q4 2017 - avance gas · • tce earnings of $15.3 million, up from $9.7 million, reflecting the...

Q4 2017

Oslo, 15 February 2018

DisclaimerThis presentation contains forward looking statements. Forward-looking statements are statementsthat are not historical facts and may be identified by words such as “anticipate”, “believe”, “continue”,“estimate”, “expect”, “intends”, “may”, “should”, “will” and similar expressions. The forward-lookingstatements in this presentation are based upon various assumptions, many of which are based, inturn, upon further assumptions. Although Avance Gas believes that these assumptions werereasonable when made, these assumptions are inherently subject to significant known and unknownrisks, uncertainties, contingencies and other important factors which are difficult or impossible topredict and are beyond its control. Such risks, uncertainties, contingencies and other importantfactors could cause actual events to differ materially from the expectations expressed or implied inthis presentation by such forward-looking statements.

The information, opinions and forward-looking statements contained in this presentation speak onlyas at its date, and are subject to change without notice.

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Highlights

Financials

Fleet & Market Update

Summary & Outlook

Agenda

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Christian Andersen – President

Peder Simonsen – Chief Financial Officer

CompanyRepresentatives

Highlights

• Ton-miles increase as US Gulf exports continue to grow - Middle East exports are down in line with expectations

• Eight ship delivered from shipyards in South Korea and Japan during Q3, having an negative impact on supply/demand balance and Q4 freight market

• TCE rate of $12,163/day, up from $7,524/day in Q3

• Available liquidity at quarter-end of $ 112.3 million, including $50 million in available RCF

1 Highlights

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Q4 2017 Comments Average Time Charter Equivalent

Avance Gas Spot VLGC Index 30 days prior to calendar quarter

($ 000s)Three months ended

31 December 2017Three months ended

30 September 2017

Operating revenue 27,369 23,679

Voyage expenses (12,113) (14,025 )Operating expenses (9,836) (9,655 )Administrative and general expenses (1,303) (1,297 )

Operating profit (loss) before depreciation expense 4,117 (1,298 )

Depreciation and amortization expenses (9,917) (10,034 )

Operating loss (5,800) (11,332 )

Non-operating (expenses) income:Finance expense (6,521) (6,510 )Finance income 5 10Foreign currency exchange gain 5 22

(6,511) (6,478)

Income tax expense (55) —

Net loss (12,366) (17,810)

Loss per share:Basic (0.19) (0.28 )Diluted (0.19) (0.28 )

Financials – Q4 2017

• TCE earnings of $15.3 million, up from $9.7 million, reflecting the improved freight market in Q4

• Operating expenses of $9.8 million, marginally up from $9.7 million Q3 2017

• Administrative and general expenses of $1.3 million, in line with last quarter

• Non-operating expenses—mainly financial expenses—of $6.5 million, unchanged since Q3 2017

• A reported net loss of $12.3 million, compared to a net loss of $17.8 million in Q3 2017

2 Financials

Income Statement Comments

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($ 000s)As of

31 December 2017As of

30 September 2017Cash and cash equivalents 62,316 58,106Receivables 16,920 12,165Inventory 3,993 5,850Other current assets 3,566 2,903Total current assets 86,795 79,024Property, plant and equipment 823,495 831,373Goodwill and intangible assets 150 178Total non-current assets 823,645 831,551Total assets 910,440 910,575

Current portion of long-term debt 20,598 20,598Accounts payable 5,867 4,715Accrued expenses (inc voyage expenses) 4,219 3,093Current portion of derivative financial instruments 2,538 3,622Other current liabilities 1,317 1,381Total current liabilities 34,539 33,409Long-term debt 367,000 372,063Long-term revolving credit facilities 100,000 85,000Long-term derivative financial instruments 4,969 7,392Total non-current liabilities 471,969 464,455Share capital 64,528 64,528Paid-in capital 379,851 379,851Contributed capital 95,185 95,102Retained loss (116,316) (103,951)Treasury shares (11,867 ) (11,867 )Accumulated other comprehensive loss (7,449) (10,952)Total shareholders’ equity 403,932 412,711Total liabilities and shareholders’ equity 910,440 910,575

Balance Sheet Comments

2 Financials

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Financials – Q4 2017

• Cash at end Q4 of $62.3 million up from $58.1 million end Q3, due to higher freight rates and drawdown of $15.0 million on the revolving credit facility

• Total assets of $910.4 million, versus $910.6 million in the prior quarter, mainly reflecting depreciation of the fleet offset by increased cash and receivables

• Net total interest-bearing debt of $487.6 million, compared with $477.7 million, reflecting scheduled debt repayments offset by a $15.0 million drawdown on the revolving credit facility

• Shareholders’ equity ratio of 44.4%, compared with45.3% in Q3 2017

Cash Flow Statement Comments

2 Financials

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Financials – Q4 2017($ 000s)

Three months ended31 December 2017

Three months ended30 September 2017

Cash flows (used in) from operating activities:Cash flow from operations 2,830 (4,621)Interest paid (6,035) (6,322)

Net cash flows (used in) from operating activities (3,205) (10,943)

Cash flows used in investing activities:Capital expenditures (2,334) (324)

Net cash flows used in investing activities (2,334) (324)

Cash flows from (used in) financing activities:Repayment of long-term debt (5,506) (5,506)Drawdown revolving credit facility 15,000 10,000

Net cash flows from (used in) financing activities 9,494 4,494

Effect of exchange rate changes on cash 255 2

Net increase (decrease) in cash and cash equivalents 4,210 (6,771)

Cash and cash equivalents at beginning of period 58,106 64,887

Cash and cash equivalents at end of period 62,316 58,106

• Net cash flow from operating activities negative of $3.2 million in Q4, up from $10.9 million in Q3 reflecting higher freight rates during the quarter

• Cash flows impacted by timing of freight payments and voyage expenses

• Net cash flow from financing activities was $9.5 million, reflecting drawdown of $15.0 million on the revolving credit facilities, offset by scheduled debt repayments

• The cash position at quarter-end was $62.3 million, with total available liquidity of $112.3 million, including available undrawn credit lines

Cash break-even and CAPEX

• Cash break-even for 2017 was $17,200/day, including a 50% reduction in principal payments as part of the bank amendment agreement from Q4 2016

• Avance Gas continues to focus on maintaining a low cash break-even rate with ongoing prudent and cost efficiency measures

• Total estimated CAPEX for periodical drydockingsof the Avance Gas fleet is $9.5 million in 2018

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Comments Cash break-even

Based on reported results for the third quarter and estimated cash cost for the remaining of 2017, divided by calendar days

$7,600$1,000

$4,300

$4,300

$17,200

Based on reported results for the full year of 2017, divided by calendar days, rounded.

3 Fleet & Market Update

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Avance Gas Spot Index vs Avance Gas Spot Fixtures

Chartering and Fleet

• Avance Gas Spot Index based on Baltic weekly, reflecting estimated USD per day for a roundtrip Ras Tanura – Chiba – Ras Tanura (13,642 nm), 24 hours for bunkering, 3% sea margin, bunker prices as quoted on Fridays, lowest of Singapore and Fujairah

• Source: Company

• Six spot fixtures Q4/2018;

• three Middle East, two US Gulf and one USWC

• Seven COA nominations Q4/2017

• “Avance “ periodical dry dock 29 days in China November

• “Iris Glory” periodical dry dock 33 days in China January

• “Thetis Glory” periodical dry dock 27 days in China February

• “Venus Glory” and “Providence” is scheduled for dry dock Q2

• “Promise” is scheduled for dry dock Q4

• “Passat” will proceed to repair yard upon completion discharge this week; expected back in service in April

Global VLGC Fleet Utilization


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Avance Gas’ Waiting Days per Ship

Utilization

• Avance Gas Spot Index based on Baltic weekly, reflecting estimated USD per day for a roundtrip Ras Tanura – Chiba – Ras Tanura (13,642 nm), 24 hours for bunkering, 3% sea margin, bunker prices as quoted on Fridays, lowest of Singapore and Fujairah

• Source: Company

Source: Clarkson Platou2017 Fleet Utilization 92%

Fleet OutlookOrderbook

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2017 Deliveries

• Source: Nordic Shipping; Company

Orderbook at 13% of existing fleet

VLGC LPG ExportsVLGC LPG Exports from the Middle East VLGC LPG Exports from the US Gulf

• Source: Waterborne LPG Report

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2017: 36.4m tons (2016: 38.7m tons) 2017: 24.0m tons (2016: 19.7m tons)

LPG Exports – 2016 and 2017VLGC LPG Exports from the US Gulf 2017 (# cargoes) VLGC LPG Exports from the US Gulf (# cargoes)


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Harvey

LPG Exports – 2016 and 2017VLGC Destinations from the US Gulf 2016 VLGC Destinations from the US Gulf 2017


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Summary and Outlook• US VLGC exports continue to grow

• 12 new VLGC orders placed in Q4 and January 2018

• Four of 11 2018 deliveries entered the global fleet

• Two VLGC sold for recycling January 2018• Sea Dolphin – 78 500 cbm - built 1990• Everrich 8 – 77 500 cbm - built 1990

• Continued growth of US shale oil and gas production expected to drive increased long-haul US LPG exports

• US infrastructure improvements provide upside potential

• Focusing on operational efficiency and reducing costs

• Preserving strong liquidity position and balance sheet

4 Summary & Outlook

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“Pampero – Passing clear” Photo by Lukaz Serozynski, Pampero

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Questions?

q4 2017 - avance gas · • tce earnings of $15.3 million, up from $9.7 million, reflecting the...

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