GasLog’s 2015 profit rises to USD 53.7 mln

gasLog

GasLog Ltd. and its subsidiaries, an international owner, operator and manager of liquefied natural gas carriers, today reported its unaudited financial results for the quarter and the year ended December 31, 2015.

Highlights

  • Completed a $1.3 billion financing for GasLog’s eight newbuild vessels.
  • Post quarter-end, completed a $576.50 million refinancing for all GasLog’s 2016 and 2017 debt maturities.
  • Post quarter-end, GasLog entered the Japanese financing market through the sale and leaseback of the Methane Julia Louise with a subsidiary of Mitsui Co. Ltd. (“Mitsui”).
  • Quarterly dividend of $0.14 per common share payable on March 17, 2016.
  • EBITDA(1) of $68.0 million (Q4 2014: $68.1 million), Profit of $18.2 million (Q4 2014: $9.9 million) and earnings per share (“EPS”) of $0.04(2) (Q4 2014: $0.11), for the quarter ended December 31, 2015.
  • Adjusted EBITDA(1) of $69.2 million (Q4 2014: $67.5 million), Adjusted Profit(1) of $14.0 million (Q4 2014: $24.0 million) and Adjusted EPS(1) a loss of $0.02(2) (Q4 2014: earnings of $0.28) for the quarter ended December 31, 2015.

(1) EBITDA, Adjusted EBITDA, Adjusted Profit and Adjusted EPS are non-GAAP financial measures, and should not be used in isolation or as a substitute for GasLog’s financial results presented in accordance with International Financial Reporting Standards (“IFRS”). For definition and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, please refer to Exhibit II at the end of this press release.

(2) The EPS and Adjusted EPS are negatively affected by the Profit attributable to the non-controlling interest of $12.7 million and the dividend on preferred stock of $2.5 million.

CEO Statement

Paul Wogan, Chief Executive Officer, stated “GasLog executed a number of important financing transactions during the quarter and post quarter-end which we believe has given GasLog the balance sheet strength to manage a prolonged downturn in the LNG shipping markets.

Our on-the-water and newbuild fleet remains largely contracted with one of the world’s largest oil and gas companies following the successful takeover of BG Group plc (“BG Group”) by Royal Dutch Shell plc (“Shell”) in mid-February. GasLog has significant in-built growth from the eight newbuild vessels we have delivering over the next few years, seven of which are contracted for periods of 7-10 years.

Following the successful completion of the $1.3 billion newbuild financing during the quarter, on attractive terms, these eight new deliveries are now expected to be fully financed with proceeds of this facility, available cash and cash from operations. In addition, following the conclusion of the $576.5 million facility and the sale and leaseback post quarter-end GasLog has no debt maturities until 2018 at the earliest. The transaction we announced with Mitsui may open up further commercial and financial opportunities for GasLog in the Japanese financing market.

Despite the current downturn in the energy markets, GasLog has continued to perform strongly with all of its contracted vessels operating at 100% utilization through the quarter. This performance alongside the completion of a number of significant financing transactions support GasLog’s payment of a dividend of $0.14 for the quarter.”

Dividend Declaration

On November 17, 2015, the board of directors declared a dividend on the Series A Preference Shares of $0.546875 per share or $2.52 million in the aggregate payable on January 4, 2016 to holders of record as of December 31, 2015. GasLog paid the declared dividend to the transfer agent on December 29, 2015.

On February 24, 2016, the board of directors declared a quarterly cash dividend of $0.14 per common share payable on March 17, 2016 to shareholders of record as of March 7, 2016.

Debt Refinancing

On February 18, 2016, GasLog signed a senior and junior tranche mortgage debt refinancing on five of its contracted vessels of up to $576.50 million (the “Five Vessel Refinancing”) for debt maturities which were due in 2016 and 2017. It is comprised of a five-year senior tranche facility of up to $396.50 million and a two-year bullet junior tranche of up to $180.0 million. The vessels covered by the Five Vessel Refinancing are the GasLog-owned Methane Lydon Volney and Methane Becki Anne and the GasLog Partners LP-owned (“GasLog Partners” or the “Partnership”) Methane Alison Victoria, Methane Shirley Elisabeth and Methane Heather Sally. ABN AMRO BANK N.V. and DNB (UK) LTD. were mandated lead arrangers to the transaction. The other banks in the syndicate are: DVB Bank America N.V., Commonwealth Bank of Australia, ING Bank N.V. London Branch, Credit Agricole Corporate and Investment Bank and National Australia Bank Limited.

Sale and Leaseback of the Methane Julia Louise with Mitsui

On February 24, 2016, GasLog’s subsidiary, GAS-twenty six Ltd. completed the ship sale and leaseback transaction with a subsidiary of Mitsui for the sale and leaseback of the Methane Julia Louise. Mitsui has the right to on-sell and lease back the vessel. The vessel is being sold to Mitsui for a total consideration approximately equivalent to its current book value. GasLog has leased back the vessel under a bareboat charter from Mitsui for a period of up to 20 years. GasLog has the option to re-purchase the vessel on pre-agreed terms no earlier than the end of year 10 and no later than the end of year 17 of the bareboat charter.

Financial Summary

 In millions of U.S. dollars except per share data For the three months ended For the year ended
  December 31,
 2014
December 31,
 2015
December 31,
 2014
December 31,
 2015
Revenues 99.0 107.5 328.7 415.1
Profit 9.9 18.2 50.8 53.7
Adjusted Profit(1) 24.0 14.0 73.9 55.9
Profit attributable to the owners of GasLog 8.8 5.5 42.2 10.8
EBITDA(1) 68.1 68.0 217.6 262.2
Adjusted EBITDA(1) 67.5 69.2 217.2 263.0
EPS 0.11 0.04 0.54 0.04
Adjusted EPS(1) 0.28 (0.02 ) 0.83 0.07


(1)
Adjusted Profit, EBITDA, Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures, and should not be used in isolation or as a substitute for GasLog’s financial results presented in accordance with IFRS. For definitions and reconciliations of these measurements to the most directly comparable financial measures calculated and presented in accordance with IFRS, please refer to Exhibit II at the end of this press release.

There were 1,701 and 6,097 operating days for the quarter and the year ended December 31, 2015, respectively, as compared to 1,354 and 4,392 operating days for the quarter and the year ended December 31, 2014, respectively. The increase in operating days resulted from the new vessel deliveries and on-the-water vessel acquisitions during the previous periods.

Profit was $18.2 million and $53.7 million for the quarter and the year ended December 31, 2015, respectively ($9.9 million and $50.8 million for the quarter and the year ended December 31, 2014, respectively). The increase in profit for the quarter is mainly attributable to an increase in gain on swaps partially offset by the decrease in profit from operations. The increase in profit for the year is attributable to an increase in profit from operations and a decrease in loss on swaps, partially offset by an increase in finance costs derived from higher average outstanding debt.

Adjusted Profit was $14.0 million and $55.9 million for the quarter and the year ended December 31, 2015, respectively ($24.0 million and $73.9 million for the quarter and the year ended December 31, 2014, respectively).

Profit attributable to the owners of GasLog was $5.5 million and $10.8 million for the quarter and year ended December 31, 2015 ($8.8 million profit and $42.2 million profit for the quarter and year ended December 31, 2014). The decrease in profit attributable to the owners of GasLog was affected by the increase in profit attributable to the non-controlling interest (non-controlling unitholders of GasLog Partners) following the dropdown of three additional vessels to GasLog Partners on July 1, 2015.

EBITDA was $68.0 million and $262.2 million for the quarter and the year ended December 31, 2015, respectively ($68.1 million and $217.6 million for the quarter and the year ended December 31, 2014, respectively). The marginal decrease in EBITDA for the quarter is attributable to the weaker spot market conditions in 2015. The increase in EBITDA for the year is attributable to the increase in revenues due to the increase in the average number of vessels in our fleet, partially offset by the increase in vessel operating and supervision costs and voyage expenses and commissions associated with our increased fleet, an increase in general and administrative expenses and weaker spot market conditions in 2015.

Adjusted EBITDA was $69.2 million and $263.0 million for the quarter and the year ended December 31, 2015, respectively ($67.5 million and $217.2 million for the quarter and the year ended December 31, 2014 respectively).

EPS was $0.04 for the quarter and the year ended December 31, 2015 ($0.11 and $0.54 for the quarter and the year ended December 31, 2014, respectively). The decrease in EPS is mainly attributable to the decrease in Profit attributable to the owners of GasLog and the dividend on preferred stock.

Adjusted EPS was a loss of $0.02 and earnings of $0.07 for the quarter and the year ended December 31, 2015, respectively ($0.28 and $0.83 for the quarter and the year ended December 31, 2014, respectively). The decrease in Adjusted EPS is mainly attributable to the decrease in Adjusted Profit, the increase in Profit attributable to non-controlling interest and the dividend on preferred stock.

Revenues were $107.5 million and $415.1 million for the quarter and the year ended December 31, 2015, respectively ($99.0 million and $328.7 million for the quarter and the year ended December 31, 2014, respectively). The increase in revenues is attributable to the increase in the operating days in 2015 compared to the same period in 2014 and is negatively affected by the weak spot market conditions in 2015.

Vessel operating and supervision costs were $24.6 million and $98.6 million for the quarter and the year ended December 31, 2015, respectively ($19.9 million and $70.7 million for the quarter and the year ended December 31, 2014, respectively). The increase in vessel operating and supervision costs is mainly attributable to the increase in the average number of vessels in our fleet in 2015.

Voyage expenses and commissions were $4.1 million and $14.3 million for the quarter and the year ended December 31, 2015, respectively ($1.6 million and $7.7 million for the quarter and the year ended December 31, 2014, respectively). The increase in commission expenses resulted from the increase in revenues while the increase in voyage expenses was mainly attributable to repositioning or bunkers consumption in between spot charters for certain of our vessels. Our vessels are not otherwise subject to fuel costs, which are paid by our charterers.

Depreciation of fixed assets was $28.5 million and $106.6 million for the quarter and the year ended December 31, 2015, respectively ($22.2 million and $70.7 million for the quarter and the year ended December 31, 2014, respectively).

General and administrative expenses were $10.9 million and $41.3 million for the quarter and the year ended December 31, 2015, respectively ($9.6 million and $34.2 million for the quarter and the year ended December 31, 2014, respectively). The increase in the three-month period is mainly attributable to the increase in share-based compensation expense and the increase in foreign exchange differences due to the significant fluctuation in exchange rates. The annual increase in general and administrative expenses was also affected by the higher legal and other professional fees including those related to the Partnership’s listing requirements since the completion of its initial public offering on May 12, 2014.

Financial costs were $24.7 million and $92.0 million for the quarter and the year ended December 31, 2015, respectively ($24.5 million and $71.6 million for the quarter and the year ended December 31, 2014, respectively). The increase is mainly attributable to the higher weighted average outstanding debt partially offset by the write-off of unamortized loan fees occurred in the comparative periods of 2014 in connection with the repayment of GasLog Partners’ then existing facilities. An analysis of financial costs is as follows:

(All amounts expressed in thousands of U.S. dollars) For the three months ended For the year ended
  December 31,
 2014
December 31,
 2015
December 31,
 2014
December 31,
 2015
Financial costs
Amortization and write-off of deferred loan issuance costs and premium (7,650 ) (3,188 ) (15,362 ) (11,355 )
Interest expense on loans and realized loss on cash flow hedges (12,513 ) (18,391 ) (43,743 ) (68,253 )
Interest expense on bond and realized loss on cross-currency swaps (2,856 ) (2,856 ) (9,533 ) (11,331 )
Other financial costs (1,472 ) (264 ) (2,941 ) (1,017 )
Total           (24,491 )   (24,699 )   (71,579 )   (91,956 )

(Loss)/gain on swaps was a gain of $3.2 million and a loss of $10.3 million for the quarter and the year ended December 31, 2015, respectively (loss of $11.5 million and $24.8 million for the quarter and the year ended December 31, 2014, respectively). An analysis of (loss)/gain on swaps is as follows:

(All amounts expressed in thousands of U.S. dollars) For the three months ended For the year ended
  December 31,
 2014
December 31,
 2015
December 31,
 2014
December 31,
 2015
(Loss)/gain on swaps
Realized loss on interest rate swaps held for trading (2,657 ) (2,222 ) (10,310 ) (8,904 )
Unrealized (loss)/gain on interest rate swaps held for trading (5,625 ) 5,819 (7,873 ) (149 )
Recycled loss of cash flow hedges reclassified to profit or loss in relation to derivatives no longer designated as hedges (3,401 ) (359 ) (6,641 ) (1,290 )
Ineffective portion on cash flow hedges 188 (1 ) 37 11
Total           (11,495 )   3,237     (24,787 )   (10,332 )


Contracted Charter Revenues

GasLog’s contracted charter revenues are estimated to increase from $412.5 million for the fiscal year 2015 to $482.9 million for the fiscal year 2017, based on contracts in effect as of December 31, 2015. The total future firm contracted revenue stands at $3.7 billion(2) on December 31, 2015. These amounts reflect contracted revenues for the eight vessels owned by GasLog Partners and the seven out of the eight LNG carriers on order for which we have secured time charters, but does not include the vessels operating in the spot market.

(2) Contracted revenue calculations assume: (a) 365 revenue days per annum, with 30 off-hire days when the ship undergoes scheduled drydocking; (b) all LNG carriers on order are delivered on schedule; and (c) no exercise by our charterers of their options to extend the term of charters.

Liquidity and Capital Resources

As of December 31, 2015, GasLog had $303.0 million of cash and cash equivalents, of which $163.9 million was held in time deposits and the remaining balance in current accounts. Moreover, as of December 31, 2015, GasLog had $6.0 million held in time deposits with an initial duration of more than three months but less than a year that have been classified as short-term investments. As of December 31, 2015, GasLog had $62.7 million in restricted cash in relation to cash held in blocked accounts in order to comply with the covenants under three of its credit facilities.

As of December 31, 2015, GasLog had an aggregate of $2.3 billion of indebtedness outstanding under eleven credit facilities, of which $645.2 million is repayable within one year, including $42.2 million under its revolving credit facility. As of December 31, 2015, GasLog had $113.7 million outstanding under the NOK bond agreement that is payable in June 2018.

As of December 31, 2015, our current assets totaled $398.1 million while current liabilities totaled $734.4 million, resulting in a negative working capital position of $336.3 million. However, as discussed above, we have entered into the $576.5 million Five Vessel Refinancing with certain financial institutions, to refinance $464.6 million of our current debt plus $111.9 million of our non-current debt. In addition, following the completion of the sale and leaseback of the Methane Julia Louise, $50.6 million of our current debt ($230.0 million in total) was prepaid.

As of December 31, 2015, GasLog’s commitments for capital expenditures are related to the eight LNG carriers on order, which have a gross aggregate contract price of approximately $1.6 billion. As of December 31, 2015, the total remaining balance of the contract prices of the eight newbuildings was $1.5 billion that we expect will be funded with the $1.3 billion under the financing agreement we entered into on October 16, 2015, cash balances and cash from operations.

GasLog has hedged 43.6% of its expected floating interest rate exposure on its outstanding debt at a weighted average interest rate of approximately 4.6% (including margin) as of December 31, 2015.

Future Deliveries

GasLog has six newbuildings on order at Samsung Heavy Industries Co., Ltd., and two newbuildings on order at Hyundai Heavy Industries Co., Ltd. Our vessels presently under construction are on schedule and within budget. The expected delivery quarters are as follows:

Hulls Delivery quarter
Hull No. 2072 Q1 2016
Hull No. 2073 Q2 2016
Hull No. 2102 Q3 2016
Hull No. 2103 Q4 2016
Hull No. 2130 Q1 2018
Hull No. 2800 Q1 2018
Hull No. 2801 Q1 2018
Hull No. 2131 Q1 2019

Our subsidiaries that own the vessels due to be delivered in 2016 have signed seven to ten year time charters with Methane Services Limited (“MSL”), a subsidiary of Shell, following the acquisition of BG Group by Shell in February 2016. Our subsidiaries that own two of the vessels expected to be delivered in 2018 and one vessel expected to be delivered in 2019 have entered into 9.5 year time charters with MSL at similar rates. GasLog currently has one newbuilding on order that is not fixed on a long-term contract.

LNG Market Update and Outlook

While the rates paid for LNG vessels in the short-term market remain at low levels, in 2016, we expect projects coming on stream, in both Australia and the US will add approximately 40 million tonnes per annum (“mtpa”) of new liquefaction nameplate capacity (annualized). In Australia, Australia Pacific Train 1 (4.5 mtpa) and Gladstone LNG (7.7 mtpa) have shipped their first cargoes in recent weeks and are expected to ramp up production to full capacity through 2016. Other Australian projects due to start up in 2016 include Gorgon (15.6 mtpa) and Australia Pacific Train 2 (4.5 mtpa), with Wheatstone (8.9 mtpa) and Prelude (3.6 mtpa) following in 2017. The infrastructure for these projects has now largely been built and the majority of the volumes for these projects have already been sold.

Sabine Pass, one of five US projects under construction, is expected to export its first cargo later in 2016. When construction is completed, Sabine Pass will have a total export capacity of 22.5 mtpa and will be the first US project outside of Alaska to export LNG into the global market. This is a welcome development for the LNG shipping sector as it creates new suppliers, new customers and new trade routes. The majority of US volumes have already been contracted. Export of LNG into the Asian and European markets should be positive for tonne mile demand. The US Gulf Coast to Asia voyage is approximately 9,000 nautical miles through the Panama Canal (which is not yet open to large LNG carriers). The same voyage around Cape Horn is approximately 13,000 nautical miles. From the US Gulf Coast to northwest Europe, the distance is approximately 5,000 nautical miles. In 2014 and 2015, the average global LNG voyage was approximately 4,000 nautical miles, and thus any voyage in excess of this distance will increase the global average distance and the need for LNG carriers.

Angola LNG (5.2 mtpa), which has been shut down for over a year for refurbishment and enhancements, is also due to restart in 2016. The seven vessels that were chartered to Angola LNG have been operating in the spot market while the plant has been closed, and are expected to be put back into service for the project in 2016.

With the expected projects coming onstream, we are seeing encouraging levels of tendering activity for vessels to transport these increased LNG volumes. We continue to see a future shortfall of vessels that will be required for the Australian and US projects that have taken final investment decision and are currently under construction.

LEAVE A COMMENT

×

Comments are closed.