Good day, and thank you for standing by. Welcome to the Avance Gas Holding Ltd fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Øystein Kalleklev, CEO. Please go ahead.
Okay, thank you, everybody, for joining. This is Avance Gas fourth quarter results presentation, where we also cover the recent events, the market, and, of course, the full-year 2024 numbers. Today, I am joined, as usual, by our CFO, Randi, who will go through the numbers in a bit more detail later in the presentation. Before I do a market section and the Q&A session. Before we begin, I just want to highlight a disclaimer. We will provide some non-GAAP measure, like time charter equivalent earnings, which is the best proxy for average rates obtained on the ships. Of course, there are limits to completeness of the detail we can provide. I also recommend you to read the earnings report, which we also distributed this morning. Let's kick off with the highlights.
Q4, maybe not too surprisingly, was a very profitable quarter for us as we closed the sale of the 12 VLGCs to BW in that $1 billion transaction. Hence, we booked substantial gains on that transaction and ended up with net profit for the quarter of $210 million, giving our earnings per share of $2.74. If we adjust away all the profits and transactions related to the sale of ships, we still delivered a small profit from operation, $13 million, and adjusted earnings of $0.18. In total, we've been selling 16 ships this year, booking profit from those ships. If we take away those transactions for the year, we delivered an adjusted profit of $125 million, which is actually our third highest number obtained.
All in all, a good year just from operation, but it's a tremendous year when taking into consideration also the asset sales we have been doing. Net profit for the year, $443 million, which then includes our mark-to-market loss on the BW shares we received, giving an EPS of $5.78. Status, as I mentioned, we completed the sale of the VLGCs with the last ship, Avance Avior, delivered to BW on December 31, in line with our plan. Again, on sale, $287 million, but we also had $12 million in saved depreciations as we discontinued depreciation when we announced the deal on August 15. After retiring all our debt, we had net cash proceeds of $242 million, plus then these $19.3 million BW shares, which then made us, for a short while at least, the second biggest shareholder in BW with a 12.7% ownership share.
We will not be a shareholder in BW for long. There was a lockup period on those shares, which lapsed on Sunday, February 9th. We are now today announcing that we will distribute these shares to the owners, being the shareholders of Avance Gas. For every Avance Gas share you own, you will receive one share in BW. We are planning to transfer those shares to your VPS account by February 26th, which means you should have them in your account when BW LPG is reporting their Q4 numbers on February 27th. If you keep it until their ex-dividend date, you will also then be entitled to get a dividend from BW for the fourth quarter. In general, Avance Gas, we received $6 million of dividend for the third quarter. We still have one pending transaction. Basically, more or less everything is ready.
We signed the heads of agreement with Exmar to sell our MGC fleet consisting of four newbuilds for $282.4 million. That was signed in November. In January, we moved forward signing the actual novation of the shipbuilding contract, where we signed them, Exmar signed them, and also the yard signed them that these shipbuilding contracts can be novated to Exmar, which then is liable for the remaining CapEx. The only outstanding item today is that the bank providing the refund guarantee for the yard is sending us a SWIFT confirming that the refund guarantee has been moved from Avance Gas to Exmar. With the Lantern Festival yesterday in China marking the end of the Chinese New Year festive season, we expect this SWIFT to be incoming very swiftly.
Once that has happened, we have also then today declared a dividend of $0.75, which will be paid out immediately once the funds are released to us. The money is already on our escrow. The only thing missing is this SWIFT. Once that's been confirmed, the money will be released to Avance Gas, and we will not sit there and hold on those $62.1 million. We will send them back to you immediately. We are declaring a regular cash dividend per share of $2 per share, meaning $153 million. We are structuring this return as return of capital. We had a special general meeting on February 5th where we were authorized to reduce our paid-in capital. The shareholders getting this dividend will get this as return of capital, not return on capital, which has favorable tax treatment depending a bit on your tax jurisdiction.
As I mentioned, we will pay out the extraordinary dividend of $0.75 as soon as we receive the SWIFT and the escrow is released. As I mentioned, we will pay a dividend in kind where the compensation is one BW share for each four shares you have in Avance Gas. Once that is done, we will collect the remaining cash. We still have our pending payment from Exmar of $34 million payable scheduled in April. We will just wind up the company, sort out all receivables and liabilities, and then pay out the money sometime, probably April, May this year before we liquidate the company. In that process, we also terminate all the employment contracts, including my own, Randi, and all the other employees of the company.
If we're looking at the journey we've been through, we sold three ships, older ships, as part of our fleet renewal process in 2022: Thetis Glory, Promise, and Providence. This year, we've been super busy selling 16 VLGCs. We sold Iris Glory in January, Venus Glory in March. We sold the two newbuilds, Castor and Pollux, in March and May. We had a big bang on 15th August when we sold the remaining 12 VLGCs to BW for this $1 billion and $50 million. Lastly, when we reported Q3 numbers on November 27, we also announced the sale of the MGC fleet. These are newbuildings under construction in 2026.
Taking this all together, it's a bit more than $1.8 billion of asset sales, giving us a total book gain of close to $500 million and a cash release of close to $600 million plus these BW shares. We pegged them here at the transaction value where we put the BW share at a theoretical net asset value, fair price of $17.25. It sagged at the end of the year, closing slightly above $11, and now it's up again to $13. It will be exciting to see what BW are reporting later in the month. We are simple people, so we try to have a simple strategy, basically buy low and sell high, try to contract the ships when they are cheap, and then selling the ships when asset prices are more attractive. I think we've done that fairly well.
If you look at the dual fuel new builds, contracted them for $78 million, put on some extra spec on some of them, so the new build price closer to $80 million. We sold two new builds, as I mentioned, with delivery March and May last year for $120 million each. We sold the rest of the dual fuel new builds, four ships in total, average age slightly less than two years, but then average price of $150 million. We think we really found a good spot there to sell the ships. We sold, as I mentioned, three ships in 2022. The last two ships we sold this year, we're actually selling ships which are 15 years at a price close to the 10-year parity. Altogether, good divestments. In general, also, it's not that easy to sell a lot of ships.
This market is not super liquid when it comes to second-hand tonnage. We've seen the second-hand market drying out in the second half of 2024 and also new build activity tapering off. We are also happy with that. We've seen on the MGCs, contracted these for $61.5 million, selling them at $70.6 million, where basically the new build price has plateaued. Just to give a recap on the different transactions then, I've already covered this in quite a lot of detail. Twelve VLGCs to BW with the cash proceeds of around $240 million and then the BW shares. At kind of the fair asset value, we think $17.25, meaning $333 million. Value of those stocks today is around $250 million.
The MGCs, contracted $248 million, sold for $282 million, giving us this $34 million profit, which we expect to collect in April once the steel cutting of the fourth and final new building takes place. At year-end, we had paid yard installments of $56 million, and then we paid another yard installment of $6 million in January. That translates to $62 million, which we are waiting to collect shortly, and then $34 million in April. In our to-do list or the wind-up process, we are already checking a lot of these boxes. We have distributed some fairly large dividends in advance of the liquidation process. We have closed the BW transaction. We held a special general meeting last week to reduce our paid-in capital. We have signed novation on the MGCs.
The only thing waiting for is the SWIFT to release the $62 million and then collect the profit in April. We have now reported Q4 and announced distribution of more cash and the BW shares. In April, once we collect the remaining funds, we will send out notice for our general meeting probably in May. We will be doing a Q1 final reporting somewhere end of April, maybe early May, where we'll do the final distribution of capital to the shareholders. We will start the kind of wind-up process by having a liquidator in Bermuda. That will be the end of the Avance Gas story about 11 years after we listed this company in Oslo. It has been a good run, especially the last couple of years here with a lot of dividends I'm going to cover on the last page.
We have been doing quite well operationally. Last year, we made $164 million in kind of earnings. We paid out $165 million. You can see for 2023, dividend per share was $2.15 compared to earnings of $2.40. We thought, okay, Q1, when we sold some of the ships, let's pay a year's dividend in one quarter. We paid $2.15. Next quarter, we paid out $1.35. Together, that was $3.50. We thought in Q3, why not pay out the same amount in just one quarter? We took it up to $3.50. We are not able to double it for Q4, but not far. $2 of our cash dividend, $3.25 dividend in kind in the BW shares, kind of the market value of those shares today, and then the $0.75, which we plan to pay out very shortly. That has turned out to $6 of dividends.
We will have a remaining dividend in April, May of $0.70-$0.75 or so, depending a bit on timing and cost in connection with the wind-up. Although if you look at some of the numbers here, it is not really that much. For those shareholders who have a share count not divisible by four, you have a few days to kind of adapt to that, adapt your share count in order to not miss out on a right for a share. We will have an ex- date on February 18. If you want to maximize your dividend in terms of BW shares, you should get a share count divisible by four. Sources and uses for these dividends, before handing over to Randi, we closed the year with $176 million. $250 million now is the value of our BW shares. We have paid out at year-end.
We had paid the yard $56 million, and then we paid $6 million in January, meaning the $62 million. We collected the $34 million profit element in April. We have a marginal working capital G&A and these other costs of about $1 million. That translates to $516 million in kind of net asset values. I believe in Q3, when we reported, we said $518, estimated $518. We are in line with the estimates we provided in November. We are paying out the BW shares. We will probably, after this dividend, have around 130,000 BW shares left. That's why it's a slightly lower number, $249. We pay out the ordinary cash dividend of $2 per share. After that, we have $114 million of remaining kind of net asset value. We are paying the $0.75, $58 million.
We will have somewhere around $55 million-$60 million we expect to have left once that has been completed. That is the money you can expect to receive for the final Q1 dividends. With that, I think I hand it over to you, Randi.
Thank you, Øystein. Let's move to slide 10 for the income statements and key financial figures for the fourth quarter. Overall, the results were more or less in line with the guidance provided in November last year, both in terms of the top line and the bottom line. Our TC on discharge-to-discharge came in at $28,200 per day. We had a positive load-to-discharge effect of $7,000 a day, adding to the TC, which is explained by no load-to-discharge adjustment of the spot voyages as we sold the whole VLGC fleet at year-end.
Thereby, the effect is only related to the reversal from the third quarter. We ended up with a reported TC per day of $35,000 a day, rounded. Moving further down in the P&L, you can see that we have no depreciation during the fourth quarter, which is the result of the VLGC fleet being classified as held for sale on August 15. Consequently, the depreciation stopped. If we depreciated the vessel until the actual handover date of the vessel to BW LPG, the depreciation expense would have been $12 million, of which $5 million should have been recognized in Q3 and $7 million in Q4. The gain on sale of $287 million recorded during the fourth quarter relates to the sale, obviously, of the VLGC fleet to BW. The gain is calculated based on the transaction settlement consisting of 70% settlement in cash and 30% in BW shares.
The BW LPG share was measured using the quoted share price at the announcement date on August 15 of $16.18. Thereby, the total transaction settlement was $1 billion and $33 million in our books. Less the book value of $746 million brings us to the gain of $287 million. The gain on sale, combined with the $12 million lower in depreciation expense, gives us the total P&L effect of $299 million during the quarter, as explained by Øystein on previous slides. The net finance expense of $91 million was a significant amount this quarter, which I will explain on a high level. Since the announcement date of the BW LPG transaction, the share of BW went down from $16.18 to $11.16. Thereby, we have an unrealized mark-to-market loss in our books of $97 million recognized as finance expense.
As of yesterday, the share quoted at approximately $13, meaning that the unrealized mark-to-market loss has been reduced by $35 million, which will be recorded as a gain for the first quarter, 2025 . As a result of selling the VLGC fleet, we have also repaid all our interest-bearing debt. Actually, we early prepaid the debt for five vessels to save some interest expense. Due to the accounting standard, we had to expense the debt issuance cost amortized over the maturity of the loan of $4.6 million. With no underlying debt to hedge, we also terminated the interest rate swaps during the quarter, resulting in a gain of $8 million, of which $4.4 million had cash. This basically leaves us with a net profit of $210 million or earnings per share of $2.74 per share for the fourth quarter 2024.
This obviously boosted our net profit for the full- year of 2024, amounting to $443 million, equaling $5.78 per share, which is actually the best full-year result for Avance ever, much attributable to the vessel sales.
It's hard to sell the fleet every year.
Yeah. We will not try to do the same now, are we?
Maybe try to sell some hot air.
Yeah. In total, during the year, we have sold 16 vessels, as Øystein already commented, which resulted in a book gain on sale of $408 million. By excluding the gain on the vessel sales, change in fair value and dividend income of the BW investment, the net profit was $125 million, which ranks as one of the top three best years for Avance. Let's go to slide 11. You can see that our balance sheet has been shrinked by the sales, obviously.
We had a total assets amounted to $457 million at year-end compared to $1.2 billion last year. Cash were $176 million compared to $132 million last year. During the year, we generated a net free cash flow of $630 million, of which 70% comes from the vessel sales. The remaining 30% comes from the cash flow from operations, net of CapEx on the MGCs. 93% of the free cash flow generated was paid in dividend to shareholders during the year, amounting to $586 million. The 16 VLGC sold was also derecognized following the completion of the four vessels in the first half and the 12 vessels sold to BW in the second half completed, actually the last sale on New Year's Eve, just in time. This explains the reduction in the vessel book values on the VLGCs and new building.
While the MGCs remains in our balance sheet with a book value of $57 million at year-end, and it's classified as held for sale as the highly probable criteria in IFRS has been fulfilled. We paid an additional installment of $6.2 million in January, which brings us to the $62.1 million, which will be reimbursed by Exmar shortly. As we commented earlier, the transaction with BW was settled 70% cash, 30% in shares. These 19.3 million shares were recorded as current assets measured at fair value of $215 million at year-end. This was based on the quoted share price of $11.16. On the liability side, there are no interest-bearing debts left, resulting in an equity ratio of 99%. We are in the process of distributing the shareholders' equity back to investors, of which $403 million has been announced today.
It is more to come, as explained by Øystein earlier. We have also provided a pro forma financial key figure for 2025 and how the P&L will look like. We initiated the cost cutting last year following the sale of the fleet, and headcounts will be reduced during the first half of 2025, including the termination of employment contracts, including the termination of the employment contract of the management. We estimate that the administrative and general expense will be about $7 million, consisting of settlement of outstanding obligations towards vendors and personal expense, as well as the winding-up costs. The MGC sale is expected to be recorded at $34 million following closing of the transaction with Exmar. Interest expense of $1 million from our cash holdings will also be collected.
We have a fair value adjustment coming from the BW shares of $35 million, as mentioned earlier, subject, of course, to fluctuations in the share. Thereby, we estimate the net profit to be $63 million for the first half of 2025. On the next slide, page 12, we have the cash flow bridge showing the movements during the fourth quarter, as well as the expected movements in the cash basis announcement today. We started the quarter with $193 million in cash. We generated $251 million in free cash flow , of which $242 million net cash proceeds from BW LPG transactions, all of which and more was paid in dividends. On Little Christmas Eve, we paid $3.50 per share in dividends, amounting to $268 million in total. Thereby, we ended the quarter with a cash position of $176 million.
In 2025, an additional $90 million will be collected coming from the MGC sale, net of yard installments paid by Avance this year. We have $56 million is expected net cash effect following issuance of the refund guarantee, as commented by Øystein. The remaining $34 million will be collected in April. Further, we estimate a positive net working capital of $1 million during the first quarter, consisting of collecting the outstanding receivables as freight and demurrage, sale of the remaining 130,000 shares in BW after distribution, offset by the outstanding obligation towards ship managers, as well as administrative expense, including winding-up costs. We announced a combined distribution of BW shares and return of capital of $5.25 per share in total for the fourth quarter.
This includes the $3.25 per share in BW shares and $2 million in cash dividend structure as return of capital, amounting to $403 million in total. As already commented, shareholders will receive one BW LPG share for every four Avance Gas shares they hold. We expect to pay an additional extraordinary dividend of $0.75 per share once the refund guarantee in relation to the MGC sale has been issued and the yard reimbursement amounting to $62 million has been settled. This leaves us with a pro forma cash of $56 million or approximately $0.70 per share, which is expected to be distributed per May 2025, prior to delisting and winding up of the company. By that, I hand the word back to you, Øystein, to comment a bit on the U.S. production growth and what we can expect in the stock market.
Yes. Okay. Thank you.
I just want to make one comment there because you look at this mark-to-market loss in Q4, $97 million. It seems like although it's been reduced now with the BW share picking up in Q1, the loss is about $60 million now on this. It seems like it's a fairly big number. Just to put it into perspective, we sold the fleet for slightly more than $1 billion. When we sold that fleet, we got 70% of the settlement cash settled. The remaining shares then we are taking in BW shares. If we look at what has happened since we announced this on August 15, the market really slumped because the winter market never really took off. If you look at Dorian share, which Dorian has a very similar strategy to Avance Gas, slightly less levered in terms of indebtedness.
That stock went from $38 to $23 today, which means it dropped 40% even with less leverage than Avance Gas. We have then got a BW share which has less leverage and have a more integrated model where they have made close to $100 million on the product services just in one year, 2024. That stock, since we took settlement of that stock, went from $16 to $13, down less than 20%. Kind of where would our stock be given the fact we have had a similar kind of setup as Dorian? We feel that we de-risked it. We've taken the cash on top of the cycle. We've taken most of the settlement in cash. We have been able to get a settlement in a share which has performed relatively better than the sector.
With that, we are not really into the market any longer. We're going to be exposed to the market until we dividend out the BW shares and collect the money on the MGCs. We can just give you some key input on this as you will become shareholder in BW very shortly. In terms of the market, market growth is good, driven by U.S., as has been the case the last couple of years. Needless to say, the U.S. volumes are the most ton- mileage intensive, driving shipping demand. As we have told you about in the presentation in November, the market has been a bit soft because Panama Canal has been up in normal capacity, meaning sailing distances are driven down, resulting in more ships available in the market. More ships in the market means lower rates.
In terms of the imports, it's still healthy growth from the traditional importers being China and India. Looking at U.S. exports, which is the main driver for the market, domestic consumption is basically a flat line, while production will keep on growing, meaning that this will be the main driver of export growth. At the same time, we do see quite a few export terminals in the U.S. ramping up. First one out, Energy Transfer's Nederland, coming up later in the year, and then two projects from Enterprise. We had just a recent announcement from ONEOK for a further expansion in 2028. We can see the capacity in the U.S. here growing from about 60 million tons a year up to all the way up to 100 million tons. It's really a good driver for freight demand.
In terms of the freight market, as I said, it's really sagged. I think the only thing about this year is we haven't had that huge drop in the freight market as we've seen in 2024 and 2023 at the beginning of the year. The reason was that the rates were dropping from $40,000 to around $25,000 today, while the last two seasons, we have been above $100,000 per day and then dropping all the way down to basically OpEx levels. We are above that. The market will tighten during the year for reasons I'm going to explain later, meaning that the FFA curve or the forward freight agreements are flatlining at around $40,000. FFAs are not really that good at predicting actual level, but they give you a good sense of direction of the market. Direction is up.
Usually, we do see some spikes in the winter market, so it's a bit surprisingly flat in the winter season. But at $40,000 per day, so if we look at the investor presentation by BW, which they released on August 15 in connection with the transaction, they have certain intervals of the freight rates and what kind of dividend yield they will be able to pay under those circumstances. If you look at that presentation, which is available on BW website, you will see that at $40,000 per day, they will be able to pay a dividend yield of 17%-21%, depending on whether they have a payout ratio of 75% or 100%. We do think that it's a good investment.
As we said, when we made the assessment to take those shares as settlement for the 30%, we kind of pegged the value of that stock at $17.25, and it's been trading below that. Still, in terms of the rate movements, we've seen the terminals picking out a lot of the arbitrage because there's been basically too many ships. That arbitrage between freight and product has narrowed, but still, it's a bit wider than usual. There are some room here on the upside of rates, which is also evident from the FFA. Looking out at one theme that comes up from time to time, it's the Iranian sanctioned trade to China, and the numbers of ships going into that trade just keep on growing. Last year, 2023, we ended the year at around 50 ships. We did an assessment this week.
We came to a number in cooperation with brokers of 57 ships in this trade. You are talking about the fleet of slightly above 400 ships, so it is a huge number. These ships are old. Of those 57, 35 of those vessels are trading beyond the typical scrapping age. We do see Trump being more aggressive on Iran. This has been one of the drivers of the tanker market. It could also happen in the LPG space. Typically, you would see more production from OPEC, being then typically those with slack capacity, main contender Saudi, but maybe also United Arab Emirates. They will have a similar sailing route as the Iranian LPG. However, those Iranian ships in that trade will not be able to take those barrels. You will be moving demand from the dark fleet to the white fleet.
Additionally, you could see some more flow from the U.S. to China and India, which would be also a driver for ton- mileage intensive. It is also about the kind of the LPG capacity in the Middle East compared to Iran, which has a fairly high LPG production compared to or LPG export compared to the crude oil. We were looking at some of the numbers just to give you some sense of this. In 2021, when we came out of COVID, Saudi were able to put 900,000 more barrels on ships in exports. During that time, from 2021 to 2022, they grew their LPG export by 60,000 barrels per day. That year, when they grow their kind of oil production by 900,000 barrels, that year, Iran produced 1.2 million. They are now closer to 1.6 million. They produced 250,000 barrels of LPG.
There is a higher LPG export kind of ratio for Iran compared to Saudi. The historical kind of context here is that Saudi then will have one-third of the effect of the LPG- to- oil ratio compared to Iran, while the United Arab Emirates, they have a higher LPG- to- oil ratio. In general, we do think this would be positive for those who own LPG, so LPG ships in the white trade. You would probably also see a big pickup in scrapping of all of these older ships. Heading then into the last slide before concluding, it's the delivery schedule. As I mentioned, you have muted growth in the VLGC fleet now during 2025 and into the first half of 2026 before it takes off again from end of 2026, but in line with also the export production growth from the U.S..
As I mentioned, contracting has tailed off. We see a lot less contracting these days than we saw early last year. We see aging fleet also driven by those Iranian ships, which are very old. The last element I'm just going to touch upon is these dry docking cycles. They go depending on the contracting cycle. We see a lot more dry docking this year also, meaning that more ships will exit for special service, which will also kind of reduce fleet growth. In general, we have a constructive view on 2025 and 2026. We will see whether there will be some scrapping and how the ramp-up of these U.S. volumes will happen. With that, I think we conclude. I'm just not going to give too much here. Profits are good. We are paying out everything.
We completed the sale of the VLGC fleet. We are very soon closing the MGC transaction. Once that happens, you will also get an extra dividend of $0.75 on top of the $5.25 dividend declared today. We will collect the remaining funds from Exmar transaction and/or the working capital and pay out the remainder of the funds end of April, early May before we close the shop. With that, thank you for listening in. We're going to do some questions so we can check the phone whether there are some questions there before heading into the chat.
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Okay. Let's check the chat then. We have one question on the chat. Seems like everything is very clear. What are you going to do next? I think we explained it in rather good detail here. We're going to collect the money. We're going to pay it out. For myself, I'm going to keep on working on Flex. If you want to reinvest the money in another dividend company, you are welcome to invest in Flex. We have paid out, I believe, $610 million of dividends the last three and a half years. Randi will be busy doing a lot of this cleaning up and winding up the process, at least for a couple of more months.
We will come back with the updates end of April, early May. Until then, enjoy the dividends. I wish you a happy day.