of cash and cash equivalents presented in cash flow statement | ||||||
| Cash and cash equivalents | 57 699 | 67 481 | 57 699 | 67 481 | 57 089 | |
| Other interest bearing liabilities (overdraft facility) | - | 2 676 | - | 2 676 | 1 835 | |
| Cash and cash equivalents (as presented in cash flow statement) | 57 699 | 64 805 | 57 699 | 64 805 | 55 254 |
** Yard installment of USD 4.7 million paid in January 2020 is included in YTD Q3-20 as change in working capital and not as installment paid/cash flow from investment activitites as milestone was completed in December 2019.
| 01 | Accounting policies |
|---|---|
| 02 | Segment reporting |
| 03 | Revenue from contracts with customers |
| 04 | Vessels |
| 05 | Newbuildings |
| 06 | Financial assets and financial liabilities |
| 07 | Financial items |
| 08 | Share capital, shareholders, dividends and reserves |
| 09 | Transactions with related parties |
| 10 | Events after the balance sheet date |
| 11 | Reconciliation of alternative performance measures |
Klaveness Combination Carriers ASA ("Parent Company/The Company/KCC") is a public limited liability company domiciled and incorporated in Norway. The parent company and its subsidiaries ("The Group") has its headquarter and registered office in Drammensveien 260, 0283 Oslo. The share is listed on Oslo Axess with ticker KCC.
The objectives of the Group is to provide transportation for dry bulk, chemical and product tanker clients, as well as to develop new investment and acquisition opportunities that fit the Group's existing business platform. The Group has nine CABU vessels, vessels with capacity to transport caustic soda (CSS), floating fertilizer (UAN) and molasses as well as all dry bulk commodities. In addition, the Group has five CLEANBU vessels in operation and three CLEANBU newbuildings with estimated delivery in 1H 2021. The fifth CLEANBU vessel was delivered 13 October. The CLEANBUs are both full fledged LR1 product tankers and kamsarmax dry bulk vessels.
The interim condensed financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the Europen Union and are based on IAS 34 Interim Financial Reporting. The interim condensed financial statements of the Group should be read in conjunction with the audited consolidated financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRS, as adopted by the European Union.
During second quarter 2020, the three CLEANBU vessels owned by KCC Shipowning AS was sold to KCC KBA AS, which are subject toordinary Norwegian taxation. In third quarter two of the CLEANBUS were sold back to KCC Shipowning, and KCC KBA AS own as per end of September one CLEANBU, MV Barracuda. The Group expect no income tax to be recognized in 2020. The internal sale has no material effect on Group accounts.
Where KCC has acquired own shares under a share buy-back program, the amount of consideration paid, including directly attributable costs, is recognized as a change in equity and classified as treasury shares. No gain or loss is recognized in profit and loss on the purchase, sale, issue, reissue or cancellation of KCC's own equity instruments.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the annual consolidated financial statements of the year ended 31 December 2019 except for the adoption of new accounting standards or amendments with effective date after 1 January 2020. There was no material impact of new accounting standards or amendments adopted by the period.
The Group is an owner and operator of combination carriers and operates mainly within the dry bulk shipping industry and the product tanker industry. Currently, the Group owns nine CABUs, five CLEANBUs on water and three CLEANBUs on order with expected deliveries through 2020 and 2021. The fourth and fifth CLEANBU vessel were delivered respectively in August and October 2020.
The CABUs are from 72,456 dwt to 80,344 dwt and have the capacity to transport caustic soda solution (CSS), floating fertilizer (UAN) and molasses as well as all types of dry bulk commodities.
The CLEANBUs have approximately 82,500 dwt carrying capacity. The CLEANBUs are both full-fledged LR1 product tankers and kamsarmax bulk carriers transporting clean petroleum products (CPP), heavy liquid cargoes such as CSS, UAN and molasses as well as all types of dry bulk products.
| Q3 2020 | Q3 2019 | ||||||
|---|---|---|---|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total | |
| Operating revenue, vessels | 27 851 | 8 398 | 36 249 | 30 394 | 4 141 | 34 535 | |
| Voyage expenses | (13 998) | (1 892) | (15 891) | (17 013) | (951) | (17 964) | |
| Net revenue | 13 852 | 6 506 | 20 358 | 13 381 | 3 190 | 16 571 | |
| Operating expenses, vessels | (6 418) | (3 336) | (9 753) | (5 431) | (2 132) | (7 563) | |
| Group administrative services | (509) | (264) | (773) | (748) | (293) | (1 041) | |
| Salaries and social expense | (263) | (136) | (399) | - | - | - | |
| Tonnage tax | (34) | (7) | (41) | (20) | (4) | (24) | |
| Other operating and administrative expenses | (89) | (46) | (135) | (128) | (50) | (179) | |
| Operating profit before depreciation (EBITDA) | 6 541 | 2 716 | 9 257 | 7 054 | 710 | 7 764 | |
| Ordinary depreciation | (3 316) | (1 505) | (4 821) | (2 807) | (814) | (3 621) | |
| Operating profit after depreciation (EBIT) | 3 225 | 1 211 | 4 437 | 4 247 | (104) | 4 143 |
| Reconciliation of average revenue per onhire day (TCE earnings USD/day) | ||||||
|---|---|---|---|---|---|---|
| Q3 2019 | ||||||
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total |
| Net revenues from operations of vessels | 13 852 | 6 506 | 20 358 | 13 381 | 3 190 | 16 571 |
| IFRS 15 adjustment* | (413) | 42 | (370) | (271) | (83) | (354) |
| Net revenue ex IFRS adjustment | 13 439 | 6 548 | 19 988 | 13 110 | 3 107 | 16 217 |
| Onhire days | 713 | 271 | 984 | 758 | 136 | 895 |
| Average TCE earnings per onhire day (\$/d) | 18 840 | 24 182 | 20 310 | 17 287 | 22 802 | 18 127 |
| Q3 2020 | Q3 2019 | |||||
|---|---|---|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total |
| Operating expenses, vessels | 6 418 | 3 336 | 9 753 | 5 431 | 2 132 | 7 563 |
| Leasing cost previously presented as opex | 84 | 28 | 113 | 151 | 21 | 172 |
| Start up cost CLEANBU vessels | - | (590) | (590) | - | (647) | (647) |
| Operating expenses, vessels adjusted | 6 502 | 2 774 | 9 276 | 5 582 | 1 506 | 7 088 |
| Operating days | 828 | 333 | 1 161 | 828 | 165 | 993 |
| Opex per day (\$/d) | 7 853 | 8 330 | 7 990 | 6 741 | 9 126 | 7 138 |
* IFRS 15 adjustment: Revenue recognized from load-to-discharge and not from discharge-to-discharge, resulting in higher volatility in revenues from month to month.
| Q3 2020 YTD | Q3 2019 YTD | |||||
|---|---|---|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total |
| Operating revenue, vessels | 93 289 | 27 728 | 121 018 | 88 576 | 6 621 | 95 197 |
| Voyage expenses | (46 066) | (6 685) | (52 751) | (50 585) | (2 109) | (52 694) |
| Net revenue | 47 224 | 21 043 | 68 267 | 37 991 | 4 512 | 42 503 |
| - | - | |||||
| Operating expenses, vessels | (17 980) | (8 520) | (26 499) | (16 285) | (5 116) | (21 401) |
| Group administrative services | (1 614) | (760) | (2 374) | (2 843) | (526) | (3 369) |
| Salaries and social expense | (617) | (296) | (913) | - | - | - |
| Tonnage tax | (73) | (25) | (98) | (87) | (10) | (97) |
| Other operating and administrative expenses | (397) | (184) | (581) | (677) | (233) | (910) |
| Operating profit before depreciation (EBITDA) | 26 542 | 11 259 | 37 801 | 18 100 | (1 374) | 16 725 |
| Ordinary depreciation | (8 953) | (4 580) | (13 532) | (7 732) | (1 809) | (9 541) |
| Operating profit after depreciation (EBIT) | 17 589 | 6 679 | 24 269 | 10 367 | (3 183) | 7 185 |
| Q3 2020 YTD | Q3 2019 YTD | |||||
|---|---|---|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total |
| Net revenues from operations of vessels | 47 224 | 21 043 | 68 267 | 37 991 | 4 512 | 42 503 |
| IFRS 15 adjustment* | (78) | (569) | (647) | (30) | (83) | (113) |
| Offhire compensation | - | (134) | (134) | - | - | - |
| Net revenue ex IFRS adjustment | 47 146 | 20 340 | 67 486 | 37 961 | 4 429 | 42 390 |
| Onhire days | 2 335 | 803 | 3 138 | 2 353 | 246 | 2 599 |
| Average TCE earnings per onhire day (\$/d) | 20 190 | 25 333 | 21 506 | 16 137 | 17 970 | 16 312 |
| Q3 2020 YTD | Q3 2019 YTD | |||||
|---|---|---|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total | CABU | CLEANBU | Total |
| Operating expenses, vessels | 17 980 | 8 520 | 26 499 | 16 285 | 5 116 | 21 401 |
| Leasing cost previously presented as opex | 246 | 82 | 328 | 321 | 50 | 371 |
| Start up cost CLEANBU vessels | - | (761) | (761) | - | (1 569) | (1 569) |
| Operating expenses, vessels adjusted | 18 225 | 7 841 | 26 066 | 16 606 | 3 597 | 20 202 |
| Operating days | 2 466 | 879 | 3 345 | 2 457 | 336 | 2 793 |
| Opex per day (\$/d) | 7 391 | 8 920 | 7 793 | 6 758 | 10 705 | 7 233 |
The Group has income from COA contracts (1-3 years), spot voyages and TC contracts. Set out below is the disaggregation of the Group's revenue from contracts with customers.
| Revenue types | Quarter ended | YTD | Year ended | |||
|---|---|---|---|---|---|---|
| USD'000 | Classification | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Revenue from COAs | Freight revenue | 22 733 | 26 961 | 77 550 | 66 251 | 98 110 |
| Revenue from spot voyages | Freight revenue | 6 629 | 7 506 | 28 295 | 28 297 | 32 658 |
| Revenue from TC contracts | Charter hire revenue | 6 887 | 68 | 15 039 | 649 | 5 752 |
| Other revenue | Charter hire revenue | - | - | 134 | - | - |
| Total revenue, vessels | 36 249 | 34 535 | 121 018 | 95 197 | 136 521 |
| Vessels | ||
|---|---|---|
| (USD '000) | 30 Sep 2020 | 31 Dec 2019 |
| Cost price 1.1 | 492 075 | 330 218 |
| Delivery of newbuildings | 52 163 | 155 847 |
| Additions (mainly upgrading and docking of vessels) | 3 861 | 6 010 |
| Costprice end of period | 548 098 | 492 075 |
| Acc. Depreciation 1.1 | 176 866 | 163 181 |
| Depreciation for the period | 13 205 | 13 685 |
| Acc. Depreciation end of period | 190 071 | 176 866 |
| Carrying amounts end of period* | 358 027 | 315 208 |
| *carrying value of vessels includes dry-docking | ||
| No. of vessels | 13 | 12 |
| Useful life | 25 | 25 |
| Depreciation schedule | Straight-line | Straight-line |
| Reconciliation of depreciations | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 30 Sep 2019 |
30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 | |
| Depreciation vessels | 4 708 | 3 522 | 13 205 | 9 263 | 13 685 |
| Depreciation right of use assets | 113 | 99 | 328 | 278 | 385 |
| Depreciations for the period | 4 821 | 3 621 | 13 532 | 9 541 | 14 070 |
Identification of impairment indicators is based on an asessment of development in market rates (dry bulk, MR tanker, LR1 tanker and fuel), TCE earnings for the fleet, vessel opex, operating profit, technological development, change in regulations, interest rates and discount rate. The Group experienced somewhat higher opex and more offhire caused by Covid-19, however, TCE earnings for Q3 for both the fleet of CABUs and the fleet of CLEANBUs and diversified market exposure supports the conclusion of no impairment indicators identified as per 30 September 2020. Contract coverage for the CABUs for 2021 is high, while the CLEANBUs will trade in the spot market.
The Group has per 30 September 2020 four CLEANBU combination carrier newbuildings on order at Jiangsu New Yangzi ShipbuildingCo., Ltd in China with delivery scheduled in the period Q4 2020 and 1H 2021. The contracts include options for further two (four as per 30.09 however two options expired 10 October 2020) vessels. One vessel, MV Baleen, was delivered in Q3 (note 4), while the fifth CLEANBU, MV Bangus was delivered 13 October 2020 (note 10).
The fleet of newbuildings are fully financed (note 6).
| Net carrying amount | 63 929 | 62 316 |
|---|---|---|
| Delivery of newbuilings | (52 163) | (155 847) |
| Other capitalized cost | 4 394 | 8 813 |
| Yard installments paid | 48 554 | 148 170 |
| Borrowing cost | 828 | 1 302 |
| Cost 1.1 | 62 316 | 59 877 |
| (USD '000) | 30 Sep 2020 | 31 Dec 2019 |
The commitments related to the four newbuildings are set out below.
| Total commitments newbuildings | 65 100 | 65 100 | 130 200 |
|---|---|---|---|
| Combination carriers | 65 100 | 65 100 | 130 200 |
| Remaining installments at 30 September 2020 (USD '000) |
2020 | 2021 | Total |
The below tables present the Group's financing arrangements as per 30 September 2020.
During Q3 2020 the Group, with KCC Shipowning AS as Borrower, signed a USD 60 million Sustainability Linked Term Loan and Revolving Credit Facility with Nordea and Credit Agricole to finance two CLEANBU vessels with delivery in 2021. The margin is 2.75% and main terms including parent guarantee and financial covenants are in line with existing financing.
In September the Group issued NOK 200 million in additional bonds in a tap issue under the KCC04 bond loan. The issue price was 98.5% of par and the total outstanding amount under the KCC04 bond loan is NOK700 million. The NOK 200 million was converted to USD fixed rate loan via cross currency interest rate swaps.
| (USD '000) | ||||
|---|---|---|---|---|
| Mortgage debt | Description | Interest rate | Maturity | Carrying amount |
| Nordea/Danske Facility | Term loan, USD 100 mill | LIBOR + 2.3 % | March 2022 | 79 213 |
| DNB/SEB Facility | Term loan, USD 105 mill | LIBOR + 2.3 % | December 2023 | 95 203 |
| SEB/SR-Bank/SPV Facility* | Term loan/RCF, 90.675 mill | LIBOR + 2.3 % | October 2025 | - |
| Nordea/Crédit Agricole** | Term loan/RCF, 60 mill | LIBOR + 2,75 % | March 2026 | - |
| Capitalized loan fees | (597) | |||
| Mortgage debt 30 September 2020 | 173 819 |
* Facility relates to financing of the three CLEANBU vessels with delivery in 2020. Term loan facility (USD60.450) expected fully drawn within Q4 2020
** Facility relates to financing of the two CLEANBU vessels with delivery in 2021. Margin adjustment up to 10 bps based on fleet emission performance.
| Face value | Carrying amount 30 Sep 2020 |
||
|---|---|---|---|
| Bond loan | NOK'000 | Maturity | USD'000 |
| KCC03 | 300 000 | 27.05.2021 | 35 370 |
| Buyback KCC03 (Q1 2020) | (158 000) | (18 628) | |
| Exchange rate adjustment | (1 771) | ||
| Capitalized expenses | (39) | ||
| Sum KCC03 | 14 932 | ||
| KCC04 | 700 000 | 11.02.2025 | 76 390 |
| Exchange rate adjustment | (2 590) | ||
| Capitalized expenses | (1 083) | ||
| Bond discount | (329) | ||
| Sum KCC04 | 72 388 | ||
| Total bond loan | 842 000 | 87 320 |
| (USD '000) | Fair value | Carrying amount | Carrying amount |
|---|---|---|---|
| Interest bearing liabilities | 30 Sep 2020 | 30 Sep 2020 | 31 Dec 2019 |
| Mortgage debt | 157 049 | 157 049 | 170 074 |
| Capitalized loan fees | - | (597) | (770) |
| Bond loan | 70 294 | 73 800 | 34 023 |
| Bond discount | - | (329) | - |
| Capitalized expenses bond loan | - | (1 083) | (187) |
| Total non-current interest bearing liabilties | 227 344 | 228 840 | 203 139 |
| Mortgage debt, current | 17 367 | 17 367 | 17 367 |
| Bond loan, current | 14 931 | 14 971 | - |
| Capitalized expenses bond loan current | - | (39) | - |
| Overdraft facility (Secured) | - | - | 1 835 |
| Total interest bearing liabilities | 259 641 | 261 139 | 222 341 |
The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments. Interest bearing debt and unsecured debt includes interest payments and interest hedge.
| Total | (42 352) | (101 471) | (156 202) | - | (300 025) |
|---|---|---|---|---|---|
| Bond loan (incl interest) | (19 433) | (9 515) | (81 867) | - | (110 815) |
| Mortgage debt (incl interests) | (22 919) | (91 956) | (74 335) | - | (189 210) |
| (USD '000) Maturity profile financial liabilities at 30 Sep 2020 |
< 1 year | 1-3 years | 3-5 years | > 5 years | Total |
Loan facilities to be refinanced during the next 12 months are included in <1 year.
As per 30 September 2020, the Group is in compliance with all financial covenants. On Group level financial covenants relate to minimum equity (USD 125 million), equity ratio (30%), and cash (USD 15 million). Financial covenants on KCC Shipowning AS level relate to minimum cash (the higher of USD 10 million and 5 % of net interest-bearing debt) and net interest-bearing debt to EBITDA (NIBD/EBITDA) of max 7x. The NIBD/EBITDA ratio can be higher than 7x for one reporting period (measured semi-annually) provided that the NIBD/EBITDA is below 7x in the previous reporting period. In addition, all secured loans contain minimum value clauses related to the value of the vessel compared to outstanding loan.
| Financial assets | ||
|---|---|---|
| (USD '000) | 30 Sep 2020 | 31 Dec 2019 |
| Financial instruments at fair value through OCI | ||
| Interest rate swaps | 59 | - |
| Forward freight agreements | 443 | 1 056 |
| Financial instruments at fair value through P&L | ||
| Forward freight agreements | - | 21 |
| Interest rate swaps | 240 | 202 |
| Financial assets | 742 | 1 279 |
| Current | 443 | 1 077 |
| Non-current | 299 | 202 |
| Financial liabilities | ||
| (USD '000) | 30 Sep 2020 | 31 Dec 2019 |
| Financial instruments at fair value through OCI | ||
| Cross-currency interest rate swap (CCIRS) | 6 960 | 1 438 |
| Interest rate swaps | 5 921 | 364 |
| Fuel Hedge | 155 | - |
| Forward freight agreements | 47 | - |
| Financial instruments at fair value through P&L | ||
| Interest rate swaps | - | 1 825 |
| FX Swaps | - | - |
| Financial liabilities | 13 084 | 3 626 |
| Current | 155 | - |
| Non-current | 12 929 | 3 626 |
| (USD '000) | Quarter ended | YTD | |||
|---|---|---|---|---|---|
| Finance income | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Other interest income | 37 | 502 | 344 | 1 641 | 1 885 |
| Fair value changes in FFA | - | 99 | - | 504 | 21 |
| Gain on foreign exchange | 20 | 1 953 | - | 1 480 | 1 074 |
| Other financial income | - | 7 | - | 7 | 43 |
| Finance income | 57 | 2 561 | 344 | 3 631 | 3 024 |
| (USD '000) | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| Finance cost | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Interest paid to related parties | - | - | - | 202 | 202 |
| Interest expenses mortgage debt | 1 678 | 1 907 | 5 807 | 5 303 | 7 563 |
| Interest expenses bond loan | 1 016 | 563 | 2 816 | 1 530 | 2 124 |
| Interest expenses lease liabilities | 21 | 25 | 67 | 69 | 96 |
| Amortization capitalized fees on loans | 139 | 89 | 486 | 243 | 373 |
| Other financial expenses* | 23 | - | 730 | 69 | 86 |
| Fair value changes in FFA | - | - | 21 | - | - |
| Fair value changes interest rate swaps** | 305 | 2 577 | 601 | 4 539 | 3 660 |
| Loss on foreign exchange | - | - | 103 | - | - |
| Finance cost | 3 182 | 5 159 | 10 630 | 11 955 | 14 105 |
*YTD Q3-20 includes premium from buyback of KCC03 in February 2020.
**YTD Q3-20 includes realized effect from terminated CCIRS against KSH of USD 0.3 million in Q1 2020.
Dividends of USD 1.4 million were paid to the shareholders in August 2020 (USD 0.03 per share).
In Q3 2020, Klaveness Combination Carriers ASA purchased 33 893 own shares for a total consideration of USD 128k.
| Quarter ended YTD |
Year ended | ||||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| G&A fee to Klaveness AS | 404 | 559 | 1 250 | 1 789 | 2 238 |
| Commercial management fee to Klaveness AS | 330 | 407 | 1 002 | 1 333 | 1 628 |
| Travel expenses and operating cost reinvoiced from Klaveness AS | 39 | 74 | 122 | 246 | 530 |
| Group commercial and administrative services | 773 | 1 041 | 2 374 | 3 369 | 4 396 |
| Quarter ended | YTD | Year ended | |||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Technical management fee to KSM* (reported as part of opex) | 808 | 685 | 2 338 | 2 009 | 2 735 |
| Crewing agency fee to KSM* (reported as part of opex) | 273 | 245 | 809 | 700 | 953 |
| Supervision fee to Klaveness AS (capitalised on newbuildings) | 442 | 455 | 1 279 | 583 | 2 075 |
| Interest cost to related parties (Klaveness Ship Holding AS) | - | - | - | 202 | 202 |
| Total other transactions with related parties | 1 523 | 1 384 | 4 426 | 3 495 | 5 965 |
* KSM refers to Klaveness Ship Management AS
As of 1 February and 1 April 2020, employment of five key employees were transferred from Klaveness AS to Klaveness Combination Carriers ASA. Loan to employees of USD 70k were transferred along with the employment, of which CEO Engebret Dahm holds a loan of USD 50k. Interest on the loans is set to the Norwegian tax administration normal interest rate for the taxation of low-cost loans. KCC has per end of third quarter six employees.
The fifth CLEANBU vessel, MV Bangus, was delivered from Jiangsu New Yangzi Shipyard in China at 13 October 2020.
On 16 October 2020, KCC notified to the Bond Trustee that the Company will excersise the bond call option to redeem the entire outstanding amount under the KCC03 issue, of NOK 142 million, with maturity in May 2021. Settlement date is 1 December 2020.
On 20 October 2020 the NOK 200 million tap issue of additional bonds made under the Company's existing senior unsecured bonds(KCC04) with maturity date 11 February 2025 was listed under the initial ISIN number.
There are no other events after the balance sheet date that have material effect on the financial statement as of 30 September 2020.
Non-GAAP financial alternative performance measures (APM) that are used are consistent with those used in the previously quarterly reports. Description and definitions of such measures can be found on the company's homepage: https://www.combinationcarriers.com/alternativeperformance-measures
| Reconciliation EBITDA adjusted | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| EBITDA | 9 257 | 7 764 | 37 802 | 16 726 | 25 763 |
| Start up costs CLEANBU vessels | 590 | 647 | 761 | 1 569 | 1 724 |
| EBITDA adjusted | 9 847 | 8 411 | 38 563 | 18 295 | 27 487 |
| Reconciliation EBIT adjusted | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| EBIT | 4 436 | 4 143 | 24 269 | 7 185 | 11 692 |
| Start up costs CLEANBU vessels | 590 | 647 | 761 | 1 569 | 1 724 |
| EBIT adjusted | 5 026 | 4 790 | 25 031 | 8 755 | 13 417 |
| Reconciliation of average revenue per onhire day (TCE earnings) | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Net revenues from operations of vessels | 20 358 | 16 571 | 68 267 | 42 503 | 61 327 |
| Offhire compensation | - | - | - | - | 15 |
| IFRS 15 adjustment* | (370) | (354) | (647) | (113) | 680 |
| Net revenue ex IFRS adjustment | 19 988 | 16 217 | 67 620 | 42 390 | 62 022 |
| Onhire days Average revenue per onhire days (\$/d) (TCE earnings) |
984 20 310 |
895 18 127 |
3 138 21 506 |
2 599 16 312 |
3 636 17 060 |
| Reconciliation of opex per day | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Operating expenses, vessels | 9 753 | 7 563 | 26 499 | 21 401 | 29 913 |
| Leasing cost previously presented as opex | 113 | 172 | 328 | 371 | 445 |
| Reversal provision | - | - | - | - | 285 |
| Start up costs CLEANBU vessels | (590) | (647) | (761) | (1 569) | (1 724) |
| Operating expenses, vessels adjusted | 9 276 | 7 088 | 26 066 | 20 203 | 28 919 |
| Operating days | 1 161 | 993 | 3 345 | 2 793 | 3 897 |
| Opex per day (\$/d) | 7 990 | 7 138 | 7 793 | 7 233 | 7 421 |
| Reconciliation of total assets to capital employed and return on capital employed (ROCE) calculation. |
Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Total assets | 502 166 | 453 002 | 502 166 | 453 002 | 459 262 |
| Total liabilities | 286 051 | 241 605 | 286 051 | 241 605 | 245 384 |
| Total equity | 216 115 | 211 397 | 216 115 | 211 397 | 213 878 |
| Total interest-bearing debt | 261 139 | 225 451 | 261 139 | 225 451 | 222 341 |
| Capital employed | 477 254 | 436 848 | 477 254 | 436 848 | 436 219 |
| EBIT adjusted annualised | 20 104 | 19 160 | 33 374 | 11 673 | 13 417 |
| ROCE adjusted | 4 % | 4 % | 7 % | 3 % | 3 % |
* IFRS 15 adjustment: Revenue recognized from load-to-discharge and not from discharge-to-discharge, resulting in higher volatility in revenues from month to month.
| Reconciliation of equity ratio | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Total assets | 502 166 | 453 002 | 502 166 | 453 002 | 459 262 |
| Total equity | 216 115 | 211 397 | 216 115 | 211 397 | 213 878 |
| Equity ratio | 43 % | 47 % | 43 % | 47 % | 47 % |
| Reconciliation of total interest-bearing debt | Quarter ended | YTD | Year ended | ||
|---|---|---|---|---|---|
| USD'000 | 30 Sep 2020 | 30 Sep 2019 | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
| Mortgage debt | 156 452 | 173 061 | 156 452 | 173 061 | 169 304 |
| Long-term bond loan | 72 388 | 32 779 | 72 388 | 32 779 | 33 836 |
| Short-term mortgage debt | 17 367 | 16 936 | 17 367 | 16 936 | 17 367 |
| Other interest bearing liabilities | - | 2 676 | - | 2 676 | 1 835 |
| Short-term bond loan | 14 932 | - | 14 932 | - | - |
| Total interest-bearing debt | 261 139 | 225 452 | 261 139 | 225 452 | 222 341 |
Klaveness Combination Carriers ASA—Third Quarter 2020 26
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