Quarterly Report • Nov 17, 2015
Quarterly Report
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| USD million | Q3'15 | Q2'15 | Q1'15 | 2014 |
|---|---|---|---|---|
| Freight income | 8.3 | 7.3 | 12.1 | 78.5 |
| Voyage related expenses | 1.1 | 1.3 | 1.8 | 11.2 |
| EBITDA | 2.8 | 1.7 | 5.5 | 41.0 |
| Net profit/(loss) | (7.3) | (11.7) | (4.7) | (2.7) |
| Total assets | 461.4 | 472.4 | 486.7 | 497.5 |
| Total equity | 168.2 | 175.4 | 187.1 | 191.8 |
| Interest bearing debt | 288.8 | 291.8 | 294.6 | 297.4 |
| Cash and cash equivalents | 21.4 | 7.6 | 17.4 | 20.8 |
| Book equity ratio | 36 % | 37 % | 38 % | 39 % |
Freight income for the quarter was MUSD 8.3, up from MUSD 7.3 in the previous quarter. The increase was due to improved utilisation of WilPride, from 3 % in Q2 to 56 % this quarter. Fleet utilisation for the quarter ended at 68 % (trading vessels), compared to 34 % in Q2 2015. Voyage related expenses were MUSD 1.1 (MUSD 1.3 Q2 2015).
Operating expenses were MUSD 3.4, same as in Q2 2015. WilGas entered cold lay-up end August, and this will reduce operating expenses to approx. USD 2,000 per day with full effect in Q4 2015. Administration expenses for the quarter were MUSD 0.9, down from MUSD 1.0 in Q2 2015. EBITDA for the quarter was MUSD 2.8 (MUSD 1.7 Q2 2015). Depreciation for the quarter was recorded at MUSD 4.0, compared to MUSD 4.2 in Q2 2015.
Net financial items were MUSD (6.1) compared to MUSD (6.0) in Q2 2015. Interest expenses on the WilForce and WilPride financial leases amounted to MUSD 6.1, same as in Q2 2015.
Loss for the period was MUSD 7.3, compared to a loss of MUSD 11.7 in Q2 2015.
Book value of vessels was MUSD 434.6 as at 30 September 2015 (MUSD 438.6 30 June 2015). The decrease reflects ordinary depreciation during the quarter. The vessel WilPower was agreed sold and presented as held for sale in Q2 2015, and was subsequently delivered to its new owners on 30 July 2015 together with settlement of the sales proceeds.
Total current assets were MUSD 26.7 as at 30 September 2015 (MUSD 15.8 as at 30 June 2015), of which cash and cash equivalents were MUSD 21.4 (MUSD 7.6 Q2 2015). Additionally there was a reduction of prepayments of MUSD 3.0 compared to last quarter.
Total equity as at 30 September 2015 was MUSD 168.2.
Total current liabilities were MUSD 16.9 as at 30 September 2015, compared to MUSD 17.4 as at 30 June 2015. MUSD 12.5 of the current liabilities relates to the short term portion of the WilForce and WilPride financial leases (MUSD 12.2 as at 30 June 2015).
The Far East gas price was relatively stable in the quarter, starting at just above USD 7/MMBTU and ending at about USD 6.50/MMBTU on the back of signs of increased LNG production. The marginal reduction in the Far East gas price further narrowed the arbitrage opportunities between West and East.
LNG import to Asia has remained weak in Q3. Chinese LNG imports continued the weakening trend and are down by about 4 % over the first 9 months, mainly as a result of increased pipeline gas import. Following mild weather and restart of nuclear power plants, Japanese and South Korean LNG imports have been reduced by 3.3% and 7.4% respectively.
As a result of continued low LNG import to Asia, limited arbitrage opportunities and continued oversupply of available vessels, the LNG shipping activity and rates remained weak during the quarter. Rates for TFDE LNG carriers stayed at USD 30,000 per day level throughout the period with low utilization.
The supply from Yemen's Balhalf LNG terminal is still down, as well as production from Angola and Egypt. On a positive note, the Australian Gladstone LNG commenced production from its first train as scheduled in Q3, and first cargo was shipped in mid-October. The second train is expected to start production by the end of the year. The next start-up is the Australia Pacific LNG plant, which is reported to be on schedule for production start from first train in Q4 this year, followed by its second train scheduled to commence 6 months later. Nameplate production capacity from Gladstone and Australia Pacific is 7.8 MTPA and 9 MTPA respectively when fully operational. Australia has four additional liquefaction plants under construction, which will bring its exports from the current 33 MTPA to 83 MTPA by 2017. Australia is thus expected to surpass Qatar as the world's largest LNG exporter over the next two years.
In total about 135 MTPA (excluding restart of Angola LNG plant) of new LNG capacity is currently under construction with expected startup by 2019. This represents a potential increase of about 50 % compared to 2014 production levels.
Despite the weak LNG market in 2015, newbuilding activity has persisted on the back of the LNG plants under construction and 20 newbuildings have been ordered so far in 2015. According to shipbrokers the total orderbook as of end Q3 2015 for LNG vessels above 100,000 cbm (excl. FSRU and FLNG) stand at 145 vessels, of which only 15 are available for contract. 19 vessels were delivered during first 9 months 2015 and 9 vessels are scheduled for delivery in Q4 15.
The principal activity of Awilco LNG ASA and its subsidiaries is to invest in and operate LNG transportation vessels. The Group handles the commercial and technical operation of the vessels from its main office in Oslo, and currently has 8 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.
Contract overview
There is currently still an oversupply of LNG vessels in the market which will have to be absorbed before the market will improve substantially. The market for older tonnage has been 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 persistent weak market.
Scheduled new LNG production and expected phasing out of older tonnage is expected to gradually improve utilisation and rates as the new production starts up. WilPride is currently operating in the spot market. Awilco LNG is continuously evaluating mid- and long-term employment opportunities for WilPride, in addition to longer term infrastructure projects and for its second generation vessels.
Oslo, 16 November 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 | Q3 | Q2 | Q3 | 1.1 - 30.9 | 1.1 - 30.9 | |
|---|---|---|---|---|---|---|
| 2015 | 2015 | 2014 | 2015 | 2014 | ||
| Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Freight income | 2 | 8 326 | 7 290 | 20 782 | 27 751 | 60 805 |
| Voyage related expenses | 5 | 1 124 | 1 264 | 3 490 | 4 215 | 8 712 |
| Net freight income | 7 202 | 6 026 | 17 292 | 23 536 | 52 093 | |
| Operating expenses | 3 417 | 3 376 | 5 030 | 10 360 | 15 463 | |
| Administration expenses | 5 | 945 | 953 | 1 392 | 3 121 | 4 134 |
| Earnings before interest, taxes, depr. and amort. (EBITDA) | 2 840 | 1 697 | 10 870 | 10 055 | 32 496 | |
| Depreciation and amortisation | 4 043 | 4 202 | 4 770 | 12 532 | 13 653 | |
| Impairment of vessel held for sale | 4 | - | 3 189 | - | 3 189 | - |
| Earnings before interest and taxes | (1 203) | (5 694) | 6 100 | (5 666) | 18 843 | |
| Finance income | 12 | 32 | 11 | 176 | 82 | |
| Finance expenses | 6 069 | 6 062 | 6 364 | 18 190 | 18 987 | |
| Net finance income/(expense) | (6 057) | (6 031) | (6 353) | (18 013) | (18 905) | |
| Profit/(loss) before taxes | (7 260) | (11 725) | (254) | (23 679) | (61) | |
| Income tax expense | 2 | 13 | - | (9) | - | |
| Profit/(loss) for the period | (7 258) | (11 712) | (254) | (23 688) | (61) | |
| Earnings per share in USD attributable to ordinary equity holders of Awilco LNG ASA: | ||||||
| Basic, profit/(loss) for the period | (0.11) | (0.17) | 0.00 | (0.35) | 0.00 | |
| Diluted, profit/(loss) for the period | (0.11) | (0.17) | 0.00 | (0.35) | 0.00 |
| Profit/(loss) for the period | (7 258) | (11 712) | (254) | (23 688) | (61) |
|---|---|---|---|---|---|
| Other comprehensive income: Other comprehensive income items |
- | - | - | - | - |
| Total comprehensive income/(loss) for the period | (7 258) | (11 712) | (254) | (23 688) | (61) |
| In USD thousands | 30.9.2015 | 30.6.2015 | 31.12.2014 | 30.9.2014 | |
|---|---|---|---|---|---|
| Note | (unaudited) | (unaudited) | (audited) | (unaudited) | |
| ASSETS | |||||
| Non-current assets | |||||
| Vessels | 434 575 | 438 610 | 467 114 | 471 753 | |
| Other fixed assets | 132 | 140 | 297 | 314 | |
| Total non-current assets | 434 707 | 438 750 | 467 411 | 472 067 | |
| Current assets | |||||
| Trade receivables | 2 578 | 2 467 | 2 520 | 2 976 | |
| Inventory | 2 312 | 2 032 | 2 794 | 3 939 | |
| Other short term assets | 405 | 3 764 | 3 960 | 3 887 | |
| Cash and cash equivalents | 21 358 | 7 579 | 20 819 | 21 491 | |
| Total current assets | 26 653 | 15 841 | 30 094 | 32 293 | |
| Vessel held for sale | 4 | - | 17 772 | - | - |
| TOTAL ASSETS | 461 360 | 472 363 | 497 505 | 504 360 | |
| EQUITY AND LIABILITIES | |||||
| Equity | |||||
| Share capital | 3 | 48 420 | 48 420 | 48 420 | 48 420 |
| Share premium | 126 463 | 126 463 | 126 463 | 126 463 | |
| Retained earnings | (6 732) | 526 | 16 956 | 19 558 | |
| Total equity | 168 150 | 175 408 | 191 838 | 194 440 | |
| Non-current liabilities | |||||
| Pension liabilities | 203 | 198 | 165 | 168 | |
| Long-term interest bearing debt | 276 111 | 279 349 | 285 556 | 288 598 | |
| Total non-current liabilities | 276 314 | 279 547 | 285 721 | 288 766 | |
| Current liabilities | |||||
| Short-term interest bearing debt | 12 487 | 12 228 | 11 699 | 11 457 | |
| Trade payables Income tax payable |
582 56 |
582 62 |
467 54 |
2 221 - |
|
| Provisions and accruals | 6 | 3 771 | 4 535 | 7 725 | 7 478 |
| Total current liabilities | 16 896 | 17 408 | 19 945 | 21 155 | |
| TOTAL EQUITY AND LIABILITIES | 461 360 | 472 363 | 497 505 | 504 360 |
| In USD thousands | Share | Share | Retained | Total |
|---|---|---|---|---|
| capital | premium | earnings | equity | |
| Equity at 1 January 2015 | 48 420 | 126 463 | 16 956 | 191 838 |
| Profit/(loss) for the period | - | - | (23 688) | (23 688) |
| Other comprehensive income for the period | - | - | - | - |
| Total comprehensive income | - | - | (23 688) | (23 688) |
| Balance as at 30 September 2015 (unaudited) | 48 420 | 126 463 | (6 732) | 168 150 |
| 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 | - | - | (61) | (61) |
| Other comprehensive income for the period | - | - | - | - |
| Total comprehensive income | - | - | (61) | (61) |
| Balance as at 30 September 2014 (unaudited) | 48 420 | 126 463 | 19 558 | 194 440 |
| In USD thousands | Q3 | Q2 | 1.1 - 30.9 | 1.1 - 30.9 |
|---|---|---|---|---|
| 2015 | 2015 | 2015 | 2014 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Cash Flows from Operating Activities: | ||||
| Profit/(loss) before taxes | (7 260) | (11 725) | (23 679) | (61) |
| Income taxes paid | - | - | - | (62) |
| Interest and borrowing costs expensed | 6 055 | 6 052 | 18 152 | 18 888 |
| Items included in profit/(loss) not affecting cash flows: | ||||
| Depreciation and amortisation | 4 043 | 4 202 | 12 532 | 13 653 |
| Impairment of vessel held for sale | - | 3 189 | 3 189 | - |
| (Gain)/Loss on sale of other fixed assets | - | - | 45 | - |
| Changes in operating assets and liabilities: | ||||
| Trade receivables, inventory and other short term assets | (77) | 34 | 110 | 5 476 |
| Trade payables, provisions and accruals | (752) | 390 | (3 898) | (634) |
| i) Net cash provided by / (used in) operating activities | 2 009 | 2 142 | 6 451 | 37 260 |
| Cash Flows from Investing Activities: | ||||
| Investment in vessels / sale of vessels | 17 764 | - | 17 764 | (6 651) |
| Investment in vessels under construction | - | - | - | (505) |
| Investment in other fixed assets | - | - | - | (2) |
| Proceeds from sale of other fixed assets | - | - | 89 | - |
| ii) Net cash provided by / (used in) investing activities | 17 764 | - | 17 853 | (7 158) |
| Cash Flows from Financing Activities: | ||||
| Repayment of borrowings | (1 982) | (3 882) | (7 701) | (8 023) |
| Interest and borrowing costs paid | (4 013) | (8 100) | (16 065) | (18 832) |
| iii) Net cash provided by / (used in) financing activities | (5 995) | (11 982) | (23 766) | (26 854) |
| Net change in cash and cash equivalents (i+ii+iii) | 13 779 | (9 840) | 538 | 3 248 |
| Cash and cash equivalents at start of period | 7 579 | 17 419 | 20 819 | 18 244 |
| Cash and cash equivalents at end of period | 21 358 | 7 579 | 21 358 | 21 491 |
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 four LNG carriers.
The Statements for the three months ended 30 September 2015 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 2014, 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 2014.
Additionally the Group has applied the following policy regarding non-current assets held for sale: Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through sale rather than continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and presented separately as assets held for sale and liabilities held for sale in the statement of financial position.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan to sell will be withdrawn. In addition, the management is committed to the plan, and it is expected that the sale will be completed within a year. Once classified as held for sale assets are not depreciated or amortised.
The Group currently owns and operates four LNG vessels, after disposing of WilPower in July 2015. 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 Q3 2015, same as in Q2 2015.
The Group had one customer contributing with more than 10 per cent of the Group's freight income in Q3 2015.
The number of issued shares was 67,788,874 at 30 September 2015. There were no changes in shares issued in Q3 2015. 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.
On 30 July 2015 WilPower was delivered to its buyer and the sales proceeds were settled.
| 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 quarterly evaluation, and is regulated according to the consumer price index in Norway. The agreement can be terminated by both parties with three months notice. 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 4.3 in yearly management fee (approx. MUSD 0.5-0.6) 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 | Q3 | Q2 | 1.1 - 30.9 | 1.1 - 30.9 |
|---|---|---|---|---|
| Related party | 2015 | 2015 | 2015 | 2014 |
| Wilhelmsen Marine Services AS | 145 | 146 | 484 | 622 |
| Awilhelmsen Management AS | 129 | 137 | 400 | 538 |
| Astrup Fearnley Group | - | - | - | 221 |
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 30 September 2015 were MUSD 3.8 (MUSD 4.5 30 June 2015), of which deferred revenue was MUSD 2.4 (MUSD 2.9 30 June 2015).
There were no material events after the balance sheet date.
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