Norway: Hoegh LNG Q2 Income Rises

Hoegh LNG Q2 Income Rises

Höegh LNG announced results for the period ended 30 June 2013.

Highlights

  • Total income USD 51.3 million, up from USD 32.3 million in the second quarter 2012
  • Operating profit before depreciation USD 7.3 million, down from USD 9.7 million in the second quarter 2012
  • Loss before tax USD 6.0 million, compared to a gain of USD 0.6 million in the second quarter 2012
  • Commitment letters received from five international banks for a USD 299 million limited recourse facility for the debt financing of the floating storage and regasification unit and mooring system to be located in Lampung in Indonesia
  • Time charter entered into with Gas Natural for LNG Libra

Subsequent Events

  • Awarded a pre-FEED study for a jetty-moored Barge FLNG solution for a North American LNG export project
  • Awarded a pre-FEED study for an offshore moored FLNG project in Asia

“We are very pleased to see our newbuilding programme proceeding according to schedule and on budget, with the first vessel now 87% complete. We are also pleased to have been awarded two important engineering contracts for potential FLNG projects in North America and Asia,” said Sveinung J.S. Støhle, President and Chief Executive Officer.

Financial review

Höegh LNG Holdings reported USD 51.3 million in total consolidated income for the second quarter 2013, up from USD 32.3 million in the same quarter of 2012. From the second quarter 2013, the Company has applied the “percentage of completion method” for revenue recognition for the mooring contract with Perusahaan Gas Negara (PGN) in Indonesia. This contract has generated revenues of USD 26.3 million in the quarter.

Operating profit before depreciation was USD 7.3 million in the quarter, down from USD 9.7 million in the second quarter 2012. The reduction is mainly explained by LNG Libra being without employment, lack of revenues from FLNG engineering studies and costs associated with the potential establishment of a master limited partnership (MLP) in the quarter. LNG Libra generated a negative operating result before depreciation of USD 4.4 million in the quarter as Höegh LNG has to cover fuel costs, operating expenses and positioning costs when the vessel is without employment. Höegh FLNG generated a negative USD 1.9 million in the quarter (2012: negative USD 0.6 million). The reduction is partly offset by the recognition of the mooring construction contract with PGN, contributing USD 3.8 million to the operating profit before depreciation in the quarter (2012: NIL).

The loss before tax of USD 6.0 million for the quarter compares to a profit of USD 0.6 million in the same quarter last year. The reduction is mainly due to the reasons mentioned above in addition to USD 3.7 million depreciation cost of LNG Libra in the quarter. The vessel generated a net loss before taxes of USD 8.1 million in the quarter.

Total cash flow was positive by USD 27.9 million in the quarter compared to USD 40.6 million in the same period last year. The cash flow in the quarter notably includes investments in new vessels of USD 37.8 million, and redemption of marketable securities of USD 80 million.

At the end of the quarter, Höegh LNG held USD 89.8 million in cash and USD 34.6 million in marketable securities. The book equity was USD 380.5 million. The book equity adjusted for mark-to-market of 2 hedging reserves was USD 463.1 million, equivalent to an adjusted book equity ratio of 43%. Net interest bearing debt was USD 423.0 million at the end of the second quarter.

During the first half of 2013, total income was USD 80.7 million compared to USD 60.0 million in the first half of 2012. Net loss before tax was USD 13.5 million compared to a net loss of USD 3.3 million in the same period in 2012. The reduction is primarily due to LNG Libra being without employment, less income from FLNG engineering studies and bond interest costs incurred, offset by the recognition of the mooring construction contract with PGN in the period. LNG Libra generated a net loss before taxes of USD 11.8 million for the first half of 2013, while Höegh FLNG generated a net loss before taxes of USD 3.9 million, compared to a loss of USD 1.9 million in the same period in 2012. The mooring contract, which was recognized in the profit and loss account for the first time in the second quarter, contributed a profit of USD 3.8 million to the first half result.

From 1 January 2014, a change in the IFRS accounting standard will require Höegh LNG to recognise joint ventures according to the equity method rather than by proportional consolidation. The change in the accounting standard will impact the equity ratio of the Group positively, as the equity will remain unchanged while total assets and liabilities will be reduced. The net profit of the Group will remain unchanged, while income and operating profit will be reduced.

[mappress]
LNG World News Staff, August 28, 2013; Image: Höegh