GasLog Ltd. (GasLog), an international owner, operator and manager of liquefied natural gas (“LNG”) carriers, yesterday reported its financial results for the quarter ended March 31, 2012. Highlights • GasLog reports Revenue of $16.6 million, EBITDA of $8.4 million and Profit of $2.2 million, for the first quarter of 2012.
• GasLog’s budgeted new building program is fully funded, based on initial public offering “IPO”, concurrent private placement and committed debt.
• The 8 LNG newbuildings are on schedule and within budget.
• 100% utilization of GasLog Savannah and GasLog Singapore during the first quarter of 2012.
• 40% of the floating interest rate exposure has been hedged at a weighted average interest rate of approximately 4.4% (including margin) as of March 31, 2012.
• Continued strong fundamentals for the LNG industry.
Chairman & CEO Statement
Mr. Peter G. Livanos, Chairman and Chief Executive Officer, stated “We were satisfied that the completion of our recent offering has now provided the capital for us to implement the business plan for our committed new ships under construction. In addition to this, and in spite of increased costs related to our becoming a public company, we are pleased to report results that are better than our expectations. Our construction program at Samsung Heavy Industries in Korea is on time and on budget, with the first ship having been launched and undergoing outfitting on schedule for delivery in January 2013. GasLog, with its technical platform and customer relations, continues to be well placed to take advantage of the projected growth in the LNG trade.”
Financial Summary
Revenues were $16.6 million for the quarter ended March 31, 2012 ($16.3 million for the quarter ended March 31, 2011: +1.9% year over year). The increase is mainly attributable to an increase in revenues in the vessel ownership segment, with GasLog’s existing fleet performing at 100% utilization.
Vessel operating and supervision costs were $3.5 million for the quarter ended March 31, 2012 ($3.0 million for the quarter ended March 31, 2011: +14.4% year over year). The increase is mainly attributable to organizational growth in GasLog’s vessel management segment.
General and administrative expenses were $5.2 million for the quarter ended March 31, 2012 ($3.0 million for the quarter ended March 31, 2011: +71.5% year over year). The increase is primarily attributable to increases in personnel expenses, directors’ fees, and travel expenses as well as one-off equity-settled compensation expense related to the former chief executive officer and staff bonuses. This increase is generally in line with GasLog’s planned growth and the reporting and compliance requirements of being a public company.
Financial costs were $3.0 million for the quarter ended March 31, 2012 ($2.3 million for the quarter ended March 31, 2011: +28.6% year over year). The increase is primarily a result of increased interest expense as a result of swapping floating rate interest to fixed rate interest in connection with the outstanding indebtedness related to the vessel GasLog Savannah.
EBITDA was $8.4 million for the quarter ended March 31, 2012 ($10.5 million for the quarter ended March 31, 2011: -20.1% year over year). This decrease is mainly attributable to higher general and administrative expenses. Please refer to Exhibit II at the end of this press release for a reconciliation of EBITDA to profit for the period, the most directly comparable financial measure calculated and presented in accordance with International Financial Reporting Standards (“IFRS”).
Profit for the period was $2.2 million for the quarter ended March 31, 2012 ($5.0 million for the quarter ended March 31, 2011: -56.7% year over year). This takes into account a year-on-year increase in unallocated expenses of $2.0 million, from $1.4 million to $3.4 million which is mainly attributable to higher general and administrative expenses. For more information on unallocated losses, please refer to the table below highlighting certain financial information for GasLog’s two segments.
As GasLog stated in the final prospectus filed April 2, 2012 for its IPO, the ramp-up of general and administrative expenses is expected to exceed revenue growth in 2012, as GasLog’s newbuildings will only commence delivery in 2013. Accordingly, GasLog expects 2012 profit will be lower than in 2011.
Contracted Charter Revenues
GasLog’s contracted charter revenues are estimated to increase from $56 million for the full year 2012 to $210 million for the full year 2015, based on contracts in effect as of March 31, 2012 for the eight ships in GasLog’s owned fleet for which time charters have been secured, including contracts for six newbuildings that are scheduled to be delivered on various dates in 2013 and 2014. For further details please refer to the Q1 6-K.
Liquidity and Financing
As of March 31, 2012, GasLog had consolidated cash and cash equivalents of $8.3 million. Subsequent to March 31, 2012, the cash position has improved significantly with the net proceeds from GasLog’s IPO completed on April 4, 2012.
As of March 31, 2012, GasLog had an aggregate of $276.3 million of indebtedness outstanding under two credit agreements, of which $25.1 million is repayable within one year.
GasLog’s current commitments for capital expenditures are related to the eight LNG carriers on order, which have a gross aggregate contract price of approximately $1.55 billion. As of March 31, 2012, the total remaining balance of the contract prices of the eight newbuildings on order was $1.42 billion, for which there are $1.13 billion of undrawn credit facilities in addition to the approximately $309.9 million net proceeds from GasLog’s IPO and concurrent private placement completed on April 4, 2012.
Interest Rate Swaps
As of March 31, 2012, GasLog has entered into eight interest rate swap agreements for a total notional amount of $559.3 million. This is in relation to the outstanding indebtedness of $276.3 million and the new loan agreements of $1.13billion in aggregate that will be drawn by GasLog upon delivery of the respective ships. In total 40% of GasLog’s floating interest rate exposure has been hedged at a weighted average interest rate of approximately 4.4% (including margin) as of March 31, 2012.
In April and May 2012, GasLog entered into seven interest rate swap agreements for a total notional amount of $312 million in relation to loan agreements of $984.5 million in aggregate that will be drawn upon delivery of the related ships. Accordingly, 62% of the floating interest rate exposure had then been hedged at a weighted average interest rate of approximately 4.3% (including margin).
Business Update
As of March 31, 2012, the eight ships under construction at Samsung Heavy Industries were on schedule and within budget. Of these eight ships, assembly was under way on the first two and steel cutting had commenced on the third and fourth ships. On April 8, 2012, the first ship was launched on schedule, for delivery during Q1 2013.
The two ships in the water in GasLog’s existing fleet, currently on multi-year charters to a subsidiary of BG Group plc, performed without any off-hire during the quarter ended March 31, 2012, thereby achieving full utilization for the period.
As of March 31, 2012, two of the newbuildings remain uncommitted and GasLog continues to hold options for two additional LNG carriers at Samsung Heavy Industries.
LNG Industry Update
GasLog believes the current supply and demand dynamics of the LNG industry are positive for LNG shipping. Recent announcements in the LNG industry regarding new LNG production projects are expected to create increased requirements for LNG carriers.
Significant progress has been made on potential US exports, notably Cheniere Energy’s Sabine Pass project. If large LNG exports projects such as these are built, additional requirements for LNG carriers will emerge. In addition, the growth of Australia as an LNG exporter, and the large gas reserves in East Africa are expected to further drive the growth of the global LNG trade.
GasLog believes the robust development of new LNG supply projects and growing global demand for natural gas is likely to drive the need for more LNG carriers. LNG project developers are typically large multinational oil and gas companies with exacting standards for safety and reliability. GasLog believes first class charterers will continue to engage experienced LNG shipowners to provide high quality LNG carriers for multi-year charter requirements.
Outlook
GasLog believes the strong fundamentals of the LNG industry will provide significant growth opportunities for GasLog’s high quality LNG shipping operations. Focus in the near term will be on delivering the growth of the business, through the on-time delivery of the newbuilding fleet while ensuring full utilization of the existing ships. GasLog expects that its strategy of leveraging its established platform and customer relationships will aid in qualification for charter possibilities for the two uncommitted newbuildings and the options it holds for two additional newbuildings. GasLog’s experience and track record may also allow GasLog to explore possibilities for industry consolidation of new entrants and to be flexible to adjust to market developments.
Source: GasLog Ltd.