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ADS Maritime Holding
Annual Report • Apr 4, 2019
8170_10-k_2019-04-04_d8255dfd-ecbc-4f3b-ba90-71d0d3d01c71.pdf
Annual Report
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ANNUAL REPORT 2018
Contents
| Board of Directors' Report2 | |
|---|---|
| Consolidated statement of comprehensive income7 | |
| Consolidated statement of financial position 8 | |
| Consolidated statement of cash flows9 | |
| Consolidated statement of changes in equity10 | |
| Notes to the consolidated financial statements11 | |
| Parent Company unconsolidated statement of comprehensive income 28 | |
| Parent Company unconsolidated statement of financial position29 | |
| Parent Company unconsolidated statement of cash flows30 | |
| Parent Company unconsolidated statement of changes in equity 31 | |
| Notes to the Parent Company unconsolidated financial statements 32 | |
| Independent auditor's report35 |
Board of Directors' Report
ADS Crude Carriers was incorporated as a private limited liability company (ADS Crude Carriers Ltd) on 30 April 2018 and converted to a public limited company (ADS Crude Carriers Plc) on 10 August 2018. The principal activities of ADS Crude Carriers Plc (the "Parent Company") and its wholly owned subsidiaries (together, the "Company") are operating tanker vessels in the global tanker market. The Company owns and operates a fleet of three VLCCs: Front Page, ADS Stratus and ADS Serenade.
HEADLINES 2018
- ADS Crude Carriers Plc and subsidiaries established
- USD 57 million gross equity raised 16 July 2018 in a private placement
- Admitted for listing at Oslo Stock Exchange Merkur Market 28 August 2018
- Purchase of three VLCCs for USD 22.5 million per vessel
- Vessels delivered on 20 July, 9 August and 13 September 2018
- Debt of USD 10 million per vessel
- Scrubber purchase and installation for all vessels fully financed; installation planned during intermediate surveys scheduled H2 2019
KEY FINANCIALS 2018
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Revenue | 13 432 |
| Net revenue¹ | 7 907 |
| TCE¹ per day (in USD) | 18 962 |
| Operating profit | 903 |
| Net profit | 102 |
| EPS (in USD per share) | 0.01 |
| Cash flow from operations | (2 595) |
| Cash and cash equivalents | 13 689 |
| Equity ratio | 61 % |
| Net interest-bearing debt¹ | 15 787 |
¹ Net revenue, TCE per day and NIBD are non-IFRS measures (see Note 17 to the consolidated financial statements)
1. Operations and market
ADS Crude Carriers Plc was formed during 2018 with an aim of acquiring tankers at low entry prices ahead of the new IMO emission regulations that come into force on 1 January 2020. The Company took delivery of three VLCCs during the third quarter 2018: Front Page on 20 July 2018, ADS Stratus on 9 August 2018 and ADS Serenade on 13 September 2018. The Company is managed by Arendals Dampskibsselskab AS, while commercial management of the vessels is provided by Frontline Ltd. Technical management of the vessels is provided by OSM Maritime and Thome Ship Management. The Company plans to install scrubbers across its fleet in Q3 and Q4 2019 and is well prepared to take advantage from the relative savings in fuel cost it expects to benefit from commencing 1 January 2020 and the initial years following IMO 2020 implementation. The cost of scrubbers, including installation, is fully financed from proceeds of the 16 July 2018 equity issue.
2. Financial review
The period from 30 April to 31 December 2018 (the "Period" or "2018") is the first financial period of the Company. There are no comparative figures as this is the first period of operation.
2.1. Income statement
The Company was in a start-up phase during the first half of the Period. After delivery of the vessels between 20 July and 13 September 2018, the Company had two vessels operating in the spot market and one on time charter. The Company recorded revenue of USD 13.4 million and net revenue of USD 7.9 million. The Company had a total of 417 available vessel days and recorded an average TCE per day of USD 18,962.
Vessel operating expenses were USD 5.5 million in the Period. Included within vessel operating costs are certain startup costs in order to prepare the vessels for operations, but which were not eligible for capitalization. General and administrative costs were USD 0.6 million in 2018 and were impacted by corporate start-up costs. Depreciation, all of which related to the Company's three vessels, was USD 1.8 million in 2018. Operating profit was USD 0.9 million for 2018.
Finance costs totalled USD 0.9 million and finance income USD 0.1 million. Finance costs consisted mainly of interest cost arising on the Company's vessel loans.
Net profit was USD 0.1 million in 2018 and EPS was USD 0.01.
2.2. Balance sheet
The Company had gross assets of USD 92.2 million at 31 December 2018, consisting of vessel carrying values of USD 67.7 million and current assets of USD 24.4 million. The book value of equity at the Period end was USD 56.0 million, non-current liabilities were USD 29.7 million and current liabilities USD 6.4 million. The non-current liabilities consist of the three vessel loans with nominal value USD 10 million per vessel, less unamortized loan costs.
2.3. Cash flow
Net cash flow from operations before working capital movements was USD 2.7 million, and after working capital movements of negative USD 5.3 million was an outflow of USD 2.6 million for the Period. The level of working capital movement is within the normal range expected during the Company's first period of operation.
Cash invested in property, plant and equipment was USD 68.4 million in 2018 following purchase of the Company's three vessels for USD 22.5 million per vessel, plus direct purchase costs. An amount of USD 0.5 million was paid as first installment to the manufacturer of scrubbers, representing 10% of the total scrubber purchase price.
Cash flow from investing activities was an inflow of USD 84.7 million, consisting mainly of gross equity raise proceeds of USD 56.9 million, less issue costs of USD 1.0 million, and gross loan proceeds of USD 30.0 million, less issue costs of USD 0.3 million. An amount of USD 0.5 million was transferred to restricted cash in relation to terms of the loan that require an amount equivalent to approximately one quarter's interest payment being deposited in escrow. Interest payment totaling USD 0.4 million was made in the Period.
Cash and cash equivalents held at 31 December 2018 totaled USD 13.7 million. In addition, the Company had restricted cash deposits of USD 0.5 million at 31 December 2018.
2.4. Dividends and allocation of net profit
The Company recorded a net profit of USD 0.1 million for 2018. The Board of Directors propose to transfer the net profit to retained earnings and do not propose a dividend for 2018.
2.5. Going concern
The Company was incorporated on 30 April 2018 as a limited liability company, converted to a public limited company on 10 August 2018 and subsequently admitted to trading on the Merkur Market on 28 August 2018. On 16 July 2018, the Company raised gross proceeds of USD 57 million in a private placement equity issue. The purpose of the equity issue was to provide proceeds to part-finance purchase of three VLCCs, finance scrubber installments on the acquired vessels planned for 2019, as well as provide liquidity for working capital build-up, cover general corporate purposes and equity transaction fees. During the second half of 2018 the Company purchased three vessels for a total price of USD 67.5 million, or USD 22.5 million per vessel. In addition to the equity contribution, the vessel purchase was partly financed by a USD 30 million loan, or USD 10 million per vessel (the "Fleet Loan"). All of the Company's vessels require intermediate surveys (dry dockings) during 2019 and the cost of the intermediate surveys will be financed either through cash from operations, debt financing, equity, or a combination.
The Company is subject to certain financial covenants under the Fleet Loan, including levels of minimum liquidity (no less than 10% of the financial indebtedness), minimum working capital (positive at all times) and maximum vessel loanto-value ratio (no more than 70%). The Company is in compliance with all financial covenants.
The Company's financial projections used in its going concern evaluation are based on certain assumptions about the future, including those related to the VLCC market, vessel utilization, productivity and operating cost level, expected future capital investments and the availability of financing such investments. Based on these assumptions, the Company expects to have sufficient liquidity to operate for at least 12 months from the date of this report and, therefore, these financial statements are prepared using the going concern assumption.
2.6. Parent company's unconsolidated financial statements
The Parent Company recorded a net loss of USD 0.2 million for 2018, driven by general and administrative costs of USD 0.2 million. The Parent Company had no revenue in 2018 as it has no revenue generating activities. The Parent Company is a holding company and expects future income in the form of dividends from subsidiaries.
The Board of Directors propose to transfer the net profit to retained earnings and do not propose a dividend for 2018.
The Parent Company had gross assets at 31 December 2018 of USD 56.8 million, of which USD 45.2 million is investment in subsidiaries and USD 11.6 million current assets. The Parent Company's book equity was USD 56.8 million at the Period end. The Company has no non-liabilities as at 31 December 2018.
2.7. Events after the reporting period
There are no events or occurrences after the reporting period and before approval of the financial statements that have a significant bearing on understanding the understanding of the consolidated or unconsolidated financial statements.
3. Financial risks
The Company's primary financial risks relate to market risk, credit risk and liquidity risk.
The Company's principle financial liabilities are loans used to finance the Company's vessels, as well as trade payables and other payables. The Company's principal financial assets are customer receivables, other assets and cash deposits at banks.
3.1. Interest rate risk
The Company's exposure to the risk of changes in market interest rates relates to its vessels loans. As at 31 December 2018, the Company had vessel loans with carrying value USD 29.7 million (nominal value USD 30 million) that had floating interest rates based on LIBOR plus a margin of 4.50%. The Company has no fixed interest rate borrowings.
To indicate the sensitivity of the Company's earnings to changes in interest rates, should LIBOR increase or decrease by 200 basis points, the Company's interest cash cost would increase or decrease by USD 0.6 million per year.
3.2. Foreign exchange risk
The Company operates in the global tanker industry, for which the majority of transactions are denominated in US dollars, the Company's functional and presentational currency. All of the Company's revenue recognized in 2018 was denominated in USD dollars. The majority of the Company's operating costs are denominated in US dollars.
As at 31 December 2018, the only financial assets and liabilities denominated in foreign currency is a cash and cash equivalent of USD 0.2 million. Hence, the Company's maximum exposure to foreign exchange risk is considered insignificant.
3.3. Credit risk
Credit risk is the risk that a counterparty defaults on its contractual obligations, resulting in a financial loss to the Company. The Company is exposed to credit risk primarily from receivables from customers and cash held at banks.
The Company manages its credit risk related to customers by aiming to provide services only to reputable customers. Part of the Company's customer credit risk management is provided by the Company's commercial vessel manager, Frontline Ltd.
During 2018, one of the Company's vessels was on a time charter and two of its vessels operated in the spot market and at 31 December 2018, the Company's vessels were on charters (time or spot) to three different counterparties. Charter hire income is payable to the Company in advance, while payment terms for spot charters are generally payment at discharge.
The Company aims to manage its counterparty risk relating to cash held at bank by only holding deposits at recognizable international banks. As at 31 December 2018 all of the Company's cash and cash equivalents and restricted cash was held with Nordea Bank.
3.4. Liquidity risk
Liquidity risk is the risk that the Company cannot meet its financial obligations as they fall due. The Company manages its risk of a shortage of funds by continuously monitoring maturity of its financial assets and liabilities and using a cash flow forecasting tool that makes projections about future cash flows from operating activities and required for investing activities.
The table below shows the maturity profile of the Company's financial liabilities based on contractual payment terms.
| (In thousands of USD) | 2019 | 2020 | 2021 | 2022 | Total |
|---|---|---|---|---|---|
| Interest-bearing debt | - | - | - | 29 729 | 29 729 |
| Other current liabilities | 1 333 | - | - | - | 1 333 |
| Trade payables | 5 113 | - | - | - | 5 113 |
| Total | 6 446 | - | - | 29 729 | 36 174 |
The Company intends to install scrubbers on board the vessels during intermediate surveys (dry dockings) scheduled for the second half of 2019. The scrubber purchase, including installation costs, total an estimated USD 3 million per vessel and is fully financed from the proceeds of the July 2018 private placement proceeds. An amount of USD 0.5 million was paid during 2018 and a further USD 1.2 million is included in trade payables at 31 December 2018 relating
to prepayments for the purchase of the scrubbers. The cost of the intermediate surveys will be in addition to the scrubbers and will be financed either through cash from operations, debt financing, equity, or a combination.
4. People and the organization
The Company's registered office is in Cyprus and its Norwegian subsidiaries are based in Arendal, Norway. The Company's fleet of vessels operate globally.
During the period ended 31 December 2018 the Company did not have any employees. On 1 March 2019 ADS Crude Carriers Plc employed one employee, based at the Company's office in Cyprus. The administrative and corporate management of the Company is provided by Arendals Dampskibsselskab AS. Commercial management of the vessels is provided by Frontline Ltd, while technical management of the vessels, including employment of crew onboard, is provided by OSM Maritime Group and Thome Ship Management.
The Company currently has five members of the Board of Directors, two of which are female.
5. Outlook
The VLCC tanker market improved significantly through the latter part of 2018 following lower levels earlier in the year. During the first quarter 2019, the VLCC market has remained dynamic, with periods of improving rates followed by short periods of declines, but overall a significant improvement resulting in a higher average market TCE rate in Q1 2019 compared to the same quarter in 2018. The market will likely be impacted during 2019 due to behaviors as a consequence of the pending IMO 2020 regulations, with an expected surge in the number of vessel owners temporarily reducing capacity to install scrubbers during the second half of the year. The VLCC market is expected to remain dynamic during 2019.
As at the date of this report, ADS Stratus and ADS Serenade continue to operate in the spot market, while Front Page is expected to complete its current time charter during the first half of April 2019 and will subsequently commence operations in the spot market.
Limassol, 3 April 2019
The Board of Directors
Consolidated statement of comprehensive income
| 30-Apr-18 to | ||
|---|---|---|
| (In thousands of USD) | Note | 31-Dec-18 |
| Revenue | 4, 5 | 13 432 |
| Operating expenses | ||
| Voyage expenses | 6 | (5 525) |
| Vessel operating expenses | 7 | (4 562) |
| General & administrative costs | 8 | (606) |
| Depreciation | 11 | (1 835) |
| Total operating expenses | (12 529) | |
| Operating profit | 903 | |
| Finance cost | 9 | (859) |
| Finance income | 9 | 57 |
| Profit before tax | 102 | |
| Income tax | - | |
| Profit after tax and total comprehensive income | 102 | |
| Earnings per share attributable to equity holders (in USD) | ||
| - Basic | 10 | 0.01 |
| - Diluted | 10 | 0.01 |
Consolidated statement of financial position
| (In thousands of USD) | Note | 31-Dec-18 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Vessels | 11 | 67 714 |
| Total non-current assets | 67 714 | |
| Current assets | ||
| Receivables from customers | 4 745 | |
| Other current assets | 12 | 5 488 |
| Restricted cash | 524 | |
| Cash and cash equivalents | 13 689 | |
| Total current assets | 24 447 | |
| Total assets | 92 161 | |
| Equity and liabilities | ||
| Equity | ||
| Issued share capital | 4 678 | |
| Share premium | 51 207 | |
| Retained earnings | 102 | |
| Total equity | 55 987 | |
| Non-current liabilities | ||
| Interest-bearing debt | 13 | 29 729 |
| Total non-current liabilities | 29 729 | |
| Current liabilities | ||
| Other current liabilities | 14 | 1 333 |
| Trade payables | 5 113 | |
| Total current liabilities | 6 446 | |
| Total equity and liabilities | 92 161 |
Consolidated statement of cash flows
| (In thousands of USD) | 30-Apr-18 to 31-Dec-18 |
|---|---|
| Cash flows from operating activities | |
| Profit for the period | 102 |
| Adjustment for items not affecting operating cash flows: | |
| Depreciation | 1 835 |
| Interest expense | 793 |
| Interest income | (35) |
| Net operating cash flow before working capital movements | 2 695 |
| Working capital movements | (5 290) |
| Total operating cash flow | (2 595) |
| Cash flows from investing activities | |
| Payments for vessels | (68 387) |
| Total cash flows used in investing activities | (68 387) |
| Cash flows from financing activities | |
| Proceeds from share issue | 56 933 |
| Transaction cost on issue of shares | (1 048) |
| Receipt from bank loan | 30 000 |
| Transaction costs related to bank loan | (300) |
| Interest paid | (391) |
| Decrease/(increase) in restricted cash | (524) |
| Interest received | 1 |
| Total cash flows from financing activities | 84 671 |
| Net increase in cash and cash equivalents | 13 689 |
| Cash and cash equivalents at the beginning of the period | - |
| Cash and cash equivalents at the end of the period | 13 689 |
Consolidated statement of changes in equity
| (In thousands of USD apart from number of shares) | Number of shares |
Issued share capital |
Share premium |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at incorporation on 30 April 2018 | - | - | - | - | - |
| Issue of share capital | |||||
| 30 April 2018 at USD 0.20 per share | 5 860 | 1 | 1 | ||
| 16 July 2018 at NOK 20 per share | 23 384 440 | 4 677 | 52 255 | 56 932 | |
| Transaction costs of issue of shares | (1 048) | (1 048) | |||
| Total comprehensive income for the period | 102 | 102 | |||
| Balance at 31 December 2018 | 23 390 300 | 4 678 | 51 207 | 102 | 55 987 |
The nominal value of the Company's authorized share capital, including issued and non-issued shares, at 31 December 2018 is USD 4.7 million, consisting of 23,390,300 shares with par value USD 0.20 per share.
Notes to the consolidated financial statements
1. General information
These consolidated financial statements of ADS Crude Carriers Plc ("ADS Crude Carriers" or the "Company") for the period ended 31 December 2018 were authorized for issue in accordance with a resolution of the Board of Directors passed on 3 April 2019.
ADS Crude Carriers Plc is a public limited company listed on the Merkur Market at the Oslo Stock Exchange.
The Company is incorporated in Cyprus and the address of its registered office is OSM House, 22 Amathountos, 4532 Agios Tychonas, Limassol, Cyprus. The Company is domiciled in Cyprus and has Norwegian subsidiaries based in Arendal, Norway. The principal activities of the Company are operating tanker vessels in the global tanker market. The Company owns and operates a fleet of three VLCCs: Front Page, ADS Stratus and ADS Serenade.
The Company is managed by Arendals Dampskibsselskab AS. Commercial management of the vessels is provided by Frontline Ltd, while technical management of the vessels is provided by OSM Maritime Group and Thome Ship Management.
2. Significant accounting policies
2.1. Basis of preparation
These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as adopted by the EU.
2.2. Going concern
The Company was incorporated on 30 April 2018 as a limited liability company, converted to a public limited company on 10 August 2018 and subsequently admitted to trading on the Merkur Market on 28 August 2018. On 16 July 2018, the Company raised gross proceeds of USD 57 million in a private placement equity issue. The purpose of the equity issue was to provide proceeds to part-finance purchase of three VLCCs, finance scrubber installments on the acquired vessels planned for 2019, as well as provide liquidity for working capital build-up, cover general corporate purposes and equity transaction fees. During the second half of 2018 the Company purchased three vessels for a total price of USD 67.5 million, or USD 22.5 million per vessel. In addition to the equity contribution, the vessel purchase was partly financed by a USD 30 million loan, or USD 10 million per vessel (the "Fleet Loan"). All of the Company's vessels require intermediate surveys (dry dockings) during 2019 and the cost of the intermediate surveys will be financed either through cash from operations, debt financing, equity, or a combination.
The Company is subject to certain financial covenants under the Fleet Loan, including levels of minimum liquidity (no less than 10% of the financial indebtedness), minimum working capital (positive at all times) and maximum vessel loanto-value ratio (no more than 70%). The Company is in compliance with all financial covenants.
The Company's financial projections used in its going concern evaluation are based on certain assumptions about the future, including those related to the VLCC market, vessel utilization, productivity and operating cost level, expected future capital investments and the availability of financing such investments. Based on these assumptions, the Company expects to have sufficient liquidity to operate for at least 12 months from the date of this report and, therefore, these financial statements are prepared using the going concern assumption.
2.3. Revenue recognition
Revenue is recognized when a contractual performance obligation is satisfied by transferring a promised good or service to a customer.
Spot charters
Revenue from spot charters is recognized over the estimated length of each voyage, calculated on a load-to-discharge basis. The load-to-discharge period is deemed to be the period during which the customer obtains economic benefit.
Certain costs that are incurred to obtain and fulfil a spot charter contract may qualify for deferral. The Company incurs voyage expenses between the previous discharge port, or customer contract date if later, and the next load port. Such voyage expenses are capitalized if the costs directly relate to the contract, generate or enhance resources of the entity that will be used in satisfying performance obligations, and the costs are expected to be recovered. Any costs capitalized during the previous discharge port and next load port are amortized on a straight-line basis during the subsequent load-to-discharge period.
Time charter
Revenue from time charters is recognized on a straight-line basis over the rental period of the charter.
2.4. Property, plant and equipment
Vessels
Vessels are stated at historical cost, less accumulated depreciation and impairments. The cost includes any costs that were directly attributable to the purchase of a vessel.
The vessels are depreciated down to their estimated residual values on a straight-line basis over the useful life of the vessels. The useful lifetime of a vessel is expected to be 20 years from the original delivery date of the vessel following construction. A vessel's residual value is its estimated scrap value expected at the date of scrapping, calculated as the product of the lightweight tonnage of the vessel and the estimated scrap price per tonne. Residual values are reviewed annually.
Capitalized docking and survey costs are depreciated fully on a straight-line basis from the completion of a docking to the estimated date of the next one. Costs related to ordinary maintenance performed during drydocking are charged to the income statement as part of vessel operating expenses in the period in which they were incurred.
2.5. Consolidation
The consolidated financial statements comprise the financial statements of ADS Crude Carriers Plc (the "Parent Company") and its subsidiaries (together, the "Company"). All of the subsidiaries in the group are 100% owned by the Parent Company and, thus, there are no minority ownership interests.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using the same accounting policies. All intercompany transactions and balances are eliminated upon consolidation of the financial statements.
2.6. Foreign currency translation
The functional currency of the Company is US dollar. The functional currency of the Parent Company and all subsidiaries is US dollar.
Income and expenses denominated in foreign currencies are translated into US dollar at the exchange rates prevailing at the dates of the transactions. Exchange gains and losses resulting from settlement of such transactions as well as from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement as finance income and finance costs.
2.7. Cash and cash equivalents
Cash and cash equivalents consist of cash deposits held at call with banks. Cash and cash equivalents that are restricted for the Company's use are disclosed separately in the statement of financial position.
2.8. Share capital
Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are recorded in equity as a reduction from the gross share issue proceeds.
2.9. Financial liabilities
Financial liabilities are measured at fair value on recognition, net of directly attributable transaction costs. Subsequent to initial recognition, the Company's financial liabilities are measured at amortized cost using the effective interest rate method. The Company's main financial liabilities consist of non-current loans, trade and other payables and accruals. The Company has no financial derivatives.
The Company derecognizes a financial liability only when the Company's obligations are discharged, cancelled or expire.
Loan fees
Expenses that are directly attributable to the inception of a loan are capitalized and amortized over the term of the relevant loan using the effective interest rate method. Amortization of loan costs are included as finance costs in the income statement. The capitalized but unamortized amount of such loan costs are recorded net of the loan liability in the statement of financial position.
2.10. Financial assets
Financial assets are measured at fair value on recognition. Subsequent to initial recognition, the Company's financial assets are measured at amortized cost using the effective interest rate method. Normally, the interest element for the Company's financial assets is disregarded since the receivables are short-term. The Company's main financial assets consist of receivables from customers and other receivables.
The Company derecognizes a financial asset when the contractual rights to cash flows from the asset expire.
Impairment of financial assets
For trade receivables, contract assets and lease receivables the Company applies the simplified approach permitted by IFRS 9 Financial instruments, which uses lifetime expected losses to be recognized from initial recognition of the financial assets. For all other financial assets that are subject to impairment under IFRS 9, the Company applies the general approach three stage model, based on changes in credit quality since initial recognition.
2.11. Impairment of non-financial assets
At each reporting date, the Company assess whether there is indication that an asset is impaired. If an indication exists, the Company estimates the asset's recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. Where the recoverable amount exceeds an asset's carrying value, there is no impairment. In the event the recoverable amount is lower than the carrying value, an impairment charge is recognized and the asset's carrying value is written down to its recoverable amount.
The carrying amounts of vessels are reviewed for potential impairments whenever there is an indication that the carrying amount may not be fully recoverable. Such indicators may include depressed spot market rates, depressed second hand tanker values and sudden and significant reductions in scrap values. The Company assesses the recoverability of the carrying value of each vessel on an individual basis by estimating the fair value less costs to sell of the vessel. The fair value is based on recent independent market transactions for similar vessels between a willing buyer and willing seller. If the fair value less costs to sell of the vessel support its carrying value, then there is no impairment. If the fair value less costs to sell is less than a vessel's carrying value, then a value in use test is performed by calculating the net present value of future cash flows the Company expects to generate from continuing use of the vessel up to and including scrapping. The value in use calculation requires the Company to make assumptions about future vessel performance, including about charter rates, utilization and productivity, vessel operating expenses, drydocking requirements, scrap values and discount rate.
2.12. Holdings on board
The Company has bunker and lube oil onboard the vessels which are consumed in line with vessel operations. Any holdings onboard at the reporting date are measured at the lower of cost and net realizable value using the first in, first out (FIFO) method.
2.13. Earnings per share
Basic earnings per share is calculated based on the net profit attributable to ordinary shareholders for the period divided by the weighted average number of shares in issue. The Company has no potentially dilutive equity instruments in issue.
2.14. Consolidated statement of cash flows
The Company's statement of cash flows is prepared using the indirect method. Cash flows are divided into cash flows attributable to either operating activities, investing activities or financing activities. In the cash flow statement, net profit for the period is adjusted for non-cash items recorded in the income statement, such as depreciation, as well as for non-cash movements in working capital. Any cash flows that have been recorded initially in the income statement as part of net profit but which are investing or financing in nature are removed from operating cash flows and presented as part of investing of financing cash flows. All amounts presented in the investing activities and financing activities sections are pure cash flows only.
2.15. Changes in accounting policies
These consolidated financial statements are for the Company's first financial period and the Company has not changed accounting policies during the period.
Certain new standards, amendments and interpretations of existing standards have been published that are mandatory for the Company's accounting periods beginning 1 January 2019 or later. The new standards, amendments and interpretations relevant for the Company are listed below.
2.15.1. IFRS 16 Leases
Effective 1 January 2019, IFRS 16 Leases will replace IAS 17 Leases. IFRS 16 eliminates the classification of leases as either operating or financial leases as is required by IAS 17 and, instead, introduce a single lessee accounting model. The Company does not currently have any lease arrangements and, hence, adoption of IFRS 16 is not expected to have any significant impact on the Company's financial statements.
2.16. Critical accounting estimates and judgments
The preparation of the Company's consolidated financial statements requires management and the board to make estimates, judgments and assumptions that affect the reported amount of revenue, expenses, assets and liabilities, as well as the accompanying disclosures. Uncertainty about these estimates, judgments and assumptions could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities in future periods. A summary of the most significant judgments, estimates and assumptions are described below.
Vessel depreciation
Vessel depreciation is based on the estimated useful lifetime of 20 years from original delivery and the estimated residual value at the end of that period. The Company uses estimated scrap value as the residual value, which requires the Company to estimate the scrap market value at the date of scrapping. The Company has used USD 425/ldt as the estimated unit scrap price.
Impairment of vessels
Whether there exists an impairment indicator may require the Company to make judgments. In preparing these consolidated financial statements, the Company performed an impairment test on the carrying value of its vessels using the fair value less cost of disposal method. The results of the test indicated there was no impairment. To assess the fair value of the Company's vessels, recent market transactions between independent third parties on a willing seller willing buyer basis are used as a benchmark. Costs of disposal are estimated by the Company as a percentage of the gross market value.
3. Financial risk management
The Company's primary financial risks relate to market risk, credit risk and liquidity risk. Market risk is the risk that the fair value of future cash flows of a financial asset or liability will fluctuate because of changes in market prices, such as foreign exchange and interest rates. The Company's financial risk exposure is monitored by Management and its Board of Directors oversee the management of these risks.
The Company's principle financial liabilities are loans used to finance the Company's vessels, as well as trade payables and other payables. The Company's principal financial assets are customer receivables, other assets and cash deposits at banks.
The table below shows the Company's financial assets and liabilities.
| (In thousands of USD) | 31-Dec-18 |
|---|---|
| Financial assets | |
| Receivables from customers | 4 745 |
| Other current assets | 5 488 |
| Restricted cash | 524 |
| Cash and cash equivalents | 13 689 |
| Total financial assets | 24 447 |
| Financial liabilities | |
| Non-current interest-bearing debt | 29 729 |
| Other current liabilities | 1 333 |
| Trade payables | 5 113 |
| Total financial liabilities | 36 174 |
| Net current financial assets/(liabilities) | 18 001 |
| Net current and non-current financial assets/(liabilities) | (11 727) |
3.1. Interest rate risk
The Company's exposure to the risk of changes in market interest rates relates to its vessels loans. As at 31 December 2018, the Company had vessel loans with carrying value USD 29.7 million (nominal value USD 30 million) that had floating interest rates based on LIBOR plus a margin of 4.50%. The Company has no fixed interest rate borrowings.
To indicate the sensitivity of the Company's earnings to changes in interest rates, should LIBOR increase or decrease by 200 basis points, the Company's interest cash cost would increase or decrease by USD 0.6 million per year.
3.2. Foreign exchange risk
The Company operates in the global tanker industry, for which the majority of transactions are denominated in US dollars, the Company's functional and presentational currency. All of the Company's revenue recognized in 2018 was denominated in USD dollars. The majority of the Company's operating costs are denominated in US dollars.
As at 31 December 2018 the Company had cash and cash equivalents denominated in Norwegian krone that had a carrying value of USD 0.2 million. All other financial assets and liabilities of the Company at 31 December 2018 are denominated in US dollars and, hence, the Company's maximum exposure to foreign exchange risk equates to USD 0.2 million.
3.3. Credit risk
Credit risk is the risk that a counterparty defaults on its contractual obligations, resulting in a financial loss to the Company. The Company is exposed to credit risk primarily from receivables from customers and cash held at banks.
The Company manages its credit risk related to customers by aiming to provide services only to reputable customers. Part of the Company's customer credit risk management is provided by the Company's commercial vessel manager, Frontline Ltd.
During 2018, one of the Company's vessels was on a time charter and two of its vessels operated in the spot market and at 31 December 2018, the Company's vessels were on charters (time or spot) to three different counterparties. Charter hire income is payable to the Company in advance, while payment terms for spot charters are generally payment at discharge.
The Company aims to manage its counterparty risk relating to cash held at bank by only holding deposits at recognizable international banks. As at 31 December 2018 all of the Company's cash and cash equivalents and restricted cash was held with Nordea Bank.
3.4. Liquidity risk
Liquidity risk is the risk that the Company cannot meet its financial obligations as they fall due. The Company manages its risk of a shortage of funds by continuously monitoring maturity of its financial assets and liabilities and using a cash flow forecasting tool that makes projections about future cash flows from operating activities and required for investing activities.
| (In thousands of USD) | 2019 | 2020 | 2021 | 2022 | Total |
|---|---|---|---|---|---|
| Interest-bearing debt | - | - | - | 29 729 | 29 729 |
| Other current liabilities | 1 333 | - | - | - | 1 333 |
| Trade payables | 5 113 | - | - | - | 5 113 |
| Total | 6 446 | - | - | 29 729 | 36 174 |
The table below shows the maturity profile of the Company's financial liabilities based on contractual payment terms.
As measured from 31 December 2018 and in addition to the financial liabilities detailed above, the Company has a capital cash commitment relating to purchase of three scrubbers totaling USD 3.0 million, excluding installation costs, which is expected to result in an outflow of cash during 2019. The scrubbers will be installed on each of the Company's vessels during the intermediate surveys planned for the second half of 2019. The total scrubber purchase and installation cost are estimated at USD 3 million per vessel and is fully financed from the proceeds of the proceeds from the July 2018 private placement. The cost of the intermediate surveys (dry dockings) will be in addition to the scrubber purchase and installation cost.
3.5. Capital management
The Company's objectives when managing capital are to maximize the return to shareholders over the remaining expected lifetime of the vessels under the Company's control, aiming to have an optimal capital structure whereby it safeguards the Company's ability to continue as a going concern but while returning excess capital to shareholders in the form of regular dividends. The management of the capital structure involves active monitoring and adjustments in light of changes in economic conditions and risk characteristics of the Company's vessels.
The Company monitors its debt on the basis of its relative leverage and its absolute debt levels. As part of this monitoring the Company monitors its equity ratio and net interest-bearing debt (NIBD). The equity ratio is calculated as the total carrying value of equity as a proportion of the Company's equity and liabilities. At 31 December 2018 the Company's equity ratio was 61%. NIBD is calculated as the nominal value of the Company's external debt, less cash and cash equivalents and any restricted cash that can be used to repay debt. At 31 December 2018, the Company's NIBD was USD 15.8 million.
4. Segment reporting
The Company's business is limited to operating a fleet of three VLCC tankers. Management has organized and manages the entity as one business segment based upon the service provided. The Company's chief operating decision maker, being the board of directors, reviews the Company's operating results on a consolidated basis as one operating segment (as defined by IFRS 8 Operating segments).
The Company took delivery of its vessels during 2018: Front Page on 20 July, ADS Stratus on 9 August and ADS Serenade on 13 September 2018. As at 31 December 2018, the Company had three vessels in operation; two vessels were operating in the spot market and one vessel was on time charter.
4.1. Major customers
The Company's revenues during the period were derived from a total of six customers. Customers from which the Company derived more than 10% of the total revenue in the period are shown in the table below.
| Period from | |||
|---|---|---|---|
| (In thousands of USD) | 30-Apr-18 to 31-Dec-18 |
||
| Customer 1 | 3 704 | 28 % | |
| Customer 2 | 2 679 | 20 % | |
| Customer 3 | 2 111 | 16 % | |
| Customer 4 | 1 725 | 13 % | |
| Customer 5 | 1 782 | 13 % | |
| Customer 6 | 1 433 | 11 % | |
| Total revenue | 13 432 | 100% |
4.2. Geographic regions
The Company's revenues are generated in multiple jurisdictions since the company derives income from operating a fleet of tankers that typically load cargo in one geographical jurisdiction and unload in another and the earnings derived are not split between jurisdictions. As a result, the Company's chief operating decision maker does not evaluate performance by geographical region.
5. Revenue from contracts with customers
The Company's revenue by type is summarized in the table below.
| Period 30-Apr-18 to 31-Dec-18 | |||
|---|---|---|---|
| (In thousands of USD) | Spot charters |
Time charters |
Total revenue |
| Revenue and net revenue by charter types | |||
| Revenue | 9 728 | 3 704 | 13 432 |
| Voyage expenses | (4 818) | (707) | (5 525) |
| Net revenue | 4 910 | 2 997 | 7 907 |
The Company did not recognize any impairment losses on any receivables or contract assets arising from contracts with customers.
| (In thousands of USD) | Receivables from customers |
Capitalized fulfilment costs |
Total contract assets |
|---|---|---|---|
| Balances from customer contracts | |||
| Balance at 30-Apr-18 | - | - | - |
| Net movement in the period | 4 745 | 684 | 5 429 |
| Balance at 31-Dec-18 | 4 745 | 684 | 5 429 |
Capitalized fulfilment costs are recognized as other current assets in the statement of financial position and are expensed on a straight-line basis over the period of revenue recognition. The Company had no contract liabilities apart from trade payables and accrued expenses incurred as part of normal operations. The Company has received no payment in advance from customers at 31 December 2018 for which revenue is expected to be recognized in a future period.
Customer contract payment terms are typically in full at discharge for spot charters and monthly in advance for time charters.
6. Voyage expenses
| 30-Apr-18 to |
|
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Bunkers | 5 372 |
| Commercial management fees and commissions | 210 |
| Other voyage expenses | 626 |
| 6 209 | |
| Capitalized customer contract fulfilment costs | (684) |
| Net voyage expenses | 5 525 |
7. Vessel operating expenses
| 30-Apr-18 to |
|
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Manning | 1 845 |
| Technical manager fee | 215 |
| Lube oils and other consumables | 404 |
| Other vessel operating expenses | 2 098 |
| Total vessel operating expenses | 4 562 |
Manning costs include the cost of the crew onboard the Company's vessels and are all third party costs. The Company does not employ any crew directly and all crew are supplied by the technical managers of the vessels, OSM Maritime and Thome Ship Management. Vessel operating expenses were negatively impacted in 2018 by certain start-up costs incurred in relation to the vessel acquisitions and preparing the vessels for operations, but which did not qualify for capitalization.
8. General and administrative expenses
| (In thousands of USD) | 30-Apr-18 to 31-Dec-18 |
|---|---|
| Administrative manager fees | 42 |
| Board of director fee accrual | 15 |
| Auditor fees | 44 |
| Tonnage tax | 59 |
| Other expenses | 447 |
| Total general and administrative expenses | 606 |
During the period ended 31 December 2018 the Company did not have any employees. On 1 March 2019 ADS Crude Carriers Plc employed one employee, based at the Company's office in Cyprus. The administrative and corporate management of the Company is provided by Arendals Dampskibsselskab AS.
| 30-Apr-18 to |
|
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Amounts paid to auditor | |
| Statutory audit fees | 14 |
| Audit related services | 30 |
| Total amounts paid to auditor | 44 |
The statutory audit fee for the 2018 audit of ADS Crude Carriers Plc to RSM Cyprus Ltd is agreed at EUR 10,500 plus VAT at 19%.
9. Net finance expense
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Finance income | |
| Interest income | 35 |
| Currency exchange gain | 23 |
| Total finance income | 57 |
| Finance expense | |
| Interest expense from interest-bearing debt | 793 |
| Currency exchange loss | 46 |
| Other finance cost | 20 |
| Total finance expense | 859 |
| Net finance expense | 802 |
10. Earnings per share
| 30-Apr-18 to 31-Dec-18 |
|
|---|---|
| Basic and diluted EPS (USD per share) | 0.01 |
| Weighted average shares outstanding | 16 070 780 |
The Company has no dilutive or potential dilutive shares.
11. Property, plant and equipment
| (In thousands of USD) | 30-Apr-18 to 31-Dec-18 |
|---|---|
| Costs | |
| Balance at start of period | - |
| Additional capital expenditures | 69 550 |
| Balance at end of period | 69 550 |
| Depreciation | |
| Balance at start of period | - |
| Depreciation for the period | 1 835 |
| Balance at end of period | 1 835 |
| Net book value at start of period | - |
| Net book value at end of period | 67 714 |
| Carrying value of pledged assets at period end | 66 050 |
The Company has capital commitments relating to manufacturing of three scrubbers totaling USD 4.7 million, excluding installation costs, of which USD 1.6 million is included in the carrying value of vessels at 31 December 2018. The scrubbers will be installed on each of the Company's vessels during the intermediate surveys planned for the second half of 2019.
12. Other current assets
| (In thousands of USD) | 31-Dec-18 |
|---|---|
| Inventory (bunkers and lube oil) | 4 242 |
| Capitalized fulfilment costs | 684 |
| Advance payments to suppliers | 115 |
| VAT receivable | 105 |
| Other assets | 342 |
| Total other current assets | 5 488 |
Capitalized fulfilment costs are voyage expenses incurred between the previous discharge port, or customer contract date if later, and the next load port. As at 31 December 2018, USD 0.7 million of voyage expenses are capitalized at 31 December 2018 in accordance with IFRS 15.
13. Interest bearing debt
| (In thousands of USD) | Inception | Maturity | Interest | 31-Dec-18 |
|---|---|---|---|---|
| Fleet Loan | ||||
| Vessel 1 - nominal USD 10 million | 19-Jul-18 | 2-Oct-22 | LIBOR + 4.50% | 9 910 |
| Vessel 2 - nominal USD 10 million | 14-Aug-18 | 22-Aug-22 | LIBOR + 4.50% | 9 910 |
| Vessel 3 - nominal USD 10 million | 13-Sep-18 | 28-Mar-22 | LIBOR + 4.50% | 9 910 |
| Total interest-bearing debt | 29 729 |
All interest-bearing debt is non-current. The loans are repayable in full at maturity, apart from a prepayment mechanism in relation to dividends whereby the Company pays 50% of any dividend payment exceeding USD 2 million per financial quarter, USD 4 million per financial half-year and USD 8 million per financial year to be applied towards prepayment of the loans until the aggregate principal amount outstanding has been reduced to USD 24 million. Costs directly related to the loan issues totaling USD 0.3 million are included in the amortized cost calculation of the carrying value of the loans. Interest is payable quarterly in arrears. Each vessel loan has security in the respective vessel.
14. Other current payables
| (In thousands of USD) | 31-Dec-18 |
|---|---|
| Accrued expenses | 931 |
| Accrued interest | 401 |
| Total other current payables | 1 333 |
15. Financial assets and liabilities
All of the Company's financial assets and financial liabilities are measured at amortized cost, apart from inventory and capitalized fulfillment costs included within other current assets. Inventory mainly consists of bunkers onboard and is measured at cost using the FIFO method, while customer contract fulfilment costs are measured in accordance with IFRS 15.
The fair values of the Company's financial assets and liabilities are summarized in the table below.
| Carrying value |
Fair value | ||
|---|---|---|---|
| Fair value | |||
| (In thousands of USD) | hierarchy | 31-Dec-18 | 31-Dec-18 |
| Financial assets | |||
| Receivables from customers | 4 745 | 4 745 | |
| Other current assets | 5 488 | 5 488 | |
| Restricted cash | 524 | 524 | |
| Cash and cash equivalents | 13 689 | 13 689 | |
| Total financial assets | 24 447 | 24 447 | |
| Financial liabilities | |||
| Interest-bearing debt | Level 2 | 29 729 | 30 760 |
| Other current liabilities | 1 333 | 1 333 | |
| Trade payables | 5 113 | 5 113 | |
| Total financial liabilities | 36 174 | 37 206 |
The fair values of receivables form customers, other current assets, restricted cash and cash and cash equivalents, other current liabilities and trade payables approximate their carrying values largely due to their short-term maturities.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted and unadjusted prices in active markets for identical assets or liabilities.
Level 2: other techniques for which inputs which have a significant impact on the fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
16. Related parties
16.1. Board of Directors
| 30-Apr-18 | |||
|---|---|---|---|
| Director | to | ||
| (In thousands of USD) | since | 31-Dec-18 | |
| Payments to Board of Directors | |||
| Bjørn Tore Larsen | Chairman | 10-Aug-18 | - |
| Marios Demetriades | 10-Aug-18 | - | |
| Penelope Evangelidou | 30-Apr-18 | - | |
| Alkistis Dimitriou | 10-Aug-18 | - | |
| Trym Otto Sjølie | 10-Aug-18 | - | |
| Total payments made to Board of Directors | - |
An amount of USD 15k was accrued at 31 December 2018 for estimated Board of Director ("Board") fees. No payment for remuneration was made in the period ending 31 December 2018 to any members of the Company's Board of Directors. Effective 1 October 2018, Marios Demetriades is entitled to board fees of EUR 30k per annum, payable quarterly in arrears and with the first payment made in January 2019. Penelope Evangelidou and Alkistis Dimitriou receive board fees of EUR 750 per annum in addition to EUR 300 per meeting, with first payment due in 2019. Fees for all members of the Board of Directors for 2018 will be reviewed at the Company's next Annual General Meeting.
16.2. Key management personnel
During the period ending 31 December 2018 the Company had no direct employees. Terje Bodin Larsen is the CEO and Ben Boiling is the CFO of the Company. The CEO and CFO are not employed directly by the Company but are engaged through a management service agreement with Arendals Dampskibsselskab AS. Terje Bodin Larsen has been employed at Arendals Dampskibsselskab AS since 2008. Ben Boiling commenced employment at Arendals Dampskibsselskab AS on 1 January 2019.
16.3. Other related parties
Arendals Dampskibsselskab AS
Arendals Dampskibsselskab AS, a company controlled by Chairman of the Board, Bjørn Tore Larsen, is contracted to provide administrative and corporate management services to the Company for an agreed fee of USD 100 per vessel calendar day, subject to annual consumer price index adjustments and increases at the manager's reasonable discretion. The management contract is for at least the period up to 31 December 2022, and the agreement will thereafter automatically be extended for successive 12-month periods unless it is terminated by either party not less than 12 months prior to the end of such period.
During 2018, USD 42k was paid to Arendals Damskibsselskab AS for administrative and corporate management services. No amount was owed to Arendals Dampskibsselskab AS at the period end.
OSM Group
B.T. Larsen & Co. Ltd, a company controlled by Chairman of the Board, Bjørn Tore Larsen, controls the OSM Group. OSM Ship Management AS, a member of the OSM Group, provides technical vessel management for two of the Company's vessels for an agreed fee of USD 180k per annum per vessel. B.T. Larsen & Co. Ltd owns 2,424,934 shares, or 10.4%, of the Company, via 2,021,754 shares owned by its 100% owned subsidiary ADS Shipping Ltd and 403,180 shares owned by its 100% owned subsidiary Shiphold Ltd.
During 2018, USD 123k was paid to OSM Ship Management AS for technical ship management services. No amount was owed to OSM Ship Management AS at the period end.
Ship Finance
Ship Finance International Ltd, a company within a group of companies controlled by Hemen Holding Ltd, provides key management personnel to the Company through representation on the Board of Directors by Trym Sjølie, Chief Operating Officer of Ship Finance. Ship Finance International Ltd owns 4,031,800 shares, or 17.2%, of the Company.
During 2018 the Company acquired three vessels from companies associated with Ship Finance International Ltd for a total consideration of USD 67.5 million.
Frontline
Frontline Management (Bermuda) Ltd, a company within the same group of companies as Ship Finance International Ltd controlled by Hemen Holding Ltd, is contracted to provide commercial management services to the Company in relation to the Company's three vessels. Under the terms of the commercial management services contract, Frontline receives a fee of USD 250 per vessel calendar day and commission of 1.25% of gross charter hire.
During 2018 the total cost of the commercial management fees and commission to Frontline was USD 210k, of which USD 94k was accrued and unpaid at the yearend.
Sterna Finance
Sterna Finance Ltd is an affiliate of Hemen Holding Ltd as it has the same beneficial owner. During 2018 the Company entered a loan agreement with Sterna Finance Ltd for financing the acquisition of its three vessels. The loan was drawn down in three tranches corresponding with the acquisition of each vessel and the total nominal value of the loan was USD 30 million. Interest is chargeable at 4.50% plus LIBOR, payable quarterly in arrears. A fee equivalent to 1% of the amount drawn was paid to Sterna Finance Ltd on each drawdown date.
During 2018 the total loan fee paid to Sterna Finance Ltd was USD 300k and the total loan interest cost to the Company was USD 793k, of which USD 430k was accrued and unpaid at the yearend. At 31 December 2018, the outstanding nominal loan amount was USD 30 million.
17. Alternative performance measures
In order to measure financial performance and position, the Company makes use of the Alternative Performance Measures (APMs) described below. The APMs are non-IFRS measures which provide supplemental information to the IFRS financial measures.
17.1. Net revenue
Net revenue is calculated as revenue less voyage expenses. The Company uses net revenue as an indication of the profitability of voyages and charters. Net revenue is used as the numerator when calculating TCE per day.
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Net revenue | |
| Revenue | 13 432 |
| Voyage expenses | (5 525) |
| Total net revenue | 7 907 |
17.2. TCE per day
Time charter equivalent (TCE) per day is calculated by dividing net revenue by the number of vessel operating days in the period. Vessel operating days are the calendar days in the period as calculated from the date of delivery of a newly acquired vessel, excluding any days associated with drydocking or off-hire. TCE is a common shipping industry measure of performance on a per day basis. The Company uses TCE per day as it enables comparison of financial performance between periods regardless of changes in the mix of charter types.
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| TCE | |
| Net revenue | 7 907 |
| Vessel operating days | 417 |
| TCE (in whole USD) | 18 962 |
The Company's vessels were delivered on 20 July, 9 August and 13 September 2018.
17.3. Net interest-bearing debt (NIBD)
NIBD is calculated as the nominal outstanding value of the Company's total interest-bearing debt, less the balance of cash and cash equivalents, as well as any restricted cash that is restricted for the purposes of repaying debt.
| (In thousands of USD) | 31-Dec-18 |
|---|---|
| Net interest-bearing debt (NIBD) | |
| Nominal value of interest-bearing debt | 30 000 |
| Cash and cash equivalents | 13 689 |
| Restricted cash available for debt repayment | 524 |
| NIDB | 15 787 |
The Company uses NIBD as it provides an indication of the Company's debt position by indicating the ability of the Company to pay off all its debt if it became due simultaneously and only using cash.
17.4. Backlog
Backlog shows the estimated proportion of vessel operating days of a future financial reporting period for which the Company has secured commitments with clients (eg. charter parties), as well as the average TCE per day for those days. The Company uses backlog since it provides the amount of committed operating activity in future periods, thus providing an indication of the Company's future net revenue.
ADS CRUDE CARRIERS PLC FULL YEAR 2018 REPORT
18. Events after the reporting period
There are no events or occurrences after the reporting period and before approval of the financial statements that have a significant bearing on the understanding of the financial statements.
Limassol, 3 April 2019
The Board of Directors
Parent Company unconsolidated statement of comprehensive income
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Revenue | - |
| Operating expenses | |
| General & administrative costs | (182) |
| Total operating expenses | (182) |
| Operating profit | (182) |
| Finance cost | (5) |
| Finance income | 18 |
| Profit before tax | (169) |
| Income tax | - |
| Profit after tax and total comprehensive income | (169) |
Parent Company unconsolidated statement of financial position
| (In thousands of USD) | Note | 31-Dec-18 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Investments in subsidiaries | 4 | 45 160 |
| Total non-current assets | 45 160 | |
| Current assets | ||
| Receivables from subsidiaries | 4 | 3 937 |
| Cash and cash equivalents | 7 684 | |
| Total current assets | 11 621 | |
| Total assets | 56 781 | |
| Equity and liabilities | ||
| Equity | ||
| Issued share capital | 4 678 | |
| Share premium | 52 255 | |
| Retained earnings | (169) | |
| Total equity | 56 764 | |
| Current liabilities | ||
| Other current liabilities | 15 | |
| Trade payables | 2 | |
| Total current liabilities | 17 | |
| Total equity and liabilities | 56 781 |
Parent Company unconsolidated statement of cash flows
| 30-Apr-18 to | |
|---|---|
| (In thousands of USD) | 31-Dec-18 |
| Cash flows from operating activities | |
| Profit for the period | (169) |
| Adjustment for items not affecting operating cash flows: | |
| Interest income | (1) |
| Net operating cash flow before working capital movements | (170) |
| Working capital movements | (3 920) |
| Total operating cash flow | (4 090) |
| Cash flows from investing activities | |
| Investment in subsidiaries | (45 160) |
| Total cash flows used in investing activities | (45 160) |
| Cash flows from financing activities | |
| Proceeds from share issue | 56 933 |
| Interest received | 1 |
| Total cash flows from financing activities | 56 934 |
| Net increase in cash and cash equivalents | 7 684 |
| Cash and cash equivalents at the beginning of the period | - |
| Cash and cash equivalents at the end of the period | 7 684 |
Parent Company unconsolidated statement of changes in equity
| (In thousands of USD apart from number of shares) | Number of shares |
Issued share capital |
Share premium |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at incorporation on 30 April 2018 | - | - | - | - | - |
| Issue of share capital 30 April 2018 at USD 0.20 per share 16 July 2018 at NOK 20 per share |
5 860 23 384 440 |
1 4 677 |
52 255 | 1 56 932 |
|
| Total comprehensive income for the period | (169) | (169) | |||
| Balance at 31 December 2018 | 23 390 300 | 4 678 | 52 255 | (169) | 56 764 |
The nominal value of the Company's authorized share capital, including issued and non-issued shares, at 31 December 2018 is USD 4.7 million, consisting of 23,390,300 shares with par value USD 0.20 per share.
Notes to the Parent Company unconsolidated financial statements
1. General information
ADS Crude Carriers Plc (the "Parent Company") is a holding company. The Parent Company's activities are ownership of shares in subsidiaries.
2. Significant accounting policies
2.1. Basis of preparation
These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as adopted by the EU.
The Parent Company's accounting principles are consistent with the accounting principles of the Company, as described in Note 2 of the consolidated financial statements, apart from as described below. Note disclosures that are similar to the information available in the consolidated financial statements are not repeated in these unconsolidated financial statements.
2.2. Investments in subsidiaries
Investments in subsidiaries are presented at cost, less any impairment. To assess for impairment, the estimated recoverable amount is compared to the carrying value of investments in subsidiaries. The recoverable amount is calculated as the discounted estimated future cash flows.
3. Financial assets and liabilities
All of the Company's financial assets and financial liabilities are measured at amortized cost.
The fair values of the Company's financial assets and liabilities are summarized in the table below.
| Carrying value |
Fair value | ||
|---|---|---|---|
| (In thousands of USD) | 31-Dec-18 | 31-Dec-18 | |
| Fair value of financial assets | |||
| Receivables from subsidiaries | 3 937 | 3 937 | |
| Cash and cash equivalents | 7 684 | 7 684 | |
| Total | 11 621 | 11 621 | |
| Fair value of financial liabilities | |||
| Other current liabilities | 15 | 15 | |
| Trade payables | 2 | 2 | |
| Total | 17 | 17 |
The fair values of receivables form subsidiaries, cash and cash equivalents, other current liabilities and trade payables approximate their carrying values largely due to their short-term maturities.
4. Investment in subsidiaries
The table below shows the movement in the Parent Company's investments in subsidiaries during the Period.
| (In thousands of USD) | 30-Apr-18 to 31-Dec-18 |
|---|---|
| Costs | |
| Investments at start of period | - |
| Additional investments | 45 160 |
| Balance at end of period | 45 160 |
| Net book value at start of period | - |
| Net book value at end of period | 45 160 |
The table below shows all subsidiaries the Parent Company owns. The Parent Company has no other interests in entities other than the subsidiaries outlined below.
| (In thousands of USD) | Country of incorporation |
Equity interest 31-Dec-18 |
Carrying value 31-Dec-18 |
|---|---|---|---|
| Name of subsidiary | |||
| ADS Crude Holding AS | Norway | 100% | 45 160 |
| ADS Crude I AS ADS Crude II AS |
Norway Norway |
100% 100% |
- - |
| ADS Crude III AS | Norway | 100% | - |
| Total | 45 160 |
4.1. Receivables from subsidiaries
| (In thousands of USD) | 31-Dec-18 |
|---|---|
| ADS Crude Holding AS | 2 437 |
| ADS Crude I AS | - |
| ADS Crude II AS | 100 |
| ADS Crude III AS | 1 400 |
| Total receivables from subsidiaries | 3 937 |
Receivables from subsidiaries are all current. The amounts receivable from subsidiaries bear interest at LIBOR + 2% and are expected to be settled within 12 months from the Period end.
5. Payments to auditor
The statutory audit fee for the 2018 audit of ADS Crude Carriers Plc to RSM Cyprus Ltd is agreed at EUR 10,500 plus VAT at 19%.
ADS CRUDE CARRIERS PLC FULL YEAR 2018 REPORT
6. Events after the reporting period
There are no events or occurrences after the reporting period and before approval of the financial statements that have a significant bearing on the understanding of the financial statements.
Limassol, 3 April 2019
The Board of Directors
Independent auditor's report
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Cyprus :
ADS Crude Carriers Plc, OSM House, 22 Amathountos, 4532 Agios Tychonas Limassol, Cyprus
Tel +357 25335501
Norway :
ADS Crude Holding AS, PO Box 198, 4802 Arendal, Norway
Tel: +47 41 49 40 00
Email: [email protected]
Visiting Address Norway: Sandvigveien 19, 4816 Kolbjørnsvik, Norway