Quarterly Report • Nov 18, 2016
Quarterly Report
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| USD million | Q3'16 | Q2'16 | Q1'16 | 2015 |
|---|---|---|---|---|
| Freight income | 8.4 | 8.3 | 8.9 | 37.4 |
| Voyage related expenses | 0.7 | 1.1 | 0.7 | 4.9 |
| EBITDA | 4.6 | 4.2 | 4.9 | 15.8 |
| Net profit/(loss) | (4.2) | (11.5) | (4.6) | (36.3) |
| Total assets | 415.9 | 423.1 | 437.9 | 445.5 |
| Total equity | 135.3 | 139.5 | 151.0 | 155.6 |
| Interest bearing debt | 276.4 | 279.6 | 282.7 | 285.8 |
| Cash and cash equivalents | 34.5 | 5.7 | 10.8 | 17.3 |
| Book equity ratio | 33 % | 33 % | 34 % | 35 % |
Freight income for the quarter was MUSD 8.4, up from MUSD 8.3 in the previous quarter. Fleet utilisation for the quarter ended at 80 %, compared to 76 % in Q2 2016 (trading vessels). Voyage related expenses were MUSD 0.7, compared to MUSD 1.1 in the previous quarter.
Operating expenses were MUSD 2.2 (MUSD 2.3 in Q2 2016) and administration expenses for the quarter were MUSD 0.9 (MUSD 0.7 in Q2 2016). EBITDA for the quarter was MUSD 4.6 (MUSD 4.2 Q2 2016). Depreciation for the quarter was recorded at MUSD 2.9, compared to MUSD 3.4 in Q2 2016. The decrease in depreciation was due to the sale of WilEnergy and WilGas. The vessels were delivered to its new owners on 18 August 2016.
Net financial items were MUSD (5.9), compared to MUSD (5.8) in the previous quarter. Interest expenses on the WilForce and WilPride financial leases amounted to MUSD 5.8 (MUSD 5.8 in Q2 2016).
Loss for the period was MUSD 4.2, compared to a loss of MUSD 11.5 in Q2 2016.
Book value of vessels was MUSD 374.7 as at 30 September 2016 (MUSD 377.6 30 June 2016). The decrease reflects ordinary depreciation during the quarter.
Total current assets were MUSD 41.1 as at 30 September 2016 (MUSD 13.2 as at 30 June 2016), of which cash and cash equivalents were MUSD 34.5 (MUSD 5.7 Q2 2016).
Total equity as at 30 September 2016 was MUSD 135.3.
Total current liabilities were MUSD 17.8 as at 30 September 2016 (MUSD 17.3 Q2 2016). MUSD 13.5 of the current liabilities relates to the short term portion of the WilForce and WilPride financial leases (MUSD 13.3 as at 30 June 2016). Total non-current liabilities were MUSD 262.9 as at 30 September 2016 (MUSD 266.4 Q2 2016), of which the long term portion of the WilForce and WilPride financial leases was MUSD 262.6 (MUSD 266.1 Q2 2016).
The increasing gas price trend in Europe and Far East from the last quarter continued in Q3. The Far East gas price started the quarter at USD 5.16/MMTBU and ended Q3 at USD 5.80/MMBTU. The UK NBP price followed same trend, starting at about USD 4.6/MMBTU and ended at USD 5.14/MMBTU while US prices increased from USD 2.7/MMBTU to USD 3.0/MMBTU. In Q4 gas prices for forward delivery has continued to improve in both Europe and Far East while spot prices in the US have come off. This has created arbitrage opportunities leading to increased fixing activity.
After a promising start of the quarter, the activity in the Atlantic region eased off halfway. Activity in the Far East was higher than in the West, but due to more available vessels in Asia rates were still reported higher in the Atlantic. West of Suez rates started at about USD 32,000 per day and increased during the quarter. Fixtures were reported in the high USD 40' per day during the quarter and ended at about USD 40,000 per day. Far East rates improved from USD 30,000 per day to USD 35,000 per day at the end of the quarter.
Short-and mid-term chartering activity has increased in Q4, so far resulting in seven vessels fixed on short term T/C and three on long term T/C while rates have so far not reacted to the increased activity. The increasing LNG production trend from the first half has continued in Q3. LNG production was up 5.6 % YoY in the first 6 months of 2016, and continued to 8.5 % YoY for the first nine months. LNG imports to China and India were up compared to Q3 2015 by 38 % and 16 % respectively. The declining import trend to Japan was halted as Japanese LNG imports in Q3 were at the same level as last year.
Q3 saw the completion of train 2 at both Australia Pacific and Sabine Pass with a combined nameplate production capacity of 9 MTPA. Both trains shipped first cargoes in October. Furthermore, Petronas MLNG completed its train 9, with a nameplate capacity of 3.6 MTPA at the end of September. The technical issues at Gorgon have been resolved and train 1 is reportedly producing at 85 % of nameplate capacity and train 2 is expected to start during Q4.
So far in 2016 we have seen 33 MTPA of new LNG nameplate production capacity added, which is merely the beginning of the largest production capacity increase in history, as additional 110 MTPA of increases is expected by 2020.
Newbuilding activity has been low during 2016. So far in 2016 5 newbuildings have been ordered, all against long term contracts. This compares to a newbuilding activity of 20 during the first 9 months of 2015. According to shipbrokers the orderbook at end Q3 2016 for LNG vessels above 100,000 cbm (excl. FSRU and FLNG) was 115 vessels, of which only 8 are available for contract. 23 vessels have been delivered in 2016, of which five in Q3 2016. A further 13 are scheduled for delivery in the remainder of 2016. As a result of the weak market and shipyard constraints some deliveries are expected to be delayed.
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 Awilco Technical Services AS, see note 5 in the interim condensed consolidated financial statements for further details.
| 2016 | 2017 | |
|---|---|---|
| WilPride | Available | |
| WilForce | On charter | Available |
The LNG shipping market has been very weak for the last two years, both in terms of low utilisation and depressed freight rates. The market for older tonnage has been even more affected by the tough market, resulting in very few fixtures for such vessels and several steam vessels have been placed in hot and cold lay-up.
The start-up of new LNG production facilities over the last 9 months has provided a positive impact to the market. We have seen both an encouraging trend in terms of improving spot market rates and increased chartering activity for both short and longer term. As a result of the new production capacity being added over the next 3 years, the outlook for LNG transportation is promising.
WilPride is currently operating in the spot market. The improving market and the Company's comfortable liquidity position suggest this is not the right time to commit to long term employment. The outlook for the long term LNG transportation market is firm and Awilco LNG is well positioned to benefit from the improving market.
Oslo, 17 November 2016
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 | |
|---|---|---|---|---|---|---|
| 2016 | 2016 | 2015 | 2016 | 2015 | ||
| Note | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Freight income | 2 | 8 435 | 8 346 | 8 326 | 25 671 | 27 751 |
| Voyage related expenses | 5 | 668 | 1 113 | 1 124 | 2 461 | 4 215 |
| Net freight income | 7 767 | 7 233 | 7 202 | 23 209 | 23 536 | |
| Operating expenses | 2 247 | 2 294 | 3 417 | 6 904 | 10 360 | |
| Administration expenses | 5 | 937 | 691 | 945 | 2 590 | 3 121 |
| Earnings before interest, taxes, depr. and amort. (EBITDA) | 4 583 | 4 248 | 2 840 | 13 716 | 10 055 | |
| Depreciation and amortisation | 2 926 | 3 407 | 4 043 | 9 979 | 12 532 | |
| Impairment of vessels | 4 | - | 6 569 | - | 6 569 | 3 189 |
| Earnings before interest and taxes | 1 657 | (5 728) | (1 203) | (2 833) | (5 666) | |
| Finance income | 1 | 1 | 12 | 99 | 176 | |
| Finance expenses | 5 875 | 5 789 | 6 069 | 17 570 | 18 190 | |
| Net finance income/(expense) | (5 874) | (5 788) | (6 057) | (17 472) | (18 013) | |
| Profit/(loss) before taxes | (4 217) | (11 516) | (7 260) | (20 304) | (23 679) | |
| Income tax expense | - | - | 2 | - | (9) | |
| Profit/(loss) for the period | (4 217) | (11 516) | (7 258) | (20 304) | (23 688) | |
| Earnings per share in USD attributable to ordinary equity holders of Awilco LNG ASA: | ||||||
| Basic, profit/(loss) for the period | (0.06) | (0.17) | (0.11) | (0.30) | (0.35) | |
| Diluted, profit/(loss) for the period | (0.06) | (0.17) | (0.11) | (0.30) | (0.35) |
| Profit/(loss) for the period | (4 217) | (11 516) | (7 258) | (20 304) | (23 688) |
|---|---|---|---|---|---|
| Other comprehensive income: Other comprehensive income items |
- | - | - | - | - |
| Total comprehensive income/(loss) for the period | (4 217) | (11 516) | (7 258) | (20 304) | (23 688) |
| In USD thousands | 30.9.2016 | 30.6.2016 | 31.12.2015 | 30.9.2015 | |
|---|---|---|---|---|---|
| Note | (unaudited) | (unaudited) | (audited) | (unaudited) | |
| ASSETS | |||||
| Non-current assets | |||||
| Vessels | 374 666 | 377 584 | 422 506 | 434 575 | |
| Other fixed assets | 99 | 107 | 124 | 132 | |
| Total non-current assets | 374 765 | 377 691 | 422 630 | 434 707 | |
| Current assets | |||||
| Trade receivables | 2 619 | 2 998 | 2 460 | 2 578 | |
| Inventory | 572 | 939 | 1 911 | 2 312 | |
| Other short term assets | 3 452 | 3 640 | 1 154 | 405 | |
| Cash and cash equivalents | 34 505 | 5 669 | 17 299 | 21 358 | |
| Total current assets | 41 147 | 13 247 | 22 823 | 26 653 | |
| Vessels held for sale | 4 | - | 32 190 | - | - |
| TOTAL ASSETS | 415 913 | 423 128 | 445 454 | 461 360 | |
| 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 | (39 624) | (35 407) | (19 320) | (6 732) | |
| Total equity | 135 258 | 139 475 | 155 563 | 168 150 | |
| Non-current liabilities | |||||
| Pension liabilities | 300 | 268 | 215 | 203 | |
| Long-term interest bearing debt | 262 575 | 266 094 | 272 804 | 276 111 | |
| Total non-current liabilities | 262 875 | 266 362 | 273 019 | 276 314 | |
| Current liabilities | |||||
| Short-term interest bearing debt | 13 535 | 13 254 | 12 752 | 12 487 | |
| Trade payables | 261 | 505 | 332 | 582 | |
| Income tax payable | - | - | 4 | 56 | |
| Provisions and accruals | 6 | 3 983 | 3 531 | 3 783 | 3 771 |
| Total current liabilities | 17 779 | 17 291 | 16 872 | 16 896 | |
| TOTAL EQUITY AND LIABILITIES | 415 913 | 423 128 | 445 454 | 461 360 |
| In USD thousands | Share | Share | Retained | Total |
|---|---|---|---|---|
| capital | premium | earnings | equity | |
| Equity at 1 January 2016 | 48 420 | 126 463 | (19 320) | 155 563 |
| Profit/(loss) for the period | - | - | (20 304) | (20 304) |
| Other comprehensive income for the period | - | - | - | - |
| Total comprehensive income | - | - | (20 304) | (20 304) |
| Balance as at 30 September 2016 (unaudited) | 48 420 | 126 463 | (39 624) | 135 258 |
| 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 | Q3 | Q2 | 1.1 - 30.9 | 1.1 - 30.9 |
|---|---|---|---|---|
| 2016 | 2016 | 2016 | 2015 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Cash Flows from Operating Activities: | ||||
| Profit/(loss) before taxes | (4 217) | (11 516) | (20 304) | (23 679) |
| Income taxes paid | - | (8) | (12) | - |
| Interest and borrowing costs expensed | 5 797 | 5 800 | 17 461 | 18 152 |
| Items included in profit/(loss) not affecting cash flows: | ||||
| Depreciation and amortisation | 2 926 | 3 407 | 9 979 | 12 532 |
| Impairment of vessels | - | 6 569 | 6 569 | 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 | 935 | (272) | 1 055 | 110 |
| Trade payables, provisions and accruals | 246 | (46) | 224 | (3 898) |
| i) Net cash provided by / (used in) operating activities | 5 686 | 3 934 | 14 973 | 6 451 |
| Cash Flows from Investing Activities: | ||||
| Investment in vessels / sale of vessels | 32 185 | - | 32 185 | 17 764 |
| Proceeds from sale of other fixed assets | - | - | - | 89 |
| ii) Net cash provided by / (used in) investing activities | 32 185 | - | 32 185 | 17 853 |
| Cash Flows from Financing Activities: | ||||
| Repayment of borrowings | (3 261) | (3 193) | (10 552) | (7 701) |
| Interest and borrowing costs paid | (5 774) | (5 841) | (19 399) | (16 065) |
| iii) Net cash provided by / (used in) financing activities | (9 034) | (9 034) | (29 951) | (23 766) |
| Net change in cash and cash equivalents (i+ii+iii) | 28 836 | (5 101) | 17 206 | 538 |
| Cash and cash equivalents at start of period | 5 669 | 10 769 | 17 299 | 20 819 |
| Cash and cash equivalents at end of period | 34 505 | 5 669 | 34 505 | 21 358 |
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 two modern TFDE LNG carriers.
The Statements for the three months ended 30 September 2016 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 2015, 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 2015.
The Group currently owns and operates two modern TFDE 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 Q3 2016, same as in Q2 2016.
The Group had two customers contributing with more than 10 per cent of the Group's freight income in Q3 2016.
The number of issued shares was 67,788,874 at 30 September 2016. There were no changes in shares issued in Q3 2016. 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.
The 1983 and 1984 built LNG carriers WilEnergy and WilGas were agreed sold in Q2 2016. The vessels were delivered to its new owner on 18 August 2016, contributing with a net positive cash effect of MUSD 32.2.
| Agreements | ||
|---|---|---|
| Related party | Description of service | Note |
| Awilco Technical Services AS (ATS) | 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 ATS, whereby ATS 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 ATS a management fee based on ATS' 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. ATS 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 2.6 in yearly management fee (approx. MUSD 0.3) 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 | 2016 | 2016 | 2016 | 2015 |
| Awilco Technical Services AS | 179 | 154 | 542 | 484 |
| Awilhelmsen Management AS | 78 | 79 | 234 | 400 |
| Astrup Fearnley Group | - | 316 | 320 | - |
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 expense (KUSD 4) and impairment of vessels (KUSD 316).
Provisions and accruals as at 30 September 2016 were MUSD 4.0 (MUSD 3.5 as at 30 June 2016), of which deferred revenue was MUSD 2.4, same as at 30 June 2016.
There were no material events after the balance sheet date.
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