EXMAR releases first half 2014 results, highlights strong LPG rates going forward

The board of directors of EXMAR has approved the accounts for the period ending 30th June 2014. This press release also refers to the one distributed on 31st July 2014 (provisional results).

Highlights of recent developments are:
- Significant Capital Gains on the sale of older LPG tonnage and strong LPG rates still going forward
- Strengthening of the Balance Sheet with USD 114 million unsecured Bond successfully closed in July to finance new offshore and LNG projects
- Intention to form and list the MLP (Master Limited Partnership) in the US before the end of the year
- LNG portfolio contributing in accordance with its respective charters

All figures mentioned in this press release have been prepared under IFRS (International Financial Reporting Standards). The Group (using the proportionate consolidation method) had an operating result (EBIT) of USD 58 million for the first semester 2014 including USD 25.9 million capital gain on sale of assets (2013: EBIT of USD 73.8 million, including 52.8 USD million capital gain on the sale of 50% of EXMAR LPG to Teekay LNG Partners). The financial result has been positively influenced by the change in fair value of interest rate derivatives entered to hedge the interest rate exposure on long-term financing of the fleet, which resulted in an non-cash unrealized profit of USD 2.8 million (2013: USD 27.1 million), and by the sale of the shares Teekay for an amount of USD 1.6 million (2013: USD 4.5 million). The consolidated result after taxation for the first half 2014 amounts to USD 51.9 million (2013: USD 90.2 million).

Change in Accounting Policy
As previously announced, the Company is applying the new accounting standards IFRS 10 and IFRS 11 as of 1st January 2014. As a result, the consolidation method applied to joint ventures has changed and the comparative figures for 2013 have been restated. All the joint ventures in which the company has an interest have now been accounted for using the equity method and the contribution by such joint ventures is now reported in the income statement under the line “Share of profit (loss) of equity accounted investees”. For information purposes, the Company included the consolidated income statement as if EXMAR would have continued to apply proportionate consolidation for its joint ventures for the first semester 2014. For more details about the impact of the first-time adoption of IFRS 10 and IFRS 11, we also refer to note 3 “Significant accounting policies”. In addition, EXMAR has applied a new depreciation policy for its LNG fleet as of 1st January 2014. The economic life for the Group’s LNG vessels has been extended from 30 to 35 years. This change in accounting estimate is reflected as from 1st January 2014 and comparative figures have not been restated. Depreciation cost relating to LNG vessels is therefore lower by USD 1.6 million for the first semester of 2014.

OUTLOOK SECOND SEMESTER
LNG:
For the second half of 2014 we expect all vessels to contribute in line with the first semester under their respective charters. No dry-docks are foreseen on the LNG fleet during the rest of 2014. The construction of the world’s first floating liquefaction unit Caribbean FLNG at Wison Heavy Industry’s shipyard in Nantong, China is progressing as planned. Start of operations is scheduled from second half of 2015. EXMAR and Pacific Rubiales ENERGY (through its affiliate Pacific Midstream Holding Corp.), ordered a floating storage and regasification unit (FSRU) in February 2014. The unit is currently being constructed by Wison Offshore and Marine and is expected to be delivered to the joint venture by mid-2016. The marketing of this FSRU with prospective clients is ongoing. Negotiations for the construction of a second floating liquefaction unit in British Colombia (BC LNG) are progressing well.

OFFSHORE:
The accommodation barges KISSAMA, NUNCE and OTTO 5 continue operating offshore Cameroon, Angola and Nigeria respectively. They will contribute fully to the results until the end of 2014. LPG : The Midsize (MGC) market, backed by limited vessel availability from both the VLGC and LGC segments as well as the smaller Handysize, has remained firm during the summer months with a couple of record high fixtures.

Market sentiment for the Midsize segment remains positive for the balance of 2014 and well into 2015. The VLGC market has reached and is maintaining historically high levels. During the coming quarters additional export terminal capacity will be coming on stream and the expectation is that a significant percentage of VLGC tonnage could be absorbed. BW TOKYO has been fixed for 2 years (of which 40% at floating rate) and will benefit from these favorable market conditions.

The results for the third quarter will be positively influenced by the capital gain of USD 9.3 million on the sale of the FLANDERS HARMONY (85,000 m³ – built 1993). For the small pressurized vessels continuing lack of activity both East and West, closure of refineries, current political uncertainty over Black Sea trading, and a series of newbuilding vessels due for entering the market during the coming months, are all factors hinting towards a period of continued downward pressure for these vessels.

SERVICES AND HOLDING:
Results are expected to be in line with the first semester.

INTERIM DIVIDEND The board of directors approved the distribution of a gross interim dividend of EUR 0.20 per share (EUR 0.15 net per share). The net interim dividend will be payable to the holders of registered shares and to the holders of dematerialized shares (through their financial institution) on 5 September 2014. (ex-date 2 September 2014 – record-date 4 September 2014).

Source: EXMAR