Flex LNG Ltd. ("Flex LNG" or the “Company”) today announced its
unaudited financial results for the second quarter and six months
ended June 30, 2019.
Highlights:
- Reported revenues of $19.0 million for the second quarter 2019,
compared to $19.1 million for the first quarter 2019.
- Average Time Charter Equivalent¹ ("TCE") rate of $46,266 per
day for the second quarter 2019, compared to $42,644 per day for
the first quarter 2019.
- Reported net loss of $3.9 million for the second quarter 2019,
compared to a net loss of $3.4 million for the first quarter
2019.
- Adjusted EBITDA¹ of $11.3 million for the second quarter 2019,
compared with $8.7 million for the first quarter 2019.
- On June 17, 2019, the Company's shares commenced trading on the
New York Stock Exchange (the "NYSE") under the ticker symbol
'FLNG'.
- In June 2019, the Company took delivery of its fifth
newbuilding LNG carrier, the Flex Constellation.
- In July 2019, the Company closed the $300 million sale and
charterback transaction with Hyundai Glovis Co. Ltd. ("Hyundai
Glovis") for the vessels Flex Enterprise and Flex Endeavour.
Øystein M Kalleklev, CEO of Flex LNG
Management AS, commented:"The first half of 2019 has been
a cold shower for most LNG industry participants with the exception
of the end consumers, who have benefited from cheap clean fuel and
made significant savings on their utility bills. Low gas prices
during the first half of the year have also negatively affected the
results of Flex LNG, as excess gas supply has predominantly been
absorbed by European consumers, cutting sailing distances and thus
affecting shipping demand and rates. Despite this challenging
market environment, we do see improved outlook for the second half
as the LNG shipping market is expected to become increasingly tight
and the likelihood of a repeat of last winter's El Nino is low.
These factors should provide tailwinds into 2020 and we expect the
LNG product market to become increasingly tight from next year.
Tighter product markets generally result in higher shipping demand
due to arbitrage and re-loads. Hence, we think a tighter product
market will positively affect the market balance in 2021."
¹ Time Charter Equivalent rate and Adjusted
EBITDA are non-GAAP measures. A reconciliation to the most directly
comparable GAAP measure is included in the back part of this
earnings report.
Business UpdateOn June 17,
2019, the Company's ordinary shares commenced trading on the
NYSE. Following the listing, the Company’s ordinary shares are
listed for trading on both the NYSE and the Oslo Stock Exchange
(the "OSE") under the ticker symbol 'FLNG'. No new securities
were issued in connection with the listing on the NYSE.
In June 2019, the Company took delivery of its
fifth newbuilding LNG carrier, the Flex Constellation, which was
built at Daewoo Shipbuilding and Marine Engineering Co. Ltd.
("DSME"). The vessel was delivered to a charterer ex-yard for her
maiden voyage.
The Company currently has five vessels on the
water and eight additional newbuildings under construction, which
are scheduled for delivery between the third quarter 2019 and the
second quarter 2021. With such scale, we believe that Flex LNG has
the ability to be present in all three major basins (the Atlantic
Basin, Pacific Basin, and Middle East Basin) providing for enhanced
customer relationships, increased vessel utilization and shorter
distance to load ports. Our fleet's characteristics are expected to
meet charterers' preference for the improved unit transportation
cost of larger and more fuel efficient vessels. The Flex LNG fleet
represents a diversified portfolio of two stroke vessels with both
M-type Electronically Controlled Gas Injection ("MEGI") and
Generation X Dual Fuel ("XD-F") propulsion systems. Seven of the
vessels are also equipped with Full Re-liquefaction System ("FRS")
or Partial Re-liquefaction Systems ("PRS") with associated
improvements in boil off rate.
Results for the three months ended June
30, 2019The Company reported a net loss of $3.9 million
(three months ended June 30, 2018: $2.9 million loss) and loss per
share of $0.07 for the second quarter 2019, compared to a net loss
of $3.4 million and loss per share of $0.06 for the first quarter
2019.
Adjusted EBITDA was $11.3 million (three months
ended June 30, 2018: $3.0 million) for the second quarter 2019, up
from $8.7 million for the first quarter 2019.
Vessel operating revenues were $19.0 million
(three months ended June 30, 2018: $7.0 million) for the second
quarter 2019, compared to $19.1 million in the first quarter
2019.
Voyage expenses, which include voyage specific
costs, broker commissions and bunkers consumption, were $1.1
million (three months ended June 30, 2018: $0.8 million) in the
second quarter 2019, compared to $3.8 million in the first quarter
2019. The decrease in voyage expenses was primarily due to improved
utilization in the second quarter 2019 compared to the first
quarter 2019, resulting in lower positioning and idle costs.
Vessel operating costs, which includes technical
operating expenses (such as crewing, insurance, lubes and repairs
& maintenance), charter hire expenses and performance claims,
amounted to $5.2 million (three months ended June 30, 2018: $2.3
million) in the second quarter 2019, compared to $4.5 million in
the first quarter 2019. The increase in vessel operating costs was
primarily due to the delivery of the Flex Constellation in
June.
Administrative expenses were $1.5 million (three
months ended June 30, 2018: $0.9 million) in the second quarter
2019 compared to $1.9 million in the first quarter 2019.
Administrative expenses in the first quarter 2019 were impacted by
costs related to the listing on the NYSE.
The Company also recorded a an unrealized loss
on the change in fair value of the interest rate swaps of $2.2
million (three months ended June 30, 2018: $0.0 million) in the
second quarter 2019.
Result for the six months ended June 30,
2019The Company reported a net loss of $7.4 million for
the six months ended June 30, 2019 compared to a net loss of $4.6
million for the six months ended June 30, 2018.
Adjusted EBITDA for the six months ended June
30, 2019 was $20.0 million compared to $5.3 million for the six
months ended June 30, 2018.
Vessel operating revenue were $38.2 million for
the six months ended June 30, 2019 compared to $22.1 million for
the six months ended June 30, 2018.
Voyage expenses were $4.9 million for the six
months ended June 30, 2019 compared to $3.9 million for the months
ended June 30, 2018. The increase in voyage expenses was
primarily due to positioning and idle costs, mainly in the first
quarter 2019.
Vessel operating costs for the six months ended
June 30, 2019 amounted to $9.7 million compared to $11.1 million
for the six months ended June 30, 2018. For the six months ended
June 30, 2018, vessel operating costs include $6.1 million in
relation to vessels chartered-in. All chartered-in vessels were
redelivered by the end of the first quarter of 2018.
Cash Flow and Balance Sheet as of June
30, 2019Total cash, restricted cash and cash equivalents
was $26.4 million as of June 30, 2019, a decrease of $19.2 million
during the second quarter 2019. Net cash provided by operating
activities in the second quarter 2019 was $9.4 million (Q1 2019:
$3.6 million cash used). Net cash used in investing activities in
the second quarter 2019 was $146.2 million (Q1 2019: $0.0 million),
relating to the final payments due on delivery of Flex
Constellation. Net cash provided by financing activities was $117.6
million (Q1 2019: $5.9 million cash used), which includes drawdown
of the $125 million tranche relating to Flex Constellation under
the $250 million term loan facility, offset by scheduled repayment
of long term debt.
During the six months ended June 30, 2019,
$182.2 million was capitalized to vessels and equipment net,
relating to the delivery of Flex Constellation.
As of June 30, 2019, long term debt was $536.8
million compared to $536.8 million as at December 31, 2018
primarily as a result of the drawdown of net $123.5 million under
our $250 million term loan facility upon delivery of Flex
Constellation. As of June 30, 2019, the current portion of long
term debt was $30.0 million (December 31, 2018: $23.4 million).
Finance updateIn April, the
Company entered into a $250 million term loan facility agreement
with a syndicate of banks for the financing of the two newbuildings
Flex Constellation and Flex Courageous. The first $125 million
tranche was drawn upon delivery of the Flex Constellation in June
2019. The remaining $125 million tranche is expected to be drawn
upon delivery of Flex Courageous, scheduled at the end of August
2019. In order to hedge against fluctuations in interest rates, the
Company has entered into interest rate swap transactions totaling a
notional principal of $125 million, whereby the floating rate has
been swapped to a fixed rate, with a concurrent maturity of five
years.
In April 2019, the Company entered into sale and
charterback agreements with Hyundai Glovis for the vessels Flex
Endeavour and Flex Enterprise. The transactions closed in July
2019, whereby the vessels were sold for a gross consideration of
$420 million, with a net consideration to the Company of $300
million adjusted for a non-amortizing and non-interest bearing
seller's credit of $120 million in total. The vessels have been
chartered back to subsidiaries of Flex LNG for a period of 10 years
on a time-charter basis. The agreements include fixed price
purchase options, whereby the Company will have options to acquire
the vessels during the term of the time-charters. The two vessels
were, together with Flex Ranger, financed under a $315 million term
loan facility with final maturity in 2023. Upon closing of the
transactions with Hyundai Glovis, outstanding amounts under the two
tranches relating to the vessels under the $315 million facility
totaling $194 million were prepaid, resulting in net proceeds, from
the financing agreement with Hyundai Glovis, to the Company of
approximately $102.8 million after fees and expenses. For further
information please see Note 13: Subsequent events.
In July 2019, the Company entered into a
five-year $100 million secured term loan and revolving credit
facility agreement with a syndicate of banks for the re-financing
of the Flex Ranger, which was financed under the $315 million
facility. The new facility is divided into a $50 million term loan
and a $50 million revolving facility. The facility was fully
drawn in July 2019, whereby the outstanding of $99.8 million under
the existing $315 million facility was prepaid. The facility has a
tenor of five years and bears interest at LIBOR plus a margin of
2.25% per annum. For further information please see Note 13:
Subsequent events.
LNG Market OutlookDuring the second quarter
2019, spot LNG freight rates stabilized and started gradually to
recover. Unseasonably slow demand in Asia over the winter due to
fewer heating days caused by warmer weather, and cooler weather
than normal in key demand areas early in the summer coupled with
ample supply growth from new liquefaction continued to weigh on
global LNG prices. The on-going trade dispute between the U.S. and
China is adversely affecting Chinese procurement from the US.
According to industry sources, US exports to Asia have stabilized
at around one million tonnes per month, with incremental US export
volumes predominantly going to Europe and lately Latin America in
the second quarter of 2019, muting tonne mile growth.
According to industry sources, global LNG exports reached 180
million tonnes in the first half of 2019, in line with the
expectations of reaching approximately 367 million tonnes by the
end of the year. This represents year on year growth of
approximately 13%. 2019 is also expected to be a significant year
as new liquefaction projects have made final investment decision
("FID") and both the Sabine Pass Train 6 (with reported4.5 million
metric tonne per annum "MMtpa") and the Mozambique LNG ( with
reported 12.9 MMtpa) receiving the green light in June 2019.
Subsequently, Calcasieu Pass (with reported 10.8 MMtpa) announced
that it has secured funding in July 2019 implying high
probability of FID for this facility located in Louisiana, USA.
The increased LNG supply has adversely affected LNG prices, with
the average Asian benchmark prices ("JKM") dropping approximately
35% lower in the first half of 2019 compared to the first half of
2018. European LNG prices ("NBP") came in 20% lower on the same
basis. The low LNG price environment has been positive for demand
growth in some regions, predominately Europe, resulting in
switching from coal and pipeline gas to LNG. Higher forward gas
prices than spot prices have stipulated build-up of, LNG inventory
particularly in Europe where inventories are reported to be around
75% full, approximately 17% above the five-year average.
Eight LNG carriers and one floating storage and regasification
unit ("FSRU") were reported delivered in the second quarter of
2019, bringing the year to date count to 20 LNG carriers and two
FSRUs. During the second quarter 2019, 11 new orders for LNG
carriers were reported. By the end of the quarter, there were 502
vessels above 125,000 cbm in the global LNG carrier fleet,
excluding FSRUs. The order book at the end of the quarter amounted
to 106 conventional LNG carriers, of which 43 were reported as
‘uncommitted’. In the second half of 2019, we expect another
20 conventional LNG carriers and one FSRU to be delivered from
yards.
Outlook for LNG shipping demand is compelling due to rapidly
increasing demand for LNG. The market has absorbed new tonnage as
it has arrived, and despite lower than expected tonne mile growth
due to muted US - Asia trade and limited arbitrage opportunities,
we believe that the market is reasonably balanced.
Flex LNG expects the market for energy-efficient modern LNG
carriers to improve going forward, as we approach the winter
market, where demand seasonally increases in the northern
hemisphere for heating. The long term outlook for the industry
continues to be well supported, and we believe that Flex LNG is
well positioned to capitalize on the global shift for cleaner
energy.
Second Quarter 2019 Result
PresentationFlex LNG will release its financial results
for the second quarter 2019 on Tuesday August 20, 2019.
In connection with the earnings release, a
webcast and conference call will be held at 3:00 p.m. CEST (9:00
a.m EST). In order to attend the webcast and/or conference call you
may do one of the following:
Attend by Webcast:Use to the
follow link prior to the webcast:
https://edge.media-server.com/mmc/p/2c7es9no
Attend by Conference
Call:Applicable dial-in telephone numbers are as
follows:Norway: +47 21 56 31 62United Kingdom: +44 (0) 203
0095710United States: +1 917 720 0178Confirmation Code: 7118508
A Q&A session will be held after the
teleconference/webcast. Information on how to submit questions will
be given at the beginning of the session. The presentation material
which will be used in the teleconference/webcast can be downloaded
on www.flexlng.com and replay details will also be
available at this website.
Forward-Looking
StatementsMatters discussed in this press release may
constitute forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than
statements of historical facts. The Company desires to take
advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The
words "believe," "expect," "anticipate," "estimate," "intend,"
"plan," "target," "project," "likely," "may," "will," "would,"
"could" and similar expressions identify forward-looking
statements.
The forward-looking statements in this press
release are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without
limitation, management’s examination of historical operating
trends, data contained in the Company’s records and other data
available from third parties. Although management believes that
these assumptions were reasonable when made, because these
assumptions are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are
beyond the Company’s control, there can be no assurance that the
Company will achieve or accomplish these expectations, beliefs or
projections. The Company undertakes no obligation, and specifically
declines any obligation, except as required by law, to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
In addition to these important factors, other
important factors that, in the Company’s view, could cause actual
results to differ materially from those discussed in the
forward-looking statements include: unforeseen liabilities, future
capital expenditures, the strength of world economies and
currencies, general market conditions, including fluctuations in
charter rates and vessel values, changes in demand in the LNG
tanker market, changes in the Company’s operating expenses,
including bunker prices, dry-docking and insurance costs, the fuel
efficiency of the Company’s vessels, the market for the Company’s
vessels, availability of financing and refinancing, ability to
comply with covenants in such financing arrangements, failure of
counterparties to fully perform their contracts with the Company,
changes in governmental rules and regulations or actions taken by
regulatory authorities, including those that may limit the
commercial useful lives of LNG tankers, potential liability from
pending or future litigation, general domestic and international
political conditions, potential disruption of shipping routes due
to accidents or political events, vessel breakdowns and instances
of off-hire, and other factors, including those that may be
described from time to time in the reports and other documents that
the Company files with or furnishes to the U.S. Securities and
Exchange Commission (“Other Reports”). For a more complete
discussion of certain of these and other risks and uncertainties
associated with the Company, please refer to the Other Reports.
Board of Directors of Flex LNG
Ltd.
|
August 20, 2019 |
|
|
|
|
|
David McManus |
|
|
|
|
|
|
|
Marius Hermansen |
Nikolai Grigoriev |
Ola Lorentzon |
|
Interim Financial
InformationCondensed Consolidated Interim
Statement of Operations |
(Unaudited figures
in thousands of $, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
Note |
2019 |
2019 |
2018 |
|
2019 |
2018 |
Vessel
operating revenues |
|
19,018 |
|
19,141 |
|
7,048 |
|
|
38,159 |
|
22,100 |
|
Voyage expenses |
|
(1,113 |
) |
(3,789 |
) |
(811 |
) |
|
(4,902 |
) |
(3,875 |
) |
Vessel operating costs |
|
(5,165 |
) |
(4,526 |
) |
(2,297 |
) |
|
(9,691 |
) |
(11,142 |
) |
Administrative expenses |
|
(1,506 |
) |
(1,864 |
) |
(929 |
) |
|
(3,370 |
) |
(1,726 |
) |
Depreciation |
|
(6,308 |
) |
(5,916 |
) |
(2,753 |
) |
|
(12,224 |
) |
(5,063 |
) |
Operating income/(loss) |
|
4,926 |
|
3,046 |
|
258 |
|
|
7,972 |
|
294 |
|
Finance income |
|
204 |
|
256 |
|
79 |
|
|
460 |
|
252 |
|
Interest expense |
8 |
(6,853 |
) |
(6,501 |
) |
(3,174 |
) |
|
(13,354 |
) |
(5,145 |
) |
(Loss)/gain on derivatives |
9 |
(2,229 |
) |
— |
|
— |
|
|
(2,229 |
) |
— |
|
Other financial items |
|
33 |
|
(239 |
) |
(20 |
) |
|
(206 |
) |
(36 |
) |
(Loss)/income before tax |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,635 |
) |
Income tax credit/(expense) |
|
— |
|
— |
|
— |
|
|
— |
|
(2 |
) |
Net (loss)/income |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
|
|
|
|
|
|
|
|
(Loss)/earnings per share: |
|
|
|
|
|
|
|
Basic and Diluted |
3 |
(0.07 |
) |
(0.06 |
) |
(0.08 |
) |
|
(0.14 |
) |
(0.13 |
) |
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Comprehensive Income |
(Unaudited figures
in thousands of $, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
Note |
2019 |
2019 |
2018 |
|
2019 |
2018 |
Net (loss)/income |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
Total other comprehensive income/(loss) |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
Total comprehensive income/(loss) attributable to Flex
LNG Ltd. |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Condensed
Consolidated Interim Balance Sheets |
|
|
(Unaudited figures
in thousands of $, except per share data) |
|
|
|
|
|
|
|
|
|
|
June 30, |
March 31, |
|
December
31, |
|
Note |
2019 |
2019 |
|
2018 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash,
restricted cash and cash equivalents |
4 |
26,444 |
|
45,616 |
|
|
55,097 |
|
Inventory |
|
1,917 |
|
994 |
|
|
915 |
|
Other current assets |
|
6,900 |
|
5,496 |
|
|
2,693 |
|
Receivables due from related parties |
|
1,082 |
|
1,568 |
|
|
1,720 |
|
Total current assets |
|
36,343 |
|
53,674 |
|
|
60,425 |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Vessel purchase prepayment |
5,7 |
385,472 |
|
421,472 |
|
|
421,472 |
|
Vessels and equipment, net |
6 |
982,459 |
|
806,566 |
|
|
812,478 |
|
Other fixed assets |
|
5 |
|
7 |
|
|
11 |
|
Total non-current assets |
|
1,367,936 |
|
1,228,045 |
|
|
1,233,961 |
|
Total Assets |
|
1,404,279 |
|
1,281,719 |
|
|
1,294,386 |
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Current portion of long-term
debt |
7,8 |
29,996 |
|
23,365 |
|
|
23,365 |
|
Derivative instruments
payable |
9 |
2,257 |
|
— |
|
|
— |
|
Payables due to related
parties |
|
— |
|
— |
|
|
206 |
|
Accounts payable |
|
2,156 |
|
1,560 |
|
|
593 |
|
Other current liabilities |
|
12,951 |
|
7,021 |
|
|
11,296 |
|
Total current
liabilities |
|
47,360 |
|
31,946 |
|
|
35,460 |
|
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
Long-term debt |
7,8 |
536,762 |
|
425,762 |
|
|
431,602 |
|
Other non-current
liabilities |
|
1 |
|
1 |
|
|
— |
|
Total non-current
liabilities |
|
536,763 |
|
425,763 |
|
|
431,602 |
|
Total
liabilities |
|
584,123 |
|
457,709 |
|
|
467,062 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital (June 30, 2019:
54,103,993 (December 31, 2018: 54,099,929) shares issued and
outstanding, par value $0.10 per share) |
11 |
5,410 |
|
5,410 |
|
|
5,410 |
|
Additional paid in
capital |
|
1,189,854 |
|
1,189,789 |
|
|
1,189,665 |
|
Accumulated deficit |
|
(375,108 |
) |
(371,189 |
) |
|
(367,750 |
) |
Total
equity |
|
820,156 |
|
824,010 |
|
|
827,325 |
|
Total Equity and
Liabilities |
|
1,404,279 |
|
1,281,719 |
|
|
1,294,387 |
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Condensed
Consolidated Interim Statements of Cash Flows |
|
|
|
|
(Unaudited figures
in thousands of $) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
Note |
2019 |
2019 |
2018 |
|
2019 |
2018 |
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net
(loss)/income |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
Adjustments to reconcile net
(loss)/income to net cash provided by/(used in) operating
activities: |
|
|
|
|
|
|
|
Depreciation |
6 |
6,308 |
|
5,916 |
|
2,753 |
|
|
12,224 |
|
5,063 |
|
Amortization of debt issuance costs |
|
65 |
|
65 |
|
88 |
|
|
130 |
|
88 |
|
Share-based payments |
|
65 |
|
129 |
|
33 |
|
|
194 |
|
67 |
|
Foreign exchange (gain)/loss |
|
(82 |
) |
8 |
|
7 |
|
|
(74 |
) |
7 |
|
Adjustment of derivatives to fair value |
8 |
2,257 |
|
— |
|
— |
|
|
2,257 |
|
— |
|
Other |
|
(1 |
) |
(16 |
) |
(439 |
) |
|
(17 |
) |
(410 |
) |
Changes in operating assets
and liabilities, net: |
|
|
|
|
|
|
|
Inventory |
|
(923 |
) |
(79 |
) |
(255 |
) |
|
(1,002 |
) |
(1,574 |
) |
Other current assets |
|
(1,404 |
) |
(2,803 |
) |
3,163 |
|
|
(4,207 |
) |
3,113 |
|
Receivables due from related parties |
|
486 |
|
152 |
|
(12 |
) |
|
638 |
|
(1,215 |
) |
Payables due to related parties |
|
— |
|
(206 |
) |
724 |
|
|
(206 |
) |
720 |
|
Accounts payable |
|
596 |
|
967 |
|
(5 |
) |
|
1,563 |
|
46 |
|
Other current liabilities |
|
5,930 |
|
(4,275 |
) |
3,129 |
|
|
1,655 |
|
5,623 |
|
Net cash provided
by/(used in) operating activities |
|
9,378 |
|
(3,580 |
) |
6,329 |
|
|
5,798 |
|
6,891 |
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Purchase of other fixed
assets |
|
— |
|
— |
|
(7 |
) |
|
— |
|
(14 |
) |
Vessel purchase
prepayments |
5 |
— |
|
— |
|
(73,600 |
) |
|
— |
|
(73,600 |
) |
Additions and installments on
newbuildings |
|
— |
|
— |
|
(108,075 |
) |
|
— |
|
(188,975 |
) |
Additions to vessels and
equipment |
6 |
(146,199 |
) |
— |
|
— |
|
|
(146,199 |
) |
— |
|
Capitalized interest |
|
— |
|
— |
|
(2,105 |
) |
|
— |
|
(2,741 |
) |
Net cash (used
in)/provided by investing activities |
|
(146,199 |
) |
— |
|
(183,787 |
) |
|
(146,199 |
) |
(265,330 |
) |
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Net proceeds from issuance of
share capital |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
Repayment of long term
debt |
7,8 |
(5,906 |
) |
(5,905 |
) |
(2,625 |
) |
|
(11,811 |
) |
(102,625 |
) |
Proceeds from long term
debt |
7,8 |
123,537 |
|
— |
|
218,688 |
|
|
123,537 |
|
428,688 |
|
Net cash provided
by/(used in) financing activities |
|
117,631 |
|
(5,905 |
) |
216,063 |
|
|
111,726 |
|
326,063 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
18 |
|
4 |
|
— |
|
|
22 |
|
— |
|
Net
(decrease)/increase in cash and cash equivalents |
|
(19,172 |
) |
(9,481 |
) |
38,605 |
|
|
(28,653 |
) |
67,624 |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and
restricted cash at the beginning of the period |
|
45,616 |
|
55,097 |
|
38,983 |
|
|
55,097 |
|
9,961 |
|
Cash, cash equivalents
and restricted cash at the end of the period |
|
26,444 |
|
45,616 |
|
77,584 |
|
|
26,444 |
|
77,584 |
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Condensed
Consolidated Interim Statement of Changes in Equity |
(Unaudited figures
in thousands of $, except per share data) |
|
|
|
|
|
|
|
|
Six months ended |
|
Year ended |
|
June 30, |
June 30, |
|
December 31, |
|
2019 |
2018 |
|
2018 |
|
|
|
|
|
Number of shares
outstanding |
|
|
|
|
At beginning of period |
54,099,929 |
|
36,797,238 |
|
|
36,797,238 |
|
Shares issued |
4,064 |
|
4,413 |
|
|
17,302,691 |
|
At end of
period |
54,103,993 |
|
36,801,651 |
|
|
54,099,929 |
|
|
|
|
|
|
Share
capital |
|
|
|
|
At beginning of period |
5,410 |
|
3,680 |
|
|
3,680 |
|
Shares issued |
— |
|
— |
|
|
1,730 |
|
At end of
period |
5,410 |
|
3,680 |
|
|
5,410 |
|
|
|
|
|
|
Additional paid in
capital |
|
|
|
|
At beginning of period |
1,189,665 |
|
895,950 |
|
|
895,950 |
|
Shares issued |
59 |
|
— |
|
|
293,646 |
|
Stock option expense |
130 |
|
— |
|
|
69 |
|
At end of
period |
1,189,854 |
|
895,950 |
|
|
1,189,665 |
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
At beginning of period |
— |
|
66 |
|
|
66 |
|
Other comprehensive
income |
— |
|
(33 |
) |
|
(66 |
) |
At end of
period |
— |
|
33 |
|
|
— |
|
|
|
|
|
|
Accumulated
deficit |
|
|
|
|
At beginning of period |
(367,750 |
) |
(379,530 |
) |
|
(379,530 |
) |
Net (loss)/income |
(7,357 |
) |
(4,637 |
) |
|
11,780 |
|
At end of
period |
(375,107 |
) |
(384,167 |
) |
|
(367,750 |
) |
|
|
|
|
|
Total
Equity |
820,157 |
|
515,496 |
|
|
827,325 |
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Notes to the Interim Consolidated
Accounts
Note 1: General informationFlex
LNG Ltd. (together with its subsidiaries, the "Company" or "Flex
LNG") is a limited liability company, originally incorporated in
the British Virgin Islands and registered in Bermuda as of June
2017. The Company's activities are focused on seaborne
transportation of liquefied natural gas ("LNG"). The Company's
ordinary share are listed on the New York Stock Exchange (the
"NYSE") and the Oslo Stock Exchange (the "OSE"). The
condensed consolidated interim financial statements of the Company
for the three months and six months ended June 30, 2019 were
authorized by the Board of Directors for release on August 20,
2019.Note 2: Accounting principles
Basis of accounting
The unaudited interim condensed consolidated
financial statements are prepared in accordance with accounting
principles generally accepted in the United States (“U.S. GAAP”).
The unaudited interim condensed consolidated financial statements
do not include all the disclosures required in an annual report,
and should be read in conjunction with the annual consolidated
financial statements and notes for the year ended December 31,
2018 included in our Registration Statement on Form 20-F, filed
with the Securities and Exchange Commission (the "SEC") on May 28,
2019.
Significant accounting
policiesThe accounting policies adopted in the preparation
of the unaudited condensed consolidated interim financial
statements are consistent with those followed in the preparation of
the Company’s annual financial statements for the year ended
December 31, 2018, with the exception of those noted below relating
to new transactions that have occurred since the last set of the
Company's audited annual financial statements.
DerivativesOur derivative
instruments relate to interest-rate swaps, which are considered to
be an economic hedge. However, these have not been designated as
hedges for accounting purposes. These transactions involve the
conversion of floating rates into fixed rates over the life of the
transactions without an exchange of underlying principal. The fair
value of the interest rate swap contracts are recognized as assets
or liabilities. Changes in the fair value of these derivatives are
recorded in gain/(loss) on derivatives in our condensed
consolidated interim statement of operations. Cash outflows and
inflows resulting from economic derivative contracts are presented
as cash flows from operations in the condensed consolidated
statement of cash flows.
Note 3: Earnings per shareBasic
earnings per share amounts are calculated by dividing the net
(loss)/income by the weighted average number of ordinary shares
outstanding during that period.
Diluted earnings per share amounts are
calculated by dividing the net (loss)/income by the weighted
average number of shares outstanding during the period plus the
weighted average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares.
The following reflects the net (loss)/income and
share data used in the earnings per share calculation.
(Unaudited figures
in thousands of $, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
|
2019 |
2019 |
2018 |
|
2019 |
2018 |
Net (loss)/income attributable to shareholders |
|
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
ordinary shares |
|
54,103,993 |
|
54,103,189 |
|
36,801,651 |
|
|
54,103,593 |
|
36,800,578 |
|
Share options |
|
141,000 |
|
141,000 |
|
— |
|
|
141,000 |
|
— |
|
Weighted average
number of ordinary shares, adjusted for dilution |
|
54,244,993 |
|
54,244,189 |
|
36,801,651 |
|
|
54,244,593 |
|
36,800,578 |
|
|
|
|
|
|
|
|
|
(Loss)/earnings per
share: |
|
|
|
|
|
|
|
Basic |
|
(0.07 |
) |
(0.06 |
) |
(0.08 |
) |
|
(0.14 |
) |
(0.13 |
) |
Diluted |
|
(0.07 |
) |
(0.06 |
) |
(0.08 |
) |
|
(0.14 |
) |
(0.13 |
) |
Note 4: Cash, restricted cash and cash
equivalentsFor the purpose of the Condensed Consolidated
Interim Balance Sheets and Statement of Cash Flows; Cash,
restricted cash and cash equivalents comprise the following:
(Unaudited figures in
thousands of $) |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December
31, |
|
|
2019 |
|
2018 |
Cash and cash equivalents |
|
26,385 |
|
|
54,932 |
|
Restricted cash |
|
59 |
|
|
165 |
|
Cash, restricted cash
and cash equivalents |
|
26,444 |
|
|
55,097 |
|
Restricted cash consists of cash that is
restricted by law for the Norwegian tax authorities in relation to
social security of employees.
Note 5: Vessel purchase
prepaymentsOn June 7, 2019, a reclassification of $36.0
million was made from Vessel purchase prepayments to Vessels and
equipment, net upon the delivery of our fifth LNG carrier, Flex
Constellation.
Note 6: Vessels and equipment,
netMovements in the six months ended June 30, 2019
for vessels and equipment may be summarized as follows:
(Unaudited figures in
thousands of $) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels and equipment |
Dry docks |
|
Total |
|
|
|
|
|
|
Cost |
|
|
|
|
|
At January 1, 2019 |
|
819,824 |
|
10,000 |
|
|
829,824 |
|
Additions |
|
143,699 |
|
— |
|
|
143,699 |
|
Transfer from vessels purchase
prepayments |
|
36,000 |
|
2,500 |
|
|
38,500 |
|
Disposals |
|
— |
|
— |
|
|
— |
|
At June 30,
2019 |
|
999,523 |
|
12,500 |
|
|
1,012,023 |
|
|
|
|
|
|
|
Accumulated
depreciation |
|
|
|
|
|
At January 1, 2019 |
|
15,929 |
|
1,475 |
|
|
17,404 |
|
Charge |
|
11,194 |
|
1,023 |
|
|
12,217 |
|
Disposals |
|
— |
|
— |
|
|
— |
|
At June 30,
2019 |
|
27,123 |
|
2,498 |
|
|
29,621 |
|
|
|
|
|
|
|
Net book
value |
|
|
|
|
|
At January 1, 2019 |
|
803,895 |
|
8,525 |
|
|
812,420 |
|
At June 30,
2019 |
|
972,400 |
|
10,002 |
|
|
982,402 |
|
On June 7, 2019, Flex LNG successfully took
delivery of its fifth LNG carrier, Flex Constellation, which was
constructed at Daewoo Shipbuilding and Marine Engineering Co. Ltd.
("DSME") in South Korea. With this regard, a total of $182.2
million was capitalized during the six month period ended
June 30, 2019.
Note 7: Capital
commitmentsCapital commitments for the Company as at
June 30, 2019 are detailed in the table below:
(Unaudited figures in
thousands of $) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year |
2 years |
3 years |
4 years |
5 years |
Thereafter |
Total |
Vessel purchase commitments |
291,200 |
|
789,800 |
|
— |
|
— |
|
— |
|
— |
|
1,081,000 |
|
Financing commitments |
30,338 |
|
32,654 |
|
32,654 |
|
257,478 |
|
107,875 |
|
112,219 |
|
573,218 |
|
Total |
321,538 |
|
822,454 |
|
32,654 |
|
257,478 |
|
107,875 |
|
112,219 |
|
1,654,218 |
|
As at June 30, 2019, Flex LNG had eight
vessels to be delivered on a Norwegian Sales Form basis, whereby we
have paid a deposit to the relevant seller at the time of entering
into the agreements, with the remaining purchase price being
payable upon delivery and transfer of title of the relevant vessel
to us. The remaining capital expenditures on these newbuildings
includes building supervision, but excludes future change requests,
sundry buyers’ supplies, fit out, studies and lube oils.
Note 8: Long-term debtIn the
three months ended June 30, 2019, we repaid $5.9 million towards
existing long term-debt and received net proceeds from draw downs
of $123.5 million.
In April 2019, the Company entered into a $250
million secured term loan facility from a syndicate of banks for
the financing of the two newbuildings Flex Constellation and Flex
Courageous. On June 7, 2019 the Company drew down $125 million on
the delivery of the first vessel, Flex Constellation, and the
remaining $125 million is expected to be drawn upon delivery of
Flex Courageous, due in August 2019. The facility has a term of
five years from delivery of the last vessel and bears interest at
LIBOR plus a margin of 2.35% per annum. The facility contains a
minimum value clause, and financial covenants that require the
Company, on a consolidated basis, to maintain a book equity ratio
of minimum 0.25 to 1.0; a minimum liquidity being the higher of $25
million and 5% of net interest bearing debt; as well as positive
working capital for the Company on a consolidated basis.
With reference to the subsequent events in Note
13, the Company entered into a $100 million term loan and revolving
credit facility in July 2019 for the re-financing of the Flex
Ranger. The vessel was, together with Flex Enterprise and Flex
Endeavour, financed under the $315 million term loan facility
agreement entered into in December 2017. The proceeds from the
$100m Facility were used to prepay the $99.8 million outstanding
under the $315 million term loan facility relating to Flex Ranger.
In July 2019, the Company also executed the sale and charterback
transactions with Hyundai Glovis Co. Ltd. ("Hyundai Glovis") for
the vessels Flex Enterprise and Flex Endeavour, raising
approximately $300 million, which was used to prepay the remaining
tranches totaling $194 million under the $315 million facility,
which has been prepaid in full subsequent to quarter end.
Note 9: Derivative
InstrumentsIn order to reduce the risk associated with
fluctuations in interest rates, the Company has entered into three
interest rate swap transactions, whereby the floating rate on the
notional principal drawn down on the Constellation of $125 million,
was swapped to a fixed rate, with a concurrent maturity of five
years.
Our interest rate swap contracts as at June 30,
2019 of which none are designated as hedging instruments are
summarized as follows:
(Unaudited figures in
thousands of $) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional principal |
|
Inception date |
|
Maturity date |
|
Fixed Interest Rate |
|
Receiving floating, pay fixed |
|
25,000 |
|
|
June 2019 |
|
June 2024 |
|
2.00% |
|
Receiving floating, pay
fixed |
|
50,000 |
|
|
June 2019 |
|
June 2024 |
|
2.15% |
|
Receiving floating, pay
fixed |
|
50,000 |
|
|
June 2019 |
|
June 2024 |
|
2.15% |
|
|
|
125,000 |
|
|
|
|
|
|
|
|
At June 30, 2019, the Company held a liability
of $2.3 million in relation to these agreements. The Company
recorded a loss on the interest rate swaps of $2.2 million in the
three months ended June 30, 2019.
Note 10: Fair Value of Financial Assets
and LiabilitiesThe principal financial assets of the
Company at June 30, 2019 and December 31, 2018 consist primarily of
cash and cash equivalents, and restricted cash, other current
assets and receivables due from related parties. The principal
financial liabilities of the Company consist of payables due to
related parties, accounts payable, other current liabilities,
derivative instruments payable and secured long-term debt.
The guidance for fair value measurements applies
to all assets and liabilities that are being measured and reported
on a fair value basis. This guidance enables the reader of the
financial statements to assess the inputs used to develop those
measurements by establishing a hierarchy for ranking the quality
and reliability of the information used to determine fair values.
The same guidance requires that assets and liabilities carried at
fair value should be classified and disclosed in one of the
following three categories based on the inputs used to determine
its fair value:
Level 1: Quoted market prices in active markets
for identical assets or liabilities;Level 2: Observable market
based inputs or unobservable inputs that are corroborated by market
data;Level 3: Unobservable inputs that are not corroborated by
market data.
The fair value of the Company's cash and cash
equivalents and restricted cash approximates their carrying amounts
reported in the accompanying consolidated balance sheets.
The fair value of secured term loan facilities
and revolving credit facility is estimated based on the average of
the current rates offered to the Company for all debt facilities.
The carrying value approximates the fair market value for the
floating rate loans and revolving credit facilities due to their
variable interest rate, being LIBOR plus a fixed margin. This has
been categorized at Level 2 on the fair value measurement
hierarchy.
The following table includes the estimated fair
value and carrying value of those assets and liabilities.
(Unaudited figures in
thousands of $) |
|
|
June 30, |
June 30, |
|
December 31, |
December 31, |
|
|
|
2019 |
2019 |
|
2018 |
2018 |
|
Fair value hierarchy level |
|
Carrying amount of asset (liability) |
Fair valueasset (liability) |
|
Carrying amount of asset (liability) |
Fair value asset(liability) |
Cash, restricted cash and cash equivalents |
Level 1 |
|
26,444 |
|
26,444 |
|
|
55,097 |
|
55,097 |
|
Other current assets |
Level 1 |
|
6,900 |
|
6,900 |
|
|
2,693 |
|
2,693 |
|
Receivables due from related
parties |
Level 1 |
|
1,082 |
|
1,082 |
|
|
1,720 |
|
1,720 |
|
Payables due to related
parties |
Level 1 |
|
— |
|
— |
|
|
(206 |
) |
(206 |
) |
Account payable |
Level 1 |
|
(2,156 |
) |
(2,156 |
) |
|
(593 |
) |
(593 |
) |
Other current liabilities |
Level 1 |
|
(12,951 |
) |
(12,951 |
) |
|
(11,296 |
) |
(11,296 |
) |
Derivative instruments
payable |
Level 2 |
|
(2,257 |
) |
(2,257 |
) |
|
— |
|
— |
|
Long-term debt* |
Level 2 |
|
(566,758 |
) |
(573,218 |
) |
|
(454,967 |
) |
(460,030 |
) |
* Carrying value of Long-term debt is shown net
of debt issuance costs, while fair value of Long-term debt is shown
gross.
There have been no transfers between different
levels in the fair value hierarchy during the six months ended June
30, 2019.
Note 11: Related party
transactionsFlex LNG receives staff, office, commercial,
legal, technical and accounting support from companies related to
Geveran Trading Co. Limited ("Geveran"), the Company's largest
shareholder, and has accrued costs of $0.5 million in the three
months ended June 30, 2019 (three months ended June 30, 2018: $0.5
million).
As at June 30, 2019, the Company had related
party receivable of $0.9 million (December 31, 2018: $1.1 million)
due from subsidiaries of Frontline Ltd. and related party
receivable of $0.2 million (December 31, 2018: $0.7 million) due
from Seatankers Management Co. Ltd.
On June 7, 2019, the Company made a final
payment of $145.1 million to a related party of Geveran upon the
delivery of the LNG carrier Flex Constellation.
Note 12: Share capitalThe
Company had an issued share capital at June 30, 2019 of $5.4
million divided into 54,103,993 ordinary shares (December 31, 2018:
$5.4 million divided into 54,099,929 ordinary shares) of $0.10 par
value.
In January 2019, the Company issued 4,461 shares
to the board of directors relating to their remuneration for the
second half of 2018.
On March 4, 2019, the Company declared a
ten-for-one reverse stock split with an effective date of March 7,
2019, which resulted in a reduction of 397 shares due to share
split fractions. The common share par value was adjusted as a
result of the reverse stock split to the value of $0.10 per share
from $0.01 per share. In line with the guidance in ASC 260 Earnings
Per Share, we have retroactively adjusted for this change in the
prior year comparatives in the condensed consolidated primary
statements and applicable footnote disclosures.
Note 13: Subsequent events
$100 million secured term loan and revolving credit
facilityOn July 15, 2019, the Company entered into a $100
million term loan and revolving credit facility agreement with a
syndicate of banks to re-finance the vessel Flex Ranger. The new
facility is divided into a $50 million term loan and a $50 million
revolving credit facility. On July 19, 2019, $100 million was
drawn down to prepay the outstanding of $99.8 million relating to
the Flex Ranger under the existing $315 million Facility. On August
15, 2019, the $50 million revolving credit facility under the $100
million facility was prepaid in full.
The new facility has a tenor of five years and
will be repaid in quarterly installments based on a 17.9 year
repayment profile. The facility bears interest of LIBOR plus a
margin of 2.25% per annum. Under the terms of the agreement, the
Company on a consolidated basis must maintain a book equity ratio
of minimum 0.25 to 1.0; a positive working capital; and liquidity
of minimum the higher of $25 million or 5% of the net interest
bearing debt.
$300 million sale and
charterbackIn April 2019, the Company entered into sale
and charterback transactions with Hyundai Glovis for the vessels
Flex Endeavour and Flex Enterprise. The transactions closed in July
2019, whereby the Company sold the vessels for a gross
consideration of $420 million, with a net consideration of $300
million adjusted for a non-amortizing and non-interest bearing
seller's credit of $120 million in total.
Flex Endeavour and Flex Enterprise have been
charted back on a time-charter basis to subsidiaries of Flex LNG
for a period of 10 years. The Company will have options to acquire
the vessels during the term of the time-charters. At the end of the
ten-year charter period, Flex LNG will have the right to acquire
the vessels and Hyundai Glovis will have the right to sell the
vessels back to Flex LNG for a total consideration of $150 million,
net of the $120 million seller's credit. The existing ship
management agreements have been novated to Hyundai Glovis, securing
continuation of the ship management services.
In July 2019, upon closing of this transaction
with Hyundai Glovis, outstanding amounts under the two tranches of
the existing $315 million facility totaling $194 million were
prepaid, and the $315 million Facility has been prepaid in
full.
(A) Reconciliation of Net Income (Loss)
to EBITDA and Adjusted EBITDA (Earnings before Interest Taxes
Depreciation and Amortization)
EBITDA is defined as net income (loss) plus net
interest expense, income tax expense and depreciation and
amortization. Adjusted EBITDA represents EBITDA adjusted to exclude
the items set forth in the table below, which represent certain
non-cash other items that we believe are not indicative of the
ongoing performance of our core operations. EBITDA and Adjusted
EBITDA are used by analysts in the shipping industry as common
performance measures to compare results across peers. EBITDA and
Adjusted EBITDA are not items recognized by U.S. GAAP, and should
not be considered in isolation or used as alternatives to net
income, operating income, cash flow from operating activity or any
other indicator of our operating performance or liquidity
calculated in accordance with U.S. GAAP.
Our presentation of EBITDA and Adjusted EBITDA
is intended to supplement investors’ understanding of our operating
performance by providing information regarding our ongoing
performance that exclude items we believe do not directly affect
our core operations and enhancing the comparability of our ongoing
performance across periods. Our management considers EBITDA and
Adjusted EBITDA to be useful to investors because such performance
measures provide information regarding the profitability of our
core operations and facilitate comparison of our operating
performance to the operating performance of our peers.
Additionally, our management uses EBITDA and Adjusted EBITDA as
measures when reviewing the Company’s operating performance. While
we believe these measures are useful to investors, the definitions
of EBITDA and Adjusted EBITDA used by us may not be comparable to
similar measures used by other companies.
We present Adjusted EBITDA because Adjusted
EBITDA eliminates the impact of additional non-cash and other items
not associated with the ongoing performance of our core operations.
To derive Adjusted EBITDA, we have excluded certain gains/losses
related to mark to market of derivatives .
The table below reconciles EBITDA and Adjusted
EBITDA to net (loss)/income, the most directly comparable U.S. GAAP
measure.
(Unaudited figures in
thousands of $) |
Three months ended |
|
Six months ended |
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
2019 |
2019 |
2018 |
|
2019 |
2018 |
Net
income/(loss) |
(3,919 |
) |
(3,438 |
) |
(2,857 |
) |
|
(7,357 |
) |
(4,637 |
) |
Finance income |
(204 |
) |
(256 |
) |
(79 |
) |
|
(460 |
) |
(252 |
) |
Interest expense |
6,853 |
|
6,501 |
|
3,174 |
|
|
13,354 |
|
5,145 |
|
Income tax benefit/(expense) |
— |
|
— |
|
— |
|
|
— |
|
2 |
|
Depreciation |
6,308 |
|
5,916 |
|
2,753 |
|
|
12,224 |
|
5,063 |
|
Earnings before Interest, Taxes, Depreciation and
Amortization |
9,038 |
|
8,723 |
|
2,991 |
|
|
17,761 |
|
5,321 |
|
(Loss)/gain on derivatives |
2,229 |
|
— |
|
— |
|
|
2,229 |
|
— |
|
Adjusted Earnings before Interest, Taxes, Depreciation
and Amortization |
11,267 |
|
8,723 |
|
2,991 |
|
|
19,990 |
|
5,321 |
|
(B) Reconciliation of Total Operating
Revenues to Time Charter Equivalent Income and Time Charter
Equivalent Rate
(i) Time Charter Equivalent
IncomeConsistent with general practice in the shipping
industry, we use Time Charter Equivalent ("TCE") income as a
measure to compare revenue generated from a voyage charter to
revenue generated from a time charter. We define TCE income as
operating revenues less voyage expenses. Under time charter
agreements, voyage expenses, such as bunker fuel, canal and port
charges and commissions are borne and paid by the charterer.
Whereas under voyage charter agreements, voyage expenses are borne
and paid by the owner. TCE income is a common shipping industry
performance measure used primarily to compare period-to-period
changes in a shipping company’s performance despite changes in the
mix of charter types (i.e., spot charters and time charters) under
which the vessels may be employed between the periods. Time Charter
Equivalent income, a non-U.S. GAAP measure, provides additional
meaningful information in conjunction with operating revenues, the
most directly comparable U.S. GAAP measure, because it assists
management in making decisions regarding the deployment and use of
our vessels and in evaluating their financial performance,
regardless of whether a vessel has been employed on a time charter
or a voyage charter.
The table below reconciles Time Charter
Equivalent income to Vessel operating revenues, the most directly
comparable U.S. GAAP measure.
(Unaudited figures in
thousands of $) |
Three months ended |
|
Six months ended |
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
2019 |
2019 |
2018 |
|
2019 |
2018 |
Vessel
operating revenues |
19,018 |
|
19,141 |
|
7,048 |
|
|
38,159 |
|
22,100 |
|
Less: |
|
|
|
|
|
|
Voyage expenses |
(1,113 |
) |
(3,789 |
) |
(811 |
) |
|
(4,902 |
) |
(3,875 |
) |
Time charter equivalent income |
17,905 |
|
15,352 |
|
6,237 |
|
|
33,257 |
|
18,225 |
|
(ii) Time Charter Equivalent
Rate
Time charter equivalent rate ("TCE rate")
represents the weighted average daily TCE income of our entire
operating fleet.
TCE rate is a measure of the average daily
income performance. Our method of calculating TCE rate is
determined by dividing TCE income by onhire days during a reporting
period. Onhire days are calculated on a vessel by vessel basis and
represent the net of available days and offhire days for each
vessel (owned or chartered in) in our possession during a reporting
period. Available days for a vessel during a reporting period is
the number of days the vessel (owned or chartered in) is in our
possession during the period. By definition, available days for an
owned vessel equal the calendar days during a reporting period,
unless the vessel is delivered by the yard during the relevant
period whereas available days for a chartered-in vessel equal the
tenure in days of the underlying time charter agreement, pro-rated
to the relevant reporting period if such tenure overlaps more than
one reporting period. Offhire days for a vessel during a reporting
period is the number of days the vessel is in our possession during
the period but is not operational as a result of unscheduled
repairs, scheduled dry docking or special or intermediate surveys
and lay-ups, if any.
The table below reconciles Time Charter
Equivalent rate to Time Charter Equivalent income.
(Unaudited figures in
thousands of $, except for TCE rate and days) |
Three months ended |
|
Six months ended |
|
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
2019 |
2019 |
2018 |
|
2019 |
2018 |
Time
charter equivalent income |
17,905 |
|
15,352 |
|
6,237 |
|
|
33,257 |
|
18,225 |
|
|
|
|
|
|
|
|
Fleet available days |
387 |
|
360 |
|
190 |
|
|
747 |
|
350 |
|
Fleet offhire days |
— |
|
— |
|
— |
|
|
— |
|
— |
|
Fleet onhire days |
387 |
|
360 |
|
190 |
|
|
747 |
|
350 |
|
|
|
|
|
|
|
|
Time charter equivalent rate |
46,266 |
|
42,644 |
|
32,826 |
|
|
44,521 |
|
52,071 |
|
INTERIM REPORT JANUARY - JUNE
2019
Responsibility Statement
We confirm, to the best of our knowledge, that
the condensed consolidated financial statements as of and for the
six months ended June 30, 2019 have been prepared in
accordance with U.S generally accepted accounting principles, and
give a true and fair view of the Company’s assets, liabilities,
financial position and profit or loss as a whole.
The Board of DirectorsFlex LNG Ltd.Hamilton,
BermudaAugust 20, 2019
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