Earnings Release • Feb 13, 2015
Earnings Release
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| USD million | Q4'14 | Q3'14 | Q2'14 | 2014 | 2013 |
|---|---|---|---|---|---|
| Freight income | 17.7 | 20.8 | 19.9 | 78.5 | 54.7 |
| Voyage related expenses | 2.5 | 3.5 | 2.7 | 11.2 | 12.8 |
| EBITDA | 8.5 | 10.9 | 10.9 | 41.0 | 16.6 |
| Net profit/(loss) | (2.6) | (0.3) | 0.2 | (2.7) | 1.2 |
| Total assets | 497.5 | 504.4 | 505.9 | 497.5 | 513.6 |
| Total equity | 191.8 | 194.4 | 194.7 | 191.8 | 194.5 |
| Interest bearing debt | 297.4 | 300.2 | 302.9 | 297.4 | 308.1 |
| Cash and cash equivalents | 20.8 | 21.5 | 23.8 | 20.8 | 18.2 |
| Book equity ratio | 39 % | 39 % | 38 % | 39 % | 38 % |
Freight income for the quarter was MUSD 17.7, down from MUSD 20.8 in the previous quarter. The decrease was due to lower utilisation of WilEnergy prior to entering lay-up in mid-December, in addition to reduced earnings on WilGas. Fleet utilisation for the quarter ended at 78 % (trading vessels), compared to 86 % in Q3 2014. Voyage related expenses were MUSD 2.5 (MUSD 3.5 Q3 2014). The decrease in voyage related expenses compared to last quarter was mainly due to repositioning and cool down of WilGas in Q3 2014 after the scheduled dry-docking.
Operating expenses were MUSD 5.7 (MUSD 5.0 Q3 2014). The increase from last quarter was mainly due to increased provisions for crew salaries year end. Lay-up reduces operating expenses to approx. USD 2,000 per day. Administration expenses for the quarter were MUSD 1.0, down from MUSD 1.4 in Q3 2014, due to a reduction in the fair value of synthetic employee options. EBITDA for the quarter was MUSD 8.5 (MUSD 10.9 Q3 2014). Depreciation for the quarter was recorded at MUSD 4.7, compared to MUSD 4.8 in Q3 2014.
Net finance income/(expense) was MUSD (6.3) compared to MUSD (6.4) in Q3 2014. Interest expenses on the WilForce and WilPride financial leases amounted to MUSD 6.2 (MUSD 6.3 Q3 2014).
Loss before tax and for the period was MUSD 2.5 and MUSD 2.6 respectively, compared to MUSD 0.3 in Q3 2014.
Freight income for the year amounted to MUSD 78.5, compared to MUSD 54.7 in 2013. The increase was mainly due to the increased fleet size in the second half of 2013. Fleet utilisation ended at 86 %, compared to 73 % in 2013 (trading vessels). Voyage related expenses were MUSD 11.2 in 2014 compared to MUSD 12.8 in 2013.
Operating expenses for the year were MUSD 21.1 compared to MUSD 18.5 in 2013, reflecting increased fleet size offset by lay-up of WilEnergy in Q4 2014. Administration expenses were recorded at MUSD 5.1 in 2014, down from MUSD 6.8 in 2013. The decrease was mainly due to a decrease in the fair value of synthetic employee options.
Full year EBITDA was MUSD 41.0, compared to MUSD 16.6 in 2013. Depreciation for the period was MUSD 18.4, compared to MUSD 10.0 in 2013. The increase was due to delivery of WilForce and WilPride in the second half of 2013. Net finance income/(expense) was MUSD (25.2) compared to MUSD (5.5) in 2013. The increased finance expenses were due to interest charges on the WilForce and WilPride lease obligations.
Loss before tax for the year was MUSD 2.6, compared to a profit of MUSD 1.1 in 2013. Income tax expense for the year amounted to MUSD 0.1, compared to a gain of MUSD 0.1 in 2013. Loss for the year was MUSD 2.7 compared to a profit of MUSD 1.2 in 2013.
Book value of vessels was MUSD 467.1 as at 31 December 2014 (MUSD 471.8 30 September 2014). The decrease reflects ordinary depreciation during the quarter.
Total current assets were MUSD 30.1 as at 31 December 2014, compared to MUSD 32.3 as at 30 September 2014. Cash and cash equivalents were MUSD 20.8 at end of Q4 (MUSD 21.5 Q3 2014), trade receivables MUSD 2.5 (MUSD 3.0 Q3 2014), inventory MUSD 2.8 (MUSD 3.9 Q3 2014) and other short term assets MUSD 4.0 (MUSD 3.9 Q3 2014). MUSD 3.0 of other short term assets reflects prepayment of WilForce and WilPride monthly lease payments, same as in Q3 2014.
Total equity as at 31 December 2014 was MUSD 191.8.
Total current liabilities were MUSD 19.9 as at 31 December 2014, compared to MUSD 21.2 as at 30 September 2014. MUSD 11.7 of the current liabilities relates to the short term portion of the WilForce and WilPride financial leases (MUSD 11.5 as at 30 September 2014). Based on the current liquidity situation and the forecasted cash flow in 2015, the Company is sufficiently funded for 2015.
After a period with increasing LNG prices in the Far East, the trend turned during the quarter as a result of declining crude oil price, mild weather and high storage levels in Japan and Korea. The Far East LNG price ended the quarter below USD 10/MMBTU, which is half the price compared to end of Q4 2013 and 35 % down from beginning of the quarter.
China increased its LNG import by about 7 % compared to last quarter, and was at the same level as Q4 2013. As a result of high storage levels, the import to Japan was down by 2 % compared to Q3 and down 4 % compared to Q4 2013. Spot rates for TFDE LNG carriers remained at a stable level during the quarter, starting at USD 68,500 per day and ending somewhat up at USD 70,500. After the end of the quarter the TFDE spot rates have decreased somewhat.
On the supply side the BG Group's Queensland Curtis LNG facility commenced exports as planned at the very end of December. This is the first of four Australian production plants expected to start over the next 12 months. Australia has further six liquefaction plants under construction, which will bring Australian exports from the current 33 MTPA to 83 MTPA by 2017, and is thus expected to surpass Qatar as the world's largest LNG exporter.
In total of about 118 MTPA of new LNG capacity is currently under construction. Due to the recent fall in energy prices, FID on some new LNG production facilities may be postponed, but several projects in pre-FID stages are unaffected by the recent drop in oil price.
After a period with high newbuilding activity in Q1 to Q3 2014 the newbuilding ordering eased off towards the end of the year. In total more than 50 LNG carriers were ordered during 2014. Shipbuilding capacity at the three big Korean LNG builders is being filled for 2017 and into 2018.
According to shipbrokers the total orderbook for LNG vessels above 100,000 cbm (excl. FSRU and FLNG), as of year-end 2014, is reported at 141 of which only 20 are available for contract. Eight vessels are scheduled for delivery in Q1 2015, of which two are uncommitted. In total 31 vessels are scheduled for delivery in 2015 of which only six are available for contract. Some deliveries can be expected to be delayed for various reasons.
Awilco LNG ASA was established in February 2011. The principal activity of Awilco LNG ASA and its subsidiaries is to invest in and operate LNG transportation vessels. The three 2nd generation vessels were delivered to the Company during first half 2011, and the two TFDE vessels WilForce and WilPride were delivered in Q3 and Q4 2013. The Group handles the commercial and technical operation of the vessels from its main office in Oslo, and currently has 9 employees. Awilco LNG purchases certain administrative and sub-management technical services from two companies in the Awilhelmsen Group; Awilhelmsen Management AS and Wilhelmsen Marine Services AS, see note 5 in the interim condensed consolidated financial statements for further details.
After three years with declining LNG production there was finally an increase in production capacity in 2014 as PNG and Queensland Curtis commenced production. Unfortunately the increase in production has been more than absorbed by a growing fleet. The short term market for LNG carriers is expected to remain challenging and volatile for at least the first part of 2015 as further newbuildings are scheduled for delivery, and the majority of new production capacity is not scheduled to start up before 2nd half 2015. The market for older tonnage is even more affected by the increased fleet than the modern, more efficient tonnage. It is expected that the phasing out of older tonnage will increase due to the soft market. Rates and utilisation is expected to improve as significant new LNG production comes online.
WilPride and WilGas are currently trading in the spot market. Awilco LNG is continuously evaluating mid- and long-term employment opportunities for these vessels, in addition to longer term infrastructure projects for its second generation vessels.
Oslo, 12 February 2015
Sigurd E. Thorvildsen Chairman of the Board
Jon-Aksel Torgersen Board member
Henrik Fougner Board member
Annette Malm Justad Board member
Synne Syrrist Board member
Jon Skule Storheill CEO
| In USD thousands, except per share figures | Q4 | Q3 | Q4 | |||
|---|---|---|---|---|---|---|
| 2014 | 2014 | 2013 | 2014 | 2013 | ||
| Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | |
| Freight income | 2 | 17 656 | 20 782 | 21 334 | 78 461 | 54 702 |
| Voyage related expenses | 5 | 2 527 | 3 490 | 5 497 | 11 239 | 12 829 |
| Net freight income | 15 129 | 17 292 | 15 837 | 67 222 | 41 873 | |
| Operating expenses | 5 671 | 5 030 | 5 288 | 21 134 | 18 524 | |
| Administration expenses | 5 | 986 | 1 392 | 2 519 | 5 120 | 6 799 |
| Earnings before interest, taxes, depr. and amort. (EBITDA) | 8 472 | 10 870 | 8 029 | 40 968 | 16 550 | |
| Depreciation and amortisation | 4 723 | 4 770 | 3 868 | 18 376 | 10 020 | |
| Earnings before interest and taxes | 3 749 | 6 100 | 4 161 | 22 592 | 6 530 | |
| Finance income | 71 | 11 | 18 | 154 | 167 | |
| Finance expenses | 6 369 | 6 364 | 4 443 | 25 356 | 5 638 | |
| Net finance income/(expense) | (6 297) | (6 353) | (4 425) | (25 202) | (5 471) | |
| Profit/(loss) before taxes | (2 549) | (254) | (264) | (2 610) | 1 059 | |
| Income tax expense | (54) | - | 12 | (54) | 112 | |
| Profit/(loss) for the period | (2 603) | (254) | (252) | (2 664) | 1 171 | |
| Earnings per share in USD attributable to ordinary equity holders of Awilco LNG ASA: Basic, profit/(loss) for the period |
(0.04) | (0.00) | (0.00) | (0.04) | 0.02 | |
| Diluted, profit/(loss) for the period | (0.04) | (0.00) | (0.00) | (0.04) | 0.02 | |
| Profit/(loss) for the period | (2 603) | (254) | (252) | (2 664) | 1 171 |
|---|---|---|---|---|---|
| Other comprehensive income: Other comprehensive income items |
- | - | - | - | - |
| Total comprehensive income/(loss) for the period | (2 603) | (254) | (252) | (2 664) | 1 171 |
| In USD thousands | 31.12.2014 | 30.9.2014 | 31.12.2013 |
|---|---|---|---|
| Note | (unaudited) | (unaudited) | (audited) |
| ASSETS | |||
| Non-current assets | |||
| Vessels | 467 114 | 471 753 | 478 705 |
| Other fixed assets | 297 | 314 | 361 |
| Total non-current assets | 467 411 | 472 067 | 479 066 |
| Current assets | |||
| Trade receivables | 2 520 | 2 976 | 3 715 |
| Inventory | 2 794 | 3 939 | 4 316 |
| Other short term assets | 3 960 | 3 887 | 8 247 |
| Cash and cash equivalents | 20 819 | 21 491 | 18 244 |
| Total current assets | 30 094 | 32 293 | 34 522 |
| TOTAL ASSETS | 497 505 | 504 360 | 513 588 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital 3 |
48 420 | 48 420 | 48 420 |
| Share premium | 126 463 | 126 463 | 126 463 |
| Retained earnings | 16 956 | 19 558 | 19 620 |
| Total equity | 191 838 | 194 440 | 194 502 |
| Non-current liabilities | |||
| Pension liabilities | 165 | 168 | 105 |
| Long-term interest bearing debt | 285 556 | 288 598 | 297 256 |
| Total non-current liabilities | 285 721 | 288 766 | 297 361 |
| Current liabilities | |||
| Short-term interest bearing debt | 11 699 | 11 457 | 10 765 |
| Trade payables | 467 | 2 221 | 3 507 |
| Income tax payable | 54 | - | 4 |
| Provisions and accruals 6 |
7 725 | 7 478 | 7 449 |
| Total current liabilities | 19 945 | 21 155 | 21 725 |
| TOTAL EQUITY AND LIABILITIES | 497 505 | 504 360 | 513 588 |
| In USD thousands | Share | Share | Retained | Total |
|---|---|---|---|---|
| capital | premium | earnings | equity | |
| Equity at 1 January 2014 | 48 420 | 126 463 | 19 620 | 194 502 |
| Profit/(loss) for the period | - | - | (2 664) | (2 664) |
| Other comprehensive income for the period | - | - | - | - |
| Total comprehensive income | - | - | (2 664) | (2 664) |
| Balance as at 31 December 2014 (unaudited) | 48 420 | 126 463 | 16 956 | 191 838 |
| In USD thousands | Share | Share | Retained | Total |
|---|---|---|---|---|
| capital | premium | earnings | equity | |
| Equity at 1 January 2013 | 48 420 | 126 463 | 18 448 | 193 330 |
| Profit/(loss) for the period | - | - | 1 171 | 1 171 |
| Other comprehensive income for the period | - | - | - | - |
| Total comprehensive income | - | - | 1 171 | 1 171 |
| Balance as at 31 December 2013 (audited) | 48 420 | 126 463 | 19 620 | 194 502 |
| In USD thousands | Q4 | Q3 | ||
|---|---|---|---|---|
| 2014 | 2014 | 2014 | 2013 | |
| (unaudited) | (unaudited) | (unaudited) | (audited) | |
| Cash Flows from Operating Activities: | ||||
| Profit/(loss) before taxes | (2 549) | (254) | (2 610) | 1 059 |
| Income taxes paid | 53 | - | (9) | (56) |
| Interest and borrowing costs expensed | 6 236 | 6 294 | 25 124 | 5 568 |
| Items included in profit/(loss) not affecting cash flows: | ||||
| Depreciation and amortisation | 4 723 | 4 770 | 18 376 | 10 020 |
| Changes in operating assets and liabilities: | ||||
| Trade receivables, inventory and other short term assets | 1 528 | 52 | 7 004 | (8 538) |
| Trade payables, provisions and accruals | (1 561) | 1 528 | (2 194) | 2 649 |
| i) Net cash provided by / (used in) operating activities | 8 430 | 12 390 | 45 690 | 10 702 |
| Cash Flows from Investing Activities: | ||||
| Investment in vessels | (68) | (5 618) | (6 719) | (1 082) |
| Investment in vessels under construction | - | - | (505) | (291 562) |
| Investment in other fixed assets | - | - | (2) | (158) |
| ii) Net cash provided by / (used in) investing activities | (68) | (5 618) | (7 226) | (292 802) |
| Cash Flows from Financing Activities: | ||||
| Proceeds from borrowings | - | - | - | 312 092 |
| Repayment of borrowings | (2 818) | (2 761) | (10 841) | (6 584) |
| Interest and borrowing costs paid | (6 215) | (6 274) | (25 047) | (7 732) |
| iii) Net cash provided by / (used in) financing activities | (9 034) | (9 035) | (35 889) | 297 775 |
| Net change in cash and cash equivalents (i+ii+iii) | (672) | (2 263) | 2 575 | 15 675 |
| Cash and cash equivalents at start of period | 21 491 | 23 754 | 18 244 | 2 569 |
| Cash and cash equivalents at end of period | 20 819 | 21 491 | 20 819 | 18 244 |
Awilco LNG ASA (the Company) is a public limited liability company incorporated and domiciled in Norway. The Company's registered office is Beddingen 8, 0250 Oslo, Norway.
The interim consolidated financial statements (the Statements) of the Company comprise the Company and its subsidiaries, together referred to as the Group. The principal activity of the Group is the investment in and operation of LNG transportation vessels. The Group owns and operates a fleet of five LNG carriers.
The Statements for the three months ended 31 December 2014 are prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The Statements have not been subject to audit or review. The Statements do not include all of the information and disclosures required by International Financial Reporting Standards (IFRS) for a complete set of financial statements, and the Statements should be read in conjunction with the Group's annual consolidated financial statements for the period ended 31 December 2013, which includes a detailed description of the applied accounting policies.
The accounting policies adopted in the preparation of the Statements are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2013, except for the adoption of new standards, amendments and interpretations effective and adopted as of 1 January 2014. IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosures of Interests in Other Entities have been implemented as of 1 January 2014, as described in the annual consolidated financial statements for 2013. The implementation of the new standards have not had any effect on the Group's financial position or performance.
The Group currently owns and operates five LNG vessels. For internal reporting and management purposes the Group's business is organised into one reporting segment, LNG transportation. Performance is not evaluated by geographical region. Revenue from the Group's country of domicile was nil in Q4 2014, same as in Q3 2014.
The Group had four customers each contributing with more than 10 per cent of the Group's freight income in Q4 2014, the contribution from each customer varying between 11 and 41 per cent of total freight income.
The number of issued shares was 67,788,874 at 31 December 2014. There were no changes in shares issued in Q4 2014. The share capital is denominated in NOK, and the nominal value per share is NOK 4 (in US dollars 0.74). All issued shares are of equal rights.
WilEnergy was placed in lay-up in Indonesia in mid-December. Lay-up reduces operating expenses to approx. USD 2,000 per day.
| Agreements | ||
|---|---|---|
| Related party | Description of service | Note |
| Wilhelmsen Marine Services AS (WMS) | Technical Sub-management Services | 1 |
| Awilhelmsen Management AS (AWM) | Administrative Services | 2 |
| Astrup Fearnley Group | Ship Brokering Services | 3 |
(1) The Group's in-house technical manager, ALNG TM, has entered into a sub-management agreement with WMS, whereby WMS assists ALNG TM in management of the Group's fleet. The sub-management services also include management for hire of the managing director in ALNG TM. ALNG TM pays WMS a management fee based on WMS' costs plus a margin of 7 %, cost being time accrued for the sub-manager's employees involved. The fee is subject to semi-annual evaluation, and is regulated according to the consumer price index in Norway. The agreement can be terminated by both parties with three months notice. WMS is 100 % owned by Awilco AS.
(2) AWM provides the Group with administrative and general services including accounting and payroll, legal, secretary function and IT. The Group pays AWM MNOK 4.0 in yearly management fee (approx. MUSD 0.7) based on AWM's costs plus a margin of 5 %. The fee is subject to semi-annual evaluation, and is regulated according to the consumer price index in Norway. The agreement can be terminated by both parties with three months notice. AWM is 100 % owned by Awilhelmsen AS, which owns 100 % of Awilco AS.
(3) One of the Company's Board Members is also the General Manager of the Astrup Fearnley Group. The Astrup Fearnley Group delivers ship brokering services on a competitive basis to the Group.
| In USD thousands | Q4 | Q4 | ||
|---|---|---|---|---|
| Related party | 2014 | 2013 | 2014 | 2013 |
| Wilhelmsen Marine Services AS | 152 | 1 035 | 774 | 3 849 |
| Awilhelmsen Management AS | 158 | 168 | 695 | 677 |
| Astrup Fearnley Group | 22 | 112 | 243 | 443 |
Purchases from related parties are included as part of Administration expenses in the income statement, except from commissions paid to the Astrup Fearnley Group, which are included in Voyage related expenses.
Provisions and accruals as at 31 December 2014 were MUSD 7.7 (MUSD 7.5 30 September 2014), of which deferred revenue was MUSD 5.0 (MUSD 4.7 30 September 2014).
There are no material events after the balance sheet date.
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