Quarterly Report • May 27, 2020
Quarterly Report
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«We are pleased to report KCC's strongest financial results to date on the back of increased combination trading and a strong tanker market. We are also pleased to have concluded a higher tanker market coverage at attractive levels for the balance of 2020. This supports a strong outlook for KCC's earnings for 2020 and an increased financial robustness in the current uncertain COVID-19 situation ».
Engebret Dahm, CEO Klaveness Combination Carriers ASA
Adjusted EBITDA (mUSD)
Adjusted EBITDA for the first quarter was USD 12.9 million, up from USD 5.3 million compared to same period last year mainly driven by caustic soda volumes and three CLEANBU vessels in operation.
| (USD '000) | Q1 2020 | Q1 2019 | 2019 |
|---|---|---|---|
| Net revenues from vessel operations | 22 403 | 13 326 | 61 327 |
| EBITDA (note 11) | 12 825 | 4 736 | 25 763 |
| EBITDA adjusted (note 11) | 12 856 | 5 289 | 27 487 |
| Profit/(loss) for the period | 4 314 | (803) | 597 |
| Earnings per share1 | 0.09 | (0.02) | 0.01 |
| Total assets | 486 785 | 363 310 | 459 262 |
| Equity | 209 237 | 177 911 | 213 878 |
| Equity ratio | 43 % | 49 % | 47 % |
| ROCE adjusted (note 11) | 8 % | 3 % | 3 % |
| Q1 2020 | Q1 2019 | 2019 | |
| Average TCE earnings (note 11) | 20 441 \$/d | 15 877 \$/d | 17 060 \$/d |
| Opex per day (note 11) | 7 627 \$/d | 7 202 \$/d | 7 421 \$/d |
| Onhire days | 1 083 | 838 | 3 636 |
| Off-hire days, scheduled | - | 41 | 141 |
| Off-hire days, unscheduled | 9 | 5 | 85 |
| % of days in main combination trades2 | 86 % | 69 % | 73 % |
| Utilisation3 | 99 % | 96 % | 91 % |
Net revenues from operations of vessels were USD 22.4 million in Q1 2020 compared to USD 13.3 million in the same quarter last year, primarily as a result of considerably higher average TCE earnings and in addition two more vessels in operation. The average TCE earnings per on-hire day were above \$20,000/day for both segments, more than \$4,200/day higher than in Q1 2019, mainly due to higher share of combination trading for both segments and considerably less off-hire.
Operating expenses for the vessels increased from USD 7.0 million in Q1 2019 to USD 8.3 million in Q1 2020 mainly due to two more vessels in operation.
Adjusted EBITDA for the period ended at USD 12.9 million up from USD 5.3 million in Q1 2019 and USD 9.2 million in previous quarter.
Net result from financial items was negative USD 4.2 million in Q1 compared to negative USD 2.8 million for the same period last year. Net interest expenses were USD 1.2 million higher due to higher mortgage debt following the delivery of the CLEANBU vessels and higher bond debt. The profit and loss statement for Q1 2020 is impacted by a realized loss of in total USD 0.9 million related to the KCC04 bond issue, repurchase of the KCC03 bond issue and settlement of the cross-currency interest rate swap securing the KCC03 bond issue. All interest rate derivatives and the entire FFA portfolio have from 1 January 2020 been accounted for as hedges. Non-cash fair value changes of these derivatives are hence recognized over other comprehensive income in Q1 2020, while such effects had a negative profit and loss impact of USD 0.9 million in Q1 2019.
Net profit after tax for Q1 ended at USD 4.3 million compared to a loss of USD 0.8 million for the same period last year and up from USD 1.7 million in Q4 2019.
| (USD/day) / # of days | Q1 2020 | Q1 2019 | 2019 |
|---|---|---|---|
| Average TCE earnings (note 2) | 20 283 \$/d | 16 088 \$/d | 16 877 \$/d |
| Opex per day (note 2) | 7 104 \$/d | 7 045 \$/d | 6 800 \$/d |
| Onhire days | 815 | 805 | 3 171 |
| Off-hire days, scheduled | - | - | 96 |
| Off-hire days, unscheduled | 4 | 5 | 18 |
| % of days in main combination trades2 | 92 % | 70 % | 74 % |
| Ballast days in % of total on-hire days | 15 % | 11 % | 11 % |
| Utilisation3 | 99 % | 96 % | 94 % |
Average TCE earnings per on-hire day for the CABU vessels ended at \$20,283/day for Q1 2020, the strongest average TCE earning per on-hire day since 2015. CABU earnings were 1.1 x average daily earnings for standard MR-tankers in the same period and up from \$16,088/day in Q1 2019 and \$19,002/day in Q4 2019. The CABUs were fully employed in combination trades except for the positioning of one vessel from Far East to America.
1 Earnings per share from operations. Based on average outstanding shares for the different periods.
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
Caustic soda shipment volume was strong in the quarter and earnings from shipment of caustic soda strengthened during the quarter following a stronger MR-tanker spot market in the second half of the quarter. The substantial weakening of both the dry bulk and fuel markets have negatively impacted earnings. The impact of the weak physical dry bulk market was partly off-set by gain on FFAs. The results include a one-time compensation of USD 0.7 million for cancelled shipment volumes under a COA in 2019.
Operating costs ended at \$7,104/day in Q1 2020, quite stable compared to Q1 2019 (\$7,045/day). Off-hire for the period was 4 days and was as well quite stable compared to the same period last year (6 days).
| (USD/day) / # of days | Q1 2020 | Q1 2019 | 2019 |
|---|---|---|---|
| Average TCE earnings (note 2) | 20 932 \$/d | 10 875 \$/d | 18 300 \$/d |
| Opex per day (note 2) | 9 198 \$/d | 8 774 \$/d | 10 751 \$/d |
| Onhire days | 268 | 33 | 465 |
| Off-hire days, scheduled | - | - | 45 |
| Off-hire days, unscheduled | 5 | 41 | 69 |
| % of days in main combination trades1 | 68 % | 0 % | 61 % |
| Ballast days in % of total on-hire days | 17 % | 0 % | 21 % |
| Utilisation2 | 98 % | 48 % | 78 % |
Average CLEANBU TCE earnings per on-hire day ended at \$20,932/day for the quarter, being 0.9 x average daily earnings for standard LR1-tankers in the same period, up from \$10,875/day in Q1 2019 and \$18,715/day in the previous quarter. The first CLEANBU vessel, MV Baru, was delivered in January 2019 and the TCE for Q1 2019 was impacted by the initial phase-in of the vessel. The vessel traded as a pure tanker vessel through the quarter. One of the three CLEANBU vessels has during Q1 2020 traded as a pure tanker vessel, while the two other vessels have been trading efficiently in combination pattern earning in average \$24,000/day. The CLEANBU TCE earnings were as the CABU earnings positively impacted by a strong tanker market, but negatively impacted by weak dry bulk markets and steep fall in fuel prices.
Average operating costs for the CLEANBU vessels ended at \$9,198/day for the quarter, somewhat up from Q1 2019 (\$8,774/day) and down from \$10,836/day for Q4 2019. Operating costs have been quite volatile over the last year due to costs related to the phase-in of the newbuildings. The CLEANBU fleet had in total 5 days off-hire in the quarter, down from 13 unscheduled off-hire days in the previous quarter and 41 unscheduled offhire days in Q1 2019.
KCC issued a five-year bond (KCC04) of NOK 500 million in February 2020 and has repurchased NOK 158 million of the NOK 300 million KCC03 bond issue with maturity in May 2021. The remaining NOK 142 million will be repaid at the latest on the final maturity date in May 2021. Margin is down from NIBOR + 5.25% in KCC03 to NIBOR + 4.75%. The KCC04 bond was listed on Oslo Stock Exchange in May. Bank financing has been secured for all three CLEANBU newbuildings with delivery in 2020 and credit approval has been obtained for the financing of the two newbuildings with delivery in 2021. The latter is subject to final documentation and the margin will likely be higher than in the existing bank facilities as a consequence of the current financial market conditions.
The equity ratio was per end of first quarter 2020 43%, down from 47% by year end 2019, while cash and cash equivalents ended at USD 77.9 million up by USD 20.8 million in the same period. Total interest-bearing debt ended at USD 247.9 million, an increase of USD 25.5 million from yearend 2019. All mentioned balance sheet items are impacted by the KCC04 bond issue and repurchase of KCC03 volumes.
Net cash flow from operating activities was USD 3.3 million in Q1 mainly due to positive EBITDA of USD 12.8 million, partly off-set by negative change in net current assets. Net cash flow from investments was negative USD 5.8 million and mainly consists of yard instalments related to newbuildings. Net cash flow from financing activities was positive USD 22.1 million, impacted by the bond issue, repurchase of existing bond, settlement of the cross-currency interest rate swap related to the KCC03 bond and cash collateral provided for negative value on financial derivatives.
The fleet consists of nine CABU and three CLEANBU combination carriers, with another five CLEANBU vessels on order. KCC has four individual fixed price options with expiry in the period between October 2020 and January 2021 with scheduled delivery in 2022.
The delivery of the next CLEANBU vessels will be delayed due to the ongoing COVID-19 virus outbreak and travel restrictions. Expected delivery of the fourth CLEANBU vessel is July 2020, with the four subsequent newbuildings expected to be delivered in the period October 2020 to March 2021. The delivery dates are uncertain and additional delays might occur.
There are outstanding guarantee items relating to two of the CLEANBU vessels on water, MV Barracuda and MV Barramundi, implying off-hire and possibly related costs. MV Baru and the subsequent five newbuildings under construction have no similar issues. The repairs are targeted to be made for one vessel in Q4 2020 and for the other vessel during first half 2021. These guarantee items are not linked to the combination carrier concept or trading capabilities of the vessels and are not expected to impact the vessels performance until being rectified.
One drydocking in connection with an intermediate survey has been cancelled, leaving three CABU vessels scheduled for periodic drydocking in the period June to December 2020 and two out of the three vessels will install BWTS in relation to 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 ultrasonic protection system to protect propellers from marine growth on all vessels.
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.
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.
Marine gasoil (MGO)3
Average dry bulk freight rates for Q1 2020 recorded the lowest quarterly average since Q1 2016. The global pandemic accelerated the seasonal decline in demand which coincides with seasonal high fleet growth. However, all time high grain export from East Coast South America put a hand under the Panamax market and offset some of the negative impacts from lower dry bulk demand in general. Panamax (P5TC) rates averaged \$7,080/day, down from \$12,684/day in Q4 2019 and down from \$8,471/day in Q1 2019. The nominal total dry bulk fleet growth in Q1 of 4.1% was the highest since Q1 2015.
Freight rates in Q2 have started on a weak note with Panamax rates averaging \$6,642/day as of mid-May. Global industrial production and energy demand have been curtailed by COVID-19 leading to negative Q/Q growth rates in the trade of most dry bulk commodities. While still strong, vessel demand from the aforementioned grain export season in East Coast South America is abating during Q2. Assuming that the peak in negative effects on industrial production from the pandemic is behind us, there are several drivers which can propel dry bulk freight rates higher in the second half of 2020. This includes an increase in iron ore volumes from Brazil, increased coal shipments and a strong grain export season in the US.
The product tanker market had a strong start of 2020 on the back of the implementation of the IMO 2020 Sulphur cap regulations with the TC5 TCE earnings, as reported by the Baltic Exchange, recorded at around \$18,500/day, but rates fell back during the first half of the quarter . During second half of the first quarter oil prices plunged due to both lower energy demand curtailed by COVID-19, as well as increased oil supply caused by the Saudi Russian oil price war. This resulted in a dramatic mismatch between supply and demand and has led to a substantial increase in floating storage and port congestion. TCE-rates have hence substantially increased towards the end of first quarter and during the first half of the second quarter. The TC5 TCE-earnings recorded a year-to-date high of around \$110,000/day. It has since fallen back to around \$26,000/day. It is expected that rates will continue to come off as the balance in the oil markets will improve with both oil production curtailments and improved demand for oil as the world economy is restarting.
The supply-demand situation for caustic soda solution (CSS) has been tight in Q1, especially in Europe and the US. The demand for PVC has declined 30-40% and chloralkali plants have reduced operations. CSS prices were hence up USD 70-100 per mt in April in these regions. The supply situation in the Far East is more stable and prices are relatively stable.
Fuel oil prices are down as a consequence of the global COVID-19 situation, reduced consumer demand for goods and hence reduced demand for fuel oil. However, this is partly offset by ship owners stocking up cheap fuel, lower oil production and lately an easing of lockdowns.
Safety is KCC's priority number one and to the Board's satisfaction there were no major incidents in Q1 2020, however, we saw an unfortunate increase in the number of medium injuries. Two of the three medium injuries related to fall from height during cleaning of cargo tanks. Investigations have been made to identify the root cause of the three incidents of which one investigation was conducted by a third party. A number of corrective measures have been implemented and a safety culture program has been initiated to strengthen further the safety culture onboard KCC's fleet. There were no navigational incidents or spills to the environment in Q1 2020.
No COVID-19 cases have been reported in the fleet and strict procedures have been implemented on board to avoid crew being infected. It is practically impossible to make crew changes, which might cause increased costs and risk of crew fatigue if not solved within a reasonable time frame. 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 | Q1 2020 | Q1 2019 | 2019 |
|---|---|---|---|
| # of medium* injuries | 3 | 1 | 5 |
| # of major** injuries | - | - | - |
| # of navigational incidents | - | - | 3 |
| # of spills to the environment | - | - | - |
* 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 around 10% 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.
KCC's environmental performance as expressed by its main environmental KPIs had mixed results in Q1 2020. CO2 emissions per ton transported cargo per nautical mile (EEOI) ended at 7.2 for first quarter and is the best quarterly performance ever reported for the fleet. The CABU fleet was mostly employed in combination trading (92%) through the quarter and two of three CLEANBU vessels were employed on long voyages in an efficient combination trading pattern to/from South America. Average CO2 emission per vessel had on the other hand a negative development and increased from to 23,000 mt from 19,800 mt in the previous quarter. This increase is mainly due to periodization effects linked to the calculation method and the KPI needs to be evaluated over a longer time horizon.
Ballast days in % of total on-hire days2 CO2 emission per ton transported cargo per nautical mile (EEOI)1,2
% of days in main combination trades4 Average CO2 emission per vessel3
1 The average CO2 emissions per vessel is calculated based on the total CO2 emissions for the fleet, divided on the number of ship years. Number of ship years is the total calendar time minus offhire time while new delivered vessels are counted from date of delivery. Quarterly figures (Q3 and Q4 2019) are annualized.
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 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 we have a little degree of ballast, but we have also seen that the index is highly affected by one or two longer ballast legs since the fleet is relatively small. These variations are evident when we look at the historical numbers, but will most likely be more stable when we have more vessels in the fleet.
4 The EEOI and % ballast for "Benchmark standard vessels" are calculated based on standard vessels (Panamax 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. End date of a voyage is decisive for periodisation of ballast days and CO2 emission (EEOI).
The situation related to the COVID-19 virus is uncertain. The virus has serious 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. These three markets have, however, had a different development during Q1 2020 and the first half of Q2 2020. While both dry bulk freight rates and fuel prices have tumbled, the product tanker market rose in April to the highest level recorded since 2005. KCC has utilized this strong tanker market to substantially increase the tanker market coverage for the balance of 2020 and first half 2021 by securing 3-6 months time charters for two of the CLEANBU vessels and a 9-12 months time charter for the third CLEANBU vessel. In addition, two COAs for transportation of caustic soda have been extended by one year and three years respectively and tanker freight derivatives have been sold for second half 2020 and Q1 2021. The full tanker capacity for the entire fleet has been secured for Q2 2020 (98% fixed rate), 69% for 2H 2020 (60% fixed rate) and 28% for 1H 2021 (16% fixed rate). KCC's contract coverage and trading pattern make KCC more resilient to demand shocks compared to many other players in the standard tanker and dry bulk market, however, negative consequences on KCC's earnings may occur as a result of lower activity in shipping markets going forward.
The delivery of the next CLEANBU vessels will be delayed due to the COVID-19 virus. The shipyard earlier this year declared a force majeure situation for delays caused by the virus. While activity at the shipyard has resumed, the supervision team is not complete as per May 2020 due to the COVID-19 outbreak and travel restrictions in Europe and in the Philippines as well as Chinese entry ban for foreigners. Agreements have been made with the shipyard to postpone delivery of the next CLEANBU newbuild until July 2020. The four subsequent CLEANBU newbuilds have agreed delivery dates in August 2020-February 2021 but will likely be delayed by approximately 1-2 months. Delivery might be further delayed.
The COVID-19 situation has negative operational consequences and amongst others it is currently difficult to make crew changes. Likewise, the Company finds it difficult to get ship managers, service personnel and vetting inspectors on board. It has also been necessary in some instances to deviate vessels to get supplies on-board. These factors have so far had limited impact on the operation of the vessels and have had limited financial impact, however, it remains uncertain how this will develop going forward.
The earnings outlook for 2020 for the CLEANBU and the CABU fleet is positive based on the secured COA and TC contracts. Once oil markets rebalance and the world economy restarts, there should be a considerable upside potential in both the dry bulk and fuel markets. As additional vessels are delivered in 2020 and 2021, the CLEANBU earnings are dependent on continued successful trading of the CLEANBUs in efficient combination trades and expansion of the number of CPP customers, types of cargoes, trades and terminals and continued improved vetting statistics and technical performance. Year to date in 2020 the vessels have successfully called a number of new terminals and with a number of new types of cargoes, e.g. jet fuel.
Oslo, 26 May 2020
The Board of Directors of Klaveness Combination Carriers ASA
Lasse Kristoffersen Chairman of the Board
Lori Wheeler Næss Board member
Magne Øvreås Board member
Rebekka Glasser Herlofsen Board member
Morten Skedsmo Board member
Engebret Dahm CEO
| Quarter ended | Year ended | ||||
|---|---|---|---|---|---|
| Unaudited | Unaudited | Audited | |||
| USD'000 | Notes | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| Freight revenue | 3 | 43 977 | 28 308 | 130 768 | |
| Charter hire revenue | 3 | 761 | 233 | 5 752 | |
| Total revenues, vessels | 3 | 44 738 | 28 541 | 136 521 | |
| Voyage expenses | (22 335) | (15 215) | (75 194) | ||
| Net revenues from operations of vessels | 22 403 | 13 326 | 61 327 | ||
| Operating expenses, vessels | (8 253) | (6 962) | (29 913) | ||
| Group commercial and administrative services | 9 | (825) | (1 261) | (4 396) | |
| Salaries and social expence Tonnage tax |
9 | (234) (8) |
- (36) |
- (163) |
|
| Other operating and administrative expenses | (258) | (330) | (1 093) | ||
| Operating profit before depreciation (EBITDA) | 12 825 | 4 736 | 25 763 | ||
| Ordinary depreciation | 4 | (4 354) | (2 778) | (14 070) | |
| Operating profit after depreciation (EBIT) | 8 472 | 1 958 | 11 692 | ||
| Finance income Finance costs |
7 7 |
256 (4 414) |
730 (3 491) |
3 024 (14 105) |
|
| Profit before tax (EBT) | 4 314 | (803) | 612 | ||
| Income tax expenses | - | - | (15) | ||
| Profit after tax | 4 314 | (803) | 597 | ||
| Attributable to: | |||||
| Equity holders of the parent company | 4 314 | (803) | 597 | ||
| Total | 4 314 | (803) | 597 | ||
| Earnings per Share (EPS): | |||||
| Basic and diluted, profit for the period attributable to ordinary equity holders of the parent |
0.09 | (0.02) | 0.01 |
| Quarter ended | Year ended | ||
|---|---|---|---|
| Unaudited | Unaudited | Audited | |
| 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| USD '000 | |||
| Profit/ (loss) of the period | 4 314 | (803) | 597 |
| Other comprehensive income to be reclassified to profit or loss | |||
| Net movement fair value on cross-currency interest rate swaps (CCIRS) | (11 327) | 119 | (1 438) |
| Reclassification to profit and loss (CCIRS) | 7 430 | 283 | 1 347 |
| Net movement fair value on interest rate swaps | (2 876) | (269) | (686) |
| Net movement fair value FX hedge | - | (44) | 38 |
| Net movement fair value bunker hedge | (1 152) | 970 | 918 |
| Net movement fair value FFA hedge | (532) | 986 | 85 |
| Net other comprehensive income to be reclassified to profit or loss | (8 457) | 2 045 | 265 |
| Total comprehensive income/(loss) for the period, net of tax | (4 143) | 1 242 | 862 |
| Attributable to: | |||
| Equity holders of the parent company | (4 143) | 1 242 | 862 |
| Total | (4 143) | 1 242 | 862 |
(Figures in USD '000)
| Unaudited | Audited | |
|---|---|---|
| ASSETS Notes |
31 Mar 2020 | 31 Dec 2019 |
| Non-current assets | ||
| Vessels 4 |
311 124 | 315 208 |
| Newbuilding contracts 5 |
67 974 | 62 316 |
| Right of-use assets 4 |
1 657 | 1 765 |
| Long-term financial assets 6 |
- | 202 |
| Long-term receivables 9 |
70 | - |
| Total non-current assets | 380 825 | 379 490 |
| Current assets | ||
| Short-term financial assets 6 |
549 | 1 077 |
| Inventories | 8 903 | 7 163 |
| Trade receivables and other current assets | 18 575 | 14 313 |
| Short-term receivables from related parties | 60 | 130 |
| Cash and cash equivalents | 77 873 | 57 089 |
| Total current assets | 105 960 | 79 772 |
| TOTAL ASSETS | 486 785 | 459 262 |
| EQUITY AND LIABILITIES | Unaudited 31 Mar 2020 |
Audited 31 Dec 2019 |
|---|---|---|
| Equity | ||
| Share capital | 8 5 725 |
5 725 |
| Share premium | 130 155 | 130 155 |
| Other reserves | (8 149) | 316 |
| Retained earnings | 81 505 | 77 681 |
| Total equity | 209 237 | 213 878 |
| Non-current liabilities | ||
| Mortgage debt | 6 165 033 |
169 304 |
| Long-term financial liabilities | 6 14 557 |
3 626 |
| Long-term lease liabilities | 1 288 | 1 395 |
| Bond loan | 6 59 552 |
33 836 |
| Total non-current liabilities | 240 430 | 208 161 |
| Current liabilities | ||
| Short-term mortgage debt | 6 17 367 |
17 367 |
| Other interest bearing liabilities | 6 5 939 |
1 835 |
| Short-term financial liabilities | 6 1 194 |
- |
| Short-term lease liabilities | 412 | 407 |
| Trade and other payables | 11 745 | 16 841 |
| Short-term debt to related parties | 349 | 617 |
| Tax liabilities | 113 | 157 |
| Total current liabilities | 37 118 | 37 223 |
| TOTAL EQUITY AND LIABILITIES | 486 785 | 459 262 |
Oslo, 26 May 2020
The Board of Directors of
Klaveness Combination Carriers ASA
Chairman of the Board
Magne Øvreås Board member 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 | - | - | - | - | 4 314 | 4 314 | |
| Other comprehensive income for the period | - | - | - | (8 457) | - | (8 457) | |
| Purchase of own shares | - | - | (8) | - | - | (8) | |
| Share option program | - | - | - | - | (9) | (9) | |
| Dividends | - | - | - | - | (480) | (480) | |
| Equity at 31 March 2020 | 5 725 | 130 155 | (8) | (8 141) | 81 505 | 209 237 |
| 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 | - | - | - | - | (803) | (803) |
| Other comprehensive income for the period | - | - | - | 2 045 | - | 2 045 |
| Dividends | - | - | - | - | (1 418) | (1 418) |
| Equity at 31 March 2019 | 4 863 | 92 271 | - | 2 096 | 78 680 | 177 911 |
| 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 | Year ended | |||
|---|---|---|---|---|
| Unaudited | Unaudited | Audited | ||
| Notes | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| Profit before tax | 4 314 | (803) | 612 | |
| Tonnage tax expensed | 8 | 36 | 163 | |
| Ordinary depreciation | 4 | 4 354 | 2 778 | 14 070 |
| Amortization of upfront fees bank loans | 215 | 77 | 373 | |
| Financial derivatives loss / gain (-) | 6 | (754) | 459 | 3 681 |
| Gain /loss on foreign exchange | 255 | - | (1 074) | |
| Interest income | 7 | (231) | (541) | (1 885) |
| Interest expenses | 7 | 2 987 | 2 294 | 9 889 |
| Taxes paid for the period | - | (45) | (46) | |
| Change in current assets | (3 103) | 394 | (5 090) | |
| Change in current liabilities** | (5 011) | (1 129) | 9 294 | |
| Interest received | 7 | 231 | 541 | 1 885 |
| A: Net cash flow from operating activities | 3 264 | 4 060 | 31 873 | |
| Acquisition of tangible assets | 4 | (162) | (488) | (6 010) |
| Installments and other cost on newbuilding contracts** | 5 | (5 658) | (46 056) | (158 285) |
| B: Net cash flow from investment activities | (5 820) | (46 544) | (164 295) | |
| Proceeds from mortgage debt | 6 | - | 31 000 | 93 000 |
| Net proceeds from bond loan | 6 | - | (630) | (630) |
| Proceeds from bond loan (KCC04) | 6 | 54 028 | - | - |
| Buyback of bond loan (KCC03) | (17 879) | - | - | |
| Transaction costs on issuance of loans | (870) | (454) | (1 596) | |
| Repayment of mortgage debt | 6 | (4 342) | (3 050) | (13 923) |
| Terminated financial instruments | 7 | (3 101) | - | - |
| Collateral paid on financial instruments | (2 900) | - | - | |
| Interest paid | (2 268) | (1 718) | (9 014) | |
| Repayment of financial lease liabilities | (108) | (94) | (385) | |
| Purchase of own shares | (8) | - | - | |
| Capital increase May 20, 2019 | - | - | 40 096 | |
| Transaction costs on capital increase | - | - | (2 147) | |
| Dividends | (480) | - | (3 814) | |
| C: Net cash flow from financing activities | 22 072 | 25 054 | 101 587 | |
| Effect of exchange rate changes on cash | (2 836) | - | - | |
| Net change in liquidity in the period | 16 680 | (17 431) | (30 836) | |
| Cash and cash equivalents at beginning of period | 55 254 | 86 090 | 86 090 | |
| Cash and cash equivalents at end of period* | 71 934 | 68 660 | 55 254 | |
| Net change in cash and cash equivalents in the period | 16 680 | (17 431) | (30 836) | |
| *Reconciliation of cash and cash equivalents presented in cash flow statement: | ||||
| Cash and cash equivalents | 77 873 | 71 665 | 57 089 | |
| Other interest bearing liabilities | 5 939 | 3 005 | 1 835 | |
| Cash and cash equivalents (as presented in cash flow statement) | 71 934 | 68 660 | 55 254 |
** Yard installment of USD 4.7 million paid in January 2020 is included 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 three CLEANBU vessels in operation and five CLEANBU newbuildings with estimated delivery between 2H 2020 and 1H 2021. 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.
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, three CLEANBUs on water and five CLEANBUs on order with expected deliveries through 2020 and 2021.
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 typesof dry bulk products. The three CLEANBU vessels were delivered 10 January, 29 July and 20 September 2019.
| Operating income and operating expenses per segment | |||
|---|---|---|---|
| Q1 2020 | |||
| (USD'000) | CABU | CLEANBU | Total |
| Operating revenue, vessels | 34 798 | 9 939 | 44 738 |
| Voyage expenses | (18 349) | (3 986) | (22 335) |
| Net revenue | 16 453 | 5 953 | 22 403 |
| Operating expenses, vessels | (5 738) | (2 515) | (8 253) |
| Group administrative services | (574) | (251) | (825) |
| Tonnage tax | (7) | (1) | (8) |
| Other operating and administrative expenses | (342) | (150) | (491) |
| Operating profit before depreciation (EBITDA) | 9 793 | 3 036 | 12 825 |
| Ordinary depreciation | (2 817) | (1 537) | (4 354) |
| Operating profit after depreciation (EBIT) | 6 976 | 1 499 | 8 472 |
| Q1 2020 | |||
|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total |
| Net revenues from operations of vessels | 16 453 | 5 953 | 22 403 |
| IFRS 15 adjustment* | 80 | (340) | (259) |
| Net revenue ex IFRS adjustment | 16 533 | 5 613 | 22 144 |
| Onhire days | 815 | 268 | 1 083 |
| Average TCE earnings per onhire day (\$/d) | 20 283 | 20 932 | 20 441 |
| (USD'000) | CABU | CLEANBU | Total |
|---|---|---|---|
| Operating expenses, vessels | 5 738 | 2 515 | 8 253 |
| Leasing cost previously presented as opex | 81 | 27 | 108 |
| Start up cost CLEANBU vessels | - | (31) | (31) |
| Operating expenses, vessels adjusted | 5 818 | 2 511 | 8 329 |
| Operating days | 819 | 273 | 1 092 |
|---|---|---|---|
| Opex per day (\$/d) | 7 104 | 9 198 | 7 627 |
* 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.
| Operating profit/EBIT | 3 396 | (1 437) | 1 959 |
|---|---|---|---|
| Ordinary depreciation | (2 289) | (489) | (2 778) |
| Operating profit before depreciation (EBITDA) | 5 685 | (948) | 4 737 |
| Other operating and administrative expenses | (248) | (83) | (330) |
| Tonnage tax | (33) | (3) | (36) |
| Group administrative services | (1 295) | 34 | (1 261) |
| Operating expenses, vessels | (5 707) | (1 256) | (6 962) |
| Net revenue | 12 967 | 359 | 13 326 |
| Voyage expenses | (14 925) | (290) | (15 215) |
| Operating revenue, vessels | 27 892 | 649 | 28 541 |
| (USD'000) | CABU | CLEANBU | Total |
| Operating income and operating expenses per segment Q1 2019 |
| Reconciliation of average TCE earnings per onhire day Q1 2019 |
|||
|---|---|---|---|
| (USD'000) | CABU | CLEANBU | Total |
| Net revenues from operations of vessels | 12 967 | 359 | 13 326 |
| IFRS 15 adjustment | (28) | - | (28) |
| Net revenue ex IFRS adjustment | 12 939 | 359 | 13 298 |
| Onhire days | 805 | 33 | 838 |
| Average TCE earnings per onhire day (\$/d) | 16 088 | 10 875 | 15 877 |
| Reconciliation of opex per day | |||
|---|---|---|---|
| Q1 2019 | |||
| (USD'000) | CABU | CLEANBU | Total |
| Operating expenses, vessels | 5 707 | 1 256 | 6 962 |
| Start up cost CLEANBU vessels | - | (554) | 554 |
| Operating expenses, vessels adjusted | 5 707 | 702 | 6 409 |
| Operating days | 810 | 80 | 890 |
| Opex per day (\$/d) | 7 045 | 8 774 | 7 202 |
The Group has income from COA contracts (1-3 years), spot voyages and TC trips. Set out below is the disaggregation of the Group's revenue from contracts with customers.
| Quarter ended | Year ended | ||||
|---|---|---|---|---|---|
| Revenue types (USD'000) | Classification | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| Revenue from COAs | Freight revenue | 31 073 | 20 009 | 98 110 | |
| Revenue from spot voyages | Freight revenue | 12 904 | 8 298 | 32 658 | |
| Revenue from TC contracts | Charter hire revenue | 761 | 233 | 5 752 | |
| Total revenue, vessels | 44 738 | 28 541 | 136 521 |
| Vessels | ||
|---|---|---|
| (USD '000) | 31 Mar 2020 | 31 Dec 2019 |
| Cost price 1.1 | 492 075 | 330 218 |
| Delivery of newbuildings | - | 155 847 |
| Additions (mainly upgrading and docking of vessels) | 162 | 6 010 |
| Costprice end of period | 492 237 | 492 075 |
| Acc. Depreciation 1.1 | 176 866 | 163 181 |
| Depreciation for the period | 4 246 | 13 685 |
| Acc. Depreciation end of period | 181 112 | 176 866 |
| Carrying amounts end of period* | 311 124 | 315 208 |
| *carrying value of vessels includes dry-docking | ||
| No. of vessels | 12 | 12 |
| Useful life | 25 | 25 |
| Depreciation schedule | Straight-line | Straight-line |
| Reconciliation of depreciations | Quarter ended | Year ended | |
|---|---|---|---|
| (USD'000) | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Depreciation vessels | 4 246 | 2 684 | 13 685 |
| Depreciation right of use assets | 108 | 94 | 385 |
| Depreciations for the period | 4 354 | 2 778 | 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. Despite all uncertainties following Covid-19, solid TCE earnings for Q1 for both the fleet of CABUs and the fleet of CLEANBUs, high contract coverage for 2020 and strong tanker market supports the conclusion of no impairment indicators identified as per 31 March 2020.
The Group has five CLEANBU combination carrier newbuildings on order at Jiangsu New Yangzi Shipbuilding Co., Ltd in China with delivery scheduled in the period 2H 2020 and 1H 2021. The contracts include options for further four vessels.
Bank loans have been secured for the first three newbuildings with delivery in 2020 (note 6), and credit approval has been obtained for bank debt related to the two newbuildings with delivery in 2021 (latter subject to final documenation).
| (USD '000) | 31 Mar 2020 | 31 Mar 2019 |
|---|---|---|
| Cost 1.1 | 62 316 | 59 877 |
| Borrowing cost | 211 | 1 302 |
| Yard installments paid | 4 650 | 148 170 |
| Other capitalized cost | 797 | 8 813 |
| Delivery of newbuilings | - | (155 847) |
| Net carrying amount | 67 974 | 62 316 |
The commitments related to the five newbuildings are set out below.
| Total commitments newbuildings | 106 950 | 65 100 | 172 050 |
|---|---|---|---|
| Combination carriers | 106 950 | 65 100 | 172 050 |
| Remaining installments at 31 March 2020 (USD '000) |
2020 | 2021 | Total |
The below tables present the Group's financing arrangements as per 31 March 2020.
The Group has USD 182.4 million in interest-bearing mortgage debt per end March 2020. To mitigate interest rate exposure, the Group has entered into interest rate swaps (IRS) to hedge the risk of variability of changes in cash flows of the interest bearing bank debt as a result of changes in floating interest rates. As from 1 january 2020, the Group treat all such IRS instruments as a portfolio which aims to hedge the underlying portfolio of interest-bearing debt in line with the Group's finance policy. Changes in fair value of the IRS hedge instruments are recognised at fair value with changes through other comprehensive income.
On 30 January 2020, the Company completed the placement of a new senior unsecured bond issue of NOK 500 million with maturitydate 11 February 2025. The bond carries a coupon of 3 months NIBOR + 475 bps p.a. with quarterly interest payments. NOK 400 million of the new bond loan (KCC04) was swapped to USD with fixed rate (cross currency interest rate swaps /CCIRS). The CCIRS qualify for hedge accounting and are recognised at fair value with changes through other comprehensive income.
During 2020, NOK 158 million of the KCC03 bond has been repurchased and the remaining NOK 142 million will be repaid at the latest on the final maturity date in May 2021. In February 2020 KCC terminated the cross-currency interest rate swap agreement related to KCC03 with Klaveness Ship Holding with a net P&L effect of negative USD 0.3 million.
| Mortgage debt 31 March 2020 | 182 399 | |||
|---|---|---|---|---|
| Capitalized loan fees | (700) | |||
| SEB/SR-Bank/SPV Facility* | Term loan/RCF, 90.75 mill | LIBOR + 2.3 % | October 2025 | - |
| DNB/SEB Facility | Term loan, USD 105 mill | LIBOR + 2.3 % | December 2023 | 98 986 |
| Nordea/Danske Facility | Term loan, USD 100 mill | LIBOR + 2.3 % | March 2022 | 84 113 |
| (USD '000) Mortgage debt |
Description | Interest rate | Maturity | Carrying amount |
*Facility relates to financing of the three CLEANBU vessels with delivery in 2020
| Capitalized expenses Sum KCC03 |
(870) 12 504 |
||
|---|---|---|---|
| KCC04 Exchange rate adjustment |
500 000 | 11.02.2025 | 54 028 (6 937) |
| Capitalized expenses Sum KCC04 |
(43) 47 048 |
||
| Total bond loan | 642 000 | 59 552 |
| (USD '000) | Fair value | Carrying amount | Carrying amount |
|---|---|---|---|
| Interest bearing liabilities | 31 Mar 2020 | 31 Mar 2020 | 31 Dec 2019 |
| Mortgage debt | 165 732 | 165 732 | 170 074 |
| Capitalized loan fees | - | (700) | (770) |
| Bond loan | 60 430 | 60 465 | 34 023 |
| Capitalized expenses bond loan | - | (913) | (187) |
| Total non-current interest bearing liabilties | 226 162 | 224 585 | 203 139 |
| Mortgage debt, current | 17 367 | 17 367 | 17 367 |
| Overdraft facility (Secured) | 5 939 | 5 939 | 1 835 |
| Total interest bearing liabilities | 249 467 | 247 890 | 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 | 28 537 | 119 516 | 137 426 | - | 285 479 |
|---|---|---|---|---|---|
| Bond loan (incl interest) | 4 298 | 20 387 | 59 243 | - | 83 927 |
| Mortgage debt (incl interests) | 24 240 | 99 129 | 78 184 | - | 201 552 |
| (USD '000) Maturity profile financial liabilities at 31 Mar 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 31 March 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 level relate to minimum equity (USD 110 million) and equity ratio (30%), minimum cash (the higher of USD 10 million and 5 % of net interest-bearing debt) and net debt to EBITDA of max 7x in 2020 and max 5x from 2021 (some facility agreements include a loan margin adjustment based on net debt to operating profit ratio in 2020). In addition, all secured loans contain minimum value clauses related to the value of the vessel compared to outstanding loan.
| Financial assets | ||
|---|---|---|
| (USD '000) | 31 Mar 2020 | 31 Dec 2019 |
| Financial instruments at fair value through OCI | ||
| Forward freight agreements | 545 | 1 056 |
| Financial instruments at fair value through P&L | ||
| Forward freight agreements | - | 21 |
| Interest rate swaps | 4 | 202 |
| Financial assets | 549 | 1 279 |
| Current | 549 | 1 077 |
| Non-current | - | 202 |
| Financial liabilities | ||
| (USD '000) | 31 Mar 2020 | 31 Dec 2019 |
| Financial instruments at fair value through OCI | ||
| Cross-currency interest rate swap (CCIRS) | 9 663 | 1 438 |
| Interest rate swaps | 4 894 | 364 |
| Fuel Hedge | 1 152 | - |
| Financial instruments at fair value through P&L | ||
| Interest rate swaps | - | 1 825 |
| FX Swaps | 42 | - |
| Financial liabilities | 15 751 | 3 626 |
| Current | 1 194 | - |
Non-current 14 557 3 626
A new CCIRS was entered into in Q1 2020 to secure NOK 400 million of KCC04 bond loan. Unrealised negative development in the value of derivatives is due to decrease in interest rates, bunkers market and dry bulk market and a weak NOK to USD currency.
| (USD '000) | Quarter ended | ||
|---|---|---|---|
| Finance income | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Other interest income | 256 | 541 | 1 885 |
| Fair value changes in FFA | - | 189 | 21 |
| Gain on foreign exchange | - | - | 1 074 |
| Other financial income | - | - | 43 |
| Finance income | 256 | 730 | 3 024 |
| (USD '000) | Quarter ended | ||
|---|---|---|---|
| Finance cost | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Interest paid to related parties | - | 202 | 202 |
| Interest expenses mortgage debt | 2 140 | 1 705 | 7 563 |
| Interest expenses bond loan | 824 | 387 | 2 124 |
| Interest expenses lease liabilities | 23 | - | 96 |
| Amortization capitalized fees on loans | 214 | 77 | 373 |
| Other financial expenses* | 665 | 35 | 86 |
| Fair value changes interest rate swaps** | 293 | 1 085 | 3 660 |
| Loss on foreign exchange | 255 | - | - |
| Finance cost | 4 414 | 3 491 | 14 105 |
*Includes premium from buyback of KCC03 in February 2020.
**Includes realized effect from terminated CCIRS against KSH of USD 0.3 million in Q1 2020.
Dividends of USD 0.5 million were paid to the shareholders in March 2020 (USD 0.01 per share).
During March 2020, KCC ASA purchased 3 063 own shares for a total consideration of USD 8k. Persons from the Management and the Board have also purchased shares in KCC during March 2020. Below is an updated overview of number of shares held by the Management and members of the Board.
| Engebret Dahm | Chief Executive Officer | 21 115 (held through E Dahm Invest AS) |
|---|---|---|
| Liv Hege Dyrnes | Chief Financial Officer | 6 500 |
| Morten Skedsmo | Board member | 225 |
| Lori Wheeler Næss | Board member | 2 105 |
| Magne Øvreås | Board member | Owns 8,5 % of EGD Shipholding AS which holds 8 805 128 shares |
| Lasse Kristoffersen | Chairperson | 3 000 shares in KCC through B7 Invest AS + owns 0.7% of Rederiaksjeselskapet Torvald Klaveness which holds 25 845 950 shares through Klaveness Ship Holding AS. |
| Quarter ended | Year ended | ||
|---|---|---|---|
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| G&A fee to Klaveness AS | 442 | 671 | 2 238 |
| Commercial management fee to Klaveness AS | 344 | 519 | 1 628 |
| Travel expenses and operating cost reinvoiced from Klaveness AS | 39 | 70 | 530 |
| Group commercial and administrative services | 825 | 1 261 | 4 396 |
| Quarter ended | |||
|---|---|---|---|
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Technical management fee to KSM* (reported as part of opex) | 758 | 642 | 2 735 |
| Crewing agency fee to KSM* (reported as part of opex) | 265 | 222 | 953 |
| Supervision fee to Klaveness AS (capitalised on newbuildings) | 395 | 128 | 2 075 |
| Interest cost to related parties (Klaveness Ship Holding AS) | - | 202 | 202 |
| Total other transactions with related parties | 1 418 | 1 195 | 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.
Rebekka Glasser Herlofsen was elected as a new Board member in the General Meeting 27 April 2020. She will replace Stephanie S Wu.
In April, KCC Shipowning AS (a subsidiary of KCC) received credit approval from two banks for an up to USD 60 million loan facility for the financing of two CLEANBU newbuilding vessels with delivery in first half of 2021. The financing is subject to final documentation estimated to be finalized in Q2 2020. Bank debt has based on this facility been secured for all newbuilds.
In May, KCC Shipowning AS (a subsidiary of KCC) received credit approval from all lending banks amending all bank loan facility agreements whereby certain financial covenants will be relaxed or replaced and a harmonization of the minimum value clauses will be introduced. The changes are subject to guarantee from Klaveness Combination Carriers ASA.
During Q2, KCC increased tanker market coverage for the CLEANBU's with the conclusion of a 3-6 months time charters for two of the CLEANBU vessels and a 9-12 months time charter for the third CLEANBU vessel. Revenue from these contracts will be subject to ordinary tax regime, however expected tax expense for 2020 is zero due to tax losses carried forward.
The NOK 500 million senior unsecured bond loan KCC04 was listed on Oslo Børs 25 May 2020.
On 26 May, 2020 the Company's Board of Directors declared to pay a cash dividend to the Company's shareholders of USD 1.44million.
There are no other events after the balance sheet date that have material effect on the financial statement as of 31 March 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/investorrelations/#alternative-performance-measures
| Reconciliation of EBITDA and EBITDA adjusted | Quarter ended | Year ended | ||
|---|---|---|---|---|
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| Net revenues from operations of vessels | 22 403 | 13 326 | 61 327 | |
| Operating expenses, vessels | (8 253) | (6 962) | (29 913) | |
| Group commercial and administrative services | (825) | (1 261) | (4 396) | |
| Salaries and social expense | (234) | - | - | |
| Tonnage tax | (8) | (36) | (163) | |
| Other operating and administrative expenses | (258) | (330) | (1 093) | |
| EBITDA | 12 825 | 4 736 | 25 763 | |
| Start up costs CLEANBU vessels | 31 | 553 | 1 724 | |
| EBITDA adjusted | 12 856 | 5 289 | 27 487 | |
| EBITDA | 12 825 | 4 736 | 25 763 | |
| Depreciation | (4 354) | (2 778) | (14 070) | |
| EBIT | 8 472 | 1 958 | 11 692 | |
| Start up costs CLEANBU vessels | 31 | 553 | 1 724 | |
| EBIT adjusted | 8 503 | 2 511 | 13 417 |
| Reconciliation of average revenue per onhire day (TCE earnings) | Quarter ended | Year ended | |
|---|---|---|---|
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Net revenues from operations of vessels | 22 403 | 13 326 | 61 327 |
| Offhire compensation | - | - | 15 |
| IFRS 15 adjustment* | (259) | (19) | 680 |
| Net revenue ex IFRS adjustment | 22 144 | 13 307 | 62 022 |
| Onhire days | 1 083 | 838 | 3 636 |
| Average revenue per onhire days (\$/d) (TCE earnings) | 20 441 | 15 877 | 17 060 |
| Reconciliation of opex per day | Quarter ended | Year ended | |
|---|---|---|---|
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Operating expenses, vessels | 8 253 | 6 962 | 29 913 |
| Leasing cost previously presented as opex | 108 | - | 445 |
| Reversal of provision | - | - | 285 |
| Start up costs CLEANBU vessels | (31) | (553) | (1 724) |
| Operating expenses, vessels adjusted | 8 328 | 6 409 | 28 919 |
| Operating days | 1 092 | 890 | 3 897 |
| Opex per day (\$/d) | 7 627 | 7 202 | 7 421 |
| Reconciliation of total assets to capital employed and return on capital employed | |||
|---|---|---|---|
| (ROCE) calculation. | Quarter ended | Year ended | |
| USD'000 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
| Total assets | 486 785 | 363 310 | 459 262 |
| Total liabilities | 277 548 | 185 399 | 245 384 |
| Total equity | 209 237 | 177 911 | 213 878 |
| Total interest-bearing debt | 247 890 | 173 301 | 222 341 |
| Capital employed | 457 127 | 351 212 | 436 219 |
| EBIT adjusted annualised | 34 532 | 10 046 | 13 417 |
| ROCE adjusted | 8 % | 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.
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