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AWILCO LNG Triples Freight Income

Highlights fourth quarter
– The Awilco LNG Group (Awilco LNG or the Group) reported net freight income of MUSD 16.3 (MUSD 6.3 in Q3 2019), EBITDA of MUSD 13.0 (MUSD 7.4 in Q3 2019) and a profit for the period of MUSD 4.7 (loss of 1.1 in Q3 2019).

– Vessel utilisation of 95 % compared to 45 % in Q3 2019 due to off-hire and repairs of WilForce in Q3 2019.

Highlights for the year 2019

– Net freight income of MUSD 33.7 (MUSD 34.8 in 2018).

– EBITDA of MUSD 25.2 (MUSD 22.4 in 2018).

– Loss for the period of MUSD 8.3 (MUSD 11.4 in 2018).

– Vessel utilisation of 72 %, down from 80 % in 2018 due to off-hire and repairs of WilForce in 2019 (83 % utilisation in 2019 adjusted for off-hire days covered by loss of hire insurance).

Image: Awilco LNG ASA

Subsequent events

– In early January 2020 the CCBFL sale/leaseback facility for WilForce and WilPride was fully executed. Both vessels were sold for a gross consideration per vessel of USD 175.0 million including non-amortizing and non-interest bearing pre-paid charter hire of USD 43.75 million per vessel. The vessels are chartered back on bareboat basis to wholly owned subsidiaries of the Company for a period of up to 10 years.

– Q1 2020 covered with an expected TCE of about USD 70,000 per day per vessel (vs USD 46,200 per day per vessel in Q1 2019)

FINANCIAL REVIEW
Income statement fourth quarter 2019

Freight income for the quarter was MUSD 17.2, up from MUSD 6.7 in Q3 2019, following seasonally firming charter rates. In mid-November 2019 WilForce was delivered on an 80-100-day time charter contract, whereas WilPride was employed on an 8-month contract for the whole quarter. Fleet utilisation for the quarter ended at 95 % compared to 45 % in Q3 2019 due to the extensive off-hire on the WilForce following a collision in May 2019 (note utilisation figures not adjusted for offhire days covered by loss of hire insurance). Voyage related expenses amounted to MUSD 0.9, up from MUSD 0.4 in Q3 2019.

Operating expenses were MUSD 2.6 in the quarter compared to MUSD 2.3 in Q3 2019. Total expenses towards repairs of vessel damage due to machinery and collision damage to the WilForce was negative MUSD 0.6 in Q4 (MUSD 0.6 expense Q3 2019) due to reversal/downward adjustment of cost estimates in the quarter. Correspondingly, hull & machinery insurance claims presented as other income totaling MUSD 0.1 were reversed in Q4 2019 (other income of MUSD 0.4 of the total other income MUSD 4.8 in Q3 2019).

Based on an assessment of facts and legal advice Awilco LNG holds the other vessel fully and completely liable for the collision involving WilForce, and the Group expects to recover costs, expenses and losses from the owner of the other vessel, including insurance deductibles, off-hire and lost time charter hire, in due course. This claim will not be reflected in Awilco LNG’s financial statements until the awarded compensation is determined.

Administration expenses were MUSD 1.2 in Q4 compared to MUSD 0.8 in Q3 2019. The increase was mainly due to professional fees arising from the LNG shipping consolidation initiative which the involved parties agreed to discontinue in Q4 2019.

EBITDA for the quarter was MUSD 13.0 (MUSD 7.4 Q3 2019) and depreciation for the quarter was MUSD 3.3, same as in Q3 2019.

Net financial items were MUSD (5.0) compared to MUSD (5.2) in Q3 2019. Interest expenses on the WilForce and WilPride financial leases amounted to MUSD 5.1, down from MUSD 5.2 in Q3 2019.

Profit for the period was MUSD 4.7 compared to a loss of MUSD 1.1 in Q3 2019.

Income statement full year 2019

Freight income for the year amounted to MUSD 37.1 compared to MUSD 40.0 in 2018. Considering loss of hire insurance MUSD 5.5 presented as other income following the WilForce being struck by another vessel in May 2019, total income in 2019 amounted to MUSD 42.6. Fleet utilisation ended at 72 % in 2019 compared to 80 % in 2018 due to extensive off-hire on the WilForce for the same reason. Utilisation adjusted for loss of hire insurance was 83 % in 2019. Voyage related expenses decreased from MUSD 5.1 in 2018 to MUSD 3.4 in 2019.

Operating expenses for the year were MUSD 9.7, up from MUSD 8.0 in 2018, mainly following extraordinary and non-recurring maintenance of various machinery on both vessels. A total of MUSD
6.7 was expensed towards repairs of vessel damage on the WilForce in 2019 (MUSD 4.5 in 2018), of which MUSD 4.7 regarding repairs of collision damage and MUSD 1.9 towards machinery damage incurred in Q3 2018. Related hull & machinery insurance proceeds of MUSD 6.2 was recognised as other income in 2019 (MUSD 4.0 in 2018).

Administration expenses amounted to MUSD 3.7 in 2019, down from MUSD 3.9 in 2018.

Full year EBITDA was MUSD 25.2, compared to MUSD 22.4 in 2018. Depreciation for the period was MUSD 13.1 (MUSD 13.0 in 2018). Net finance income/(expense) was MUSD (20.4) compared to MUSD (20.9) in 2018.
Loss before tax and for the period was MUSD 8.3 compared to MUSD 11.4 in 2018.
Statement of financial position
Book value of vessels was MUSD 350.0 as at 31 December 2019 (MUSD 353.3 Q3 2019).
Total current assets were MUSD 27.3 as at 31 December 2019 (MUSD 23.8 Q3 2019), including insurance claims of MUSD 1.2 relating to repairs and loss of hire on the WilForce expected to be settled in the near future (MUSD 5.1 Q3 2019) and cash and cash equivalents MUSD 23.5 (MUSD 14.0 Q3 2019).
Total equity as at 31 December 2019 was MUSD 107.3 (MUSD 102.6 Q3 2019).
Total current liabilities were MUSD 269.6 as at 31 December 2019 (MUSD 274.1 Q3 2019), of which MUSD 260.2 was related to the WilForce and WilPride financial lease liabilities subsequently refinanced to long-term liabilities as disclosed in note 5 (MUSD 262.2 Q3 2019), MUSD 5.5 was deferred revenue received in December 2019 relating to January 2020 presented as provisions and accruals (MUSD 2.5 Q3 2019). Total deferred bareboat hire towards the financial leases was MUSD
28.5 as at 31 December 2019 (MUSD 26.6 Q3 2019), which is included in the total financial lease liabilities above.
The WilForce and WilPride financial leases were refinanced in early January 2020 with a new 10-year sale/leaseback facility provided by CCB Financial Leasing Co. Ltd. (CCBFL). Both vessels were sold for a gross consideration per vessel of USD 175.0 million including non-amortizing and non-interest bearing pre-paid charter hire of USD 43.75 million per vessel, enabling a full take out of the previous sale/leaseback financings. The vessels are chartered back on bareboat basis to wholly owned subsidiaries of the Company for a period of up to 10 years. According to the CCBFL sale/leaseback facility Awilco LNG is to maintain minimum consolidated cash and cash equivalents of MUSD 10.0 and positive consolidated working capital.
Awilco LNG’s finance cost is initially expected to be reduced by about MUSD 7 annually subject to interest rate fluctuations compared to the previous financing arrangement. The bareboat rate, which includes amortisation, is expected at about USD 45,000 per day/per vessel in 2020. The Group has rolling repurchase options starting after three years and repurchase obligations at maturity of the facility at MUSD 37.5 per vessel.
Source: Awilco LNG Group

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