Good day, and thank you for standing by. Welcome to the Avance Gas Holding Ltd fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star and one on your telephone keypad, or you can submit your questions via the webcast. Please be advised today's conference is being recorded, and if you require further assistance, please press star zero. I'd now like to hand the conference over to your speaker today, that's CEO Kristian Sørensen. Please go ahead.
Thank you very much, and hello, everyone, and welcome to the Avance Gas Q4 conference call, where we will present our latest market update together with our Q4 results. I'm here together, as usual with, our CFO, Randi Navdal. Next slide, please, with our disclaimer. We can move on to the next slide with the highlights for the quarter. For the fourth quarter, we had time charter earnings of $32.9 million, which equates to $27,631 a day, and consequently $31,302 per day for the full calendar year.
We had time charter coverage of approximately 40% in the fourth quarter at an average of $31,000 a day, while we currently have a TC coverage at 38% of vessel days with three 2008-built vessels fixed at an average of $30,000 a day and three vessels with floating hire structure. Looking at our financial results for the quarter, we had an EBITDA of $21.6 million with a net profit of $7.5 million and earnings per share of $0.10. For the year 2021, Avance Gas has an EBITDA of $94.4 million, a net profit of $32.1 million, and earnings per share of $0.44.
In Q4, we successfully completed the sale and lease-back transaction on the Iris Glory, which generated approximately $16.6 million in net cash proceeds. For the quarter, our board has declared a dividend of $0.05 per share, corresponding to 50% of our net profits. Looking into the beginning of the new year, we had a busy period on the asset side, where we last month took delivery of our first dual-fuel VLGC, the Avance Polaris. We have sold our 2008-built Pegasus Glory, and we will take delivery of our second newbuilding, Avance Capella, on Friday this week. This vessel is, as previously announced, fixed to Petredec for a two-year period. Next slide, please.
Since we have started to phase in our new buildings, we wanted to show you the improved earnings potential for the company as the new vessels are delivered successfully from 2022 to end of 2023. For simplicity reasons, we have assumed all non-scrubber vessels, including the new buildings burning VLSFO and trading in a market environment like we have today. As illustrated, the earnings will be significantly improved as our fleet is being renewed this and next year, and at the same time, the vessels will contribute significantly to reduce Avance Gas CO2 emissions. Then Randi will take you through the details of the financial highlights for the quarter.
Thank you, Kristian, and good afternoon from Oslo. Moving to slide six, I will walk you through the financial highlights and results for the fourth quarter and full year 2021. Our commercial results for the fourth quarter were quite similar to the past two quarters and in line with our guidance in November. We recorded a time charter equivalent earnings of $32.9 million or a daily TCE of $27,631, slightly up from $31.6 million or a daily TCE per day of $27,548 in previous quarter.
TCE earnings for the full year was $143 million or a TCE per day of $31,302 and was more or less in line with last year, 2020, recording a TCE earnings of $144.1 million, corresponding to a daily TCE of $32,418. Our operating expenses came in at $9.7 million for the quarter, equaling a daily average of $8,139. This compares to $8,610 a day in previous quarter. The operating expense for the fourth quarter was impacted by COVID-19 crew change expenses of approximately $500 a day and is expected to come down in 2021 as the vaccine is rolled out to our seafarers.
Operating expenses were $42 million for the full year, down from $45 million in 2020, driven by lower operating expense per calendar day, combined with one ship less in the fleet as the 2003-built VLGC Avance was sold in September 2020. Administrative and general expense, also known as the A&G for the quarter, was $1.6 million, down from $1.9 million in Q3, representing an average, A&G per, calendar day of 1,351 for the quarter, and is expected to be maintained at, one point six million on a quarterly basis in, into next year. For the full year 2021, the administrative and general expense were $6.5 million, up from $3.9 million in 2020 due to increase in number of headcounts combined with non-recurring, personal expense.
Based on this, we reported an EBITDA of $21.6 million for the fourth quarter, up from $19.5 million previous quarter. For the full year, we recognized an EBITDA of $94.4 million, in line with last year of $95.1 million. Depreciation expense were $11.4 million for the quarter, and it's a normalized depreciation going forward. For the full year, depreciation expense was $47.2 million, up from $41.7 million previous year, driven by depreciation of dry docking of eight vessels performed in 2020, and depreciation of the scrubber installation of the six vessels. Just a reminder, in accordance with IFRS accounting, dry docking expense is capitalized and depreciated over five years, and scrubber installation is also capitalized but depreciated over the lifetime of the vessel.
Finance expense is down for both the quarter and the year due to a lower average debt and interest expense combined with capitalized borrowing costs relating to our new building program. Finance income consists primarily of dividend distribution from the Norwegian Shipowners' Mutual War Risks Insurance Association of $1.3 million after tax. With that, we recorded a net profit of $7.5 million or $0.10 per share for the quarter, compared to $4.2 million or earnings per share of $0.06 the previous quarter. For the full year 2021, we recorded a net profit of $32.1 million compared to $37 million in previous year, adjusted for a reversal of impairment recognized in 2020. Just a few remarks on the balance sheet movements.
As Kristian Sørensen already stated, in December, we successfully executed a refinancing of the VLGC Iris Glory by way of a sale leaseback structure with a repurchase option in favor of Avance after year two, and with a tenor of nine years, and no repurchase obligation while we released $16.6 million. We recorded an equity ratio of 56%, year end, up 6% from last year, and a cash balance of $101.9 million, representing an increase of $25.2 million during the year. I will now go briefly through the cash activities during the year on the next slide.
Cash movements year to date is primarily driven by positive cash flow from operations of $91.2 million, equity raise of $64 million securing funding of the new building program, assuming a normalized financing structure at delivery, cash release of refinancing of the VLGC Iris Glory, offset by new building capital expenditure of $60.2 million, ordinary scheduled debt repayment of $44 million, interest payment of $17.6 million, and lastly, prepaid expenses of $2.6 million relating to the pre-funding of OpEx and predelivery cost of our new buildings. We paid $23 million to our shareholding shareholders, leaving us with a cash position of $101.9 million at year-end. Just a few comments on the capital expenditure relating to our new building program.
As of the date of this report, we have paid $157 million in accumulated new building CapEx since 2019. Of the $157 million, $105 million is sourced from cash flow from operations corresponding to 55% of predelivery CapEx, and $52 million sourced from bank financing, reflecting drawdown of the debt at delivery of Avance Polaris in early January. We have secured the sustainability link financing of the two first new buildings, Avance Polaris and Avance Capella, announced last year. Assuming the same financing for the remaining new builds, we have approximately $55 million in new building CapEx to be sourced by cash and cash flow from operations until delivery of the final new building and in 2023.
Moving to slide eight, we have an estimated cash break even of $22,500 for the year 2022, representing administrative and general, personnel and office space expenses of $1,200 a day. Operating expenses of $7,900 per ship day, excluding any COVID-19 expenses, which is expected to come down from 2021 levels, as the majority of our crew has now been fully vaccinated. Furthermore, we have a repayment of debt of 9,400 a day and interest expense of $4,000 a day. Looking into the first quarter this year, we estimate the TCE rate of approximately $40,000 per day, contracted for 80% of vessel days.
The guidance includes our current TC coverage of 38% for the first quarter, consisting of the three time charter agreements for our 2008-built vessels for a period of two years at an average rate of $30,000 a day previously announced. Furthermore, we have three vessels with a floating hire structure consisting of the two time charter agreements for our new builds, Avance Polaris and Avance Capella, for a period of two years. Lastly, we have one time charter agreement for 12 months on the floating hire. In current market sentiment with the freight rates ranging between mid-20s depending on the load area, we are clearly benefiting from the time charter coverage with a fixed rate.
Furthermore, we are offloading waiting risk on owner's account on our TC agreements with the floating structure as the Panama Canal congestion continues. I will now hand the word over to you, Kristian, who will talk more about the market. Thank you, and please go ahead, Kristian.
Okay. Thank you, RandI. Let's have a look at the VLGC market for the quarter. Next slide, please. The LPG market in the fourth quarter was pretty much as expected, as the winter market in the Northern Hemisphere led to solid exports from the U.S. to Asia. In addition, the energy crunch was driving energy prices up and landed LPG prices in Asia followed the crude oil price upwards, while we at the same time saw twice as many VLGC cargoes going transatlantic compared to the previous quarter. All in all, U.S. exports were up six cargoes per month from the same quarter in 2020, which demonstrates the strength of the U.S. LPG export capacity. The Middle East exports were steady throughout the quarter, but are still lagging the volumes from 2020. We expect a gradual increase as OPEC reverse its cutbacks on crude oil production.
From a trade pattern point of view, it is interesting to see that India is now importing close to 50% of the exports from the Middle East, excluding the Iranian LPG volumes, which in next turn is giving room to U.S. exports to find its home in other parts of Asia. Next slide, please. The end of the fourth quarter was busy, and rates doubled and reached close to $60,000 per day for scrubber-fitted vessels. The congestion around the Panama Canal was taking up considerable capacity in itself and also leading to more vessels ballasting the longer route from Asia via Suez or South Africa to U.S. Gulf.
Like mentioned in the slide excuse me, the longer route represents a 10-13 days longer ballast than going the Pacific route via Panama without delays and helped to push rates up during the last part of the quarter. On top of the inefficiency and uncertainty around the Panama Canal, there was also delays in several major discharge areas in Asia due to COVID, bad weather, and general congestion. Next slide, please. The Asian LPG story is a good story in itself. India imports continue to climb as the government-driven program to burn LPG for residential use continues. According to Argus, 10 million low-income homes were added to the program during last fiscal year, and another 6 million homes will be included this year. In addition, VLGCs are now lifting the lion's share of the LPG imports, close to 80% in 2021.
Looking towards 2025, these imports are expected to grow significantly, driven by its vast petrochemical sector. Last year, around a third of the Chinese LPG imports were sourced from the U.S. and consequently underpinning the long-haul U.S. Far East trade pattern. On top of the two main importers, India and China, the LPG market is gradually growing in developing economies in Southeast Asia, as well as more mature economies like Korea. Next slide, please. Looking at the U.S. LPG exports, the expectations are more positive than what you would expect six months ago. There are signs of increased drilling activity on the back of the current high energy prices, and the Asian demand side has proven to be relatively price inelastic.
Although every new project needs time to ramp up the production volumes, we could pass 60 million tons of LPG exported from the States this year, and we also expect additional volumes to be added next year. Next slide, please. I wanted to show you this, slide, describing the VLGC secondhand market, as the Avance Gas continued to sell all the vessels and following the sale of the Avance in 2020. We decided to sell the 2008 Thetis Glory beginning of this year as part of our fleet renewal program and also the profit from solid secondhand prices. The VLGC secondhand market is characterized more as a project-driven market than a conventional S&P market that you would see in tankers, bulkers, and containers. The last year, it's relatively busy secondhand market.
It's very much a reflection of increased demand for LPG in India, Southeast Asia, as well as China. What is worthwhile noticing is that most vessels which are sold into Southeast Asia are going into captive trade, shuttling, and storage operations, and are subsequently taken out of the conventional VLGC trade. The price level for these vintage vessels is holding up firm, and following the sale of Thetis Glory, we are receiving buying interest also on other vessels which we are evaluating. Next slide, please. Moving on to the next slide and the VLGC order book. In general, there is very little news from last quarter. New building activity is muted as inflated new building prices are very hard to justify. Including our Avance Capella, we count 16 more vessels to be delivered from the yard this year.
Next year looks more challenging with 47 new buildings delivered, but the picture is not as grim as you should think barely by looking at the new building list. There are considerable forces extracting capacity from the fleet. With increased seaborne trade, Panama Canal transit delays, more ships sailing the long route from Asia through the U.S. Gulf, new emission regulations coming into force favoring younger tonnage as well as vintage vessels disappearing from the trade into captive trade in Southeast Asia. However, in order to protect the downside, we have increased our time charter ratio, although with a mixed bag of time charter hire structures to maintain exposure to the market as previously described. Next slide, please.
To summarize the fourth quarter as well as the year of 2021, we report a TCE per day of $27,631 for the quarter and $31,302 per day for the calendar year. We are happy to also this quarter declare a dividend payout to our shareholders corresponding to 60% of net profit. In total, our board has declared $19.8 million in dividend for the financial year of 2021. Looking at the market, we continue to see inefficiencies taking out capacity from the fleet at the same time as seaborne LPG trade continues to increase.
As part of our strategy to capitalize on the firm asset prices and to release cash, we executed a sale leaseback transaction on the Iris Glory in December, which generated a cash release of $16.6 million, which together with a sustainability-linked bank loan added $145 million of new debt financing, while we raised $65 million in equity to finance our new building program. Reflecting the firm winter markets, we are pleased to guide on a TCE per day of $40,000 fixed for 80% of the vessel days for the first quarter, and we maintain our positive outlook for 2022 with robust market fundamentals, which will favor our new buildings, which we now are taking delivery of. On that note, I would like to open up for questions.
Thank you. As a reminder, if you would like to ask a question over the phone, you can press star and one on your keypad, and it's the hash key to cancel. So star and one to ask a question over the phone, or you can submit your questions by typing them into the web. We have a question on the phone line. This is from the line of Climent Molins from Value Investor's Edge. Please go ahead. Your line is open.
Good morning. Thank you for taking my questions. You have fixed several of your new builds in time charter contracts with floating hire. Could you provide some further commentary on how are these charters structured, namely if they are, for example, 100% index-linked, or if they have a floor or a cap?
Thank you for your question. Since these contracts are made on a confidential and private basis, we can't reveal too much of the details. It's giving us a good exposure to the market fluctuations, as well as providing us with downside protection. It's difficult for us to go into detail since these contracts are made on a private basis.
All right, I understand. When talking about the secondhand market, you mentioned that older vessels sold to Asian buyers disappear from the conventional VLGC market. Could you provide some further commentary on this? How many vessels do you estimate to be trading in these niche markets?
Well, if you go back to the slide, Randy, that one. You can see that vessels going into the India trade, they continue to service the Indian markets on a time charter basis, competing, let's say, with the rest of the global fleet. The vessels sold to China and Southeast Asia are going into typical captive trade, where they are being used as floating storage terminals, shuttle tankers. I think it's fair to say that parts of the fleet which is controlled by Chinese interests is also lifting cargoes from Iran.
All right. That's helpful. Final question from me. After the recent divestment of the Thetis Glory, I was wondering how are you looking at the remaining 2008 and 2009 build vessels? And on a similar note, should we expect any effect of upcoming regulations on these vessels?
Yeah, there is, like mentioned, we are receiving good interest, buying interest also for other parts of our older fleet after the sale of the Thetis Glory. We are evaluating the various interests as we speak. Of course, if we manage to obtain a good price on these kind of vessels, we are likely to offload more vessels as we move forward. When it comes to the new regulations, the part of our fleet which is built from 2015 and younger is not gonna be affected by the new regulations in terms of having to reduce speed.
We expect that the vessels which are built in 2008 and nine will have to reduce the speed, but we don't know exactly yet. There is an IMO meeting in June, which will most likely shed more light on the exclusion list and the details in this new framework. We expect this vessel class to reduce service speed as we move into 2023. I don't know, Randi, would you like to add some details on the regulations?
Yeah. As Kristian Sørensen mentioned, we do expect that the new regulations will somehow impact the VLGC fleet. The strategy we're heading for and has been delivering upon since the acquisition of the first newbuilds in Q4 2019 is to have a fleet renewal to partly reduce the emission and have a more economic fleet composition, generating value back to our shareholders. We think in one step we're well-positioned towards the new regulations with the fleet renewal. In terms of the EEXI certification, it's well taken care of. We see that the EEXI regulation is basically a stamp.
The CII, the carbon indicator regulations with ratings will definitely show that the older part of the VLGC fleet will have to most likely reduce the speed by 1-2 knots to comply with the minimum C rating.
All right. That's very helpful. Thank you very much for taking my questions.
Our pleasure.
Thank you for your questions.
Thank you. As a reminder, it's star and one on your keypad if you do have any questions to ask over the phones. You can also type your questions in via the webcast. No further questions coming through the phone lines at the moment.
We have one question coming in from the webcast from Tommy, and the question is dividend policy going forward as the new builds will increase profitability. I can start off with responding to that question, which is quite relevant, I would say. Just looking back at the past year, one of our key focus has been to return value back to our shareholders by distributing dividend. We're very happy to announce dividend for the fifth quarter in a row. Going forward into this year, we are expecting positive fundamentals. We have seen it coming into the first quarter with the TCE rate earnings of $40,000 a day, contracted for 80% of our vessel days.
We will continue returning value back to our shareholders while keeping in mind that towards the order book in 2023 we need to position ourselves to handle the bad potential weather coming into next year. We will balance the dividends with strengthening the balance sheet of the company towards 2023 and going forward. Also, ensuring that we have a healthy cash position in the company. Yeah. Okay. No further questions from the webcasts currently.
No questions on the phone lines at the moment.
Okay. Thank you. I believe that concludes the call. Thank you for dialing in, and we wish you still a nice day and a nice winter holiday break week.
Goodbye.
Thank you. That does conclude the conference for today. Thank you for participating, and you may now disconnect.