Philly Tankers Condensed Consolidated Financial Statements For the third quarter and nine months ended 30 September 2017

Transcription

1 Philly Tankers Condensed Consolidated Financial Statements For the third quarter and nine months ended 30 September December 2017 Page 1 of 5

2 CONDENSED CONSOLIDATED INCOME STATEMENT Q3 Amounts in USD millions Full Year (except number of shares and earnings per share) Operating revenues and other income Operating expenses (0.4) (0.2) (0.7) (0.3) (0.6) Operating income/(loss) before depreciation - EBITDA 14.9 (0.2) 29.4 (0.3) 13.9 Depreciation Operating income/(loss) - EBIT 14.9 (0.2) 29.4 (0.3) 13.9 Net financial items (2.9) - (5.7) - (2.3) Income/(loss) before tax 12.0 (0.2) 23.7 (0.3) 11.6 Tax expense Income/(loss) for the period 12.0 (0.2) 23.7 (0.3) 11.6 Average number of outstanding shares 127, , , , ,500 Basic and diluted earnings/(loss) per share (USD) (1.57) (2.35) CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Q3 Full Year Amounts in USD millions Income/(loss) for the period 12.0 (0.2) 23.7 (0.3) 11.6 Other comprehensive income, net of income tax Total comprehensive income/(loss) for the period 12.0 (0.2) 23.7 (0.3) 11.6 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 Sept. 31 Dec. Amounts in USD millions ASSETS Non-current assets Deposits on vessels Total non-current assets Current assets Cash and cash equivalents Other current assets Total current assets Total assets EQUITY AND LIABILITIES Total equity Current liabilities Dividend payable Trade payables and accrued liabilities Total current liabilities Total liabilities Total equity and liabilities CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Full Year Amounts in USD millions As of beginning of period Total comprehensive income/(loss) for the period 23.7 (0.3) 11.6 Dividend paid/payable (35.0) - (39.2) As of end of period CONDENSED CONSOLIDATED CASH FLOW STATEMENT Full Year Amounts in USD millions Net cash from/(used in) operating activities 23.9 (0.3) 12.2 Net cash from investing activities Net cash used in financing activities (74.2) - - Net change in cash and cash equivalents (12.2) (0.3) 51.2 Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Page 2 of 5

3 Notes to the condensed interim consolidated financial statements for the 3 rd quarter and year-to-date Accounting Principles BACKGROUND AND BASIS FOR PREPARATION Philly Tankers AS (PTAS or the Company) was formed on 10 June 2014 to be the holding company of Philly Tankers LLC (PTLLC), a Jones Act shipping company. PTAS is domiciled in Oslo, Norway. PTLLC is domiciled in Wilmington, Delaware, USA. This interim report has not been subject to audit or review by independent auditors. The consolidated 2016 annual financial statements of PTAS, which include a detailed description of accounting policies and significant estimates, are posted on the NOTC A-List found on the following website under the ticker symbol PHILLY. These condensed interim consolidated financial statements reflect all adjustments, in the opinion of PTAS s Board, that are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter and year-to-date periods are not necessarily indicative of the results that may be expected for any subsequent quarter or year. STATEMENT OF COMPLIANCE These condensed interim consolidated financial statements of PTAS have been prepared based on International Financial Reporting Standards (IFRS) as adopted by the European Union IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited consolidated financial statements of PTAS as of and for the year ended 31 December SIGNIFICANT ACCOUNTING PRINCIPLES The accounting polices applied by PTAS in these condensed interim consolidated financial statements are substantially the same as those applied by PTAS in its consolidated financial statements for the year ended 31 December There have not been any new IFRS standards or interpretations which were effective 1 January 2017 that have had a significant impact on Q or the year-to-date period. USE OF ESTIMATES The preparation of condensed interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense in the financial statements. Although these estimates are based on management s best knowledge of current events and actions, actual results may ultimately differ from those estimates. 2. Share capital and equity At 30 September 2017, PTAS had 127,500 shares, consisting of 127,499 Class A shares and 1 Class B share, at a par value of NOK 1 per share, which is the average number of shares used in the calculation of income per share for the periods presented. The Class A shares carry one vote per share. The Class B share carries 5,103 votes. Otherwise, the Class A shares and the Class B share are equal. For further information on the shares and voting rights, preferences and restrictions, please refer to the PTAS Articles of Association posted on the NOTC A-List found on the following website under the ticker symbol PHILLY. At 30 September 2017, PTAS has declared and paid the following dividends: (1) A dividend of USD 39.2 million to the shareholders in PTAS as of the date of delivery of Hull 025 (30 November 2016). The dividend was declared by the Board of Directors of PTAS on 21 December 2016 and paid in two installments on 17 January 2017 (USD 35.0 million) and 14 March 2017 (USD 4.2 million). (2) A dividend of USD 35.0 million to the shareholders in PTAS as of the date of delivery of Hull 026 (29 March 2017). The dividend was declared by the Board of Directors of PTAS on 11 April 2017 and paid in full on 18 April The foregoing dividends were made pursuant to an authorization granted by the annual general meeting of PTAS on 27 May The dividends were for accounting purposes taken from the account paid-in-capital and for Norwegian tax purposes treated as repayment of paid-in-premium on shares. Any U.S. withholding tax which PTAS was obliged to make on behalf of any of its non-u.s. shareholders was set-off in such dividend payments. Page 3 of 5

4 PTAS will not make any further dividend payments before liquidation other than any dividends necessary to cover U.S. tax withholding payments on behalf of its non-u.s. shareholders due at an earlier time. PTAS believes this is the most cost and tax efficient manner to distribute its capital to its shareholders. 3. Related party transactions Philly Shipyard ASA (PHLY), through its subsidiaries, owns 53.7% of PTAS. The Company believes that related party transactions are made on terms equivalent to those that prevail in arm s length transactions. The Company had no accreted interest income for Q (none for Q3 2016) or for the nine-month period ending 30 September 2017 (USD 72 thousand for the same period in 2016). See note 4 regarding the note receivable from APSI Tanker Holdings II, LLC (ATH II), a wholly-owned indirect subsidiary of PHLY. See note 5 regarding the shipbuilding contracts and option agreement with Philly Shipyard, Inc. (PSI), a whollyowned direct subsidiary of PHLY. PTLLC has entered into an administrative services agreement with PSI whereby PSI will supply certain administrative services to PTLLC. Total related costs were USD 30 thousand for Q (USD 30 thousand for Q3 2016) and USD 90 thousand for the nine-month period ending 30 September 2017 (USD 90 thousand for the same period in 2016). 4. Note receivable On 16 June 2014, PTLLC received a non-interest bearing promissory note issued by ATH II with a face value of USD 58.0 million in exchange for 62,475 units of PTLLC. On 9 July 2014, ATH II contributed these units of PTLLC to PTAS in exchange for an equal number of shares of PTAS, consisting of 62,474 class A shares and 1 class B share, and USD million in cash recorded as a distribution from share premium. The principal amount of this note was reduced dollar-for-dollar as PSI invested its own funds into the construction of Hulls 025 and 026, the first two vessels under contract between PSI and PTLLC. As this note was issued as an interestfree instrument, the Company discounted its value and imputed interest income on the discounted amount at the rate of 3.49% per annum. The dollar-for-dollar reductions commenced in the third quarter of 2015 with a total reduction of the full USD 58.0 million through the second quarter of Commitments and contingencies In July 2014, PTLLC entered into a pair of shipbuilding contracts with PSI for the construction and sale of two 50,000 dwt product tankers with deliveries in 2016 and 2017, designated as Hulls 025 and 026. Concurrently, PSI granted PTLLC an option to purchase two identical product tankers with deliveries in 2017, designated as Hulls 027 and 028. In February 2015, in exchange for a credit of USD 0.4 million and other consideration, PTLLC prepaid USD 29.6 million of progress payments in cash for Hulls 025 and 026 which were originally due in the second half of % of this total amount (i.e., USD 14.8 million) was allocated to each of these vessels. In addition, in February 2015, PTLLC secured long-term charter contracts with a domestic end-user for Hulls 025 and 026. In July 2015, PTLLC declared its option for Hulls 027 and 028. The combined four-vessel purchase price is USD million plus USD 0.6 million of change orders plus actual construction financing costs and has been reduced in part by the USD 0.4 million credit described above and funded in part via progress payments made by or on behalf of PTLLC. In August 2015, PTLLC entered into definitive agreements with a subsidiary of Kinder Morgan, Inc. (KMI) for the assignment of its shipbuilding contracts for Hulls and certain related assets, including its charters for Hulls 025 and 026. PTLLC agreed to assign each of the four contracts and two charters to KMI immediately prior to delivery of the relevant vessel. The transaction was formally approved at an extraordinary general meeting of the shareholders of PTAS in September In connection with the KMI transaction described above, PTLLC agreed to provide certain buyer s supplies on board the vessels on behalf of KMI. In September 2016, PTLLC and KMI amended their agreements to transfer the responsibility for these buyer s supplies (other than approximately USD 130 thousand of long-lead items of owner furnished equipment per vessel) from PTLLC to KMI. As consideration for this transfer, PTLLC agreed to reduce the amount it will receive from KMI at delivery of each vessel by USD 2.0 million. After these amendments, the transaction is valued at a total of USD million (excluding change orders and construction financing costs). On 30 November 2016, PTLLC closed the sale of its shipbuilding contract and related assets with respect to the first vessel, Hull 025, immediately prior to the delivery of Hull 025 by PSI to KMI. On 29 March 2017, PTLLC closed the sale of its shipbuilding contract and related assets with respect to the second vessel, Hull 026, immediately prior to the delivery of Hull 026 by PSI to KMI. The Company recognized a pre-tax gain on each of these sales of approximately USD 12.0 million. On 26 July 2017, PTLLC closed the sale of its shipbuilding contract with respect to the third vessel, Hull 027, immediately prior to the delivery of Hull 027 by PSI to KMI. The Company recognized a pre-tax gain on this sale of approximately USD 12.5 million. Page 4 of 5

5 Total deposits made on the one remaining product tanker (Hull 028) by PTLLC through 30 September 2017 amount to USD 30.7 million in cash payments by PTLLC. The foregoing amount includes the early progress payment of USD 14.8 million made on Hull 026 described above. This prepayment was reallocated to Hull 028 in connection with the KMI transaction described above. The foregoing amount excludes USD 14.2 million in cash paid by KMI on behalf of PTLLC as a deposit made on Hull 028. As of 30 September 2017, PTLLC has unpaid purchase commitments on the one remaining product tanker (Hull 028) of approximately USD 94.4 million, all of which is expected to be paid in Q Events subsequent to 30 September 2017 On 20 November 2017, PTLLC closed the sale of its shipbuilding contract with respect to the fourth vessel, Hull 028, immediately prior to the delivery of Hull 028 by PSI to KMI. The Company expects to recognize a pre-tax gain on this sale of approximately USD 12.0 million. With this closing, the Company has successfully divested all of its shipping assets and intends to promptly initiate a liquidation process. PTAS will announce further details regarding the liquidation process later in Q On 8 December 2017, the Board of Directors of PTAS resolved to pay USD 2,561,479 as dividends, equal to USD per share, to the shareholders in PTAS as of the date of delivery of Hull 027 (26 July 2017). The resolution was made pursuant to an authorization granted by the Annual General Meeting of PTAS on 12 July The dividends will for accounting purposes be taken from the account paid-in-capital and shall for Norwegian tax purposes be treated as repayment of paid-in-premium on shares. The dividends will be paid on or about 15 December Any U.S. withholding tax which PTAS is obliged to make on behalf of any of its non-u.s. shareholders will be set-off in the dividend payment to such shareholder. Page 5 of 5