Avance Gas Holding Ltd

Okay thank you everybody for joining and this is Avanska's fourth quarter results presentation where we also cover the recent events, the market and of course the full year 2024 numbers. Today I am joined as usual by our CFO Randi who will go through the numbers in a bit more detail later in the presentation before I do a market section and the Q&A session. So before we begin I just want to highlight our disclaimer We will provide some non-GAF measure like time charter equivalent earnings, which is the best proxy for average rate obtained on the chips. Of course, there are limits to completeness of the detail we can provide. So I also recommend you to read the earnings report, which we also distributed this morning. So let's kick off with the highlights. Q4, maybe not too surprisingly, was a very profitable quarter for us as we closed the sale of the 12 VLGCs to BW in that $1 billion transaction. Hence, we booked substantial gains on that transaction and ended up with net profit for the quarter of $210 million, giving our earnings per share of $2.74. adjust away all the profits and transactions related to the sale of ships. We still delivered a small profit from operation, $13 million, and adjusted earnings of $0.18. In total, we've been selling 16 ships this year, booking profit from those ships. If we take away those transactions for the year, we delivered an adjusted profit of $125 million. which is actually our third highest number obtained. So all in all, a good year just from operation, but it's a tremendous year when taking into consideration also the asset sales we have been doing. Net profit for the year, 443 million, which then includes our market loss on the BW shares we received, giving an X of $5.78. So status, as I mentioned, we completed the sale of the VLDCs with the last ship, Avance Avior, delivered to BW on December 31st, in line with our plan. Again, on sale, 287 million. But we also had 12 million in saved depreciations as we discontinued depreciation when we announced the deal on August 15th. After retiring all our debts, We had net cash proceeds of 242 million, plus then this 19.3 million BW shares, which then made us, for a short while at least, the second biggest shareholder in BW with a 12.7% ownership share. We will not be a shareholder in BW for long. There was a lockup period on those shares, which lapsed on Sunday, February 9th. So we are now today announcing that we will distribute these shares to the owners, being the shareholders of Avansca. So for every four Avansca shares you own, you will receive one share in BW. And we are planning then to transfer those shares to your VPS account by February 26, which means you should have them in your account when BW LPG is reported in their Q4 numbers on February 27th. And if you keep it then until their ex-dividend date, you will also then be entitled to get a dividend from BW for the fourth quarter. In general, in Avantgas, we received $6 million of dividend for the third quarter. We still have one pending transaction. Basically, more or less everything is ready. We signed the heads of agreement with Exma to sell our MGC fleet consisting of four new builds for 282.4 million. So that was signed in November. And then in January, we moved forward signing the actual innovation of the shipbuilding contract where we signed them, Exma signed them, and also the yard signed them that these shipbuilding contracts can be innovated to Exma, which then is liable for the remaining capex. So the only outstanding item today is that the bank providing the refund guarantee for the yard is sending us a swift confirming that the refund guarantee has been moved from Avans Gas to Exmoor. So with the Lantern Festival yesterday in China, marking the end of the Chinese New Year festive season, we expect this SWIFT to be incoming very swiftly. And once that has happened, we have also then today declared a dividend of 75 cents, which will be paid out immediately once the funds are released to us. So the money is already on our escrow. The only thing missing is this SWIFT. And once that's been confirmed, the money will be released to Avanskast and we will not sit there and hold on those 62.1 million. We will send them back to you immediately. So we are declaring a regular cash dividend per share of $2 per share, meaning 153 million. We are structuring this return as return of capital. We had a special general meeting on February 5th. where we were authorized to reduce our paid-in capital, so the shareholders getting this dividend will get this return of capital, not return on capital, which has favorable tax treatment depending a bit on your tax jurisdiction. Then, as I mentioned, we will pay out the extraordinary dividend of 75 cents as soon as we receive the SWIFT and the escrow is released. As I mentioned, we will pay a dividend in kind, where the compensation is one BW share for each four shares you have in Avantgas. Then, once that is done, we will collect the remaining cash. We will still have our pending payment from Exfa of 34 million, payable scheduled in April. So we'll just wind up the company, sort out all receivables and liabilities, and then pay off the money sometime probably April, May this year before we liquidate the company. And in that process, we also terminate all the employment contracts, including my own, Randi's, and all the other employees of the company. So if you're looking at the journey we've been through, We sold three ships, older ships, as part of our fleet renewal process in 2022, Tethys, Glory, Promise and Providence. This year, we've been super busy selling 16 VLCs. We sold Iris Glory in January, Venus Glory in March. We sold the two new builds, Casper and Pollux, in March and May, and then we had a big bang in 15th of August, when we sold 12, the remaining 12 VLGCs to BW for this 1 billion and 50 million. And then lastly, when we reported Q3 numbers on November 27, we also announced the sale of the MGC fleet. These are new buildings under construction in 26. So taking this all together, it's a bit more than 1.8 billion of asset sales, giving us a total book gain of close to half a billion dollars and a cash release of close to 600 million dollars plus these BW shares. We peg them here at the transaction value where we put the BW share at a theoretical net asset value fair price of 17.25. It sagged at the end of the year closing slightly above 11 and now it's up again to 13. Will be exciting to see what BW are reporting later in the month. So we are simple people. So we try to have a simple strategy, basically buy low and sell high. Try to contract the ships when they are cheap and then selling the ships when asset prices are more attractive. So I think we've done that fairly well. If you look at the dual fuel new builds, contracted them for 78 million, put on some extra spec on some of them. So the new build price closer to 80. We sold two new builds, as I mentioned, then with delivery March and May last year for 120 million each. And then we sold the rest of the dual fuel new builds, four ships in total, average age slightly less than two years, and then average price of 150. So we think we really found a good spot there to sell the ships. We sold, as I mentioned, three ships in 2022. The last two ships we sold this year, we're actually selling ships which are 15 years at a price close to the 10-year parity. So altogether, good divestments. And in general, also, it's not that easy to sell a lot of ships. This market is not like super liquid when it comes to secondhand tonnage. We've seen the second-hand market drying out in the second half of 2024, and also new-build activity tapering off. So we're also happy with that. We've seen on the MGCs, contracted these for 61 and a half, selling them at 70.6 million, where basically the new-build price have plateaued. So just to give a recap on the different transactions then, I've already covered this in quite a lot of detail, 12 VLGCs to BW. with the cash proceeds of around 240 million, and then the BW shares at kind of the fair asset value, we think 17.25, meaning 333 million. Value of those stocks today is around 250 million dollars. Then the MGCs contracted 248, sold for 282, giving us this 34 million which we expect to collect in April, once the steel cutting of the fourth and final new building takes place. At the end, we had paid yard installments of 56 million, and then we paid another yard installment of 6 million in January. So that translates to 62 million, which we are waiting to collect shortly, and then 34 million in April. So in our to-do list, or the wind-up process, We are already checking a lot of these boxes. We have distributed some fairly large dividends in advance of the liquidation process. We have closed the BW transaction. We held a special general meeting last week to reduce our paid-in capital. We have signed the innovation on the MGC. The only thing waiting for is the SWIFT to release the 62 and then collect profit in April. We have now reported Q4 and announced distribution of more cash and the BW shares. And then in April, once we collect the remaining funds, we will send out notice for our general meeting probably in May. We will be doing a Q1 final reporting somewhere end of April, maybe early May. we'll do the final distribution of capital to the shareholders and then we will start the kind of wind-up process by having a liquidator in Bermuda and that will be the end of our gas story about 11 years after we listed this company in Oslo so it's been a good run especially the last couple of years here with a lot of dividends I'm going to cover on the last page so We've been doing quite well operationally. Last year, we made 164 million in earnings. We paid out 165 million. So you can see for 2023, dividend per share was 215 compared to earnings of 214. So then we thought, okay, Q1, when we sold some of the ships, let's pay our years of dividend in one quarter, and we paid 215. Next quarter, we paid out 135. Together, that was 350. So we thought, in Q3, why not pay out the same amount in just one quarter? And we took it up to 350. We are not able to double it for Q4, but not far. $2 of our cash dividend, $3.25 dividend in a kind in the BW shares, kind of the market value of those shares today, and then the 75 cents, which We plan to pay out very shortly. And that turned out to $6 of dividends. And then we will have a remaining dividend in April, May of 70, 75 cents or so, depending a bit on timing and cost in connection with the windup. Although, if you look at some of the numbers, it's not really that much. So for those shareholders who have a share count not divisible by four, you have a few days to kind of adapt to that, adapt your share count in order to not miss out on a right for a share. So we will have an X date on February 18. So if you want to maximize your dividend in terms of BW shares, you should get a share count divisible by four. So sources and uses for these dividends before handing over to Durandi. We closed the year with $176 million. $250 million now is the value of our BW shares. We have paid out at year end, we have paid the yard $56 million. And then we paid $6 million in January, meaning the $62 million. We collected $34 million profit elements. in April, and then we have a marginal working capital, G&A, and then these are the costs of about a million dollars. That translates to 516 million in kind of net asset values. I believe in Q3, when we reported, we said 518, estimated 518. So we are in line with the estimates we provided in November. We are paying out the BW shares We will probably, after this dividend, we will probably have around 130,000 BW shares left. That's why it's a slightly lower number, 249. We pay out the ordinary cash dividend of $2 per share. After that, we have $114 million of remaining kind of net asset value. Then we're paying the 75 cents, $58 million. And then we will have somewhere around 55 to 60 million we expect to have left. once that has been completed. And that is the money you can expect to receive for the final Q1 dividends. So, with that, I think I hand it over to you, Randi.

Thank you, Eisen. Let's move to slide 10 for the income statements and key financial figures for the fourth quarter. Overall, the results were more or less in line with the guidance provided in November last year. both in terms of the top line and the bottom line. Our TCE on discharge-to-discharge came in at $28,000 to $200 per day, and we had a positive load-to-discharge effect of $7,000 a day, adding to the TCE, which is explained by no load-to-discharge adjustment of the spot wages as we've sold the whole V2C fleet. at the end, and thereby the effect is only related to the reversal from the third quarter. And we ended up with a reported TTC per day of $35,000 a day, rounded. Moving further down in the P&L, you can see that we have no depreciation during the fourth quarter, which is a result of the VGC fleet being classified as health for sale on August 15, and consequently the depreciation stopped. If we depreciated the vessel until the actual handover date of the vessel to BWLPG, the depreciation expense would have been 12 million, of which five should have been recognized in Q3 and seven in Q4. The gain on sale of 287 million, recording during the fourth quarter, relates to the sale, obviously, of the VLTC fleet to BW. The gain is calculated based on the transaction settlement consisting of 70% settlement in cash and 30% in BW shares. So the BW LPG share was measured using the quoted share price at the announcement date on the August 15 of $16.18. And thereby the total transaction settlement was $1 billion and 33 million in our books. And that's the book value of 746 million brings us to the gain of 287 million. The gain on sale combined with the 12 million lower in depreciation expense gives us the total PML effect of 299 million during the quarter as explained by Esten on previous slide. So the net finance expense of 91 million, a significant amount this quarter, which I will explain on a high level. Since the announcement date of the BW LPG transaction, the share of BW went down from $16.18 to $11.16. And thereby we have an unrealized market-to-market loss in our books of 97 million, recognized as finance expense. As of yesterday, the share quoted at approximately $13, meaning that the unrealized market-to-market loss has been reduced by 35 million, which will be recorded as a gain for the first quarter, 25. As a result of selling the VGC fleet, we have also repaid all our interest-bearing debt. Actually, we early prepaid the debt for five vessels to save some interest expense. But due to the accounting standard, we had to expense the deficient cost amortized over the maturity of the loan of 4.6 million. And with no underlying debt to hedge, we also terminated interest rate swaps during the quarter, resulting in a gain of 8 million, of which 4.4 had cash. So this basically leaves us with a net profit of 210 million or earnings per share of $2.74 per share. for the fourth quarter, 24. And this obviously boosted our net profit for the full year of 24, amounting to $443 million, equaling $5.78 per share, which is actually the best full year results for a bounce ever, much attributable to the best of sales.

It's hard to sell the feet every year.