Avance Gas Holding Ltd

Thank you, and good afternoon, and welcome to Avanska's third quarter earnings presentation. As mentioned, I'm Øystein Kjelleklev, CEO of Avanska, and as usual, I will be joined by our CFO, Randi Navdal-Bekkelund, who will guide you through the financial a bit later in the presentation. As mentioned, you can submit questions either by the telephone conference or using the chat function, and we will cover the questions at the end of the presentation. Before we begin, I would like to draw your attention to the picture on the front page. Here you can see Sirocco, one of our VLGCs, leaving the Panama Canal, which we thought would be an appropriate picture for today's presentation. As you are probably aware of, Panama has experienced significant drought this year, which have reduced water levels to such low levels that the canal authorities have been forced to cut daily allowed transit by half in order to preserve fresh water. The reduced capacity in Panama has dramatically increased sailing distances for VLGCs, and thus made the freight market super tight. We will discuss the situation in Panama and implication for VLGC freight market in more detail in the market section. In the picture here, Sirocco is going through the Coccoli Locks, close to Panama City in laden condition, and you can actually see both the Bridge of Americas and the Pacific Ocean in the horizon. So, before we begin the presentation, I will just remind you The disclaimer, as we will provide some forward-looking statements, use some non-IFRS measures, and of course, there are limits to completeness of detail we can provide in this webcast. So we recommend to review the earnings support together with the presentation. So Randy, let's kick off today's presentation. Q3 highlights. Our average time charter equivalent earnings, or TCE, for the third quarter came in at $55,300 per day for the fleet. This is on a discharge to discharge basis, which is the basis we use for our guidance. While we technically are within the TCE guidance at 55, 300 a day is in the high interval of 50,000, we have to admit that we were expecting that the TCE would be more like 58 to $59,000 per day when we made our guidance on August 30th. However, on the following day, August 31, We saw the biggest ever daily jump in the Baltic LPG-1 index. Baltic LPG-1 is the index for spot voyages from Saudi Arabia to Japan, which is the most liquid index, and therefore the index we utilize for hedging freight by using forward freight agreement, or FFA. In one single day on August 31st, the cost of freight for this route jumped 20% from $98.5 per metric ton to $118 per metric ton. The Baltic LPG-1 index then went on to record its strongest ever seven-day trading results, with the index shooting up by more than 50% to 151.5 points by September 8th. While a booming freight market is good news for us, our results in Q3 is, however, adversely impacted by FFA, especially in September, as this is the fixing window for October cargoes. Overall, average TCE for the fleet was thus reduced by 10.6 million in Q3, or $8,300 per day due to FFA hedging, and I will cover this in more detail shortly. Another effect of rapidly increasing freight rate is that we recorded a very big deviation in our earnings on a low-to-discharge basis, which is the basis for IFRS accounts, compared to discharge-to-discharge basis. which is one type of economics typically used by shipping industries to measure trading performance. Over time, these two metrics even out, but they can deviate substantially when the market moves either up or down. For this quarter, the IFRS effect was 10.9 million, and the low to discharge numbers therefore came in $8,600 lower at $46,700 per day. I will also shed some more light on this timing effect shortly. Despite these two timing effects, totaling 21.4 million, trading results for the quarter was very strong with a net profit of 30 million for the quarter, thereby increasing the net profit for the year to 102 million. Hence, we have already surpassed the results from last year with the best yet to come, as we expect Q4 to be by far our best trading results this year. Please note that the 102 million above does not include the gain from the sale of Iris Glory. As we announced in July, we have agreed to sell Iris Glory for 60 million, and we expect to book a profit of 22 million once she is delivered to new owners. Iris Glory is currently discharging her last cargo under her two-year time shutter, and we are currently marketing her for a final spot voyage prior to delivering her to new owners.

We therefore expect to handle... Is something wrong with the sound?

Okay, let's continue. I just got some message here from my speakerphone. We therefore expect to hand Iris Glory over to new owners once this last spot voyage has been completed.