1
AVANCE GAS - ANNUAL REPORT 2022
AVANCE GAS
ANNUAL REPORT
2022
Avance Gas, Avance Riegel
3
AVANCE GAS - ANNUAL REPORT 2022
2
AVANCE GAS - ANNUAL REPORT 2022
CONTENTS
3 Key Operational and Financial Highlights
10 History & Fleet
14 Presentation of the Board of Directors
16 Board of Director’s Report
24 Responsibility Statement
25 Consolidated Financial Statements
59 Statement of Corporate Governance
67 Auditor’s Report
Highlights
KEY OPERATIONAL AND FINANCIAL
Avance Gas, Avance Polaris
4 5
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
fl
fi
fffl

Freight Rates 2022
$ pr. ton









           


Source: Baltic; Clarkson, Poten & Partners



KEY FINANCIAL HIGHLIGHTS

$38,236

$224.2

12

$8,403

$1,375




4,7874,849

fi






fi
fifl


fi







fi
fi

fi




ft



4
1) Refer to Note 10 of the Financial statements for definitions and reconciliation of Alternative Performance Measures (APMs)

6 7
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
Avance Gas TCE
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


Cash-break even 2022
 
 
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



flfi
ff





ff
fl
flfi

fi

fi
fi
fl


ft
fi


fi





8 9
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
KEY OPERATIONAL HIGHLIGHTS
fl
98.3%

8

30

0


0.57

252*
*
fl


1,150,819

819,326

ff


fi



ff



fl

fl





fi

ft













fi

ff





The Fleet
VESSEL SIZE CBM YARD BUILT OWNERSHIP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
11
AVANCE GAS - ANNUAL REPORT 2022
10
AVANCE GAS - ANNUAL REPORT 2022

fl

History
& Fleet
Avance Gas, Avance Polaris
12 13
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
History
2007-2009


fi


Althea GasAvance

2013-2014







ff






fi

fi

2010-2012

flIris Glory
Thetis GloryVenus Glory

fl


PromiseProvidence

Avance Gas., Avance Riegel
2018-2020



fi

ft

fi





fi

flff




Avance



2021






fi


fi

fifi
Avance PolarisAvance Capella






ff

ff

2022

Thetis Glory
Providence Promise

Avance PolarisAvance
Capellafi
ft


fifi
fiAvance Rigel
Avance Aviorfifi
fi
fi
Avance CastorAvance Pollux
fi
fi


fi
2015-2017
MistralMonsoonBreeze
PassatSiroccoLevantChinookPampero

fl




ff

PRESENTATION OF THE
Board of
Directors
15
AVANCE GAS - ANNUAL REPORT 2022
14
AVANCE GAS - ANNUAL REPORT 2022
ØYSTEIN KALLEKLEV
Executive Chairman

ftff
ff



FRANÇOIS SUNIER
Director





KATHRINE FREDRIKSEN
Director





JAMES O'SHAUGHNESSY
Director

ff
ff
ffff




Avance Gas, Avance Riegel
17
AVANCE GAS - ANNUAL REPORT 2022
16
AVANCE GAS - ANNUAL REPORT 2022
Board of
Directors’
Report


fi





flfi

fl






fi

fi


fl



fi

COMPANY AND BUSINESS






fl





fl




MARKET DEVELOPMENT

ft
fi

fl









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
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
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
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


Avance Gas
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AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
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



fi





fi


ff



















FINANCIAL RESULTS



fifi

fl
ff
ff

fl

Consolidated results








fi
fi

fl
fffi

fi

Financial position and cash flow




fi
fi









fi

fi








fl
fl

ff
flfi


ff


FINANCING


fi
flfi

fi
fi
fl

fi




fl

fi

fi
fi
fl


ft
fi







ENVIRONMENT, SOCIAL AND
GOVERNANCE (ESG) REPORT







fl









fi






HUMAN RESOURCES
AND DIVERSITY









20 21
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022










ff


ff

ff


fi





fi




ff


HEALTH AND SAFETY


















ff





















ff

fift


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

ff

fi
fl

CORPORATE SOCIAL
RESPONSIBILITY


ff

















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


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
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fi














22 23
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
DIRECTORS AND OFFICERS
LIABILITY INSURANCE

ff




fi
GOING CONCERN
fi





fi

PRINCIPAL RISKS


fi



fi
fi












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


fi
fl

fi

ff












fl

fl






fi

SUBSEQUENT EVENTS





Director


Director


Executive Chairman


Director


25
AVANCE GAS - ANNUAL REPORT 2022
24
AVANCE GAS - ANNUAL REPORT 2022
fi
fi
fi
fi
fi

fi
Responsibility
Statement
Avance Gas, Chinook
Consolidated
Financial
Statements


Director


Director


Executive Chairman


Director


26 27
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
DECEMBER 31,
2022
DECEMBER 31,
2021
Note
Operating revenue 10 254,540 210,677
Voyage expenses 11 (71,504) (67,689)
Operating expenses 12 (40,748) (42,093)
Administrative and general expenses 13 (6,667) (6,466)
Gross operating profit 135,621 94,429
Depreciation and amortisation expense 5 (45,020) (47,209)
Gain on disposal of asset 5 18,648 -
Operating profit 109,249 47,220
Finance expense 14 (21,362) (16,608)
Finance income 1,692 1,859
Foreign currency exchange gains (302) 136
Income before tax 89,277 32,607
Income tax expense 15 (285) (498)
Net profit 88,992 32,109
Earnings per share 9
Basic 1.16 0.44
Diluted 1.16 0.44
(in USD thousands)
FOR THE YEAR ENDED
See accompanying notes that are an integral part of these consolidated financial statements.
CONSOLIDATED INCOME STATEMENT
DECEMBER 31,
2022
DECEMBER 31,
2021
Note
Net profit 88,992 32,109
Other comprehensive (loss) income:
Items that may be reclassified subsequently to profit
and loss:
Net fair value adjustment of interest rate swaps designated
for hedge accounting
7, 20 26,497 12,875
Amortisation of gain on discontinued hedges
7, 20 (647) -
Exchange differences arising on translation of foreign
operations (12)
Other comprehensive (loss) income 25,850 12,863
Total comprehensive income 114,842 44,972
(in USD thousands)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
See accompanying notes that are an integral part of these consolidated financial statements.
FOR THE YEAR ENDED
28 29
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
See accompanying notes that are an integral part of these consolidated financial statements.
DECEMBER 31,
2022
DECEMBER 31,
2021
ASSETS
Note
Cash and cash equivalents 3 224,243 101,910
Receivables
4 12,229 21,098
Related party receivable balances
16 - 134
Inventories 4,976 7,933
Mobilisation cost 4,186 2,322
Prepaid expenses 7,461 6,940
Other current assets
4 3,453 3,620
Derivative financial instruments
7 5,988 -
Total current assets 262,536 143,957
Property, plant and equipment
5 715,866 716,577
Newbuildings
5 83,597 92,609
Derivative financial instruments
7 5,871 2,240
Total non-current assets 805,334 811,426
Total assets 1,067,870 955,383
(in USD thousands)
AS OF
CONSOLIDATED BALANCE SHEET
See accompanying notes that are an integral part of these consolidated financial statements.
DECEMBER 31,
2022
DECEMBER 31,
2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Note
Current portion of long-term debt 6, 7 37,278 44,574
Accounts payable 4,308 7,477
Related party payable balances
16 248 532
Accrued voyage expenses 4,294 4,161
Accrued expenses 1,200 2,795
Derivative financial instruments
7 - 5,691
Other current liabilities 2,372 457
Total current liabilities 49,700 65,687
Long-term debt
6, 7 300,858 263,423
Long-term revolving credit facilities
6, 7 113,387 81,984
Derivative financial instruments
7 - 5,121
Total non-current liabilities 414,245 350,528
Shareholders’ equity
Share capital
8 77,427 77,427
Paid-in capital 431,366 431,366
Contributed capital 94,772 95,070
Accumulated deficit (5,620) (44,825)
Treasury shares (11,351) (11,351)
Accumulated other comprehensive loss
20 17,331 (8,519)
Total shareholders’ equity 603,925 539,168
Total liabilities and shareholders’ equity 1,067,870 955,383
(in USD thousands)
CONSOLIDATED BALANCE SHEET
AS OF
..................................................
Francois Sunier
Director
..................................................
James O'Shaughnessy
Director
..................................................
Kathrine Fredriksen
Director
The Board of Directors of Avance Gas Holding Ltd
April 14, 2023
..................................................
Øystein Kalleklev
Executive Chairman
30 31
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
SHARE
CAPITAL
PAID-IN
CAPITAL
CONTRIB-
UTED
CAPITAL
RETAINED
(LOSS)
INCOME
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
TREASURY
SHARES TOTAL
Balance December
31, 2020 64,528 379,851 94,780 (53,856) (21,382) (11,351) 452,570
Comprehensive
income (loss):
Net profit - - - 32,109 - - 32,109
Other comprehensive
income (loss):
Net fair value
adjustment of
interest rate swaps
designated for hedge
accounting less
portion reclassified
to income statement
(note 7, 20) - - - - 12,875
Exchange differences
arising on translation
of foreign operations - - - - (12) - (12)
Total other
comprehensive
income - - - - 12,863 - 12,863
Total
comprehensive
income - - - 32,109 12,863 - 44,972
Transactions with
shareholders:
Share Capital In-
crease (note 8) 12,899 51,515 - - - - 64,414
Dividend - - - (23,078) - - (23,078)
Compensation
expense for share
options (note 18) - - 290 - - - 290
Total transactions
with shareholders 12,899 51,515 290 (23,078) - - 41,626
Balance, December
31, 2021 77,427 431,366 95,070 (44,825) (8,519) (11,351) 539,168
(in USD thousands)
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
See accompanying notes that are an integral part of these consolidated financial statements.
SHARE
CAPITAL
PAID-IN
CAPITAL
CONTRIB-
UTED
CAPITAL
RETAINED
(LOSS)
INCOME
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
TREASURY
SHARES TOTAL
Balance, December
31, 2021 77,427 431,366 95,070 (44,825) (8,519) (11,351) 539,168
Comprehensive
income (loss):
Net profit - - - 88,992 - - 88,992
Other comprehensive
income (loss):
Net fair value
adjustment of
interest rate swaps
designated for hedge
accounting less
portion reclassified
to income statement
(note 7, 20) - - - - 26,497 - 26,497
Amortisation of gain
on discontinued
hedges
- - - - (647) - (647)
Exchange differences
arising on translation
of foreign operations - - - - - - -
Total other
comprehensive
income - - - - 25,850 - 25,850
Total
comprehensive
income - - - 88,992 25,850 - 114,842
Transactions with
shareholders:
Dividend - - - (49,786) - - (49,786)
Compensation
expense for share
options (note 18) - - (298) - - - (298)
Total transactions
with shareholders (298) (49,786) - - (50,084)
Balance, December
31, 2022 77,427 431,366 94,772 (5,620) 17,331 (11,351) 603,925
(in USD thousands)
See accompanying notes that are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
12,875
-
32 33
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
DECEMBER 31,
2022
DECEMBER 31,
2021
Note
Cash flows from operating activities
Cash generated from operations
21 142,180 91,158
Interest paid (19,057) (17,603)
Settlement of share options (933) (959)
Net cash flows from operating activities 122,190 72,596
Cash flows used in investing activities:
Net cash proceeds from sale of assets
5 141,525 -
Capital expenditures
5 (155,102) (60,179)
Net cash flows used in investing activities (13,577) (60,179)
Cash flows from financing activities:
Dividend (49,786) (23,078)
Proceeds from issue of share capital - 64,414
Repayment of long-term debt
6 (271,242) (61,652)
Drawdown of long-term debt
6 429,000 41,650
Repayment of revolving credit facility
6 (93,598) (6,126)
Transaction cost related to loans and borrowings (6,212) (1,707)
Cash settlement of derivatives 6,067 -
Net cash flows from (used in) financing activities 14,229 13,501
Net increase (decrease) in cash and cash equivalents 122,842 25,918
Cash and c
ash equivalents at beginning of period 101,910 75,882
Effect of exchange rate changes on cash (509) 110
Cash and cash equivalents at end of period 224,243 101,910
(in USD thousands)
FOR THE YEAR ENDED
CONSOLIDATED STATEMENT OF CASH FLOWS
See accompanying notes that are an integral part of these consolidated financial statements.
1. GENERAL
INFORMATION
Corporate information
Avance Gas Holding Ltd (the “Company” or “Avance Gas”)
is an exempted company limited by shares incorporated
under the laws of Bermuda on January 20, 2010. The
Company and its subsidiaries (collectively “the Group”)
are engaged in the transportation of Liquefied Petroleum
Gas (“LPG”). As of December 31, 2022, the Company owns
and operates a fleet of twelve ships and four Dual Fuel LPG
newbuildings due for delivery in 2023 and 2024.
Basis for preparation
These consolidated financial statements comprise the
consolidated income statement, consolidated statement
of comprehensive income, consolidated balance sheet,
consolidated statement of changes in shareholders’ equity,
consolidated statement of cash flow, and the basis of
preparation, accounting policies and related notes of the
Company, and its subsidiaries (collectively, the “Group”).
The consolidated financial statements have been prepared
in accordance with the International Financial Reporting
Standards (“IFRS”), as adopted by the European Union.
Details of the Group’s accounting policies, including changes
thereto, are outlined in Note 2 Significant Accounting
policies.
The consolidated financial statements are prepared on the
historical cost basis except for certain assets, liabilities,
and financial instruments, including derivatives, which are
measured at fair value. Further, the financial statements are
prepared based on the going concern assumption.
The functional currency of the Group is US dollars. The
consolidated financial statements are presented in US
dollars, and all amounts have been rounded to the nearest
thousand, unless otherwise indicated.
The Group has considered the potential impact of climate-
related matters related to GHG emissions and more
stringent regulations and standards for the industry in
preparing the consolidated financial statements of the
Company. The Group’s Environmental Policy outlines how
to reduce GHG emissions through optimal operation of
vessels and machinery, implementing new technologies,
and diligent work with Ship Energy Efficiency Management
Plan (SEEMP). The Group focuses on its vessel’s GHG
emission profiles of the vessels when considering fleet’s
useful economic life, residual values and impairment. The
Group’s fleet has an average age of less than 6 years old
including the newbuilding program.
2. SIGNIFICANT
ACCOUNTING POLICIES
ESTIMATION UNCERTAINTY,
JUDGEMENTS, AND
ASSUMPTIONS
Key accounting estimates and
judgements
In connection with the preparation of the consolidated
financial statements, management has made assumptions
and estimates about future events, and applied judgements
that affect the reported amounts of assets, liabilities,
revenue, expenses, and the related disclosures. The
assumptions, estimates and judgements are based on
historical experience, current trends, and other factors
that management believes to be relevant at the time the
consolidated financial statements are prepared. Actual
results may differ from these estimates. Critical accounting
estimates and judgements are those that have a significant
risk of causing material adjustment in the next year’s
reporting period.
Management believes the following area involves significant
judgements and estimates in the preparation of the
consolidated financial statements:
IMPAIRMENT OF NON-CURRENT ASSETS
The Group has significant carrying amounts related to
ships. For the purposes of preparing the Group's financial
statements, management is required to assess the ships
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
34 35
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
for indicators of impairment or reversal of previously
recognised impairment, whenever events or changes
in circumstances indicate the carrying amount of the
ships may not be recoverable, or that assumptions for
previously recognised impairment are no longer present.
The Group tests its fleet of ships for impairment and reversal
of impairment on a vessel-by-vessel basis as that is the
lowest level in which the cash flows are independent of
other cash-generating units.
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
The Group holds financial derivative instruments for
hedging purposes, which are measured at fair value. When
measuring fair value, the Group uses observable market
data to the extent possible. Where there is no active market,
fair value is determined using valuation techniques which
includes discounted cash flows method based on forward
curves after the balance sheet date.
REVENUE RECOGNITION
Voyage revenues from spot voyages are recognised as the
Company satisfies its performance obligations in accordance
with IFRS 15. The performance obligation is satisfied over
time from the point of loading to the point of discharge.
Management uses judgement to estimate the total duration
of each voyage at year end and allocates revenue to
the voyage based on the percentage of completion. In
estimating the total duration of the voyage, management
considers historical trends, the operating capacity of each
vessel and the distance of the planned route.
ACCOUNTING POLICIES
Basis of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date of no control.
All intra group transactions and balances between group
companies are eliminated upon consolidation, including
any gains and losses on transactions. When necessary,
amounts reported by subsidiaries have been adjusted to
conform with the Group’s accounting policies.
Foreign currency
The functional currency of Avance Gas and the majority of
its subsidiaries is U.S. dollars.
Transactions in foreign currencies are translated at
the foreign exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated
at the foreign exchange rate prevailing at that date. Non-
monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are not translated
while non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated
at foreign exchange rates prevailing at the dates the fair
value was determined.
Operating segments
As of December 31, 2022, the Group operates twelve VLGCs
and four Newbulidings under construction in the LPG
segment. These vessels are operating worldwide and
thereby it is considered that allocating the assets to specific
locations are not suitable. However, during the year 2022,
the Group mainly loaded the cargo in the Middle East and US
Gulf and discharged in Asia and Europe. The performance
of the vessels is reviewed regularly by the chief operating
decision maker, which is the Group’s management, and
thereby constitutes the Group’s only reportable segment.
Financial assets
ACCOUNTS RECEIVABLE
Accounts receivable are initially recognised at the
transaction price in the contract with the customer and
are subsequently measured at amortised cost. Accounts
receivable are assessed for impairment on an ongoing basis
using the expected credit loss method and presented net
of expected losses if expected losses are not insignificant.
Individual receivables are credit impaired and subsequently
written off if enforcement activities indicate that a full
recovery is not possible.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include current bank deposits
and monetary items with a maturity of three months or less.
Inventory
Inventories are valued at the lower of cost and net realisable
value. Inventories, being predominantly bunkers and lube
oils, are accounted for based on first-in, first-out principle.
Property, plant and equipment
Items of property, plant and equipment mainly consist
of the Group’s ships, in addition to furniture and fixtures,
which are measured at cost, less accumulated depreciation
and any recognised impairment losses. Cost includes
expenditures that are directly attributable to the acquisition
of the asset, with addition of directly attributable borrowing
costs for assets that take a substantial period of time to get
ready for their intended use.
Subsequent expenditures are only capitalised if it is
probable that the future economic benefits associated with
the item will flow to the Group. Such expenditures include
major refits and cost of replacement assets. Subsequent
expenditures are included in the carrying amount of the
asset or recognised as a separate asset as appropriate.
Repairs and maintenance which are considered as a regular
part of the daily operation of the ships are charged to the
income statement as they occur and are included in Other
operating expenses.
Generally, ships drydock every five years. After a ship is
fifteen years old, an intermediate survey is performed
by a shipping classification society between the second
and third year of the five-year drydocking period. The
Group capitalises a substantial portion of the costs
incurred during drydocking, including the survey costs
and depreciates those costs on a straight-line basis from
the time of completion of a drydocking or intermediate
survey based upon the estimated life of each component
of the drydocking. Costs related to routine repairs and
maintenance incurred during drydocking that do not
improve or extend the useful lives of the ships are expensed.
Depreciation is recognised on a straight-line basis over the
remaining useful life of the asset. Depreciation commences
when the asset is available for use, being in the location
and condition necessary to operate as intended by
management.
Estimated useful life is 25 years for each VLGC and from
3 to 5 years for drydock assets and furniture and fixtures.
Residual value for the ships is based on steel price times
lightweight tonnage and is reassessed annually. If the
drydock results in an extension of the useful life of a
ship, then the estimated useful life of the ship is changed
accordingly.
An asset is derecognised upon disposal or when the asset
is no longer expected to generate any future benefits to
the Group. Gain or loss due to disposal of the asset is
calculated as the difference between the net proceeds
from the disposal and the carrying value of the asset and
is recognised in the income statement.
IMPAIRMENT AND REVERSAL OF IMPAIRMENT
Property, plant and equipment is reviewed for impairment
whenever events or significant changes in circumstances
indicate that the carrying amount might not be recoverable.
If any such indication exists, the asset’s recoverable amount
is estimated in order to determine the extent of any
impairment loss. Where the asset does not generate cash
flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the
risks specific to the asset.
An impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount.
An impairment loss is assessed for reversal if there is an
indication of a subsequent increase of the recoverable
amount. If such indications exist, a previously recognised
impairment is reversed partially or in full if there has been
a change in the estimates used to determine the asset’s
recoverable amount.
Borrowing cost
Borrowing costs that are directly attributable to the
acquisition, construction or production of assets that take
a substantial period of time to get ready for their intended
use or sale (‘qualifying asset’) are added to the cost of such
assets. Borrowing costs added to the carrying amount of
Property, plant and equipment are depreciated over the
useful life of the respective asset.
36 37
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
Financial liabilities
INTEREST-BEARING DEBT
The Group currently holds bank loans and a lease financing
agreement which are initially recognised at fair value less
directly attributable transaction costs, and subsequently
measured at amortised cost using the effective interest rate
method. The portion of bank loans which is due within 12
months after the balance sheet date is presented as current.
OTHER FINANCIAL LIABILITIES
Financial liabilities as accounts payable and other current
liabilities are presented as current if the liability is due
within 12 months after the balance sheet date. If the
contractual obligations related to any financial liabilities
expire, the liability is derecognised.
Derivative financial instruments
INTEREST RATE SWAPS
The Group holds interest rate swaps for the purpose of
hedging its exposure to fluctuations in the market interest
rates. All the interest rate swaps are designated for hedge
accounting. These derivative financial instruments are
initially recognised at fair value on the date the derivative
contract was entered into and are subsequently remeasured
at fair value, with the effective portion of the hedge
recognised through other comprehensive income at the
end of each reporting period.
The Group documents at the inception of the hedging
transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have
been, and will continue to be, highly effective in offsetting
changes in fair values or cash flows of hedged items.
The fair values of the derivative financial instruments used
for hedging purposes are disclosed in note 7. Movements in
the fair value of hedging derivatives in shareholders’ equity
are shown in note 20. The derivative financial instruments
are presented gross in the consolidated balance sheet
unless contract terms include the option to settle the
instruments on a net basis and the Group has the intention
and ability to do so. Derivative financial instruments with
maturity equal to or less than 12 months after the balance
sheet date are classified as a current asset or liability, and
as non-current asset or liability if the maturity exceeds 12
months.
Operating revenue
The Group renders transportation services of LPG by sea
and has categorised its revenue streams the two following
categories:
FREIGHT REVENUE
The Group recognises revenues as it satisfies its
performance obligation to deliver freight services to the
customer. Revenue is recognised on a load-to-discharge
basis in accordance with IFRS 15, with cost related to
fulfil the contract incurred prior to loading capitalised as
mobilisation costs and amortised over the related period
for which revenue is recognised. Voyage expenses incurred
as repositioning for non-committed freight contracts are
expensed as incurred. Other revenue from services, such
as demurrage, is recognised when earned and is included
in freight revenue.
TIME CHARTER REVENUE
Time charter revenue is accounted for as an operating lease
under IFRS 16 and is recognised on a straight-line basis over
the term of the time charter arrangement.
Expenses
VOYAGE EXPENSES AND OPERATING EXPENSES
Voyage expenses include all expenses that are incurred
as a direct and incremental consequence of a particular
voyage, such as bunker fuel expenses, port fees, cargo
loading and unloading expenses, time charter expenses,
canal tolls and agency fees. Ship operating expenses include
crew costs, repairs and maintenance, insurance, lube
oils and communication expenses. Voyage expenses are
recognised pro-rata over the duration of the voyage, while
ship operating expenses are recognised when incurred.
Share-based compensation
The fair value at the grant date of options granted to
employees is recognised as an employee expense, with a
corresponding increase in equity, over the vesting period.
The fair value of the options is measured using the Black-
Scholes option valuation model, taking into account the
terms and conditions upon which the options were granted.
The total amount to be expensed is determined by reference
to the fair value of the options granted, including any
market performance conditions (e.g. the entity’s share
price), excluding the impact of any service and non-market
performance vesting conditions and including the impact
of any non-vesting conditions (e.g. the requirement for
employees to save or hold shares for a specific period of
time).
Income taxes
Under current Bermuda law, the Company is not required
to pay taxes in Bermuda on either income or capital gains.
Through the Group’s shipping activities, some subsidiaries
operate in foreign jurisdictions and are subject to local tax
schemes, including the local tax system in Norway and
in the United Kingdom. Income tax expense includes the
current tax payable based on taxable profit for the year,
adjusted for tax adjustments from previous periods, and
any changes in deferred taxes.
Leases
The Group applies an accounting policy choice that short-
term leases (being 12 months or less) and leases of low
value will be expensed as incurred, following the exemption
in IFRS 16. This mainly applies to short-term leases of
office equipment and low value leases of office premises,
which are charged to the income statement as incurred
and included in Administrative and general expenses. The
Group assesses at contract inception whether a contract is,
or contains, a lease. As of the reporting date the Group has
not entered into any lease contracts that are not meeting
the short-term or low value exemptions in the standard.
NEW OR AMENDMENTS
TO STANDARDS
The following new or amendments to standards and
interpretations have been issued and become effective
for annual reporting periods beginning on or after January
1, 2023, and earlier adoption is permitted. The Group
has not early adopted the new or amended standards
in preparing these accounts, and they are not expected
to have a significant impact on the Group’s consolidated
financial statements:
.
Insurance Contracts (IFRS 17) and Insurance Contracts
(Amendment to IFRS 17)
.
Presentation of Financial Statements (Classification
of Liabilities as Current or Non-current (Amendment
to IAS 1)
.
Presentation of Financial Statements and Practice
Statement 2 (Disclosure of Accounting Policies)
(Amendment to IAS 1)
.
Accounting policies, Changes in Accounting Estimates
and Errors (Definition of Accounting Estimates)
(Amendment to IAS 8)
.
Deferred Tax related to Assets and Liabilities arising
from a Singe Transaction (Amendment to IAS 12)
The company has adopted all other new standards and
amendments that are applicable as of January 1, 2022,
which had no material impact on the Group’s consolidated
financial statements. These include Classification of
liabilities as Current or Non-current (Amendments to IAS
1), Covid 19-related Rent concessions (Amendments to
IFRS 16) and Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
38 39
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise of cash and short-term time deposits held by the Group, which are subject to an
insignificant risk of changes in value. The Group has no restricted cash.
DECEMBER 31,
2022
DECEMBER 31,
2021
Cash at bank 224,243 101,910
Cash and cash equivalents 224,243 101.910
(in USD thousands)
AS OF
4. RECEIVABLES AND OTHER CURRENT ASSETS
DECEMBER 31,
2022
DECEMBER 31,
2021
Receivables
Customer trade receivables 9,780 18,984
Demurrage 2,951 2,466
Other 2 1
Total 12,733 21,451
Allowance for credit losses (504) (353)
Receivables 12,229 21,098
AS OF
(in USD thousands)
Refer to note 7 for an analysis of credit risk of receivables.
DECEMBER 31,
2022
DECEMBER 31,
2021
Other current assets
Advance canal toll and port disbursement 3,034 3,138
Other assets 419 481
Other current assets 3,453 3,620
AS OF
(in USD thousands)
5. PROPERTY, PLANT AND EQUIPMENT
& NEWBUILDINGS
SHIPS
FURNITURE
AND
FIXTURES DRYDOCKING
TOTAL
PROPERTY,
PLANT AND
EQUIPMENT
Cost:
December 31, 2020 1,019,744 486 38,713 1,058,943
Additions 2 139 2 , 4 8 5 2,627
Disposals - - - -
December 31, 2021 1,019,746 625 41,198 1,061,570
Additions 166,808 - 467 167,275
Disposals (204,548) ( 6 3 ) (9,901) (214,512)
December 31, 2022 982,007 5 6 2 31,764 1,014,333
(in USD thousands)
Accumulated depreciation, amortisation, impairment and reversals:
December 31, 2020 284,777 297 12,710 297,784
Depreciation expense for the year 38,289 19 8,901 47,209
Disposals - - - -
December 31, 2021 323,066 316 21,611 344,994
Depreciation expense for the year 38,321 17 6,682 45,020
Disposals (83,306) (40) (8,201) (91,547)
December 31, 2022 278,081 294 20,092 298,466
Carrying value:
December 31, 2021 696,680 309 19,588 716,577
December 31, 2022 703,926 269 11,672 715,866
40 41
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
Sales of Vessels
During the first half of 2022, the Company sold the 2008
built VLGC’s Thetis Glory and Providence resulting in the
Company recognising a gain on sale of vessels of $10.8
million. During the fourth quarter of 2022, the Company
sold the 2009-built VLGC Promise with a Time-Charter (TC)
attached resulting in the Company recognising a gain on
sale of vessels of $7.9 million resulting in a total gain on
sale for the year of $18.7 million.
Newbuildings
On December 16, 2019 the Company entered into
shipbuilding contracts for two LPG Dual-Fuel VLGCs with
Daewoo Shipbuilding and Marine Engineering (DSME) in
South Korea, for delivery in Q1 2022. The Company took
delivery of these vessels (VLGC Avance Polaris and VLGC
Avance Capella) during the first quarter of 2022, resulting
in reclassification of $166.3 from newbuildings to property,
plant and equipment.
On January 18, 2021 the Company entered into shipbuilding
contracts for a further two LPG Dual-Fuel VLGCs with DSME
in South Korea (Avance Rigel and Avance Avior). Avance
Rigel was subsequently delivered in February 2023 and
Avance Avior is scheduled for delivery during the second
quarter 2023.
On April 21, 2021 the Company further increased its Duel-
Fuel VLGC newbuilding program with DSME in South Korea
with an additional two vessels scheduled for delivery in
the second half of 2023 and 2024.
As of December 31, 2022, The Company has four Dual Fuel
LPG newbuildings due for delivery in 2023 and 2024.
BORROWING COST
The capitalisation rate used to determine the amount of
borrowing costs to be capitalised is the weighted average
interest rate applicable to the Company’s general borrowing
during the year. The average interest rate for the borrowing
cost in 2022 was 3.8%.
Contractual obligations
Refer to note 7 for information on contractual obligations
related to LPG Dual-Fuel VLGCs shipbuilding contracts.
Assets pledged as security
The carrying amount of each vessel is pledged for a relative
portion of the Group’s bank loans. Refer to Note 6 Interest-
bearing liabilities.
Impairment and reversal of impairment
Tangible assets with a defined economic life are tested
for impairment if indicators are identified that would
suggest that the carrying amount of the assets exceed the
recoverable amount. The Company performs a quarterly
assessment to determine any indicators of impairment or
reversal of previous recognised impairment for its vessels.
An impairment loss is recognised if the carrying amount
exceeds recoverable amount. The recoverable amount
is the higher of an asset’s fair value less cost of disposal
(FVLCOD) and value in use (VIU), and each ship is considered
a separate cash generating unit (CGU) for the purpose of
impairment testing.
VALUE IN USE
VIU is based on the present value of discounted cash flows
for each separate CGU for its remaining life. Management
considers the current competitive situation, developments
in market rates, and macroeconomic trends when
estimating the future cash flows.
FAIR VALUE LESS COST OF DISPOSAL
FVLCOD (level 3) (see note 7) is determined as the amount
that would be obtained from sale of the asset in a regular
market, less cost of sales, based on an average of third-
party valuation reports from two independent ship
brokers. The Company understands that shipbrokers
apply newbuilding price parity as part of their basis for their
appraisals. Newbuilding prices are adjusted for building
supervision costs and other additional costs, which results
in an estimated delivered cost of a newbuilding with prompt
delivery adjusted for age of each vessel.
lMPAlRMENT TESTS PERF0RMED lN 2022
As of December 31, 2022, indicators of impairment were
assessed. The assessment was performed on a quarterly
basis. Based on this assessment it was concluded that
no significant indicators of impairment or reversal of
impairment were present for the year ended December
31, 2022.
lMPAlRMENT TESTS PERF0RMED lN 2021
As of December 31, 2021, indicators of impairment were
assessed. The assessment was performed on a quarterly
basis. Based on this assessment it was concluded that
no significant indicators of impairment or reversal of
impairment were present for the year ended December
31, 2021.
Long-term debt consisted of debt collateralised by the
Group’s 12 VLGCs as of December 31, 2022. The long-term
debt consisted of debt collateralised by the Group’s 13
VLGCs as of December 31, 2021.
During the first quarter of 2022, the company drew $104.0
million on the sustainability linked financing entered into
in July 2021 in connection with the delivery of Avance
Polaris in January 2022 and Avance Capella in February
2022. During the second quarter of 2022, the Company
drew $325.0 million on a $555 million sustainability linked
financing facility entered into in May 2022, fully refinancing
the existing $515 million facility.
In August, 2022, the Company signed a $135 million sale
and leaseback agreement with Bocomm Leasing for the
final two dual fuel newbuilding vessels due to be delivered
in the fourth quarter of 2023 and first quarter of 2024. The
lease has a post-delivery tenor of 10 years.
In 2022 the long-term debt repayments were $364.8 million.
Of the $364.8 million, $33.7 million is scheduled repayment
of debt, $237.5 million is repayment on refinancing of the
existing $515 million facility, $23.2 million were repaid on
sale of VLGC Thetis Glory, $20.9 million were repaid on
the sale of VLGC Providence, $20 million were repaid on
the $515 million revolving credit facility and $29.5 million
were repaid on the $555 million facility during the fourth
quarter in relation to the sale of VLGC Promise.
6. FINANCIAL LIABILITIES
DECEMBER 31,
2022
DECEMBER 31,
2021
Non-current liabilities:
Long-term debt 231,968 187,763
Revolving credit facilities 113,387 81,984
Lease financing agreement 68,890 75,660
414,245 345,407
Current liabilities:
Current portion of long-term debt 30,522 37,818
Current portion of lease financing agreement 6,756 6,756
37,278 44,574
Total net debt 451,523 389,981
(in USD thousands)
AS OF
NEW-
BUILDINGS
Cost:
Newbuildings as at December 31, 2020 31,825
Instalments paid during 2021 58,068
Capitalised borrowing costs during 2021 2,716
Newbuildings balance at December 31, 2021 92,609
Instalments paid during 2022 154,629
Vessels delivered during 2022 (166,235)
Capitalised borrowing cost during 2022 2,594
December 31, 2022 83,597
(in USD thousands)
42 43
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
AS OF
(in USD thousands)
Currency
Year of
maturity Face value
Carrying
amount Face value
Carrying
amount
Long-term debt USD 2027-2028 268,275 262,490 228,590 225,581
Revolving credit facility USD 2028 113,387 113,387 81,984 81,984
Lease financing agreement USD 2030 77,029 75,646 83,957 82,416
Total interest-bearing liabilities 458,691 451,522 394,531 389,981
DECEMBER 31, 2022
Terms and repayment schedule
DECEMBER 31, 2021
Loan covenants
The Group’s secured bank loan contains a loan covenant, which under the terms of the loan agreement, the Group must
comply with the following covenants at all times:
Financial covenants
• Total equity > $250 million
• Equity ratio > 30%
• Working capital > 0
•
Minimum free liquidity: Cash and cash equivalents shall be at least the higher of (i) $35 million and (ii) 5% of the
consolidated gross interest-bearing debt of the Group.
Other covenants
•
A change of control provision which will be triggered if a person or company other than Hemen Holding Ltd, Frontline
Ltd. or Sungas Holdings Ltd gains control, directly or indirectly, of one-third or more of the voting and/or shares of
Avance Gas.
•
Fair market value of VLGCs shall be minimum 130% of the aggregate of total loans outstanding for the $104.0 million
facility. Fair market value of VLGCs shall be minimum 125% of the aggregate of total loans outstanding for the first
two years, then subsequently increase to 130% for the $555 million facility.
The Group has complied with the covenants of its borrowing facilities during the period covered by these financial
statements and as of December 31, 2022 and 2021.
The carrying amount of total interest-bearing liabilities is the face value
of the liability, less directly attributable transaction costs.
7. FINANCIAL RISK MANAGEMENT
& FINANCIAL INSTRUMENTS
Financial risks
The Group’s activities create exposure to a variety of financial risks: credit risk, liquidity risk, market risk (including
interest rate risk, currency risk and price risk). The board of directors has the overall responsibility for the establishment
and oversight of the Group’s risk management policies, which focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group’s financial performance. The Company continuously monitors
financial risk and implements financial risk policies for foreign exchange risk, interest rate risk, credit risk, and investment
of excess liquidity, as applicable.
CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and the exposure
is limited to the carrying amount of the Group’s receivables from customers.
Trade receivables
The Group performs credit checks upon entering into an initial sales contract with a customer and regularly reviews the
days past due accounts. The company assesses the credit quality of its counterparties as good since customers are on
the whole large well known energy firms. The majority of trade receivables are in U.S. dollars.
For the year ended December 31, 2022, the Group had one external customer who generated revenue greater than 10%
of total revenue. The amount was $42.4 million. For the year ended December 31, 2021, the Group had three customers
who each generated revenue greater than 10% of total revenue. The amounts were $28.2 million, $23.8 million, and
$21.2 million.
44 45
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
GROSS
AMOUNT
IMPAIRMENT
OF TRADE
RECEIVABLES
AS OF DECEMBER 31, 2022
Up to 30 days past due 24 -
31 to 60 days past due 7 -
61 to 90 days past due 2 -
More than 91 days past due 918 504
951 504
(in USD thousands)
GROSS
AMOUNT
IMPAIRMENT
OF TRADE
RECEIVABLES
AS OF DECEMBER 31, 2021
Up to 30 days past due 7,004 -
31 to 60 days past due 337 -
61 to 90 days past due - -
More than 91 days past due 396 353
7, 737 353
(in USD thousands)
The following table provides information about the exposure to credit risk and expected credit losses (ECLs) for overdue
trade receivables from individual customers:
DECEMBER 31,
2022
DECEMBER 31,
2021
Beginning of the period 353 131
Net remeasurement of loss allowance 151 222
End of period 504 353
(in USD thousands)
LIQUIDITY RISK
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities when they become due. The Group’s objective when managing liquidity is to ensure that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group.
Maturity of financial liabilities and contractual obligations
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are
gross and undiscounted, and include contractual interest payments:
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
As of December 31, 2022
Contractual cash flows
Carrying
Amount
Total
contractual
cash flow
Less than
1 year
1 to 2
years
2 to 5
years
More than
5 years
Trade and other payables 10,051 10,051 10,051 - - -
Long-term debt 262,490 321,757 46,239 44,436 189,992 41,090
Revolving credit facilities 113,387 146,239 6,461 6,461 19,382 113,935
Lease financing agreement 75,646 102,869 11,367 11,577 31,198 48,727
Total non-derivative financial liabilities 461,573 580,916 74,118 62,475 240,572 203,752
Interest rate swaps used for hedging (net) (10,880) (10,880) (5,008) (3,321) (1,891) (661)
Total financial liabilities 450,693 570,036 69,110 59,154 238,682 203,092
(in USD thousands)
As of December 31, 2021
Contractual cash flows
Carrying
Amount
Total
contractual
cash flow
Less than
1 year
1 to 2
years
2 to 5
years
More than
5 years
Trade and other payables 14,965 14,965 14,965 - - -
Long-term debt 225,581 246,037 45,881 49,283 150,873 -
Revolving credit facilities
81,984 89,952 2,666 3,500 83,786 -
Lease financing arrangement 82,416 108,719 10,428 10,740 30,320 57,231
Total non-derivative financial liabilities 404,946 459,673 73,940 63,523 264,979 57,231
Interest rate swaps used for hedging (net) 8,580 8,580 4,891 2,543 1,963 (817)
Total financial liabilities 413,526 468,253 78,831 66,066 266,942 56,414
(in USD thousands)
Contractual obligations related to LPG Dual-Fuel VLGCs shipbuilding contracts
As at December 31, 2022, the Company has entered into shipbuilding contracts for four new vessels, providing future
payments of:
2023 2024 Total amount
As of December 31, 2022
187,038 57,638 244,675
(in USD thousands)
2022 2023 Total amount
As of December 31, 2021
204,273 181,135 385,408
(in USD thousands)
The contractual interest payments on outstanding debt as of December 31, 2022 are based on 3 months SOFR forward
curve plus an applicable margin.
Additionally, the Group’s contractual cash flows will include drawdown of $115 million at delivery of Avance Rigel
and Avance Avior which is scheduled during 2023. The $115 million is a facility B in the $555 million facility which was
refinanced in May 2022, as stated in note 7. Further, the cash flows will include the $135 million sale leaseback agreement
signed in August 2022 which concluded the financing of the two last dual fuel newbuildings due for delivery second half
2023 and 2024.
46 47
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
INTEREST RATE RISK
The Group has floating interest on its interest-bearing loans and is exposed to changes in the interest market. Based
on its outstanding loan portfolio and swap agreements as of December 31, 2022, a 1 % change in the LIBOR rate would
increase/decrease the Group’s interest expense by $4.5 million. To mitigate this interest rate exposure, the Group holds
interest rate swaps for risk management purposes which are designated in cash flow hedging relationships. Refer to
the Hedge Accounting section below.
Financial instruments and fair value
The following table shows the carrying amounts and fair values of financial assets and financial liabilities which have
been determined by the Group, using appropriate market information and valuation methodologies. Considerable
judgement is required to develop these estimates of fair value, thus the estimates provided herein are not necessarily
indicative of the amounts that could be realised in a current market exchange.
The carrying amount of cash and cash equivalents, receivables, and accounts payable are a reasonable estimate of their
fair value, due to their short maturity. The estimated value of the Group’s long-term debt equals its carrying value as
of December 31, 2022 and December 31, 2021 as it is variable-rated. Derivative financial instruments are interest rate
swaps, forward freight agreements and bunker hedges designated in hedge relationships and are measured at Fair
Value through OCI. The Company values the interest rate swaps according to level 2 in the fair value hierarchy, based on
discounted future cash flows.
FAIR VALUE HIERARCHY
The below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
•
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices) (Level 2).
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
DECEMBER 31, 2022 DECEMBER 31, 2021
Note
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Financial liabilities
Long-term debt 6
262,490 262,490 225,581 225,581
Revolving credit facilities 6 113,387 113,387 81,984 81,984
Lease financing agreement 6 75,646 75,646 82,416 82,416
Derivative financial instruments
Interest rate swap assets
10,880 10,880 2,240 2,240
Interest rate swap liabilities - - 10,812 10,812
Forward Freight Agreements and
Bunker Hedges
979 979 - -
(in USD thousands)
AS OF
Hedge accounting
FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses financial instruments to hedge its interest rate exposure. The Company has designated a hedge
relationship between the interest on its long-term debt and interest rate swaps, where the changes in the fair value of
the hedging instrument is offset partly or in full by changes in cash flows of the underlying hedging object. The cash
flows on these instruments will vary depending on LIBOR during the relevant period. The fair value of the interest rate
swaps will depend on expectations of future interest rates, the forward yield curve.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item
based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group
assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes
in cash flows of the hedged item using the hypothetical derivative method.
The interest rate swaps have a maturity in 2025 and 2030. The swaps due in 2025 are amortising in line with the underlying
debt, while the swaps maturing in 2030 have a fixed notional amount through to maturity. The portion of the interest
rate swaps with maturity less than 12 months are classified as current. The designated hedge accounting relationship
with the underlying loans assumes refinancing of outstanding loans at maturity of each loan agreement at substantially
the same terms.
In 2022, the Group terminated number of swaps for cash proceeds and entered into new swaps. In Q3 2022, the Com-
pany
terminated one interest rate swap with gain of $6.2m and entered into two new interest rate swaps which in-
creased the
Group’s hedging portfolio by $100m notional. The new interest rate swaps are forward starting in August
2024 and August
2025, respectively, with a tenor of six years from start date. In Q4 2022, the Group terminated interest
rate swaps for cash
proceeds of $6.1m. The gains on termination of the interest rate swaps are being reclassified from
other comprehensive
income to the income statement in line with the future cash flows of the original hedged item.
The fair value (level 2) of the Company’s interest rate swap agreements is the estimated amount that the Company would
receive or pay to terminate the agreements at the reporting date, considering, as applicable, fixed interest rate curves
and the current credit worthiness of both the Company and the derivative counterparty. The estimated amount is the
present value of future cash flows. The fair value (level 2) of the Company’s Forward Freight Agreements and Bunker
hedges are determined using forward commodity prices at the balance sheet date. Fair value adjustment of interest rate
swaps, forward freight agreements and bunker hedges as of December 31, 2022 and December 31, 2021 is recognised
in the statement of other comprehensive income / loss, refer to note 9.
8. SHARE CAPITAL, PAID IN SURPLUS
AND CONTRIBUTED CAPITAL
Shares outstanding
ORDINARY
SHARES
TREASURY
SHARES
NUMBER OF
SHARES
OUTSTANDING
December 31, 2020 64,527,972 (833,889) 63,694,083
Share Capital Increase 12,899,000 - 12,899,000
December 31, 2021 77,426,972 (833,889) 76,593,083
December 31, 2022 77,426,972 (833,889) 76,593,083
48 49
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
Restriction on payment of dividend
Under the Bermuda Companies Act, dividends cannot be paid if there are reasonable grounds for believing that (a) The
company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) The realisable value of
the company’s assets would thereby be less than its liabilities. The Company has acted within the rules in the Bermuda
Companies Act when declaring dividends.
NAME NUMBER OF SHARES HOLDING %
Hemen Holding Limited 59,382,696 76.7%
Nordnet Bank AB 1,344,022 1.7%
UBS Switzerland AG 832,597 1.1%
Danske Bank A/S 693,060 0.9%
The Bank of New York Mellon SA/NV 529,626 0.7%
Stavern Helse og Forvaltning AS 500,000 0.6%
Skandinaviska Enskilda Banken AB 454,448 0.6%
Saxo Bank A/S 451,185 0.6%
Frontline LTD 442,384 0.6%
Nordea Bank Abp 440,258 0.6%
Dorian LPG. Ltd. 429,304 0.6%
State Street Bank and Trust Comp 331,747 0.4%
Nordnet Livsforsikring AS 330,083 0.4%
Avanza Bank AB 305,619 0.4%
Heggelund, Jan 276,500 0.4%
The Bank of New York Mellon SA/NV 212,109 0.3%
BNP Paribas Arbitrage SNC 209,676 0.3%
Citibank, N.A. 186,561 0.2%
Swedbank AB 186 443 0.2%
Skandinaviska Enskilda Banken AB 185 120 0.2%
Total top 20 shareholders 67 723 438 87.5%
Other shareholders 9 703 534 12.5%
TOTAL SHAREHOLDERS 77,426,972 100.0%
List of largest shareholders as of December 31, 2022
Top 20 Shareholders:
9. EARNINGS PER SHARE
DECEMBER 31,
2022
DECEMBER 31,
2021
Net profit attributable to common shareholders 88,992 32,109
Basic weighted average shares outstanding 76,593 73,130
Dilutive effect of share options 311 88
Diluted weighted average shares outstanding 76,904 73,218
Basic earnings per share 1.16 0.44
Diluted earnings per share 1.16 0.44
(in thousands, except per share data)
FOR THE YEAR ENDED
10. OPERATING REVENUE AND TIME CHARTER
EQUIVALENT (TCE RATE)
DECEMBER 31,
2022
DECEMBER 31,
2021
External revenue disaggregated by nature:
Freight revenue 173,013 159,711
Time charter revenue 81,527 50,966
Operating revenue 254,540 210,677
Timing of revenue recognition:
Products and services transferred at a point in time 7,421 7,267
Products and services transferred over time 165,592 152,444
Revenue from contracts with customers 173,013 159,771
Time charter revenue 81,527 50,966
Operating revenue 254,540 210,677
(in USD thousands)
FOR THE YEAR ENDED
SHARE CAPITAL
The share capital of Avance Gas Holding Ltd. was $77.4 million, consisting of 77,426,972 shares at per value of $1 per share
as of December 31, 2022 and as of December 31, 2021. In April 2021, the company issued 12.9 million shares at a price
of $5.1 (NOK 43) per share. All ordinary shares were issued at par value of $1.0. All shares are fully paid. All shares have
equal voting rights and the rights to receive dividends. The Company’s authorised share capital consists of 200,000,000
common shares at par value of $1 per share as of December 31, 2022 and December 31, 2021.
In August 2021, the majority shareholder of Avance Gas Holding Ltd., Hemen Holding Limited (“Hemen”) acquired
additionally 127,207 shares in the Company. Following the acquisition, Hemen, combined with its holdings through its
ownership of Frontline Ltd., held a total of 33.35% of the shares in the Company. Pursuant to section 6-1 of the Norwegian
Securities Trading Act the transaction triggered an obligation for Hemen to make a mandatory offer to acquire all shares
in the Company at a price of NOK 43 per share. Following settlement of the mandatory offering in October 2021, Hemen
owned 59,382,696 shares, equating to approximately 76.7% of the Company.
TREASURY SHARES
Repurchased shares are classified as treasury shares and presented as a deduction from total equity. The treasury shares
are available for use in connection with settlement in share-based incentive schemes.
Avance Gas Holding Ltd holds 833,889 treasury shares representing 1.08% of total issued shares as of December 31, 2022.
50 51
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
The Group’s freight revenue was mainly generated in the Middle East and US Gulf for the years ended December 31, 2022
and 2021, when based on the region in which the cargo is loaded. For time charter revenue, the Group is aware that the
chartered ships have operated in geographic regions other than the Middle East and the US Gulf.
Maturity of time charter contracts
Time charter contracts are entered into on long-term (defined as more than 6 months) and short-term (less than 6 months)
basis. As at December 31, 2022 undiscounted payments receivable under long-term time charter contracts with fixed
rates due within 12 months amount to $29.8 million. In addition to this, as of December 31, 2022 the Company has three
contracts with variable rates. As at December 31, 2021 undiscounted payments receivable under long-term time charter
contracts due within 12 months amount to $47.0 million, and $64.4 million within 24 months.
ALTERNATIVE PERFORMANCE MEASURES (‘APM’) – TIME CHARTER EQUIVALENT (TCE RATE)
The Company uses time charter equivalent (TCE rate) as an alternative performance measure (APM) in communications
with shareholders. TCE rate is operating revenue less voyage cost per operating day. Operating days are calendar days,
less technical off-hire.
DECEMBER 31,
2022
DECEMBER 31,
2021
Operating revenue 254,540 210,677
Voyage expenses (71,504) (67,689)
Voyage result 183,036 142,988
Calendar days 4,849 4,745
Technical off-hire days (62) (177)
0perating days 4,787 4,568
TCE per day (§)
38,236 31,302
(in USD thousands)
FOR THE YEAR ENDED
DECEMBER 31,
2022
DECEMBER 31,
2021
Bunkers 48,091 43,117
Port and canal charges 18,266 20,869
Commissions 4,225 3,060
Other 922 643
TOTAL VOYAGE EXPENSES 71,504 67,689
(in USD thousands)
11. VOYAGE EXPENSES
FOR THE YEAR ENDED
DECEMBER 31,
2022
DECEMBER 31,
2021
Crewing costs 23,078 23,690
Maintenance and repairs 1,267 2,210
Insurance 1,945 1,445
Ship supplies and provisions 11,434 11,843
Ship management fee 2,640 2,470
Other 384 435
TOTAL OPERATING EXPENSES 40,748 42,093
(in USD thousands)
12. OPERATING EXPENSES
FOR THE YEAR ENDED
DECEMBER 31,
2022
DECEMBER 31,
2021
Employee benefit and secondment expenses 3,707 3,347
Information systems 735 1,142
Legal fees 312 230
Professional fees 1,737 985
Office fees 205 254
Travel and entertainment expenses 39 31
Share option compensation expense (298) 290
Other 230 186
TOTAL ADMINISTRATIVE AND GENERAL EXPENSES 6,667 6,466
(in USD thousands)
13. ADMINISTRATIVE
AND GENERAL EXPENSES
FOR THE YEAR ENDED
Capitalised borrowing cost are added to the cost of PP&E that take a substantial period of time to complete.
DECEMBER 31,
2022
DECEMBER 31,
2021
Interest on long-term debt 19,579 17,686
Amortisation of debt issuance cost 3,640 1,237
Commitment fee 1,384 383
Amortisation of gain on discontinued hedges (647) 0
Other finance costs 1 18
Capitalised borrowing cost (2,594) (2,716)
FINANCE COST EXPENSED 21,362 16,608
(in USD thousands)
14. FINANCE EXPENSES
FOR THE YEAR ENDED
52 53
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
15. INCOME TAX EXPENSE
16. RELATED PARTY TRANSACTIONS
At the date of this report there is no Bermuda income, corporation, or profits tax nor is there any, capital tax, capital
transfer tax, estate duty or inheritance tax payable by the Company. The Company has obtained from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966, an assurance that, in the event of there
being enacted in Bermuda any legislation imposing tax computed on profits or income, or computed on any capital assets,
gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035 be
applicable to the Company or to any of its operations, or to the Company’s shares, debentures or other obligations, except
in so far as such tax applies to persons ordinarily resident in Bermuda and holding the Company’s shares, debentures,
or other obligations, or any property in Bermuda leased or let to the Company.
Tax expense of $285 thousand recognised in the consolidated income statement in 2022 relates to income taxes in foreign
jurisdictions. Tax expense recognised in the consolidated income statement in 2021 relates to income and withholding
taxes in foreign jurisdictions, with $498 thousand in 2021 consisting of income taxes of $33 thousand and withholding
taxes of $465 thousand. Withholding taxes related to an Equity distribution form Den Norske Krigsforsikring for Skib, or
DNK, the Norwegian Shipowners Mutual War Risk Insurance Association. The Group has no deferred taxes. The effective
tax rate for the Group was 0.3% for the year ended December 31, 2022, and 1.5% for the year ended December 31, 2021.
The Group entered into a corporate secretarial services agreement in July 2018, a technical supervision agreement
in Q2 2019 with Frontline Management (Bermuda) and an office lease and shared service agreement with Seatankers
Management Norway AS in Q2 2019. Additionally, the Group entered into a separate technical supervision agreement for
the Group’s newbuilding program with Frontline Management (Bermuda) in Q1 2021 and a shared services agreement
with Front Ocean Management AS (Norway) in Q4 2021. Further, during 2022 the Group entered into an accounting and
administrative service agreement with Flex LNG Management Ltd.
In addition, the Group received a recharge of operational credits of 1,028.8 thousand and $115.9 thousand in 2022
and
in 2021, respectively.
The Group had no receivables against related parties per December 31, 2022. Related party receivables were $134
thousand per December 31, 2021. Payables to related parties were $248 thousand and $532 thousand per December
31, 2022 and 2021, respectively.
Fees paid to related parties
DECEMBER 31,
2022
DECEMBER 31,
2021
Corporate secretarial services 248 117
Technical supervision 2,246 2 , 0 1 4
Office lease and shared services 980 331
(in USD thousands)
FOR THE YEAR ENDED
17. MANAGEMENT REMUNERATION
Remuneration to management:
Key management consists of the Chief Executive Officer and Chief Financial Officer of Avance Gas AS. The compensation
to key management is paid in NOK and the USD figure is not fully comparable year on year. The Company discloses
remuneration to management on aggregated levels. Total compensation and benefits of the key management were as
follows:
Remuneration to the Board of Directors:
The Directors of the Board received a yearly remuneration of $40.0 thousand for the years ended December 31, 2022
and December 31, 2021 respectively, paid proportionally for the time served on the Board. The Chairman of the Board
received $100.0 thousand for the year ended December 31, 2022 and $100 thousand for the year ended December 31,
2021. Total Board fees for the year ended December 31, 2022 were $247.2 thousand and $247.2 thousand for the year
ended December 31, 2021.
The table below shows the total number of shares owned directly or indirectly by Directors and key management as of
December 31, 2022. Key management of Avance Gas and remaining Directors do not, directly or indirectly, own shares
in Avance Gas as of December 31, 2022.
Management has received share options as part of the Company’s remuneration program for its employees. Information
about share-based payments is disclosed in Note 18.
DECEMBER 31,
2022
DECEMBER 31,
2021
Salary 526 497
Bonus 177 81
Other remuneration 5 6
Pension contribution 31 3 7
739 621
(in USD thousands)
FOR THE YEAR ENDED
NAME
NUMBER OF SHARES % NUMBER OF SHARES
Øystein Kalleklev
50,000 < 0.1%
54 55
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
2017
SHARE
OPTION
2018
SHARE
OPTION
2021
SHARE
OPTION
2022
SHARE
OPTION
TOTAL SHARE
OPTIONS
Average exercise price ($) 1.24 0.86 5.64 4.75
0utstanding January 1, 2022 41 500 89 500 1 524 666 - 1 655 666
Changes during the year:
Granted - - - 625 000 625 000
Exercised (41 500) (83 500) (166 083) (291 083)
Expired - - - - -
Forfeited - (6 000) (994 750) - (1 000 750)
Outstanding December 31, 2022 - - 363 833 625 000 988 833
Exercisable December 31, 2022 - - 6,333 - -
Remaining average contractual life - - 2.6 4.7
The Company has set up a share option plan in order to encourage the Company’s directors, officers and other employees
to hold shares in the Company. Following the award, declared and cancellation of share options since 2016, a total of
988,833 share options remained outstanding under the Company’s share option scheme as of December 31, 2022.
Options granted under the 2015-2018 Plan vest 25% each anniversary of continuing employment after grant. The options
are not transferable. The subscription price is at the discretion of the Board, provided the subscription price is never
reduced below the par value of the share. The subscription price for options granted will be reduced by the amount
of all dividends declared by the Company in the period from the date of grant until the date the option is exercised.
Options may be exercisable when they are vested, and within five years from the date of grant. Options are forfeited by
employees upon termination of employment in most circumstances. The Group has no legal or constructive obligation
to repurchase or settle the options in cash.
During the first quarter in 2022, Kristian Sorensen resigned as CEO of the company resulting in his options being cancelled.
On August 30, 2022, the Board of Avance Gas granted Mr. Kalleklev and Mr. Foss 375,000 and 250,000 stock options in
Avance Gas. The share options will have a five-year term from August 30, 2022, with a three-year vesting period, whereby
25% will vest after one year, 35% will vest after two years, and 40% will vest after three years. The options have an exercise
price of NOK 52.50 and the exercise price will be adjusted for any distribution of dividends made before the relevant
options expire.
Share based expense for the year ended December 31, 2022 was negative $298 thousand as result of the derecognition
of forfeited options. Share based expense for the year ended December 31, 2021 was $290 thousand.
The weighted average fair value of options determined using the Black-Scholes valuation model was $0.72, $0.82,
$0.79, $0.66, $1.47 and $1.73 per option for options granted in 2016, 2017, 2018, 2019, 2021 and 2022 respectively. The
significant inputs into the model were weighted average share price of $2.19, $2.34, $2.16, $3.05, $5.43 and $4.92 per share
for options granted in 2016, 2017, 2018, 2019, 2021 and 2022 respectively, an expected option life of five years, and an
annual risk-free rate of 1.24%, 1.84%, 2.83%, 1.46%, 0.87% and 2.81% for options granted in 2016, 2017, 2018, 2019, 2021
and 2022 respectively. The volatility was measured based on the share price development for the period since the IPO.
2016
SHARE
OPTION
2017
SHARE
OPTION
2018
SHARE
OPTION
2019
SHARE
OPTION
2021
SHARE
OPTION
TOTAL
SHARE
OPTIONS
Average exercise price ($) 1.64 1.59 1.45 4.38 6.23
0utstanding January 1, 2021 58 750 55 000 197 500 160 000 - 471 250
Changes during the year:
Granted - - - - 1 549 999 1 549 999
Exercised (58 750) (13 500) (108 000) (80 000) - (260 250)
Expired - - - (80 000) - (80 000)
Forfeited - - - - (25 333) (25 333)
Outstanding December 31, - 41 500 89 500 - 1 524 666 1 655 666
Exercisable December 31, 2021 - 41 500 62 000 - - 103 500
Remaining average
contractual life - 0.9 1.8 - 3.6
18. SHARE-BASED PAYMENTS
56 57
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
20. ACCUMULATED OTHER
COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the gain or loss arising from the change in fair value of interest
rate swaps and translation adjustments. Accumulated other comprehensive loss is broken down between the two
categories as follows:
FOREIGN
CURRENCY
RESERVE
CASH FLOW
HEDGE
RESERVE
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
As of January 1, 2021
65 (21,447) (21,382)
Effective portion of changes in fair value of
interest rate swaps
- 6,608 6,608
Reclassified to income statement
- 6,267 6,267
Translation adjustment, net
(12) - (12)
As of December 31, 2021
53 (8,572) (8,519)
Effective portion of changes in fair value of
interest rate swaps
- 24,155 24,155
Reclassified to income statement
- 1,695 1,695
Translation adjustment, net
- - -
As of December 31, 2022
53 17,278 17,331
19. AUDITOR’S REMUNERATION
PricewaterhouseCoopers AS is the auditor of the Company. The following table shows the annual fees for the
appointed auditor:
Audit fees are agreed and billed in NOK.
DECEMBER 31,
2022
DECEMBER 31,
2021
Audit 124 120
Other assurance services 22 15
TOTAL AUDIT FEES 146 135
(in USD thousands)
FOR THE YEAR ENDED
(in USD thousands)
21. SUPPLEMENTAL INFORMATION TO THE
CONSOLIDATED STATEMENT OF CASH FLOWS
Reconciliation of net profit to cash generated from operations:
Note
DECEMBER 31,
2022
DECEMBER 31,
2021
Net profit 88,992 32,109
Adjustments to reconcile net profit to net cash from
operating activities:
Depreciation and amortisation of property, plant and
equipment and intangibles 45,020 47,209
Net finance expense
14 21,664 16,472
Share Option Compensation expense
18 (298) 290
Gain on sale asset
5 (18,648) -
Changes in assets and liabilities:
Decrease (increase) in receivables 9,004 (4,805)
Decrease (increase) in prepaid expenses, inventory,
related party receivables, mobilisation cost and other
current assets 738 (8,869)
(Decrease) increase in accounts payable (3,167) 5,030
(Decrease) increase in accrued voyage expenses, other
current liabilities, and related party balances 168 3,716
Other (1,295) 6
Cash flows from operating activities 142,180 91,158
(in USD thousands)
FOR THE YEAR ENDED
Avance Gas, Avance Capella
59
AVANCE GAS - ANNUAL REPORT 2022
58
AVANCE GAS - ANNUAL REPORT 2022
NON-CASH CHANGES
DECEMBER 31,
2021
CASH
FLOWS
AMORTI-
SATION
OTHER
CHANGES
DECEMBER 31,
2022
Long-term debt 225,581 33,473 3,428 8 262,490
Long-term revolving credit facility 81,984 31,402 - - 113,386
Lease financing arrangements 82,416 (6,928) 212 (54) 75,646
Total liabilities from financing activities 389,981 57,948 3,640 (46) 451,522
NON-CASH CHANGES
DECEMBER 31,
2020
CASH
FLOWS
AMORTI-
SATION
OTHER
CHANGES
DECEMBER 31,
2021
Long-term debt 284,069 (58,959) 1,164 (693) 225,581
Long-term revolving credit facility 88,110 (6,126) - - 81,984
Lease financing arrangements 44,366 38,957 73 (980) 82,416
Total liabilities from financing activities 416,545 (26,128) 1,237 (1,673) 389,981
Changes in liabilities arising from financing activities:
22. SUBSEQUENT EVENTS
In February 2023, the Company took delivery of Avance Rigel, the third of its six 91,000 cbm VLGC newbuildings from
Deawoo Shipyard in South Korea.
Cash flows include transaction costs related to loans and borrowings.
STATEMENT OF
Corporate
Governance
60 61
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
1 INTRODUCTION
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



1.1 DEVIATIONS FROM THE CODE
fi

Deviation from section 2 “Business”:




fi



Deviation from section 3 “Equity and
dividends”:








fi
fi


Deviation from section 5 “Freely
negotiable shares”:











ff

fi


Deviation from section 6 “General
meetings”:








Deviation from section 7 “Nomination
committee”:



Deviation from section 8 “Remuneration
for the Board”:


Yaroslav Akulov, Chinook
2 MAIN OBJECTIVES
FOR CORPORATE
GOVERNANCE IN
AVANCE GAS









3 CORPORATE
GOVERNANCE REPORT
3.1 IMPLEMENTATION AND
REPORTING











3.2 BUSINESS


fl





fi
fi




fi
fi





3.3 EQUITY AND DIVIDENDS



fi

















fi

fifi


62 63
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
3.4 EQUAL TREATMENT
OF SHAREHOLDERS
3.4.1 General information




ff
3.4.2 Share issues without pre-emption
rights for existing shareholders



fi

fi


3.4.3 Transactions in own shares






3.5 SHARES AND
NEGOTIABILITY




fi


3.6 GENERAL MEETINGS
3.6.1 Exercising rights



ff


.





.

fi



.




.




.


3.6.2 Participation without being present


.


.


.



3.6.3 Summary of provisions in the bye-
laws that deviate from the provisions in
Chapter 5 of the Norwegian Public Limited
Companies Act



.



.



.




.


.



ff
. fi



. 



. 




3.7 NOMINATION COMMITTEE




















fift
fi

fi


fi
ff


3.8 BOARD; COMPOSITION AND
INDEPENDENCE




ff






ff


64 65
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
fi


ff













3.9 THE WORK OF THE BOARD
3.9.1 General
















ff






3.9.2 Audit committee






ff









3.9.3 Remuneration committee








3.9.4 Annual evaluation


3.10 RISK MANAGEMENT AND
INTERNAL CONTROL









3.11 REMUNERATION OF THE
BOARD



fl





fi
ft
ftft









fi
fi
fi
3.12 REMUNERATION OF
EXECUTIVE PERSONNEL




fi







3.13 INFORMATION AND
COMMUNICATIONS
3.13.1 General information

fi




fi



3.13.2 Information to shareholders












3.14 TAKE-OVERS
3.14.1 General




ffff
Avance Gas, Breeze
67
AVANCE GAS - ANNUAL REPORT 2022
66
AVANCE GAS - ANNUAL REPORT 2022
3.14.2 Main principles for action in the
event of a take-over bid



.
ff

. 


.


.




.




ff

ff
ff

fffi

ff


fi





3.15 AUDITOR


fi













fifi




* * *
Auditor’s
Report
68 69
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Avance Gas Holding Ltd
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of Avance Gas Holding Ltd (the Group), which
comprise the balance sheet as at 31 December 2022, the income statement, statement of
comprehensive income, statement of shareholders’ equity and statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion
x the financial statements comply with applicable statutory requirements, and
x the financial statements give a true and fair view of the financial position of the Group as at 31
December 2022, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Group as required
by relevant laws and regulations in Norway and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Group for 9 years from the election by the general meeting of the
shareholders for the accounting year 2014.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. This matter was addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on this matter.
The Group’s business activities are largely unchanged compared to last year. We have not identified
regulatory changes, transactions or other events that qualified as new key audit matters. Impairment
2 / 5
assessment for vessels and newbuildings has the same characteristics and risks this year as the
previous year and consequently has been an area of focus also for the 2022 audit.
Key Audit Matters
How our audit addressed the Key Audit Matter
Impairment assessment for vessels and
newbuildings
Refer to note 2 (Significant accounting
policies) and note 5 (
Property, plant and
equipment) where management explains
how they assess the value of the vessels
and newbuildings.
As at 31 December 202
2, the Group
owns 1
2 VLGC vessels and 4
newbuildin
gs. The vessels have a
combined carrying amount of USD
71
5,866. The newbuildings have a
combined carrying amount of USD
8
3,597. The Group has not recognised
an impairment on the VLGCs or
newbuildings
in 2022.
Indicators for impairment for the VLGCs and
newbuildings
were assessed by
management
and not considered present
during 202
2. As explained in the notes,
management considered
among others the
conditions in LPG freight market, estimated
fair value less cost
of sale of the vessels
and newbuildings, discount rate and market
capitalisation versus net book value of the
Group, which gave no indication of
impairment. As a result of the above factors,
management have not performed an
impairment test.
Management con
siders each vessel and
newbuilding to be a cash generating unit
(“CGU”, “vessel” or “newbuilding”) in their
assessment of impairment indicators
.
We focused on this area due to the
significant carrying value of the vessels
and newbuildings and the judgemen
t
inherent in the assessment of indicators
of impairment.
We evaluated and challenged management’s
assessment of indicators of impairment and the
process by which this was performed. We assessed
management’s accounting policy against IFRSs and
obtained explanations from management as to how
the specific requirements of the standards, in
particular IAS 36 – Impairment of assets, were met.
We also assessed the consistency year on year of the
application of the accounting policy.
In order to assess each of the assumptions in the
impairment indicator assessment, we interviewed
management and challenged their assumptions. For
certain key assumptions we specifically used external
market data to assess the assumptions used to build
the discount rate. We considered that the discount
rate assessed was within an appropriate range and
changes did not lead to any indication of impairment.
We utilised current and historical external market data
to corroborate the freight rates assessed by
management. We challenged management on their
assessment of current market rates. We also
corroborated management’s assessment with external
market reports where possible. We considered that
freight rates used by management were within an
appropriate range and changes did not lead to any
indication of impairment. In addition, we noted current
freight rates are broadly in line with those utilised by
management in the last performance of full
impairment for this period.
In order to assess the estimates for fair value less
costs of disposal as an indicator of impairment,
management compiled broker valuation certificates for
the vessels and newbuildings. We satisfied ourselves
that the external brokers had both the objectivity and
the competence to provide the estimate. In order to
assess this, we corroborated if under the terms of the
bank lending facilities, specific brokers are identified
as being approved for use, for purposes of minimum
value clause covenant reporting. Management used
brokers from this approved list. We interviewed
selected brokers to understand how the estimates for
70 71
AVANCE GAS - ANNUAL REPORT 2022 AVANCE GAS - ANNUAL REPORT 2022
fair value were compiled. We also satisfied ourselves
found
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AVANCE GAS - ANNUAL REPORT 2022
CONTACT:
WWW.AVANCEGAS.COM
IR@AVANCEGAS.COM
+47 23 11 40 00
Avance Gas, Chinook
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