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1. Basis of Presentation and General Information
Dorian LPG Ltd. (“Dorian”) was incorporated on July 1, 2013, under the laws of the Republic of the Marshall Islands and is headquartered in the United States and is engaged in the transportation of liquefied petroleum gas (“LPG”) worldwide through the ownership and operation of LPG tankers. Dorian LPG Ltd. and its subsidiaries (together “we”, “us”, “our”, “DLPG” or the “Company”) is primarily focused on owning and operating very large gas carriers (“VLGCs”), each with a cargo carrying capacity of greater than 80,000 cbm. After the latest delivery of our VLGC on January 2, 2015, our fleet currently consists of seven LPG carriers, including three fuel-efficient 84,000 cbm ECO-design VLGCs, three 82,000 cbm VLGCs and one pressurized 5,000 cbm vessel. In addition, we have newbuilding contracts for the construction of sixteen new fuel-efficient 84,000 cbm ECO-design VLGCs at Hyundai Heavy Industries Co., Ltd. (“Hyundai” or “HHI”), and Daewoo Shipping and Marine Engineering Ltd. (“Daewoo”), both of which are based in South Korea, with scheduled deliveries between June 2015 and February 2016. We refer to these contracts along with the three VLGCs that were delivered between July 2014 and January 2015 as our VLGC Newbuilding Program.
The Company remained dormant until July 29, 2013 when the following transactions were completed concurrently:
· |
DLPG completed a private placement of 9,310,054 shares of its common stock with institutional investors and other investors in Norway (“NPP”). The shares were issued at NOK 75.00 per share, equivalent to USD 12.66 per share and realized gross proceeds of $117.9 million based on the exchange rate on July 29, 2013. |
· |
DLPG acquired from Dorian Holdings the following in exchange for 4,667,135 shares of its common stock and $9.7 million in cash: |
(a) |
100% interest in three ship owning entities, CNML LPG Transport LLC (“CNML”), CJNP LPG Transport LLC (“CJNP”) and CMNL LPG Transport LLC (“CMNL”), which each owned a Very Large Gas Carrier (“VLGC”) (the Captain Nicholas ML , the Captain John NP and the Captain Markos NL respectively), the related bank debt, interest rate swaps, and the inventory on board each vessel. The Captain Nicholas ML, Captain John NP and Captain Markos NL were previously owned by Cepheus Transport Ltd, Lyra Gas Transport Ltd and Cetus Transport Ltd., all owned by principals of Dorian Holdings until July 29, 2013 on which date they were sold to CNML, CJNP and CMNL, respectively. The sale of the vessels required approval from the bank that had provided the related financing that was assumed by the Company in connection with the transaction and resulted in a modification of the financing terms in connection with the acquisition. A further description of the loan arrangements is provided in Note 11. |
(b) |
100% interest in two entities, each a party to a contract for the construction of one VLGC, option rights to construct an additional 1.5 VLGCs and $2.67 million in cash. |
DLPG acquired from an affiliate of Dorian Holdings a 100% interest in an LPG pressurized gas carrier, the LPG Grendon, and the inventory onboard the vessel for $6.672 million in cash.
The abovementioned acquisitions from Dorian Holdings and its affiliate were accounted as a business combination (refer Note 4) and the operations of LPG Grendon along with that of the three Very Large Gas Carriers referred to above are herein referred to as the Predecessor.
· |
DLPG issued 4,667,135 shares of its common stock to SEACOR Holdings Inc., through its subsidiary, SeaDor Holdings LLC (“SeaDor”) as consideration for the following: |
(a) |
100% interest in a subsidiary company, SEACOR LPGI LLC, a party to a contract for the construction of one VLGC |
(b) |
$49.9 million in cash and |
(c) |
the assignment to DLPG of option rights to purchase 1.5 VLGC vessels. |
The above mentioned acquisitions from SeaDor were accounted for as an asset acquisition. The allocation of the purchase price between the assets acquired is described in Note 3(b).
At the closing of the NPP, Dorian Holdings surrendered the 100 shares of capital stock of DLPG, which were then cancelled. Following the completion of the above transactions on July 29, 2013, Dorian Holdings, whose chairman is Mr. John Hadjipateras, and SeaDor, each owned approximately 25.0% of the Company’s outstanding common stock with the remaining 50% held by institutional investors and high net worth investors.
We successfully closed our initial public offering (“IPO”) on May 13, 2014 and our shares are listed on the NYSE and trade under the symbol LPG.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Dorian LPG Ltd. and its subsidiaries.
Our subsidiaries, which are all wholly-owned and all are incorporated in Republic of the Marshall Islands (unless otherwise indicated below), as of March 31, 2015 are listed below.
Vessel Owning Subsidiaries
Subsidiary |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(1) |
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Grendon Tanker LLC |
|
PGC |
|
LPG Grendon |
|
1996 |
|
5,000 |
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
Newbuild Vessel Owning Subsidiaries(3)
Subsidiary |
|
Type of |
|
Hull |
|
Vessel’s Name |
|
Estimated |
|
CBM(1) |
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
S749 |
|
Cougar |
|
Q2 2015 |
|
84,000 |
Dorian Houston LPG Transport LLC |
|
VLGC |
|
S750 |
|
Cobra |
|
Q2 2015 |
|
84,000 |
Concorde LPG Transport LLC |
|
VLGC |
|
2660 |
|
Concorde |
|
Q2 2015 |
|
84,000 |
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
S753 |
|
Continental |
|
Q3 2015 |
|
84,000 |
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
S755 |
|
Constitution |
|
Q3 2015 |
|
84,000 |
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
S751 |
|
Commodore |
|
Q3 2015 |
|
84,000 |
Constellation LPG Transport LLC |
|
VLGC |
|
2661 |
|
Constellation |
|
Q3 2015 |
|
84,000 |
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
2336 |
|
Cresques |
|
Q3 2015 |
|
84,000 |
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
S756 |
|
Cheyenne |
|
Q3 2015 |
|
84,000 |
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
S752 |
|
Clermont |
|
Q4 2015 |
|
84,000 |
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
S754 |
|
Chaparral |
|
Q4 2015 |
|
84,000 |
Commander LPG Transport LLC |
|
VLGC |
|
2662 |
|
Commander |
|
Q4 2015 |
|
84,000 |
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
2337 |
|
Cratis |
|
Q4 2015 |
|
84,000 |
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
2338 |
|
Copernicus |
|
Q4 2015 |
|
84,000 |
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
S757 |
|
Challenger |
|
Q4 2015 |
|
84,000 |
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
S758 |
|
Caravelle |
|
Q1 2016 |
|
84,000 |
Management Subsidiaries
Subsidiary |
|
Incorporation |
Dorian LPG Management Corp |
|
July 2, 2013 |
Dorian LPG (USA) LLC (incorporated in USA) |
|
July 2, 2013 |
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
November 18, 2013 |
Dorian LPG Finance LLC |
|
January 16, 2015 |
Dormant Subsidiaries
Subsidiary |
|
Incorporation |
SeaCor LPG I LLC |
|
April 26, 2013 |
SeaCor LPG II LLC |
|
April 26, 2013 |
Capricorn LPG Transport LLC |
|
November 15, 2013 |
Constitution LPG Transport LLC |
|
February 17, 2014 |
Occident River Trading Limited (incorporated in UK) |
|
January 9, 2015 |
(1)CBM: Cubic meters, a standard measure for LPG tanker capacity
(2)Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”)
(3)Represents newbuild vessels not yet delivered as of December 31, 2014
(4)Represents calendar year quarters
The following charterers individually accounted for more than 10% of our revenue for the periods presented as follows:
Charterer |
|
% of revenue |
|
Statoil ASA |
|
27 |
% |
Royal Dutch Shell plc |
|
19 |
% |
Itochu Corporation |
|
14 |
% |
Indian Oil Corporation Ltd. |
|
12 |
% |
Maritime Pressx Limited |
|
11 |
% |
Charterer |
|
% of revenue |
|
Statoil ASA |
|
51 |
% |
Naftomar Shipping and Trading Co. Ltd |
|
13 |
% |
Kuwait Petroleum Corporation |
|
10 |
% |
|
2. Significant Accounting Policies
(a) |
Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly-owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated. |
(b) |
Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
(c) |
Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus has not presented this in the statement of operations or in a separate statement. |
(d) |
Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, the Company had no foreign currency derivative instruments. |
(e) |
Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
(f) |
Restricted cash: Restricted cash represents pledged cash deposits or minimum liquidity to be maintained with certain banks under the Company’s borrowing arrangements. In the event that the obligation relating to such deposits is expected to be terminated within the next twelve months or relates to general minimum liquidity requirements with no obligation to retain such funds in retention accounts, these deposits are classified as current assets otherwise they are classified as non-current assets. |
(g) |
Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero. |
(h) |
Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method. |
(i) |
Vessels, net: Vessels, net are stated at cost, less accumulated depreciation. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Interest costs incurred to finance the cost of vessels during their construction period are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred. |
(j) |
Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. |
(k) |
Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. |
(l) |
Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations. |
(m) |
Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected in Deferred charges in the accompanying consolidated balance sheet. |
(n) |
Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured. |
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(o) |
Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses. |
(p) |
Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values, net of expected forfeitures, and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We estimate restricted stock award forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. As a result, we record stock-based compensation expense only for those awards that are expected to vest. |
(q) |
Segment reporting: Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. |
(r) |
Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges. |
(s) |
Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories: |
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(t) |
Recent accounting pronouncements: On May 28, 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2016. Early adoption is not permitted. The Company has not yet evaluated the impact, if any, of the adoption of this new standard. |
On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. For public business entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, on a retrospective basis. Early adoption is permitted. We have not early adopted this standard. The effect from the adoption of this standard would be the presentation of the debt issuance costs as a direct deduction of the related debt liability instead of as a non-current asset.
|
3. Transactions with Related Parties
(a) |
Dorian Holdings: Dorian LPG Ltd. was formed by Dorian Holdings on July 1, 2013, to acquire and operate LPG tankers and initially to acquire the LPG tankers held by affiliates of Dorian Holdings. These acquisitions were accounted for as the acquisition of a business, refer Notes 1 and 4. In addition on July 29, 2013, we entered into a license agreement with Dorian Holdings pursuant to which Dorian Holdings has granted us a non-transferable, non-exclusive, perpetual (subject to termination for material breach or a change of control event), world-wide, royalty-free right and license to use the Dorian logo and “Dorian LPG” in connection with our LPG business. |
(b) |
SEACOR Holdings Inc. (“SEACOR”): On April 29, 2013, affiliates of the Company entered into a series of agreements with subsidiaries of SEACOR under which the affiliates of the Company granted certain rights to SEACOR to purchase newbuilding contracts for VLGCs and associated options. The affiliates of the Company had the right to repurchase a portion of those contracts and the associated options. As part of these agreements, subsidiaries of SEACOR paid the first installment under the newbuilding contracts to the shipyard, which, under the terms of the agreements, could be partially acquired by Dorian affiliates for the amount of the installments paid, certain agreed third party expenses, and a capital charge of 6% per annum. |
As described in Note 1, the Company acquired a 100% interest in SEACOR LPG I LLC, a party to a contract for the construction of one VLGC, $49.9 million in cash and the assignment to the Company of option rights to purchase 1.5 VLGC vessels, from SEACOR in exchange for 4,667,135 shares of its common stock. This transaction was accounted for as an asset acquisition.
The fair value of the transaction was determined based on the number of shares issued by the Company. The fair value of the common stock was determined to be NOK75.00 per share (or $12.66 per share at the exchange rate on July 29, 2013) which was the price per share for the Company’s common shares issued to private investors on the same date.
The total transaction value of $59.4 million (including transaction costs) was allocated to the assets purchased as follows:
Cash |
|
49,854,870 |
|
Purchase contract for one VLGC newbuilding contract (includes advance payment) |
|
7,009,675 |
|
Purchase option contracts |
|
2,529,126 |
|
|
|
59,393,671 |
|
The allocation between the newbuilding contract and the purchase options was based on their relative fair value. The fair value of the newbuilding contract and purchase options was computed as the excess of the purchase consideration for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus for newbuilding contracts any advance to the shipyard as of the acquisition date. The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free.
(c) |
Scorpio Tankers Inc. (“Scorpio”): On November 26, 2013, the Company issued 7,990,425 shares of its common stock to Scorpio as consideration for 100% interest in thirteen subsidiary companies, (each a party to a contract for the construction of one VLGC) and $1.9 million in cash. This transaction was accounted for as an asset acquisition. |
The fair value of the transaction was determined based on the number of shares issued by the Company. The fair value of the common stock was determined to be NOK92.50 per share (or $15.16 per share at the exchange rate on November 26, 2013), which was the price per share for the Company’s common shares issued to private investors on the same date.
The total transaction value of $121.3 million (including transaction costs) was allocated to the assets purchased as follows:
Cash |
|
1,930,000 |
|
Purchase contract for thirteen VLGC newbuilding contracts (includes advance payments) |
|
119,386,040 |
|
|
|
121,316,040 |
|
The cost of the group of non-cash assets was allocated to each of the new building contracts based on their relative fair value. The fair value of each newbuilding contract was determined as the excess of the purchase consideration as of the acquisition date for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus any advance paid to the shipyard, The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free.
(d)Dorian (Hellas) S.A.:
A. Ship-Owning Companies Management Agreements: Pursuant to management agreements entered into by each vessel owning subsidiary on July 26, 2013, as amended, with Dorian (Hellas) S.A. (“DHSA” or the “Manager”), the technical, crew and commercial management as well as insurance and accounting services of its vessels was outsourced to DHSA. In addition, under these management agreements, strategic and financial services had also been outsourced to DHSA. DHSA had entered into agreements with each of Eagle Ocean Transport Inc. (“Eagle Ocean Transport”) and Highbury Shipping Services Limited (“HSSL”), to provide certain of these services on behalf of the vessel owning companies. Mr. John Hadjipateras, our Chairman, President and CEO, who is also the chairman of Dorian Holdings, owns 100% of Eagle Ocean Transport, and our Vice President of Chartering, Insurance and Legal, Nigel Grey-Turner, owns 100% of HSSL. The fees payable for the above services to DHSA amounted to $93,750 per month per vessel, payable one month in advance. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from DHSA and are now provided through our wholly owned subsidiaries Dorian LPG (USA) LLC, Dorian LPG (UK) Ltd. and Dorian LPG Management Corp. Subsequent to the transition agreements, Eagle Ocean Transport continues to incur related travel costs for certain transitioned employees as well as office-related costs, for which we reimbursed Eagle Ocean Transport $0.7 million for the year ended March 31, 2015.
Management fees related to these agreements for the year ended March 31, 2015 and for the period July 1, 2013 to March 31, 2014 amounted to $1.1 million and $3.0 million, respectively, and are presented in Management fees—related party in the consolidated statement of operations.
In July 2014, Dorian LPG (UK) Ltd. and Dorian (Hellas) entered into an agreement for a period of twelve months, for the provision by Dorian LPG (UK) Ltd. of certain chartering and marine operation services to Dorian (Hellas), for which income totaling $0.1 million was earned and included in other income. This amount was owed by Dorian (Hellas) to Dorian LPG (UK) Ltd. as of March 31, 2015.
B. Pre-Delivery Services: A fixed monthly fee of $15,000 per hull was payable to the Manager for pre-delivery services provided during the period from July 29, 2013 until the date of delivery of each newbuilding. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from the Manager and are now provided through our wholly owned subsidiaries. Management fees related to the pre-delivery services provided by DHSA for the year ended March 31, 2015 and for the period July 1, 2013 to March 31, 2014 amounted to $0.9 million and $1.2 million, respectively. For the period July 1, 2013 to March 31, 2014, $0.1 million is presented in Management fees-related party in the consolidated statement of operations and $1.1 million was capitalized and presented in vessels under construction in the accompanying consolidated balance sheet.
(e) |
Eagle Ocean Transport Inc.: As part of the series of agreements with SEACOR, Eagle Ocean Transport, a company 100% owned by Mr. John Hadjipateras, is entitled to retain 100% of any portion of the shipbroker fee rebated to it as compensation for its services in securing the newbuilding contracts for three VLGCs and three associated option agreements. To the extent that any fees are received in respect of option vessels under such agreements, the fees shall be shared evenly between SEACOR and Eagle Ocean Transport. Collectively, Eagle Ocean Transport and SEACOR received a total of $0.8 million and $0.5 million of shipbroker rebates for their services in securing the newbuilding contracts for the year ended March 31, 2015 and period ended March 31, 2014, respectively. In addition, Eagle Ocean Transport was reimbursed for an amount of $0.3 million, representing costs incurred on behalf of the Company relating to equity issuances and debt restructuring for the period July 1, 2013 to March 31, 2014. |
(f) |
Consulting: Since the formation of the Predecessor Companies, a member of our board of directors, who resigned effective May 1, 2015, provided certain chartering and commercial services to the Company, its subsidiaries, and the Predecessor Companies. This individual entered into a consulting agreement on May 1, 2015 that provides for, among other things, an annual fee of $250,000, payable for services rendered commencing on May 8, 2014. For the year ended March 31, 2015, we expensed $0.2 million related to this consulting agreement. |
The amounts due to/from related parties represent amounts due to/from DHSA and Eagle Ocean Transport relating to payments made by them on behalf of the Company relating to the vessels operations, fees due to them for services rendered, net of amounts transferred to them.
|
4. Acquisition of Business
On July 29, 2013, Dorian Holdings sold to Dorian LPG in exchange for equity and $9.7 million in cash its 100% interest in CMNL, CJNP, CNML owners of the Captain Markos NL , Captain John NP and the Captain Nicholas ML , respectively and acquired the related inventory on board, and assumed the associated bank debt, and interest rate swap and 100% interest in two entities, each a party to a contract for the construction of one VLGC, and option rights to construct an additional 1.5 VLGCs and $2.67 million in cash. The $9.7 million cash related to the payment for inventories and LPG coolant on board of $2.3 million and to reimburse for an advance for vessels under construction of $7.4 million
In addition on July 29, 2013 Dorian LPG acquired 100% interest of Grendon Tanker LLC, the owner of the LPG Grendon, from an affiliate of Dorian Holdings for a cash consideration of $6,625,000 plus the value of inventory on board the vessel.
These acquisitions have been treated as business acquisitions and were initially recorded at fair value.
The following table summarizes the fair value of the consideration paid and assets/liabilities acquired.
Fair value of total consideration
|
|
Acquisition |
|
Grendon |
|
Total |
|
Cash |
|
9,732,911 |
|
6,672,485 |
|
16,405,396 |
|
Equity instruments (4,667,135 common shares of the Company at NOK 75.00 per share) |
|
59,092,499 |
|
— |
|
59,092,499 |
|
Total consideration |
|
68,825,410 |
|
6,672,485 |
|
75,497,895 |
|
Fair value of identifiable assets and liabilities acquired: |
|
|
|
|
|
|
|
Cash |
|
2,672,500 |
|
— |
|
2,672,500 |
|
Vessels |
|
194,457,529 |
|
6,625,000 |
|
201,082,529 |
|
Inventories on board the vessels |
|
1,407,622 |
|
47,485 |
|
1,455,107 |
|
Newbuilding vessels contracted for construction |
|
17,593,130 |
|
— |
|
17,593,130 |
|
Other assets—Vessel purchase options |
|
4,605,000 |
|
— |
|
4,605,000 |
|
Long term bank debt |
|
(135,224,500 |
) |
— |
|
(135,224,500 |
) |
Interest rate swaps |
|
(16,685,871 |
) |
— |
|
(16,685,871 |
) |
Net assets acquired—fair value |
|
68,825,410 |
|
6,672,485 |
|
75,497,895 |
|
The fair value of the common stock was determined to be NOK75.00 per share (or $12.66 per share at the exchange rate on July 29, 2013) being the price the Company issued its common shares to private investors under its private placement which closed on the same date.
The vessels were acquired with attached charters. The attached charters for each vessel were evaluated by the Company based on market charter rates on the acquisition date and were found to be at market values, and thus none of the purchase consideration was allocated to the attached time charters or voyage charter.
The fair values of the vessels, excluding LPG coolant, on the date of acquisition were determined by the Company based on valuations from an independent broker. The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free. The fair value of the LPG coolant at the date of acquisition was determined by the quantity purchased valued at the then current LPG rate. The fair value of the newbuilding contracts and vessel purchase options was computed as the excess of the purchase consideration for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus in respect of the newbuilding contracts any advance paid to the shipyard as of the acquisition date. The fair value of the interest rate swaps was determined using a discounted cash flow approach based on market-based LIBOR swap yield rates. The fair value of the bank debt and cash was determined to be its face value.
In addition, on July 29, 2013 Dorian Holdings granted the Company a royalty-free, non-exclusive right and license to use the then newly created Dorian logo and “Dorian LPG”. The Company evaluated the license agreement and did not assign any value to the use of this logo and name based on the fact that it was a brand new logo, created shortly prior to the NPP and never used in the market place, and for which the Company does not have exclusive use.
The revenue and net income relating to the Predecessor operations acquired since their acquisition date to March 31, 2014 included in the consolidated statement of operations for the period ended March 31, 2014 amount to $29,633,700 and $3,152,335, respectively.
Pro forma Information (unaudited)
The following table summarizes total net revenues and net income of the Company, had the acquisition of the Predecessor operations occurred on April 1, 2013:
$ in 000’s |
|
For the year ended |
|
|
Net revenues |
|
$ |
45,017 |
|
Net income |
|
$ |
6,613 |
|
The combined results in the table above have been prepared for comparative purposes only and include acquisition related adjustments for depreciation, interest charges and management fees. The combined results do not purport to be indicative of the results of operations which would have resulted had the acquisition been effected at the beginning of the applicable period noted above, or the future results of operations of the combined entity.
|
5. Inventories
Our inventories by type were as follows:
|
|
March 31, 2015 |
|
March 31, 2014 |
|
Bunkers |
|
2,446,424 |
|
596,768 |
|
Lubricants |
|
737,502 |
|
358,381 |
|
Victualing |
|
132,017 |
|
83,840 |
|
Bonded stores |
|
35,399 |
|
15,354 |
|
Communication cards |
|
24,417 |
|
3,986 |
|
Total |
|
3,375,759 |
|
1,058,329 |
|
|
6. Vessels, Net
|
|
Cost |
|
Accumulated |
|
Net book Value |
|
Balance, July 1, 2013 |
|
— |
|
— |
|
— |
|
Vessel acquisitions through business combinations (Refer Note 4) |
|
201,082,529 |
|
— |
|
201,082,529 |
|
Other |
|
307,606 |
|
— |
|
307,606 |
|
Depreciation |
|
— |
|
(6,555,269 |
) |
(6,555,269 |
) |
Balance, March 31, 2014 |
|
201,390,135 |
|
(6,555,269 |
) |
194,834,866 |
|
Additions |
|
240,415,534 |
|
— |
|
240,415,534 |
|
Impairment(1) |
|
(2,625,000 |
) |
1,193,182 |
|
(1,431,818 |
) |
Depreciation |
|
— |
|
(13,842,529 |
) |
(13,842,529 |
) |
Balance, March 31, 2015 |
|
439,180,669 |
|
(19,204,616 |
) |
419,976,053 |
|
(1) |
We recognized a non-cash impairment loss of $1.4 million for the year ended March 31, 2015 and no impairment losses for the period ended March 31, 2014. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable. |
The additions represent amounts transferred from Vessels under Construction relating to the cost of our newbuildings, the Comet, the Corsair and the Corvette, which were delivered to us on July 25, 2014, September 26, 2014 and January 2, 2015, respectively.
Vessels, with a total carrying value of $416.0 million as of March 31, 2015, are first-priority mortgaged as collateral for our loan facilities (refer Note 11).
|
7. Vessels Under Construction
Balance, July 1, 2013 |
|
— |
|
Acquisition of two newbuilding contracts from Dorian Holdings on July 29, 2013 (refer Note 4) |
|
17,593,130 |
|
Acquisition of one newbuilding contract from SeaDor on July 29,2013 (refer Note 3b) |
|
7,009,675 |
|
Acquisition of thirteen newbuilding contracts from Scorpio on November 26, 2013 (refer Note 3c) |
|
119,386,040 |
|
Acquisition cost of vessel purchase options from Dorian Holdings and SeaDor exercised on February 21, 2014 (refer Notes 3b and 4) |
|
7,134,126 |
|
Installment payments to shipyards |
|
169,271,536 |
|
Other capitalized expenditures |
|
1,839,689 |
|
Capitalized interest |
|
972,010 |
|
Balance, March 31, 2014 |
|
323,206,206 |
|
Installment payments to shipyards |
|
300,866,261 |
|
Other capitalized expenditures |
|
11,016,951 |
|
Capitalized interest |
|
3,501,620 |
|
Vessels delivered (transferred to Vessels) |
|
(240,415,534) |
|
Balance, March 31, 2015 |
|
398,175,504 |
|
Other capitalized expenditures for the year ended March 31, 2015 represent LPG coolant of $1.4 million, fees paid to our Manager of $0.9 million, to third party vendors of $8.6 million and $0.1 million of employee-related costs for supervision fees and other newbuilding pre-delivery costs including engineering and technical support, liaising with the shipyard, and ensuring key suppliers are integrated into the production planning process. Other capitalized expenditures for the period ended March 31, 2014 represent fees paid to our Manager of $1.1 million and to third party vendors of $0.7 million for supervision fees and other newbuilding pre-delivery costs including engineering and technical support, liaising with the shipyard, and ensuring key suppliers are integrated into the production planning process.
|
8. Other Fixed Assets, Net
Other fixed assets of $464,889 and $60,904 as of March 31, 2015 and March 31, 2014, respectively, represent leasehold improvements, software and furniture and fixtures at cost. Accumulated depreciation on other fixed assets net as of March 31, 2015 was $46,402 and there was no accumulated depreciation as of March 31, 2014 as they had not yet been brought into use.
|
9. Deferred Charges, Net
The analysis and movement of deferred charges is presented in the table below:
|
|
Financing |
|
Drydocking |
|
Equity |
|
Total deferred |
|
On inception , July 1, 2013 |
|
— |
|
— |
|
— |
|
— |
|
Additions |
|
1,516,847 |
|
600,394 |
|
1,304,343 |
|
3,421,584 |
|
Amortization |
|
(800,807 |
) |
(65,103 |
) |
— |
|
(865,910 |
) |
Balance, March 31, 2014 |
|
716,040 |
|
535,291 |
|
1,304,343 |
|
2,555,674 |
|
Additions |
|
13,411,075 |
|
323,623 |
|
760,680 |
|
14,495,378 |
|
Amortization |
|
(830,899 |
) |
(189,209 |
) |
— |
|
(1,020,108 |
) |
Transferred to APIC |
|
— |
|
— |
|
(2,065,023 |
) |
(2,065,023 |
) |
Balance, March 31, 2015 |
|
13,296,216 |
|
669,705 |
|
— |
|
13,965,921 |
|
The drydocking costs incurred during the year ended March 31, 2015 relate to the drydocking for Grendon and the drydocking costs incurred during the period ended March 31, 2014 relate to the drydocking for Captain Nicholas ML.
Financing costs incurred during the year ended March 31, 2015 relate to the 2015 Debt Facility.
Offering costs related to our IPO were transferred to additional paid-in capital (“APIC”) on completion of our IPO on May 13, 2014.
|
10. Accrued Expenses
Accrued expenses comprised of the following:
|
|
March 31, 2015 |
|
March 31, 2014 |
|
Accrued loan and swap interest |
|
1,619,897 |
|
1,439,237 |
|
Accrued voyage and vessel operating expenses |
|
1,406,023 |
|
87,029 |
|
Accrued professional services |
|
1,282,639 |
|
173,708 |
|
Accrued financing costs |
|
705,000 |
|
— |
|
Accrued employee-related costs |
|
546,095 |
|
— |
|
Accrued IPO charges |
|
— |
|
469,707 |
|
Other |
|
88,048 |
|
26,705 |
|
Total |
|
5,647,702 |
|
2,196,386 |
|
|
11. Long-Term Debt
Description of our Debt Obligations
2015 Debt Facility
In March 2015, we entered into a $758 million debt financing facility (the “2015 Debt Facility”) with four separate tranches. Commercial debt financing (“Commercial Financing”) of $249 million is being provided by ABN AMRO Capital USA LLC (“ABN”); ING Bank N.V., London Branch, (“ING”); DVB Bank S.E. (“DVB”); Citibank (“Citi”); and Commonwealth Bank of Australia, New York Branch, (“CBA”), (collectively the “Commercial Lenders”), while the Export Import Bank of Korea (“KEXIM”) is directly providing $204 million of financing (“KEXIM Direct Financing”). The remaining $305 million of financing is being provided under tranches guaranteed by KEXIM of $202 million (“KEXIM Guaranteed”) and insured by the Korea Trade Insurance Corporation (“K-sure”) of $103 million (“K-sure Insured”). Financing under the KEXIM guaranteed and K-sure insured tranches will be provided by certain Commercial Lenders; Deutsche Bank AG; and Santander Bank, N.A. The debt financing will be secured by, among other things, eighteen of the Company’s VLGC newbuildings, and will represent a loan-to-contract cost ratio before fees of approximately 55%.
The 2015 Debt Facility contains various covenants providing for, among other things, maintenance of certain financial ratios and certain limitations on payment of dividends, investments, acquisitions and indebtedness. A commitment fee is payable on the average daily unused amount under the 2015 Debt Facility of 40% of the margin on each tranche. Additionally, we incurred approximately $13.4 million of debt issuance costs associated with the 2015 Debt Facility, which have been deferred and are amortized over the life of the agreement and are included as part of interest expense. Certain terms of the borrowings under each tranche of the 2015 Debt Facility are as follows:
|
|
|
|
Term |
|
Interest Rate Description(1) |
|
Interest Rate at |
Tranche 1 |
|
Commercial Financing |
|
7 years |
|
London InterBank Offered Rate (“LIBOR”) plus a margin(4) |
|
3.02% |
Tranche 2 |
|
KEXIM Direct Financing |
|
12 years(3) |
|
LIBOR plus a margin of 2.45% |
|
2.72% |
Tranche 3 |
|
KEXIM Guaranteed |
|
12 years(3) |
|
LIBOR plus a margin of 1.40% |
|
1.67% |
Tranche 4 |
|
K-sure Insured |
|
12 years(3) |
|
LIBOR plus a margin of 1.50% |
|
1.77% |
(1) |
The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches. |
(2) |
The set LIBOR rate in effect as of March 31, 2015 was 0.27%. |
(3) |
The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche. |
(4) |
The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2015, the set margin was 2.50%. |
On March 26 2015, we made our initial drawdown under the 2015 Debt Facility of $81.2 million, including $2.5 million of deferred financing fees, which was secured by the Comet and the Corvette and was divided into the four separate tranches. As of March 31, 2015, $676.8 million was available to be drawn.
Royal Bank of Scotland plc. (“RBS”) secured bank debt
As discussed in Note 1, the Company assumed the debt obligations associated with the financing of the vessels that were acquired through the acquisition of CMNL, CJNP and CNML. The prior loan arrangements associated with those vessels required approval from the lenders to sell the vessels and agreement from the lenders to transfer the borrowings to another party. As a consequence, the Company and the lender negotiated new borrowing terms in connection with this transaction. The new terms are described below. The total borrowings outstanding immediately prior to the debt modification and immediately after remained the same.
CMNL, CJNP, CNML and Corsair as joint and several borrowers (Borrowers), and Dorian LPG, Ltd as parent guarantor entered into a loan facility of $135,224,500 (the “RBS Loan Facility”), which replaced the prior borrowing arrangements of the Predecessor. The RBS Loan Facility is divided into three tranches. Tranche A of $47.6 million, Tranche B of $34.5 million and Tranche C of up to $53.1 million and is associated with each of the Captain John NP, Captain Markos NL and the Captain Nicholas ML, respectively.
Tranche A is payable in twelve equal semi-annual installments each in the amount of $1,700,000 that commenced on September 24, 2013 plus a balloon of $27,200,000 payable concurrently with the last installment on March 24, 2019.
Tranche B is payable in eleven equal semi-annual installments each in the amount of $1,278,500 that commenced on November 17, 2013 plus a balloon of $20,456,000 payable concurrently with the last installment on November 17, 2018.
Tranche C is payable in fourteen equal semi-annual installments each in the amount of $1,827,500 that commenced on January 21, 2014 plus a balloon of $27,520,000 payable concurrently with the last installment July 21, 2020.
The interest rate on the RBS Loan Facility increased in accordance with the loan agreement from LIBOR plus a margin of 1.5% per annum to LIBOR plus a margin of 2.0% per annum on September 26, 2014, concurrent with the delivery of the Corsair. The margin will increase to 2.5% on September 26, 2015 until maturity.
The RBS Loan Facility is secured by first priority mortgages on the vessels financed and first assignments of all freights, earnings and insurances.
The RBS Loan Facility also requires the Borrowers to maintain a minimum market adjusted security cover ratio equal to at least 125% of the aggregate of the outstanding loan balance and 50% of the related swap exposure up to September 2014 or 100% thereafter. In the event of non-compliance the Borrowers will be required within one month of being notified in writing by the lender to make such prepayment. In the event the lender agrees to release Corsair or another borrower approved by the lender from joint and several liabilities under the agreement, the minimum market adjusted security cover is adjusted to 175% and the margin will be increased to 2.75%.
The RBS Loan Facility also contains customary covenants that require the Company to maintain adequate insurance coverage and to obtain the lender’s prior consent before changes are made to the flag, class or management of the vessels, or enter into a new line of business. The RBS Loan Facility also requires that Dorian Holdings maintain a minimum ownership percentage. The loan facility includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and warranty, a cross-default to other indebtedness and non-compliance with security documents, and prohibit the Borrowers from paying dividends. However, the RBS Loan Facility permits the Borrowers to make expenditures to fund the administration and operation of Dorian LPG.
Debt Covenants: The following financial covenants are the most restrictive from the 2015 Debt Facility and the RBS Loan Facility which the Company is required to comply with, calculated on a consolidated basis, determined and defined according to the provisions of the loan agreement:
RBS Loan Facility Covenants
The ratio of cash flow from operations before interest and finance costs to cash debt service costs shall not be less than 1:1;
Minimum shareholders’ equity, as adjusted for any reduction in the vessel fair market value, shall not be less than $85 million;
Minimum cash balance of $10 million at the end of each quarter and minimum cash balances of $1.5 million per mortgaged vessel in a pledged account with the lender at all times;
The ratio of Total Debt to Shareholders Funds shall not exceed 150% at all times;
The ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan, plus 100% of the related swap exposure, at all times shall be in excess of 125%; and
No dividends shall be paid in excess of free cash flow if an event of default is occurring.
2015 Debt Facility Covenants
The ratio of current assets divided by current liabilities shall always be greater than 1.00;
Maintain minimum stockholder’s equity at all times equal to the aggregate of (i) $400,000,000, (ii) 50% of any new equity raised after loan agreement date and (iii) 25% of the positive net income for the immediately preceding financial year;
Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained (i) greater than or equal to: 1.00 for the 12-month period starting in the calendar quarter following the one in which delivery of the first ship occurs, (ii) 1.50 in the subsequent year, (iii) 2.00 in the third year following the initial period, and (iv) 2.50 thereafter;
The ratio of consolidated net debt to consolidated total capitalization shall not exceed 0.60 to 1.00;
Minimum cash balance must be the higher of (a) the aggregate of (i) $25 million and (ii) $1,100,000 for every vessel delivered and financed by the 2015 Debt Facility and (b) 5% of the consolidated interest bearing debt outstanding of the Company;
Fair market value of the mortgaged ships plus any additional security shall be at least 135% of the outstanding loan balance;
No dividends shall be paid if an event of default has occurred and is continuing, or if an event of default would result therefrom, or if we are not in compliance with any financial covenants or any payment of dividends or any form of distribution or return of capital would result us not being in compliance with any of the financial covenants.
We were in compliance with the financial covenants as of March 31, 2015.
Debt Obligations
The table below presents our debt obligations:
RBS secured bank debt |
|
March 31, 2015 |
|
March 31, 2014 |
|
Tranche A |
|
40,800,000 |
|
44,200,000 |
|
Tranche B |
|
30,684,000 |
|
33,241,000 |
|
Tranche C |
|
47,622,500 |
|
51,277,500 |
|
Total |
|
119,106,500 |
|
128,718,500 |
|
|
|
|
|
|
|
2015 Debt Facility |
|
|
|
|
|
Commercial Financing |
|
26,695,381 |
|
— |
|
KEXIM Direct Financing |
|
21,890,212 |
|
— |
|
KEXIM Guaranteed |
|
21,655,293 |
|
— |
|
K-sure Insured |
|
10,996,041 |
|
— |
|
Total |
|
81,236,927 |
|
— |
|
Total debt obligations |
|
200,343,427 |
|
128,718,500 |
|
|
|
|
|
|
|
Presented as follows: |
|
|
|
|
|
Current portion of long-term debt |
|
15,677,553 |
|
9,612,000 |
|
Long-term debt—net of current portion |
|
184,665,874 |
|
119,106,500 |
|
Total |
|
200,343,427 |
|
128,718,500 |
|
Future Cash Payments for Debt
The minimum annual principal payments, in accordance with the loan agreements, required to be made after March 31, 2015 are as follows:
Year ending March 31: |
|
|
|
2016 |
|
15,677,553 |
|
2017 |
|
15,677,553 |
|
2018 |
|
15,677,553 |
|
2019 |
|
63,333,553 |
|
2020 |
|
9,720,553 |
|
Thereafter |
|
80,256,662 |
|
Total |
|
200,343,427 |
|
|
12. Common Stock
Under the articles of incorporation effective July 1, 2013, the Company’s authorized capital stock consists of 500,000,000 registered shares, par value $.01 per share, of which 450,00,000 are designated as common share and 50,000,000 shares are designated as preferred shares.
On July 29, 2013, the Company issued the following shares:
· |
9,310,054 common shares on completion of its NPP, at NOK75.00 per share, equivalent to USD12.66 per share based on the exchange rate on July 29, 2013 |
· |
4,667,135 common shares to Dorian Holdings (refer Note 4) |
· |
4,667,135 common shares to SeaDor Holdings LLC (refer Note 3) |
The fair value of the shares issued to Dorian and SeaDor was determined by the Company to be NOK75 (or USD12.66) per share based on the issue price of the NPP.
On November 26, 2013, the Company issued the following shares:
· |
16,081,081 common shares on completion of a second Private Placement in Norway (“NPP2”), at NOK92.50 per share, equivalent to USD15.16 per share based on the exchange rate on November 26, 2013 |
· |
7,990,425 common shares to Scorpio Tankers Inc. (refer Note 3) |
On February 12, 2014, the Company issued the following shares:
· |
5,649,200 common shares on completion of a third Private Placement in Norway (“NPP3”), at NOK110.00 per share, equivalent to USD17.92 per share based on the exchange rate on February 12, 2014 |
Each holder of common shares is entitled to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common shares are entitled to share equally in any dividends, which the Company’s board of directors may declare from time to time, out of funds legally available for dividends. Upon dissolution, liquidation or winding-up, the holders of common shares will be entitled to share equally in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock. Holders of common shares do not have conversion, redemption or pre-emptive rights.
On April 25, 2014 the Company completed a one-for-five reverse stock split and reduced the number of the Company’s issued and outstanding common shares and affected all issued and outstanding common shares, outstanding immediately prior to the effectiveness of the reverse stock split. The number of the Company’s authorized common shares was not affected by the reverse split and the par value of our common shares remained unchanged at $0.01 per share. The reverse stock split reduced the number of the Company’s common shares outstanding at March 31, 2014 from 241,825,149 to 48,365,011 after the cancellation of 19 fractional shares. No fractional shares were issued in connection with the reverse stock split. Shareholders who otherwise held a fractional share of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional share. All amounts related to number of shares and per share amounts have been retroactively restated.
On April 25, 2014, we completed a private placement of 1,412,698 common shares with a strategic investor at a price of NOK 110.00 or USD 18.40 based upon the exchange rate on April 24, 2014, which represents approximately $26.0 million in gross proceeds not including closing fees.
On May 13, 2014, we completed an initial public offering of 7,105,263 common shares on the New York Stock Exchange at a price of $19.00 per share, or $135.0 million in gross proceeds not including underwriting fees or closing costs. The shares began trading on the New York Stock Exchange on May 8, 2014 under the ticker symbol “LPG”.
On May 22, 2014, we completed the issuance of 245,521 common shares related to the overallotment exercise by the underwriters of our initial public offering at a price of $19.00 per share, or $4.7 million in gross proceeds not including underwriting fees or closing costs.
On June 25, 2014, we completed the exchange offer of unregistered common shares that we previously issued in our prior equity private placements, other than the common shares owned by our affiliates, for 15,528,507 common shares that have been registered under the Securities Act of 1933, as amended, the complete terms and conditions of which were set forth in a prospectus dated May 8, 2014 and the related letter of transmittal.
In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our directors, employees and non-employee consultants (see Note 13 for further discussion regarding stock-based compensation).
|
13. Stock-Based Compensation Plans
In April 2014, we adopted an equity incentive plan, which we refer to as the Equity Incentive Plan, under which we expect that directors, officers, and employees (including any prospective officer or employee) of the Company and its subsidiaries and affiliates, and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, as well as entities wholly-owned or generally exclusively controlled by such persons, may be eligible to receive non-qualified stock options, stock appreciation rights, stock awards, restricted stock units and performance compensation awards that the plan administrator determines are consistent with the purposes of the plan and the interests of the Company. We have reserved 2,850,000 of our common shares for issuance under the Equity Incentive Plan, subject to adjustment for changes in capitalization as provided in the Equity Incentive Plan in April 2014. The plan is administered by our compensation committee.
In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our directors, employees and non-employee consultants. One-third of these restricted shares vest three years after grant date, one-third vest four years after grant date, and one-third vest five years after grant date. The restricted shares were valued at their fair market value on their grant date and are expensed on a straight-line basis over five years. Our stock-based compensation expense was $2.3 million for the year ended March 31, 2015 and is included within general and administrative expenses in our accompanying consolidated statements of operations. There was no stock-based compensation expense for the period of July 1, 2013 through March 31, 2014. Unrecognized compensation cost as of March 31, 2015 was $16.0 million and will be recognized over the remaining weighted average life of 4.45 years.
A summary of the activity of our restricted shares as of March 31, 2015 and changes during the nine months then ended, is as follows:
Restricted Share Awards |
|
Number of Shares |
|
Weighted-Average |
|
|
Unvested as of March 31, 2014 |
|
— |
|
$ |
— |
|
Granted |
|
929,000 |
|
19.70 |
|
|
Unvested as of March 31, 2015 |
|
929,000 |
|
$ |
19.70 |
|
|
14. Revenues
Revenues comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Voyage charter revenues |
|
$ |
77,331,934 |
|
$ |
11,210,785 |
|
Time charter revenues |
|
26,098,290 |
|
17,602,137 |
|
||
Other revenues |
|
698,925 |
|
820,778 |
|
||
Total |
|
$ |
104,129,149 |
|
$ |
29,633,700 |
|
Time charter revenue included a profit-sharing element of the time charter agreements of $7.8 million and $6.1 million for the year ended March 31, 2015 and the period ended March 31, 2014, respectively. Other revenue represents income from charterers relating to reimbursement of expenses such as costs for security guards and war risk insurance.
|
15. Voyage Expenses
Voyage expenses comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Bunkers |
|
$ |
15,678,905 |
|
$ |
5,271,126 |
|
Port charges and other related expenses |
|
3,603,707 |
|
552,634 |
|
||
Brokers’ commissions |
|
1,703,589 |
|
386,244 |
|
||
Security cost |
|
709,035 |
|
298,820 |
|
||
War risk insurances |
|
146,320 |
|
37,001 |
|
||
Other voyage expenses |
|
240,300 |
|
125,146 |
|
||
Total |
|
$ |
22,081,856 |
|
$ |
6,670,971 |
|
|
16. Vessel Operating Expenses
Vessel operating expenses comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Crew wages and related costs |
|
$ |
14,529,018 |
|
$ |
5,306,441 |
|
Spares and stores |
|
2,666,100 |
|
1,395,287 |
|
||
Insurance |
|
1,343,071 |
|
566,021 |
|
||
Repairs and maintenance costs |
|
1,315,028 |
|
502,424 |
|
||
Lubricants |
|
964,951 |
|
480,279 |
|
||
Miscellaneous expenses |
|
437,997 |
|
144,507 |
|
||
Total |
|
$ |
21,256,165 |
|
$ |
8,394,959 |
|
|
17. Interest and Finance Costs
Interest and finance costs is comprised of the following:
|
|
Year ended March 31, 2015 |
|
July 1, 2013 (inception) to March 31, 2014 |
|
||
Interest incurred |
|
$ |
2,657,943 |
|
$ |
1,666,159 |
|
Amortization of financing costs |
|
830,899 |
|
800,806 |
|
||
Other financing costs |
|
301,868 |
|
84,251 |
|
||
Capitalized interest |
|
(3,501,620 |
) |
(972,010 |
) |
||
Total |
|
$ |
289,090 |
|
$ |
1,579,206 |
|
|
18. Income Taxes
The Company and its vessel-owning subsidiaries are incorporated in the Marshall Islands and under the laws of the Marshall Islands, are not subject to tax on income or capital gains and no Marshall Islands withholding tax will be imposed on dividends paid by the Company to its shareholders. The Company is also subject to United States federal income taxation in respect of income that is derived from the international operation of ships and the performance of services directly related thereto attributable to the transport of cargo to or from the United States (“Shipping Income”), unless exempt from United States federal income taxation.
If the Company does not qualify for the exemption from tax under Section 883, of the Internal Revenue Code of 1986, as amended, the Company and its subsidiaries will be subject to a 4% tax on its “U.S. source shipping income,” imposed without the allowance for any deductions. For these purposes, “U.S. source shipping income” means 50% of the Shipping Income derived by the Company and its subsidiaries that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
We do not believe that we were able to qualify for exemption under Section 883 and as a consequence, our gross U.S. source shipping income for our first fiscal year ended March 31, 2014 is subject to a 4% gross basis tax (without allowance for deductions) equal to $39,266 and is included in Voyage expenses in the consolidated statement of operations.
We believe that we will qualify for exemption under Section 883 and as a consequence, our gross U.S. source shipping income for our fiscal year ended March 31, 2015 will not be subject to a 4% gross basis tax.
|
19. Commitments and Contingencies
Commitments under Newbuilding Contracts
As of March 31, 2015, we had $871.4 million of commitments under shipbuilding contracts and supervision agreements for sixteen newbuildings. We expect to settle these commitments during the twelve months ended March 31, 2016.
Commitments under Operating Leases
We had the following commitments as a lessee under operating leases relating to our United States, Greece and United Kingdom offices:
|
|
March 31, 2015 |
|
|
Less than one year |
|
$ |
376,620 |
|
One to three years |
|
607,020 |
|
|
Three to five years |
|
140,370 |
|
|
Total |
|
$ |
1,124,010 |
|
Other
From time to time we expect to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any claim, which is reasonably possible and should be disclosed or probable and for which a provision should be established in the accompanying consolidated financial statements.
|
20. Financial Instruments and Fair Value Disclosures
Our principal financial assets consist of cash and cash equivalents, amounts due from related parties and trade accounts receivable. Our principal financial liabilities consist of long-term bank loan, interest rate swaps, accounts payable, amounts due to related parties and accrued liabilities.
(a)Concentration of credit risk: Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable, amounts due from related parties, cash and cash equivalents. We limit our credit risk with accounts receivable by performing ongoing credit evaluations of our customers’ financial condition and generally do not require collateral for our trade accounts receivable. We place our cash and cash equivalents, with highly-rated financial institutions.
(b)Interest rate risk: Our long-term bank loan is based on LIBOR and hence we are exposed to movements in LIBOR. We entered into interest rate swap agreements in order to hedge our variable interest rate exposure. We use interest rate swaps for the management of interest rate risk exposure. The interest rate swaps effectively convert our debt from a floating to a fixed rate. To hedge our exposure to changes in interest rates we are a party to five floating-to-fixed interest rate swaps with RBS. Interest rate swaps are stated at fair value, which is determined using a discounted cash flow approach based on market-based LIBOR swap yield rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that we would have to pay for the early termination of the agreements. The principal terms of the interest rate swaps are as follows:
Subsidiary |
|
Termination Date |
|
Fixed |
|
Nominal value |
|
CMNL(1) |
|
Nov 2018 |
|
5.395 |
% |
20,456,000 |
|
CMNL(1) |
|
Nov 2018 |
|
4.936 |
% |
10,228,000 |
|
CJNP(2) |
|
March 2019 |
|
4.772 |
% |
30,523,500 |
|
CJNP(2) |
|
March 2019 |
|
2.960 |
% |
10,276,500 |
|
CNML(3) |
|
July 2020 |
|
4.350 |
% |
46,440,000 |
|
|
|
|
|
|
|
117,924,000 |
|
(1) |
reduces semi-annually by $1,278,500 with a final settlement of $21,734,500 due in November 2018. |
(2) |
reduces semi-annually by $1,700,000 with a final settlement of $28,900,000 due in March 2019. |
(3) |
RBS exercised its right to extend the interest rate swap until July 2020 and based on the extension reduces semi-annually by $1,720,000 with a final settlement of $27,520,000 due in July 2020. |
(c)Fair Value Measurements:
Fair Value on a Recurring Basis: The following table summarizes the bases used to measure the financial assets and liabilities that are carried at fair value on a recurring basis on our balance sheet, which comprise our financial derivatives:
|
|
|
|
March 31, 2015 |
|
March 31, 2014 |
|
||||
Derivatives not designated as hedging |
|
Balance sheet location |
|
Asset |
|
Liability |
|
Asset |
|
Liability |
|
Interest rate swap agreements |
|
Long-term liabilities—Derivative instruments |
|
— |
|
12,730,462 |
|
— |
|
14,062,416 |
|
The effect of derivative instruments on the consolidated statement of operations for the periods presented are as follows:
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
Year ended |
|
July 1, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
1,331,954 |
|
$ |
2,623,456 |
|
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(5,291,157 |
) |
(3,727,457 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
(3,959,203 |
) |
$ |
(1,104,001 |
) |
As of March 31, 2015 and March 31, 2014, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the accompanying consolidated balance sheets. We did not have any other assets or liabilities measured at fair value on a non-recurring basis during the year ended March 31, 2015 or during the period ended March 31, 2014.
Fair value on a non-recurring basis: As of March 31, 2015, we reviewed the carrying amount and the estimated recoverable amount for each of our vessels. The review indicated that the carrying amount was not recoverable for our PGC vessel. The fair value is considered a Level 2 item in the fair value hierarchy and is based on our best estimate of the value of the vessel, which is supported by three independent vessel appraisals. We recognized an impairment loss of $1.4 million during the year ended March 31, 2015 as further described in Note 6 to the consolidated financial statements.
We did not have any other assets or liabilities measured at fair value on a nonrecurring basis during the year ended March 31, 2015 or during the period ended March 31, 2014.
(d)Book values and fair values of financial instruments. In addition to the derivatives that we are required to record at fair value on our balance sheet (refer (c) above), we have other financial instruments that are carried at historical cost. These financial instruments include trade accounts receivable, amounts due from related parties, cash and cash equivalents, accounts payable, amounts due to related parties and accrued liabilities for which the historical carrying value approximates the fair value due to the short-term nature of these financial instruments. We also have long term bank debt for which we believe the historical carrying value approximates their fair value as the loans bear interest at variable interest rates, being LIBOR, which is observable at commonly quoted intervals for the full terms of the loans, and hence are considered as Level 2 items in accordance with the fair value hierarchy. Cash and cash equivalents and restricted cash are considered Level 1 items.
|
21. Retirement Plans
Defined Contribution Plan
United States-based employees participate in our 401(k) retirement plan and may contribute a portion of their annual compensation to a 401(k) plan on a pre-tax basis, in accordance with Internal Revenue Service guidelines. On behalf of all participants in the plan, we provide a safe harbor contribution subject to certain limitations. Employee contributions and our safe harbor contributions are vested at all times. We recognized and paid compensation expense associated with the safe harbor contributions totaling $0.1 million for the year ended March 31, 2015. There was no compensation expense associated with the safe harbor contributions for the period ended March 31, 2014 as the plan was initiated during the year ended March 31, 2015 coinciding with the transfer of management services from the Manager to our wholly owned subsidiaries, as described in Note 3.
Defined Benefit Plan
Our Greece-based employees have a statutory required defined benefit pension plan according to provisions of Greek law 2112/20 covering all eligible employees (the “Greece Plan”). We recognized compensation expense and recorded a corresponding liability associated with our projected benefit obligation to the Greece Plan totaling $0.3 million for the year ended March 31, 2015 and no compensation expense for the period ended March 31, 2014.
Other
We contribute to retirement accounts for certain United Kingdom-based employees based on a percentage of their annual salaries. For the year ended March 31, 2015, we recognized compensation expense of $0.1 million related to these contributions. There was no compensation expense associated with these contributions for the period ended March 31, 2014.
|
23. Selected Quarterly Financial Information (unaudited)
The following tables summarize the 2015 and 2014 quarterly results:
|
|
Three months
ended |
|
Three months
ended 2014 |
|
Three months
ended |
|
Three months March 31, 2015 |
|
||||
Revenues |
|
$ |
15,853,840 |
|
$ |
20,358,211 |
|
$ |
32,583,990 |
|
$ |
35,333,108 |
|
Operating income |
|
5,200,271 |
|
3,476,450 |
|
10,825,590 |
|
10,493,169 |
|
||||
Net income |
|
$ |
3,667,249 |
|
$ |
3,768,677 |
|
$ |
8,996,605 |
|
$ |
8,828,251 |
|
Earnings per common share, basic and diluted |
|
$ |
0.07 |
|
$ |
0.07 |
|
$ |
0.16 |
|
$ |
0.15 |
|
|
|
July 1, 2013 |
|
Three months |
|
Three months |
|
|||
Revenues |
|
$ |
6,055,682 |
|
$ |
13,707,591 |
|
$ |
9,870,427 |
|
Operating income/(loss) |
|
(509,733 |
) |
3,908,734 |
|
992,366 |
|
|||
Net (loss)/income |
|
$ |
(1,425,761 |
) |
$ |
5,570,247 |
|
$ |
(1,310,643 |
) |
Earnings/(loss) per common share, basic and diluted |
|
$ |
(0.08 |
) |
$ |
0.20 |
|
$ |
(0.03 |
) |
|
24. Subsequent Events
On April 1, 2015, we commenced operations of Helios LPG Pool LLC (“Helios LPG”). Helios LPG is jointly run by Dorian LPG and Phoenix Tankers Pte. Ltd (“Phoenix Tankers”), a 100% subsidiary of Mitsui OSK Lines Ltd. Helios LPG is operated out of offices in London and Singapore.
Helios LPG is operating seven VLGCs on the water, including three of Dorian LPG’s VLGCs: Corsair, Captain John NP and Captain Nicholas ML, of which one is a ECO-design vessel.
On May 15, 2015, the Compensation Committee of our Board of Directors approved a $1.5 million discretionary cash bonus to executive management and $0.4 million to other employees in recognition of their contribution to the Company’s performance for the fiscal year ended March 31, 2015. These bonuses will be recognized as compensation expense in our consolidated financial statements for the year ended March 31, 2016.
|
(a)Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly-owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated.
(b)Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(c)Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus has not presented this in the statement of operations or in a separate statement.
(d)Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, the Company had no foreign currency derivative instruments.
(e)Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
(f)Restricted cash: Restricted cash represents pledged cash deposits or minimum liquidity to be maintained with certain banks under the Company’s borrowing arrangements. In the event that the obligation relating to such deposits is expected to be terminated within the next twelve months or relates to general minimum liquidity requirements with no obligation to retain such funds in retention accounts, these deposits are classified as current assets otherwise they are classified as non-current assets.
(g)Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero.
(h)Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method.
(i)Vessels, net: Vessels, net are stated at cost, less accumulated depreciation. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Interest costs incurred to finance the cost of vessels during their construction period are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred.
(j)Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.
(k)Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.
(l)Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations.
(m)Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected in Deferred charges in the accompanying consolidated balance sheet.
(n)Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured.
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(o)Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses.
(p)Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values, net of expected forfeitures, and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We estimate restricted stock award forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. As a result, we record stock-based compensation expense only for those awards that are expected to vest.
(q)Segment reporting: Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
(r)Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges.
(s)Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(t) |
Recent accounting pronouncements: On May 28, 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2016. Early adoption is not permitted. The Company has not yet evaluated the impact, if any, of the adoption of this new standard. |
On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. For public business entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, on a retrospective basis. Early adoption is permitted. We have not early adopted this standard. The effect from the adoption of this standard would be the presentation of the debt issuance costs as a direct deduction of the related debt liability instead of as a non-current asset.
|
Vessel Owning Subsidiaries
Subsidiary |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(1) |
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Grendon Tanker LLC |
|
PGC |
|
LPG Grendon |
|
1996 |
|
5,000 |
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
Newbuild Vessel Owning Subsidiaries(3)
Subsidiary |
|
Type of |
|
Hull |
|
Vessel’s Name |
|
Estimated |
|
CBM(1) |
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
S749 |
|
Cougar |
|
Q2 2015 |
|
84,000 |
Dorian Houston LPG Transport LLC |
|
VLGC |
|
S750 |
|
Cobra |
|
Q2 2015 |
|
84,000 |
Concorde LPG Transport LLC |
|
VLGC |
|
2660 |
|
Concorde |
|
Q2 2015 |
|
84,000 |
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
S753 |
|
Continental |
|
Q3 2015 |
|
84,000 |
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
S755 |
|
Constitution |
|
Q3 2015 |
|
84,000 |
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
S751 |
|
Commodore |
|
Q3 2015 |
|
84,000 |
Constellation LPG Transport LLC |
|
VLGC |
|
2661 |
|
Constellation |
|
Q3 2015 |
|
84,000 |
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
2336 |
|
Cresques |
|
Q3 2015 |
|
84,000 |
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
S756 |
|
Cheyenne |
|
Q3 2015 |
|
84,000 |
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
S752 |
|
Clermont |
|
Q4 2015 |
|
84,000 |
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
S754 |
|
Chaparral |
|
Q4 2015 |
|
84,000 |
Commander LPG Transport LLC |
|
VLGC |
|
2662 |
|
Commander |
|
Q4 2015 |
|
84,000 |
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
2337 |
|
Cratis |
|
Q4 2015 |
|
84,000 |
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
2338 |
|
Copernicus |
|
Q4 2015 |
|
84,000 |
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
S757 |
|
Challenger |
|
Q4 2015 |
|
84,000 |
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
S758 |
|
Caravelle |
|
Q1 2016 |
|
84,000 |
Management Subsidiaries
Subsidiary |
|
Incorporation |
Dorian LPG Management Corp |
|
July 2, 2013 |
Dorian LPG (USA) LLC (incorporated in USA) |
|
July 2, 2013 |
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
November 18, 2013 |
Dorian LPG Finance LLC |
|
January 16, 2015 |
Dormant Subsidiaries
Subsidiary |
|
Incorporation |
SeaCor LPG I LLC |
|
April 26, 2013 |
SeaCor LPG II LLC |
|
April 26, 2013 |
Capricorn LPG Transport LLC |
|
November 15, 2013 |
Constitution LPG Transport LLC |
|
February 17, 2014 |
Occident River Trading Limited (incorporated in UK) |
|
January 9, 2015 |
(1)CBM: Cubic meters, a standard measure for LPG tanker capacity
(2)Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”)
(3)Represents newbuild vessels not yet delivered as of December 31, 2014
(4)Represents calendar year quarters
Charterer |
|
% of revenue |
|
Statoil ASA |
|
27 |
% |
Royal Dutch Shell plc |
|
19 |
% |
Itochu Corporation |
|
14 |
% |
Indian Oil Corporation Ltd. |
|
12 |
% |
Maritime Pressx Limited |
|
11 |
% |
Charterer |
|
% of revenue |
|
Statoil ASA |
|
51 |
% |
Naftomar Shipping and Trading Co. Ltd |
|
13 |
% |
Kuwait Petroleum Corporation |
|
10 |
% |
|
Cash |
|
49,854,870 |
|
Purchase contract for one VLGC newbuilding contract (includes advance payment) |
|
7,009,675 |
|
Purchase option contracts |
|
2,529,126 |
|
|
|
59,393,671 |
|
Cash |
|
1,930,000 |
|
Purchase contract for thirteen VLGC newbuilding contracts (includes advance payments) |
|
119,386,040 |
|
|
|
121,316,040 |
|
|
|
|
Acquisition |
|
Grendon |
|
Total |
|
Cash |
|
9,732,911 |
|
6,672,485 |
|
16,405,396 |
|
Equity instruments (4,667,135 common shares of the Company at NOK 75.00 per share) |
|
59,092,499 |
|
— |
|
59,092,499 |
|
Total consideration |
|
68,825,410 |
|
6,672,485 |
|
75,497,895 |
|
Fair value of identifiable assets and liabilities acquired: |
|
|
|
|
|
|
|
Cash |
|
2,672,500 |
|
— |
|
2,672,500 |
|
Vessels |
|
194,457,529 |
|
6,625,000 |
|
201,082,529 |
|
Inventories on board the vessels |
|
1,407,622 |
|
47,485 |
|
1,455,107 |
|
Newbuilding vessels contracted for construction |
|
17,593,130 |
|
— |
|
17,593,130 |
|
Other assets—Vessel purchase options |
|
4,605,000 |
|
— |
|
4,605,000 |
|
Long term bank debt |
|
(135,224,500 |
) |
— |
|
(135,224,500 |
) |
Interest rate swaps |
|
(16,685,871 |
) |
— |
|
(16,685,871 |
) |
Net assets acquired—fair value |
|
68,825,410 |
|
6,672,485 |
|
75,497,895 |
|
$ in 000’s |
|
For the year ended |
|
|
Net revenues |
|
$ |
45,017 |
|
Net income |
|
$ |
6,613 |
|
|
|
|
March 31, 2015 |
|
March 31, 2014 |
|
Bunkers |
|
2,446,424 |
|
596,768 |
|
Lubricants |
|
737,502 |
|
358,381 |
|
Victualing |
|
132,017 |
|
83,840 |
|
Bonded stores |
|
35,399 |
|
15,354 |
|
Communication cards |
|
24,417 |
|
3,986 |
|
Total |
|
3,375,759 |
|
1,058,329 |
|
|
|
|
Cost |
|
Accumulated |
|
Net book Value |
|
Balance, July 1, 2013 |
|
— |
|
— |
|
— |
|
Vessel acquisitions through business combinations (Refer Note 4) |
|
201,082,529 |
|
— |
|
201,082,529 |
|
Other |
|
307,606 |
|
— |
|
307,606 |
|
Depreciation |
|
— |
|
(6,555,269 |
) |
(6,555,269 |
) |
Balance, March 31, 2014 |
|
201,390,135 |
|
(6,555,269 |
) |
194,834,866 |
|
Additions |
|
240,415,534 |
|
— |
|
240,415,534 |
|
Impairment(1) |
|
(2,625,000 |
) |
1,193,182 |
|
(1,431,818 |
) |
Depreciation |
|
— |
|
(13,842,529 |
) |
(13,842,529 |
) |
Balance, March 31, 2015 |
|
439,180,669 |
|
(19,204,616 |
) |
419,976,053 |
|
(1) |
We recognized a non-cash impairment loss of $1.4 million for the year ended March 31, 2015 and no impairment losses for the period ended March 31, 2014. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable. |
|
Balance, July 1, 2013 |
|
— |
|
Acquisition of two newbuilding contracts from Dorian Holdings on July 29, 2013 (refer Note 4) |
|
17,593,130 |
|
Acquisition of one newbuilding contract from SeaDor on July 29,2013 (refer Note 3b) |
|
7,009,675 |
|
Acquisition of thirteen newbuilding contracts from Scorpio on November 26, 2013 (refer Note 3c) |
|
119,386,040 |
|
Acquisition cost of vessel purchase options from Dorian Holdings and SeaDor exercised on February 21, 2014 (refer Notes 3b and 4) |
|
7,134,126 |
|
Installment payments to shipyards |
|
169,271,536 |
|
Other capitalized expenditures |
|
1,839,689 |
|
Capitalized interest |
|
972,010 |
|
Balance, March 31, 2014 |
|
323,206,206 |
|
Installment payments to shipyards |
|
300,866,261 |
|
Other capitalized expenditures |
|
11,016,951 |
|
Capitalized interest |
|
3,501,620 |
|
Vessels delivered (transferred to Vessels) |
|
(240,415,534) |
|
Balance, March 31, 2015 |
|
398,175,504 |
|
|
|
|
Financing |
|
Drydocking |
|
Equity |
|
Total deferred |
|
On inception , July 1, 2013 |
|
— |
|
— |
|
— |
|
— |
|
Additions |
|
1,516,847 |
|
600,394 |
|
1,304,343 |
|
3,421,584 |
|
Amortization |
|
(800,807 |
) |
(65,103 |
) |
— |
|
(865,910 |
) |
Balance, March 31, 2014 |
|
716,040 |
|
535,291 |
|
1,304,343 |
|
2,555,674 |
|
Additions |
|
13,411,075 |
|
323,623 |
|
760,680 |
|
14,495,378 |
|
Amortization |
|
(830,899 |
) |
(189,209 |
) |
— |
|
(1,020,108 |
) |
Transferred to APIC |
|
— |
|
— |
|
(2,065,023 |
) |
(2,065,023 |
) |
Balance, March 31, 2015 |
|
13,296,216 |
|
669,705 |
|
— |
|
13,965,921 |
|
|
|
|
March 31, 2015 |
|
March 31, 2014 |
|
Accrued loan and swap interest |
|
1,619,897 |
|
1,439,237 |
|
Accrued voyage and vessel operating expenses |
|
1,406,023 |
|
87,029 |
|
Accrued professional services |
|
1,282,639 |
|
173,708 |
|
Accrued financing costs |
|
705,000 |
|
— |
|
Accrued employee-related costs |
|
546,095 |
|
— |
|
Accrued IPO charges |
|
— |
|
469,707 |
|
Other |
|
88,048 |
|
26,705 |
|
Total |
|
5,647,702 |
|
2,196,386 |
|
|
|
|
|
|
Term |
|
Interest Rate Description(1) |
|
Interest Rate at |
Tranche 1 |
|
Commercial Financing |
|
7 years |
|
London InterBank Offered Rate (“LIBOR”) plus a margin(4) |
|
3.02% |
Tranche 2 |
|
KEXIM Direct Financing |
|
12 years(3) |
|
LIBOR plus a margin of 2.45% |
|
2.72% |
Tranche 3 |
|
KEXIM Guaranteed |
|
12 years(3) |
|
LIBOR plus a margin of 1.40% |
|
1.67% |
Tranche 4 |
|
K-sure Insured |
|
12 years(3) |
|
LIBOR plus a margin of 1.50% |
|
1.77% |
(1) |
The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches. |
(2) |
The set LIBOR rate in effect as of March 31, 2015 was 0.27%. |
(3) |
The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche. |
(4) |
The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2015, the set margin was 2.50%. |
RBS secured bank debt |
|
March 31, 2015 |
|
March 31, 2014 |
|
Tranche A |
|
40,800,000 |
|
44,200,000 |
|
Tranche B |
|
30,684,000 |
|
33,241,000 |
|
Tranche C |
|
47,622,500 |
|
51,277,500 |
|
Total |
|
119,106,500 |
|
128,718,500 |
|
|
|
|
|
|
|
2015 Debt Facility |
|
|
|
|
|
Commercial Financing |
|
26,695,381 |
|
— |
|
KEXIM Direct Financing |
|
21,890,212 |
|
— |
|
KEXIM Guaranteed |
|
21,655,293 |
|
— |
|
K-sure Insured |
|
10,996,041 |
|
— |
|
Total |
|
81,236,927 |
|
— |
|
Total debt obligations |
|
200,343,427 |
|
128,718,500 |
|
|
|
|
|
|
|
Presented as follows: |
|
|
|
|
|
Current portion of long-term debt |
|
15,677,553 |
|
9,612,000 |
|
Long-term debt—net of current portion |
|
184,665,874 |
|
119,106,500 |
|
Total |
|
200,343,427 |
|
128,718,500 |
|
Year ending March 31: |
|
|
|
2016 |
|
15,677,553 |
|
2017 |
|
15,677,553 |
|
2018 |
|
15,677,553 |
|
2019 |
|
63,333,553 |
|
2020 |
|
9,720,553 |
|
Thereafter |
|
80,256,662 |
|
Total |
|
200,343,427 |
|
|
Restricted Share Awards |
|
Number of Shares |
|
Weighted-Average |
|
|
Unvested as of March 31, 2014 |
|
— |
|
$ |
— |
|
Granted |
|
929,000 |
|
19.70 |
|
|
Unvested as of March 31, 2015 |
|
929,000 |
|
$ |
19.70 |
|
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Voyage charter revenues |
|
$ |
77,331,934 |
|
$ |
11,210,785 |
|
Time charter revenues |
|
26,098,290 |
|
17,602,137 |
|
||
Other revenues |
|
698,925 |
|
820,778 |
|
||
Total |
|
$ |
104,129,149 |
|
$ |
29,633,700 |
|
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Bunkers |
|
$ |
15,678,905 |
|
$ |
5,271,126 |
|
Port charges and other related expenses |
|
3,603,707 |
|
552,634 |
|
||
Brokers’ commissions |
|
1,703,589 |
|
386,244 |
|
||
Security cost |
|
709,035 |
|
298,820 |
|
||
War risk insurances |
|
146,320 |
|
37,001 |
|
||
Other voyage expenses |
|
240,300 |
|
125,146 |
|
||
Total |
|
$ |
22,081,856 |
|
$ |
6,670,971 |
|
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Crew wages and related costs |
|
$ |
14,529,018 |
|
$ |
5,306,441 |
|
Spares and stores |
|
2,666,100 |
|
1,395,287 |
|
||
Insurance |
|
1,343,071 |
|
566,021 |
|
||
Repairs and maintenance costs |
|
1,315,028 |
|
502,424 |
|
||
Lubricants |
|
964,951 |
|
480,279 |
|
||
Miscellaneous expenses |
|
437,997 |
|
144,507 |
|
||
Total |
|
$ |
21,256,165 |
|
$ |
8,394,959 |
|
|
|
|
Year ended March 31, 2015 |
|
July 1, 2013 (inception) to March 31, 2014 |
|
||
Interest incurred |
|
$ |
2,657,943 |
|
$ |
1,666,159 |
|
Amortization of financing costs |
|
830,899 |
|
800,806 |
|
||
Other financing costs |
|
301,868 |
|
84,251 |
|
||
Capitalized interest |
|
(3,501,620 |
) |
(972,010 |
) |
||
Total |
|
$ |
289,090 |
|
$ |
1,579,206 |
|
|
|
|
March 31, 2015 |
|
|
Less than one year |
|
$ |
376,620 |
|
|
|
|
|
|
One to three years |
|
607,020 |
|
|
Three to five years |
|
140,370 |
|
|
Total |
|
$ |
1,124,010 |
|
|
Subsidiary |
|
Termination Date |
|
Fixed |
|
Nominal value |
|
CMNL(1) |
|
Nov 2018 |
|
5.395 |
% |
20,456,000 |
|
CMNL(1) |
|
Nov 2018 |
|
4.936 |
% |
10,228,000 |
|
CJNP(2) |
|
March 2019 |
|
4.772 |
% |
30,523,500 |
|
CJNP(2) |
|
March 2019 |
|
2.960 |
% |
10,276,500 |
|
CNML(3) |
|
July 2020 |
|
4.350 |
% |
46,440,000 |
|
|
|
|
|
|
|
117,924,000 |
|
(1) |
reduces semi-annually by $1,278,500 with a final settlement of $21,734,500 due in November 2018. |
(2) |
reduces semi-annually by $1,700,000 with a final settlement of $28,900,000 due in March 2019. |
(3) |
RBS exercised its right to extend the interest rate swap until July 2020 and based on the extension reduces semi-annually by $1,720,000 with a final settlement of $27,520,000 due in July 2020. |
|
|
|
|
March 31, 2015 |
|
March 31, 2014 |
|
||||
Derivatives not designated as hedging instruments |
|
Balance sheet location |
|
Asset |
|
Liability |
|
Asset |
|
Liability |
|
Interest rate swap agreements |
|
Long-term liabilities—Derivative instruments |
|
— |
|
12,730,462 |
|
— |
|
14,062,416 |
|
Derivatives not designated as hedging |
|
Location of gain/(loss) recognized |
|
Year ended |
|
July 1, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
1,331,954 |
|
$ |
2,623,456 |
|
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(5,291,157 |
) |
(3,727,457 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
(3,959,203 |
) |
$ |
(1,104,001 |
) |
|
|
|
Three months
ended |
|
Three months
ended 2014 |
|
Three months
ended |
|
Three months March 31, 2015 |
|
||||
Revenues |
|
$ |
15,853,840 |
|
$ |
20,358,211 |
|
$ |
32,583,990 |
|
$ |
35,333,108 |
|
Operating income |
|
5,200,271 |
|
3,476,450 |
|
10,825,590 |
|
10,493,169 |
|
||||
Net income |
|
$ |
3,667,249 |
|
$ |
3,768,677 |
|
$ |
8,996,605 |
|
$ |
8,828,251 |
|
Earnings per common share, basic and diluted |
|
$ |
0.07 |
|
$ |
0.07 |
|
$ |
0.16 |
|
$ |
0.15 |
|
|
|
July 1, 2013 |
|
Three months |
|
Three months |
|
|||
Revenues |
|
$ |
6,055,682 |
|
$ |
13,707,591 |
|
$ |
9,870,427 |
|
Operating income/(loss) |
|
(509,733 |
) |
3,908,734 |
|
992,366 |
|
|||
Net (loss)/income |
|
$ |
(1,425,761 |
) |
$ |
5,570,247 |
|
$ |
(1,310,643 |
) |
Earnings/(loss) per common share, basic and diluted |
|
$ |
(0.08 |
) |
$ |
0.20 |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Basis of Presentation and General Information
Dorian LPG Ltd. (“Dorian”) was incorporated on July 1, 2013, under the laws of the Republic of the Marshall Islands and is headquartered in the United States and is engaged in the transportation of liquefied petroleum gas (“LPG”) worldwide through the ownership and operation of LPG tankers. Dorian LPG Ltd. and its subsidiaries (together “we”, “us”, “our”, “DLPG” or the “Company”) is primarily focused on owning and operating very large gas carriers (“VLGCs”), each with a cargo carrying capacity of greater than 80,000 cbm. After the latest delivery of our VLGC on January 2, 2015, our fleet currently consists of seven LPG carriers, including three fuel-efficient 84,000 cbm ECO-design VLGCs, three 82,000 cbm VLGCs and one pressurized 5,000 cbm vessel. In addition, we have newbuilding contracts for the construction of sixteen new fuel-efficient 84,000 cbm ECO-design VLGCs at Hyundai Heavy Industries Co., Ltd. (“Hyundai” or “HHI”), and Daewoo Shipping and Marine Engineering Ltd. (“Daewoo”), both of which are based in South Korea, with scheduled deliveries between June 2015 and February 2016. We refer to these contracts along with the three VLGCs that were delivered between July 2014 and January 2015 as our VLGC Newbuilding Program.
The Company remained dormant until July 29, 2013 when the following transactions were completed concurrently:
· |
DLPG completed a private placement of 9,310,054 shares of its common stock with institutional investors and other investors in Norway (“NPP”). The shares were issued at NOK 75.00 per share, equivalent to USD 12.66 per share and realized gross proceeds of $117.9 million based on the exchange rate on July 29, 2013. |
· |
DLPG acquired from Dorian Holdings the following in exchange for 4,667,135 shares of its common stock and $9.7 million in cash: |
(a) |
100% interest in three ship owning entities, CNML LPG Transport LLC (“CNML”), CJNP LPG Transport LLC (“CJNP”) and CMNL LPG Transport LLC (“CMNL”), which each owned a Very Large Gas Carrier (“VLGC”) (the Captain Nicholas ML , the Captain John NP and the Captain Markos NL respectively), the related bank debt, interest rate swaps, and the inventory on board each vessel. The Captain Nicholas ML, Captain John NP and Captain Markos NL were previously owned by Cepheus Transport Ltd, Lyra Gas Transport Ltd and Cetus Transport Ltd., all owned by principals of Dorian Holdings until July 29, 2013 on which date they were sold to CNML, CJNP and CMNL, respectively. The sale of the vessels required approval from the bank that had provided the related financing that was assumed by the Company in connection with the transaction and resulted in a modification of the financing terms in connection with the acquisition. A further description of the loan arrangements is provided in Note 11. |
(b) |
100% interest in two entities, each a party to a contract for the construction of one VLGC, option rights to construct an additional 1.5 VLGCs and $2.67 million in cash. |
DLPG acquired from an affiliate of Dorian Holdings a 100% interest in an LPG pressurized gas carrier, the LPG Grendon, and the inventory onboard the vessel for $6.672 million in cash.
The abovementioned acquisitions from Dorian Holdings and its affiliate were accounted as a business combination (refer Note 4) and the operations of LPG Grendon along with that of the three Very Large Gas Carriers referred to above are herein referred to as the Predecessor.
· |
DLPG issued 4,667,135 shares of its common stock to SEACOR Holdings Inc., through its subsidiary, SeaDor Holdings LLC (“SeaDor”) as consideration for the following: |
(a) |
100% interest in a subsidiary company, SEACOR LPGI LLC, a party to a contract for the construction of one VLGC |
(b) |
$49.9 million in cash and |
(c) |
the assignment to DLPG of option rights to purchase 1.5 VLGC vessels. |
The above mentioned acquisitions from SeaDor were accounted for as an asset acquisition. The allocation of the purchase price between the assets acquired is described in Note 3(b).
At the closing of the NPP, Dorian Holdings surrendered the 100 shares of capital stock of DLPG, which were then cancelled. Following the completion of the above transactions on July 29, 2013, Dorian Holdings, whose chairman is Mr. John Hadjipateras, and SeaDor, each owned approximately 25.0% of the Company’s outstanding common stock with the remaining 50% held by institutional investors and high net worth investors.
We successfully closed our initial public offering (“IPO”) on May 13, 2014 and our shares are listed on the NYSE and trade under the symbol LPG.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Dorian LPG Ltd. and its subsidiaries.
Our subsidiaries, which are all wholly-owned and all are incorporated in Republic of the Marshall Islands (unless otherwise indicated below), as of March 31, 2015 are listed below.
Vessel Owning Subsidiaries
Subsidiary |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(1) |
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Grendon Tanker LLC |
|
PGC |
|
LPG Grendon |
|
1996 |
|
5,000 |
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
Newbuild Vessel Owning Subsidiaries(3)
Subsidiary |
|
Type of |
|
Hull |
|
Vessel’s Name |
|
Estimated |
|
CBM(1) |
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
S749 |
|
Cougar |
|
Q2 2015 |
|
84,000 |
Dorian Houston LPG Transport LLC |
|
VLGC |
|
S750 |
|
Cobra |
|
Q2 2015 |
|
84,000 |
Concorde LPG Transport LLC |
|
VLGC |
|
2660 |
|
Concorde |
|
Q2 2015 |
|
84,000 |
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
S753 |
|
Continental |
|
Q3 2015 |
|
84,000 |
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
S755 |
|
Constitution |
|
Q3 2015 |
|
84,000 |
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
S751 |
|
Commodore |
|
Q3 2015 |
|
84,000 |
Constellation LPG Transport LLC |
|
VLGC |
|
2661 |
|
Constellation |
|
Q3 2015 |
|
84,000 |
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
2336 |
|
Cresques |
|
Q3 2015 |
|
84,000 |
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
S756 |
|
Cheyenne |
|
Q3 2015 |
|
84,000 |
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
S752 |
|
Clermont |
|
Q4 2015 |
|
84,000 |
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
S754 |
|
Chaparral |
|
Q4 2015 |
|
84,000 |
Commander LPG Transport LLC |
|
VLGC |
|
2662 |
|
Commander |
|
Q4 2015 |
|
84,000 |
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
2337 |
|
Cratis |
|
Q4 2015 |
|
84,000 |
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
2338 |
|
Copernicus |
|
Q4 2015 |
|
84,000 |
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
S757 |
|
Challenger |
|
Q4 2015 |
|
84,000 |
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
S758 |
|
Caravelle |
|
Q1 2016 |
|
84,000 |
Management Subsidiaries
Subsidiary |
|
Incorporation |
Dorian LPG Management Corp |
|
July 2, 2013 |
Dorian LPG (USA) LLC (incorporated in USA) |
|
July 2, 2013 |
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
November 18, 2013 |
Dorian LPG Finance LLC |
|
January 16, 2015 |
Dormant Subsidiaries
Subsidiary |
|
Incorporation |
SeaCor LPG I LLC |
|
April 26, 2013 |
SeaCor LPG II LLC |
|
April 26, 2013 |
Capricorn LPG Transport LLC |
|
November 15, 2013 |
Constitution LPG Transport LLC |
|
February 17, 2014 |
Occident River Trading Limited (incorporated in UK) |
|
January 9, 2015 |
(1)CBM: Cubic meters, a standard measure for LPG tanker capacity
(2)Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”)
(3)Represents newbuild vessels not yet delivered as of December 31, 2014
(4)Represents calendar year quarters
The following charterers individually accounted for more than 10% of our revenue for the periods presented as follows:
Charterer |
|
% of revenue |
|
Statoil ASA |
|
27 |
% |
Royal Dutch Shell plc |
|
19 |
% |
Itochu Corporation |
|
14 |
% |
Indian Oil Corporation Ltd. |
|
12 |
% |
Maritime Pressx Limited |
|
11 |
% |
Charterer |
|
% of revenue |
|
Statoil ASA |
|
51 |
% |
Naftomar Shipping and Trading Co. Ltd |
|
13 |
% |
Kuwait Petroleum Corporation |
|
10 |
% |
1.Basis of Presentation and General Information
The accompanying combined financial statements include the accounts of entities listed below (collectively, the “Owning Companies” or “Company” or “Predecessor”). The Owning Companies have been presented on a combined basis, as they had common board of directors who functioned as the executive management and made all significant management decisions throughout the periods presented. In order to present the track record of this management team the entities are presented in a single combined set of financial statements.
Vessel owning Company |
|
Date of |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(2) |
Cepheus Transport Ltd. (Cepheus) (1) |
|
March 17, 2004 |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
Lyra Gas Transport Ltd (Lyra) (1) |
|
January 30, 2005 |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
Cetus Transport Ltd. (Cetus) (1) |
|
January 27, 2004 |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Orion Tankers Limited (Orion) (1) |
|
October 26, 2005 |
|
PGC |
|
Grendon |
|
1996 |
|
5,000 |
(1) |
Incorporated in Republic of Liberia. |
(2) |
CBM: Cubic meters, a standard measure for LPG tanker capacity. |
(3) |
Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”) |
The Owning Companies are engaged in providing international seaborne transportation services of liquefied petroleum gas (LPG) worldwide through the ownership of LPG tankers to LPG producers and users. The Owning Companies’ vessels are managed by Dorian (Hellas) S.A.-Panama (the “Manager”), a related party. The Manager is a company incorporated in Panama and has a registered branch in Greece, established in 1974 under the provisions of Law 89/1967, 378/1968 and article 25 of law 27/75, as amended by article 4 of law 2234/94.
The following charterers individually accounted for more than 10% of the Company’s revenues as follows:
|
|
% of total revenues |
|
||
Charterer |
|
April 1, 2013 |
|
Year ended |
|
Statoil Hydro ASA |
|
49 |
|
53 |
|
Petredec Ltd. |
|
18 |
|
19 |
|
E1Corp. |
|
19 |
|
17 |
|
Astomos Energy Corporation |
|
12 |
|
— |
|
|
2. Significant Accounting Policies
(a) |
Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly-owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated. |
(b) |
Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
(c) |
Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus has not presented this in the statement of operations or in a separate statement. |
(d) |
Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, the Company had no foreign currency derivative instruments. |
(e) |
Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
(f) |
Restricted cash: Restricted cash represents pledged cash deposits or minimum liquidity to be maintained with certain banks under the Company’s borrowing arrangements. In the event that the obligation relating to such deposits is expected to be terminated within the next twelve months or relates to general minimum liquidity requirements with no obligation to retain such funds in retention accounts, these deposits are classified as current assets otherwise they are classified as non-current assets. |
(g) |
Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero. |
(h) |
Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method. |
(i) |
Vessels, net: Vessels, net are stated at cost, less accumulated depreciation. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Interest costs incurred to finance the cost of vessels during their construction period are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred. |
(j) |
Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. |
(k) |
Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. |
(l) |
Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations. |
(m) |
Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected in Deferred charges in the accompanying consolidated balance sheet. |
(n) |
Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured. |
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(o) |
Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses. |
(p) |
Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values, net of expected forfeitures, and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We estimate restricted stock award forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. As a result, we record stock-based compensation expense only for those awards that are expected to vest. |
(q) |
Segment reporting: Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. |
(r) |
Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges. |
(s) |
Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories: |
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(t) |
Recent accounting pronouncements: On May 28, 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2016. Early adoption is not permitted. The Company has not yet evaluated the impact, if any, of the adoption of this new standard. |
On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. For public business entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, on a retrospective basis. Early adoption is permitted. We have not early adopted this standard. The effect from the adoption of this standard would be the presentation of the debt issuance costs as a direct deduction of the related debt liability instead of as a non-current asset.
2.Significant Accounting Policies
(a) |
Principles of combination: The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operating results of the legal entities comprising the Owning Companies as discussed in Note 1, which were all under common management. The combined statements represent an aggregation of the U.S. GAAP financial information of the entities comprising the Owning Companies. All intercompany balances and transactions have been eliminated upon combination. |
(b) |
Use of estimates: The preparation of the Predecessor combined financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
(c) |
Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented. |
(d) |
Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Each foreign currency transaction is measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of the balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the combined statement of operations. |
(e) |
Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
(f) |
Trade receivables (net): Trade receivables (net), reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was recorded for the periods presented. |
(g) |
Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method. |
(h) |
Vessels: Vessels are stated at cost, less accumulated depreciation. The cost of the vessels consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The cost of vessels constructed includes financing costs incurred during the construction period. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred. |
(i) |
Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels. |
(j) |
Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate, which is estimated to be $ 400 per lightweight ton. Management of the Owning Companies estimates the useful life of its vessels to be 20 years from the date of initial delivery from the shipyard for VLGC’s and 25 years for PGC vessels. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. |
(k) |
Drydocking and special survey costs: Drydocking and special survey costs are accounted under deferral method whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock a vessel once every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within “Depreciation and amortization” in the combined statements of operations. |
(l) |
Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding debt extinguishment. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to debt extinguishment. The unamortized financing costs are reflected in Deferred Charges in the accompanying combined balance sheets. |
(m) |
Revenue and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured. |
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Accrued revenue results from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred.
Commissions: Charter hire commissions to brokers or the Manager are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, and other miscellaneous expenses.
(n) |
Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses. |
(o) |
Segment reporting: Each of the Owning Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. |
(p) |
Derivative Instruments: The Company enters into interest rate swap agreements to manage its exposure to fluctuations of interest rate risk associated with its borrowings. All derivatives are recognized in the combined financial statements at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis. When such derivatives do not qualify for hedge accounting, the Company recognizes their fair value changes in current period earnings. |
(q) |
Fair value of financial instruments: |
In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(r) |
Recent accounting pronouncements: There are no recent accounting pronouncements the adoption of which would have a material effect on the Company’s combined financial statements in the current period or expected to have an impact on future periods. |
|
3. Transactions with Related Parties
(a) |
Dorian Holdings: Dorian LPG Ltd. was formed by Dorian Holdings on July 1, 2013, to acquire and operate LPG tankers and initially to acquire the LPG tankers held by affiliates of Dorian Holdings. These acquisitions were accounted for as the acquisition of a business, refer Notes 1 and 4. In addition on July 29, 2013, we entered into a license agreement with Dorian Holdings pursuant to which Dorian Holdings has granted us a non-transferable, non-exclusive, perpetual (subject to termination for material breach or a change of control event), world-wide, royalty-free right and license to use the Dorian logo and “Dorian LPG” in connection with our LPG business. |
(b) |
SEACOR Holdings Inc. (“SEACOR”): On April 29, 2013, affiliates of the Company entered into a series of agreements with subsidiaries of SEACOR under which the affiliates of the Company granted certain rights to SEACOR to purchase newbuilding contracts for VLGCs and associated options. The affiliates of the Company had the right to repurchase a portion of those contracts and the associated options. As part of these agreements, subsidiaries of SEACOR paid the first installment under the newbuilding contracts to the shipyard, which, under the terms of the agreements, could be partially acquired by Dorian affiliates for the amount of the installments paid, certain agreed third party expenses, and a capital charge of 6% per annum. |
As described in Note 1, the Company acquired a 100% interest in SEACOR LPG I LLC, a party to a contract for the construction of one VLGC, $49.9 million in cash and the assignment to the Company of option rights to purchase 1.5 VLGC vessels, from SEACOR in exchange for 4,667,135 shares of its common stock. This transaction was accounted for as an asset acquisition.
The fair value of the transaction was determined based on the number of shares issued by the Company. The fair value of the common stock was determined to be NOK75.00 per share (or $12.66 per share at the exchange rate on July 29, 2013) which was the price per share for the Company’s common shares issued to private investors on the same date.
The total transaction value of $59.4 million (including transaction costs) was allocated to the assets purchased as follows:
Cash |
|
49,854,870 |
|
Purchase contract for one VLGC newbuilding contract (includes advance payment) |
|
7,009,675 |
|
Purchase option contracts |
|
2,529,126 |
|
|
|
59,393,671 |
|
The allocation between the newbuilding contract and the purchase options was based on their relative fair value. The fair value of the newbuilding contract and purchase options was computed as the excess of the purchase consideration for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus for newbuilding contracts any advance to the shipyard as of the acquisition date. The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free.
(c) |
Scorpio Tankers Inc. (“Scorpio”): On November 26, 2013, the Company issued 7,990,425 shares of its common stock to Scorpio as consideration for 100% interest in thirteen subsidiary companies, (each a party to a contract for the construction of one VLGC) and $1.9 million in cash. This transaction was accounted for as an asset acquisition. |
The fair value of the transaction was determined based on the number of shares issued by the Company. The fair value of the common stock was determined to be NOK92.50 per share (or $15.16 per share at the exchange rate on November 26, 2013), which was the price per share for the Company’s common shares issued to private investors on the same date.
The total transaction value of $121.3 million (including transaction costs) was allocated to the assets purchased as follows:
Cash |
|
1,930,000 |
|
Purchase contract for thirteen VLGC newbuilding contracts (includes advance payments) |
|
119,386,040 |
|
|
|
121,316,040 |
|
The cost of the group of non-cash assets was allocated to each of the new building contracts based on their relative fair value. The fair value of each newbuilding contract was determined as the excess of the purchase consideration as of the acquisition date for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus any advance paid to the shipyard, The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free.
(d)Dorian (Hellas) S.A.:
A. Ship-Owning Companies Management Agreements: Pursuant to management agreements entered into by each vessel owning subsidiary on July 26, 2013, as amended, with Dorian (Hellas) S.A. (“DHSA” or the “Manager”), the technical, crew and commercial management as well as insurance and accounting services of its vessels was outsourced to DHSA. In addition, under these management agreements, strategic and financial services had also been outsourced to DHSA. DHSA had entered into agreements with each of Eagle Ocean Transport Inc. (“Eagle Ocean Transport”) and Highbury Shipping Services Limited (“HSSL”), to provide certain of these services on behalf of the vessel owning companies. Mr. John Hadjipateras, our Chairman, President and CEO, who is also the chairman of Dorian Holdings, owns 100% of Eagle Ocean Transport, and our Vice President of Chartering, Insurance and Legal, Nigel Grey-Turner, owns 100% of HSSL. The fees payable for the above services to DHSA amounted to $93,750 per month per vessel, payable one month in advance. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from DHSA and are now provided through our wholly owned subsidiaries Dorian LPG (USA) LLC, Dorian LPG (UK) Ltd. and Dorian LPG Management Corp. Subsequent to the transition agreements, Eagle Ocean Transport continues to incur related travel costs for certain transitioned employees as well as office-related costs, for which we reimbursed Eagle Ocean Transport $0.7 million for the year ended March 31, 2015.
Management fees related to these agreements for the year ended March 31, 2015 and for the period July 1, 2013 to March 31, 2014 amounted to $1.1 million and $3.0 million, respectively, and are presented in Management fees—related party in the consolidated statement of operations.
In July 2014, Dorian LPG (UK) Ltd. and Dorian (Hellas) entered into an agreement for a period of twelve months, for the provision by Dorian LPG (UK) Ltd. of certain chartering and marine operation services to Dorian (Hellas), for which income totaling $0.1 million was earned and included in other income. This amount was owed by Dorian (Hellas) to Dorian LPG (UK) Ltd. as of March 31, 2015.
B. Pre-Delivery Services: A fixed monthly fee of $15,000 per hull was payable to the Manager for pre-delivery services provided during the period from July 29, 2013 until the date of delivery of each newbuilding. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from the Manager and are now provided through our wholly owned subsidiaries. Management fees related to the pre-delivery services provided by DHSA for the year ended March 31, 2015 and for the period July 1, 2013 to March 31, 2014 amounted to $0.9 million and $1.2 million, respectively. For the period July 1, 2013 to March 31, 2014, $0.1 million is presented in Management fees-related party in the consolidated statement of operations and $1.1 million was capitalized and presented in vessels under construction in the accompanying consolidated balance sheet.
(e) |
Eagle Ocean Transport Inc.: As part of the series of agreements with SEACOR, Eagle Ocean Transport, a company 100% owned by Mr. John Hadjipateras, is entitled to retain 100% of any portion of the shipbroker fee rebated to it as compensation for its services in securing the newbuilding contracts for three VLGCs and three associated option agreements. To the extent that any fees are received in respect of option vessels under such agreements, the fees shall be shared evenly between SEACOR and Eagle Ocean Transport. Collectively, Eagle Ocean Transport and SEACOR received a total of $0.8 million and $0.5 million of shipbroker rebates for their services in securing the newbuilding contracts for the year ended March 31, 2015 and period ended March 31, 2014, respectively. In addition, Eagle Ocean Transport was reimbursed for an amount of $0.3 million, representing costs incurred on behalf of the Company relating to equity issuances and debt restructuring for the period July 1, 2013 to March 31, 2014. |
(f) |
Consulting: Since the formation of the Predecessor Companies, a member of our board of directors, who resigned effective May 1, 2015, provided certain chartering and commercial services to the Company, its subsidiaries, and the Predecessor Companies. This individual entered into a consulting agreement on May 1, 2015 that provides for, among other things, an annual fee of $250,000, payable for services rendered commencing on May 8, 2014. For the year ended March 31, 2015, we expensed $0.2 million related to this consulting agreement. |
The amounts due to/from related parties represent amounts due to/from DHSA and Eagle Ocean Transport relating to payments made by them on behalf of the Company relating to the vessels operations, fees due to them for services rendered, net of amounts transferred to them.
3.Transactions with Related Parties
Dorian (Hellas) S.A:
Ship-Owning Companies Management Agreements: The Owning Companies historically outsourced the technical, crew and commercial management as well as insurance and accounting services of the vessels to Dorian (Hellas) S.A., pursuant to management agreements (“Management Agreements“) with each vessel owning subsidiary. These agreements had an initial term of 12 months and thereafter could be terminated by either party giving two months written notice. For each of the periods presented, under the Management Agreements the Manager received for each VLGC and PGC vessel a commission of 1.25% or 2%, respectively, of the gross freight, demurrage, dead freights and charter hire which are due and payable (“charter hire commission”) and a fixed monthly management fee of $40,000 or $32,000 per vessel respectively. In addition, under the Management Agreements, the Manager is entitled to a commission of 1% on the contract price, for any vessel bought or sold.
The following amounts charged by the Manager are included in the combined statement of operations:
|
|
April 1, 2013 |
|
Year ended |
|
(i) Charter hire commissions , included in Voyage expenses—related party |
|
198,360 |
|
505,926 |
|
(ii) Management fees |
|
601,202 |
|
1,824,000 |
|
The amounts due to/from related parties represent amounts due to/from the Manager relating to payments made by the Manager on behalf of each of the Owning Companies net of amounts transferred to the Manager.
|
6. Vessels, Net
|
|
Cost |
|
Accumulated |
|
Net book Value |
|
Balance, July 1, 2013 |
|
— |
|
— |
|
— |
|
Vessel acquisitions through business combinations (Refer Note 4) |
|
201,082,529 |
|
— |
|
201,082,529 |
|
Other |
|
307,606 |
|
— |
|
307,606 |
|
Depreciation |
|
— |
|
(6,555,269 |
) |
(6,555,269 |
) |
Balance, March 31, 2014 |
|
201,390,135 |
|
(6,555,269 |
) |
194,834,866 |
|
Additions |
|
240,415,534 |
|
— |
|
240,415,534 |
|
Impairment(1) |
|
(2,625,000 |
) |
1,193,182 |
|
(1,431,818 |
) |
Depreciation |
|
— |
|
(13,842,529 |
) |
(13,842,529 |
) |
Balance, March 31, 2015 |
|
439,180,669 |
|
(19,204,616 |
) |
419,976,053 |
|
(1) |
We recognized a non-cash impairment loss of $1.4 million for the year ended March 31, 2015 and no impairment losses for the period ended March 31, 2014. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable. |
The additions represent amounts transferred from Vessels under Construction relating to the cost of our newbuildings, the Comet, the Corsair and the Corvette, which were delivered to us on July 25, 2014, September 26, 2014 and January 2, 2015, respectively.
Vessels, with a total carrying value of $416.0 million as of March 31, 2015, are first-priority mortgaged as collateral for our loan facilities (refer Note 11).
4.Vessels, Net
|
|
Vessel cost |
|
Accumulated |
|
Net book |
|
Balance, April 1, 2012 |
|
252,023,353 |
|
(53,743,681 |
) |
198,279,672 |
|
Vessel improvements |
|
469,929 |
|
— |
|
469,929 |
|
Depreciation |
|
— |
|
(11,671,879 |
) |
(11,671,879 |
) |
Balance, March 31, 2013 |
|
252,493,282 |
|
(65,415,560 |
) |
187,077,722 |
|
Vessel improvements |
|
90,492 |
|
— |
|
90,492 |
|
Depreciation |
|
— |
|
(3,839,271 |
) |
(3,839,271 |
) |
Balance, July 28, 2013 |
|
252,583,774 |
|
(69,254,831 |
) |
183,328,943 |
|
All the Company’s vessels were first-priority mortgaged as collateral to secure the bank loans. No impairment loss was identified or recorded for the year ended March 31, 2013.
The vessel improvements relate to improvements to the vessels and include systems to improve the consumption of the main engines lubricating oil, fuel system modification (double fuel system), and modifications to increase the vessel cargo operation flexibility.
|
9. Deferred Charges, Net
The analysis and movement of deferred charges is presented in the table below:
|
|
Financing |
|
Drydocking |
|
Equity |
|
Total deferred |
|
On inception , July 1, 2013 |
|
— |
|
— |
|
— |
|
— |
|
Additions |
|
1,516,847 |
|
600,394 |
|
1,304,343 |
|
3,421,584 |
|
Amortization |
|
(800,807 |
) |
(65,103 |
) |
— |
|
(865,910 |
) |
Balance, March 31, 2014 |
|
716,040 |
|
535,291 |
|
1,304,343 |
|
2,555,674 |
|
Additions |
|
13,411,075 |
|
323,623 |
|
760,680 |
|
14,495,378 |
|
Amortization |
|
(830,899 |
) |
(189,209 |
) |
— |
|
(1,020,108 |
) |
Transferred to APIC |
|
— |
|
— |
|
(2,065,023 |
) |
(2,065,023 |
) |
Balance, March 31, 2015 |
|
13,296,216 |
|
669,705 |
|
— |
|
13,965,921 |
|
The drydocking costs incurred during the year ended March 31, 2015 relate to the drydocking for Grendon and the drydocking costs incurred during the period ended March 31, 2014 relate to the drydocking for Captain Nicholas ML.
Financing costs incurred during the year ended March 31, 2015 relate to the 2015 Debt Facility.
Offering costs related to our IPO were transferred to additional paid-in capital (“APIC”) on completion of our IPO on May 13, 2014.
5.Deferred Charges, Net
The deferred charges comprised of the following:
|
|
Financing |
|
Drydocking |
|
Total |
|
April 1, 2012 |
|
310,662 |
|
1,302,458 |
|
1,613,120 |
|
Amortization |
|
(48,307 |
) |
(352,950 |
) |
(401,257 |
) |
March 31, 2013 |
|
262,355 |
|
949,508 |
|
1,211,863 |
|
Amortization |
|
(15,437 |
) |
(116,038 |
) |
(131,475 |
) |
July 28, 2013 |
|
246,918 |
|
833,470 |
|
1,080,388 |
|
|
12. Common Stock
Under the articles of incorporation effective July 1, 2013, the Company’s authorized capital stock consists of 500,000,000 registered shares, par value $.01 per share, of which 450,00,000 are designated as common share and 50,000,000 shares are designated as preferred shares.
On July 29, 2013, the Company issued the following shares:
· |
9,310,054 common shares on completion of its NPP, at NOK75.00 per share, equivalent to USD12.66 per share based on the exchange rate on July 29, 2013 |
· |
4,667,135 common shares to Dorian Holdings (refer Note 4) |
· |
4,667,135 common shares to SeaDor Holdings LLC (refer Note 3) |
The fair value of the shares issued to Dorian and SeaDor was determined by the Company to be NOK75 (or USD12.66) per share based on the issue price of the NPP.
On November 26, 2013, the Company issued the following shares:
· |
16,081,081 common shares on completion of a second Private Placement in Norway (“NPP2”), at NOK92.50 per share, equivalent to USD15.16 per share based on the exchange rate on November 26, 2013 |
· |
7,990,425 common shares to Scorpio Tankers Inc. (refer Note 3) |
On February 12, 2014, the Company issued the following shares:
· |
5,649,200 common shares on completion of a third Private Placement in Norway (“NPP3”), at NOK110.00 per share, equivalent to USD17.92 per share based on the exchange rate on February 12, 2014 |
Each holder of common shares is entitled to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common shares are entitled to share equally in any dividends, which the Company’s board of directors may declare from time to time, out of funds legally available for dividends. Upon dissolution, liquidation or winding-up, the holders of common shares will be entitled to share equally in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock. Holders of common shares do not have conversion, redemption or pre-emptive rights.
On April 25, 2014 the Company completed a one-for-five reverse stock split and reduced the number of the Company’s issued and outstanding common shares and affected all issued and outstanding common shares, outstanding immediately prior to the effectiveness of the reverse stock split. The number of the Company’s authorized common shares was not affected by the reverse split and the par value of our common shares remained unchanged at $0.01 per share. The reverse stock split reduced the number of the Company’s common shares outstanding at March 31, 2014 from 241,825,149 to 48,365,011 after the cancellation of 19 fractional shares. No fractional shares were issued in connection with the reverse stock split. Shareholders who otherwise held a fractional share of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional share. All amounts related to number of shares and per share amounts have been retroactively restated.
On April 25, 2014, we completed a private placement of 1,412,698 common shares with a strategic investor at a price of NOK 110.00 or USD 18.40 based upon the exchange rate on April 24, 2014, which represents approximately $26.0 million in gross proceeds not including closing fees.
On May 13, 2014, we completed an initial public offering of 7,105,263 common shares on the New York Stock Exchange at a price of $19.00 per share, or $135.0 million in gross proceeds not including underwriting fees or closing costs. The shares began trading on the New York Stock Exchange on May 8, 2014 under the ticker symbol “LPG”.
On May 22, 2014, we completed the issuance of 245,521 common shares related to the overallotment exercise by the underwriters of our initial public offering at a price of $19.00 per share, or $4.7 million in gross proceeds not including underwriting fees or closing costs.
On June 25, 2014, we completed the exchange offer of unregistered common shares that we previously issued in our prior equity private placements, other than the common shares owned by our affiliates, for 15,528,507 common shares that have been registered under the Securities Act of 1933, as amended, the complete terms and conditions of which were set forth in a prospectus dated May 8, 2014 and the related letter of transmittal.
In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our directors, employees and non-employee consultants (see Note 13 for further discussion regarding stock-based compensation).
6.Owners’ Capital
Each ship owning entity is a body corporate duly organized under the laws of the Republic of Liberia and has an authorized share capital divided into 500 registered and/or bearer shares of no par value, all of which have been issued in the bearer form. The holders of the shares are entitled to one vote on all matters submitted to a vote of owners and to receive all dividends, if any.
Ship-owning entity |
|
Date of incorporation |
Cetus Transport Ltd. |
|
March 17, 2004 |
Lyra Gas Transport Ltd. |
|
January 30, 2005 |
Cepheus Transport Ltd. |
|
January 27, 2004 |
Orion Tankers Limited |
|
October 26,2005 |
As discussed in Note 1, the financial statements are comprised of the combined financial information of the entities that comprise the Owning Companies. As a result, the financial statements reflect owners’ capital and not share capital and additional paid in capital of a parent company. Owners’ capital represents contributions from owners. The owners’ capital was used to partly finance the acquisition of the vessels.
|
14. Revenues
Revenues comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Voyage charter revenues |
|
$ |
77,331,934 |
|
$ |
11,210,785 |
|
Time charter revenues |
|
26,098,290 |
|
17,602,137 |
|
||
Other revenues |
|
698,925 |
|
820,778 |
|
||
Total |
|
$ |
104,129,149 |
|
$ |
29,633,700 |
|
Time charter revenue included a profit-sharing element of the time charter agreements of $7.8 million and $6.1 million for the year ended March 31, 2015 and the period ended March 31, 2014, respectively. Other revenue represents income from charterers relating to reimbursement of expenses such as costs for security guards and war risk insurance.
7.Revenues
Revenues comprise the following:
|
|
April 1, 2013 |
|
Year ended |
|
Time charter revenue |
|
8,850,543 |
|
24,143,606 |
|
Voyage charter revenue |
|
6,236,525 |
|
13,581,561 |
|
Other income |
|
296,048 |
|
936,679 |
|
Total |
|
15,383,116 |
|
38,661,846 |
|
Included in time charter revenue is the profit-sharing element of the time charter agreements of $2,702,635 for the period April 1, 2013 to July 28, 2013 and $5,193,454 for the year ended March 31, 2013. Other income represents demurrage income and income from charterers relating to expenses such as security guards and additional war risk insurance recovered from the charterers.
|
15. Voyage Expenses
Voyage expenses comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Bunkers |
|
$ |
15,678,905 |
|
$ |
5,271,126 |
|
Port charges and other related expenses |
|
3,603,707 |
|
552,634 |
|
||
Brokers’ commissions |
|
1,703,589 |
|
386,244 |
|
||
Security cost |
|
709,035 |
|
298,820 |
|
||
War risk insurances |
|
146,320 |
|
37,001 |
|
||
Other voyage expenses |
|
240,300 |
|
125,146 |
|
||
Total |
|
$ |
22,081,856 |
|
$ |
6,670,971 |
|
8.Voyage Expenses
Voyage expenses, including voyage expenses—related party, are comprised as follows:
|
|
April 1, 2013 |
|
Year ended |
|
Brokers commission |
|
396,720 |
|
1,025,761 |
|
Bunkers |
|
2,755,445 |
|
6,678,660 |
|
Port charges and other related expenses |
|
391,091 |
|
746,574 |
|
Security cost |
|
206,940 |
|
582,112 |
|
War risk insurances |
|
26,673 |
|
111,626 |
|
Other voyage expenses |
|
45,363 |
|
112,450 |
|
Total voyage expenses |
|
3,822,232 |
|
9,257,183 |
|
|
16. Vessel Operating Expenses
Vessel operating expenses comprise the following:
|
|
Year ended |
|
July 1, 2013 |
|
||
Crew wages and related costs |
|
$ |
14,529,018 |
|
$ |
5,306,441 |
|
Spares and stores |
|
2,666,100 |
|
1,395,287 |
|
||
Insurance |
|
1,343,071 |
|
566,021 |
|
||
Repairs and maintenance costs |
|
1,315,028 |
|
502,424 |
|
||
Lubricants |
|
964,951 |
|
480,279 |
|
||
Miscellaneous expenses |
|
437,997 |
|
144,507 |
|
||
Total |
|
$ |
21,256,165 |
|
$ |
8,394,959 |
|
9.Vessel Operating Expenses
Vessel operating expenses are comprised of the following:
|
|
April 1, 2013 |
|
Year ended |
|
Crew wages and related costs |
|
2,519,315 |
|
7,932,836 |
|
Spares and stores |
|
1,284,161 |
|
1,502,111 |
|
Lubricants |
|
176,502 |
|
686,375 |
|
Insurance |
|
298,249 |
|
942,847 |
|
Repairs and maintenance costs |
|
279,921 |
|
848,576 |
|
Miscellaneous expenses |
|
80,577 |
|
126,181 |
|
Total |
|
4,638,725 |
|
12,038,926 |
|
|
17. Interest and Finance Costs
Interest and finance costs is comprised of the following:
|
|
Year ended March 31, 2015 |
|
July 1, 2013 (inception) to March 31, 2014 |
|
||
Interest incurred |
|
$ |
2,657,943 |
|
$ |
1,666,159 |
|
Amortization of financing costs |
|
830,899 |
|
800,806 |
|
||
Other financing costs |
|
301,868 |
|
84,251 |
|
||
Capitalized interest |
|
(3,501,620 |
) |
(972,010 |
) |
||
Total |
|
$ |
289,090 |
|
$ |
1,579,206 |
|
10.Interest and Finance Cost
Interest and finance cost is comprised of $659,832 and $2,434,235 of interest on long-term debt and $102,983 and $134,750 of other finance costs for the period ended July 28, 2013 and the year ended March 31, 2013, respectively.
|
18. Income Taxes
The Company and its vessel-owning subsidiaries are incorporated in the Marshall Islands and under the laws of the Marshall Islands, are not subject to tax on income or capital gains and no Marshall Islands withholding tax will be imposed on dividends paid by the Company to its shareholders. The Company is also subject to United States federal income taxation in respect of income that is derived from the international operation of ships and the performance of services directly related thereto attributable to the transport of cargo to or from the United States (“Shipping Income”), unless exempt from United States federal income taxation.
If the Company does not qualify for the exemption from tax under Section 883, of the Internal Revenue Code of 1986, as amended, the Company and its subsidiaries will be subject to a 4% tax on its “U.S. source shipping income,” imposed without the allowance for any deductions. For these purposes, “U.S. source shipping income” means 50% of the Shipping Income derived by the Company and its subsidiaries that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
We do not believe that we were able to qualify for exemption under Section 883 and as a consequence, our gross U.S. source shipping income for our first fiscal year ended March 31, 2014 is subject to a 4% gross basis tax (without allowance for deductions) equal to $39,266 and is included in Voyage expenses in the consolidated statement of operations.
We believe that we will qualify for exemption under Section 883 and as a consequence, our gross U.S. source shipping income for our fiscal year ended March 31, 2015 will not be subject to a 4% gross basis tax.
11.Income Taxes
The Owning Companies are incorporated in the Republic of Liberia and under the laws of the Liberia, are not subject to income taxes, however, they are subject to registration and tonnage taxes, which are not income taxes and are included in vessel operating expenses in the accompanying combined statements of operations. Furthermore, the Owning Companies are subject to a 4% United States federal tax in respect of its U.S. source shipping income (imposed on gross income without the allowance for any deductions), which is not an income tax. Such taxes have been recorded within Voyage Expenses in the accompanying combined statements of operations. In many cases, these taxes are recovered from the charterers; such amounts recovered are recorded within Revenues in the accompanying combined statements of operations.
|
19. Commitments and Contingencies
Commitments under Newbuilding Contracts
As of March 31, 2015, we had $871.4 million of commitments under shipbuilding contracts and supervision agreements for sixteen newbuildings. We expect to settle these commitments during the twelve months ended March 31, 2016.
Commitments under Operating Leases
We had the following commitments as a lessee under operating leases relating to our United States, Greece and United Kingdom offices:
|
|
March 31, 2015 |
|
|
Less than one year |
|
$ |
376,620 |
|
One to three years |
|
607,020 |
|
|
Three to five years |
|
140,370 |
|
|
Total |
|
$ |
1,124,010 |
|
Other
From time to time we expect to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any claim, which is reasonably possible and should be disclosed or probable and for which a provision should be established in the accompanying consolidated financial statements.
12.Commitments and Contingencies
From time to time the Owning Companies expect to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. The Owning Companies are not aware of any claim, which is reasonably possible and should be disclosed or probable and for which a provision should be established in the accompanying financial statements.
|
13.Derivative Instruments
The Owning Companies use interest rate swaps for the management of interest rate risk exposure. The interest rate swaps effectively convert a portion of the Company’s debt from a floating to a fixed rate. To hedge its exposure to changes in interest rates the Company is a party to five floating-to-fixed interest rate swaps with RBS covering notional amounts aggregating approximately $136,718,000 as of March 31, 2013.
On March 31, 2005 and April 3, 2007 Cetus Transport Ltd entered into an interest rate swap agreement with RBS with effective date November 21, 2006 and November 17, 2006 respectively and termination dated November 21, 2018 and November 17, 2018. Under the terms of this arrangement the Company swaps the notional amount outstanding under the agreement from a floating rate of interest to a fixed rate of 5.395% and 4.936% respectively. The original notional amount of $51,140,000 is reduced semi-annually by $1,278,500 with a final settlement of $20,456,000 due in November, 2018.
On March 9, 2007 and February 7, 2012, Lyra Gas Transport Ltd entered into an interest rate swap agreement with RBS with effective date March 22, 2007 and September 24, 2011 respectively and termination dated March 22, 2019. Under the terms of this arrangement the Company swaps the notional amount outstanding under the agreement from a floating rate of interest to a fixed rate of 4.772% and 2.960% respectively. The original notional amount of $64,146,313 is reduced semi-annually by $1,700,000 with a final settlement of $28,900,000 due in March 22, 2019.
On January 8, 2009, Cepheus Transport Ltd entered into an extendable interest rate swap agreement with the RBS with effective date July 21, 2008 and termination dated July 21, 2014. RBS holds the right to extend the interest rate swap until the July 21 2020. Under the terms of this arrangement the Company swaps the notional amount outstanding under the agreement from a floating rate of interest to a fixed rate of 4.35%. The original notional amount of $68,800,000 is reduced semi-annually by $1,720,000 with a final settlement of $29,240,000 due in July 21, 2020.
The effect of derivative instruments on the combined statements of operations for the periods April 1, 2013 to July 28, 2013 and year ended March 31, 2013 is as follows:
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
April 1, 2013 to July 28, 2013 |
|
Year ended March 31, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
4,684,007 |
|
$ |
(13,680 |
) |
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(1,853,802 |
) |
(5,574,799 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
2,830,205 |
|
$ |
(5,588,479 |
) |
|
20. Financial Instruments and Fair Value Disclosures
Our principal financial assets consist of cash and cash equivalents, amounts due from related parties and trade accounts receivable. Our principal financial liabilities consist of long-term bank loan, interest rate swaps, accounts payable, amounts due to related parties and accrued liabilities.
(a)Concentration of credit risk: Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable, amounts due from related parties, cash and cash equivalents. We limit our credit risk with accounts receivable by performing ongoing credit evaluations of our customers’ financial condition and generally do not require collateral for our trade accounts receivable. We place our cash and cash equivalents, with highly-rated financial institutions.
(b)Interest rate risk: Our long-term bank loan is based on LIBOR and hence we are exposed to movements in LIBOR. We entered into interest rate swap agreements in order to hedge our variable interest rate exposure. We use interest rate swaps for the management of interest rate risk exposure. The interest rate swaps effectively convert our debt from a floating to a fixed rate. To hedge our exposure to changes in interest rates we are a party to five floating-to-fixed interest rate swaps with RBS. Interest rate swaps are stated at fair value, which is determined using a discounted cash flow approach based on market-based LIBOR swap yield rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that we would have to pay for the early termination of the agreements. The principal terms of the interest rate swaps are as follows:
Subsidiary |
|
Termination Date |
|
Fixed |
|
Nominal value |
|
CMNL(1) |
|
Nov 2018 |
|
5.395 |
% |
20,456,000 |
|
CMNL(1) |
|
Nov 2018 |
|
4.936 |
% |
10,228,000 |
|
CJNP(2) |
|
March 2019 |
|
4.772 |
% |
30,523,500 |
|
CJNP(2) |
|
March 2019 |
|
2.960 |
% |
10,276,500 |
|
CNML(3) |
|
July 2020 |
|
4.350 |
% |
46,440,000 |
|
|
|
|
|
|
|
117,924,000 |
|
(1) |
reduces semi-annually by $1,278,500 with a final settlement of $21,734,500 due in November 2018. |
(2) |
reduces semi-annually by $1,700,000 with a final settlement of $28,900,000 due in March 2019. |
(3) |
RBS exercised its right to extend the interest rate swap until July 2020 and based on the extension reduces semi-annually by $1,720,000 with a final settlement of $27,520,000 due in July 2020. |
(c)Fair Value Measurements:
Fair Value on a Recurring Basis: The following table summarizes the bases used to measure the financial assets and liabilities that are carried at fair value on a recurring basis on our balance sheet, which comprise our financial derivatives:
|
|
|
|
March 31, 2015 |
|
March 31, 2014 |
|
||||
Derivatives not designated as hedging |
|
Balance sheet location |
|
Asset |
|
Liability |
|
Asset |
|
Liability |
|
Interest rate swap agreements |
|
Long-term liabilities—Derivative instruments |
|
— |
|
12,730,462 |
|
— |
|
14,062,416 |
|
The effect of derivative instruments on the consolidated statement of operations for the periods presented are as follows:
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
Year ended |
|
July 1, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
1,331,954 |
|
$ |
2,623,456 |
|
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(5,291,157 |
) |
(3,727,457 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
(3,959,203 |
) |
$ |
(1,104,001 |
) |
As of March 31, 2015 and March 31, 2014, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the accompanying consolidated balance sheets. We did not have any other assets or liabilities measured at fair value on a non-recurring basis during the year ended March 31, 2015 or during the period ended March 31, 2014.
Fair value on a non-recurring basis: As of March 31, 2015, we reviewed the carrying amount and the estimated recoverable amount for each of our vessels. The review indicated that the carrying amount was not recoverable for our PGC vessel. The fair value is considered a Level 2 item in the fair value hierarchy and is based on our best estimate of the value of the vessel, which is supported by three independent vessel appraisals. We recognized an impairment loss of $1.4 million during the year ended March 31, 2015 as further described in Note 6 to the consolidated financial statements.
We did not have any other assets or liabilities measured at fair value on a nonrecurring basis during the year ended March 31, 2015 or during the period ended March 31, 2014.
(d)Book values and fair values of financial instruments. In addition to the derivatives that we are required to record at fair value on our balance sheet (refer (c) above), we have other financial instruments that are carried at historical cost. These financial instruments include trade accounts receivable, amounts due from related parties, cash and cash equivalents, accounts payable, amounts due to related parties and accrued liabilities for which the historical carrying value approximates the fair value due to the short-term nature of these financial instruments. We also have long term bank debt for which we believe the historical carrying value approximates their fair value as the loans bear interest at variable interest rates, being LIBOR, which is observable at commonly quoted intervals for the full terms of the loans, and hence are considered as Level 2 items in accordance with the fair value hierarchy. Cash and cash equivalents and restricted cash are considered Level 1 items.
14.Financial Instruments
The principal financial assets of the Company consist of cash and cash equivalents, amounts due from related parties and trade accounts receivable. The principal financial liabilities of the Company consist of long-term bank loans, interest rate swaps, accounts payable, amounts due to related parties and accrued liabilities.
(a) |
Interest rate risk: The Company’s long-term bank loans are based on LIBOR and hence the Company is exposed to movements in LIBOR. The Company entered into interest rate swap agreements, discussed in Note 13 , in order to hedge its variable interest rate exposure. |
(b) |
Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of trade accounts receivable, amounts due from related parties, cash and cash equivalents. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable. The Company places its cash and cash equivalents, with high credit quality financial institutions. |
(c) |
Fair value: The carrying values of trade accounts receivable, amounts due from related parties, cash and cash equivalents, accounts payable, amounts due to related parties and accrued liabilities are reasonable estimates of their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loans approximate the recorded value, due to their variable interest rate, being the LIBOR. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence long-term bank loans are considered Level 2 items in accordance with the fair value hierarchy. |
The interest rate swaps, discussed in Note 13, are stated at fair value. The fair value of the interest rate swaps is determined using a discounted cash flow approach based on market-based LIBOR swap yield rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that the Company would have to pay for the early termination of the agreements.
|
24. Subsequent Events
On April 1, 2015, we commenced operations of Helios LPG Pool LLC (“Helios LPG”). Helios LPG is jointly run by Dorian LPG and Phoenix Tankers Pte. Ltd (“Phoenix Tankers”), a 100% subsidiary of Mitsui OSK Lines Ltd. Helios LPG is operated out of offices in London and Singapore.
Helios LPG is operating seven VLGCs on the water, including three of Dorian LPG’s VLGCs: Corsair, Captain John NP and Captain Nicholas ML, of which one is a ECO-design vessel.
On May 15, 2015, the Compensation Committee of our Board of Directors approved a $1.5 million discretionary cash bonus to executive management and $0.4 million to other employees in recognition of their contribution to the Company’s performance for the fiscal year ended March 31, 2015. These bonuses will be recognized as compensation expense in our consolidated financial statements for the year ended March 31, 2016.
15.Subsequent Events
On July 29, 2013, the following transactions took place:
· |
Cepheus, Lyra and Cetus sold the Captain Nicholas ML, the Captain John NP and the Captain Markos NL to CMNL LPG Transport LLC, CJNP LPG Transport LLC and CNML LPG Transport LLC (being newly created entities of the same shareholders), respectively, which also assumed the related outstanding bank debt and interest rate swaps related to each vessel. |
· |
100% interest in CMNL LPG Transport LLC, CJNP LPG Transport LLC and CNML LPG Transport LLC was contributed to Dorian LPG Ltd. in exchange for equity in Dorian LPG Ltd. |
· |
The Grendon was sold to Grendon Tanker LLC, a wholly-owned subsidiary of Dorian LPG Ltd. |
|
(a)Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly-owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated.
(a) |
Principles of combination: The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operating results of the legal entities comprising the Owning Companies as discussed in Note 1, which were all under common management. The combined statements represent an aggregation of the U.S. GAAP financial information of the entities comprising the Owning Companies. All intercompany balances and transactions have been eliminated upon combination. |
(b)Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(b) |
Use of estimates: The preparation of the Predecessor combined financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
(c)Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus has not presented this in the statement of operations or in a separate statement.
(c) |
Other comprehensive income/(loss): The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented. |
(d)Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, the Company had no foreign currency derivative instruments.
(d) |
Foreign currency translation: The functional currency of the Company is the U.S. Dollar. Each foreign currency transaction is measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of the balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the combined statement of operations. |
(e)Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
(e) |
Cash and cash equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
(g)Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero.
(f) |
Trade receivables (net): Trade receivables (net), reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was recorded for the periods presented. |
(h)Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method.
(g) |
Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method. |
(i)Vessels, net: Vessels, net are stated at cost, less accumulated depreciation. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Interest costs incurred to finance the cost of vessels during their construction period are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred.
(h) |
Vessels: Vessels are stated at cost, less accumulated depreciation. The cost of the vessels consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The cost of vessels constructed includes financing costs incurred during the construction period. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred. |
(j)Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.
(i) |
Impairment of long-lived assets: The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels. |
(k)Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.
(j) |
Vessel depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate, which is estimated to be $ 400 per lightweight ton. Management of the Owning Companies estimates the useful life of its vessels to be 20 years from the date of initial delivery from the shipyard for VLGC’s and 25 years for PGC vessels. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. |
(l)Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations.
(k) |
Drydocking and special survey costs: Drydocking and special survey costs are accounted under deferral method whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. We are required to drydock a vessel once every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written-off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within “Depreciation and amortization” in the combined statements of operations. |
(m)Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected in Deferred charges in the accompanying consolidated balance sheet.
(l) |
Financing costs: Financing fees incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding debt extinguishment. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to debt extinguishment. The unamortized financing costs are reflected in Deferred Charges in the accompanying combined balance sheets. |
(n)Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured.
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(m) |
Revenue and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured. |
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Accrued revenue results from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non-current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro-rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Dispatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred.
Commissions: Charter hire commissions to brokers or the Manager are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, and other miscellaneous expenses
(o)Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses.
(n) |
Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses. |
(q)Segment reporting: Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
(o) |
Segment reporting: Each of the Owning Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. |
(r)Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges.
(p) |
Derivative Instruments: The Company enters into interest rate swap agreements to manage its exposure to fluctuations of interest rate risk associated with its borrowings. All derivatives are recognized in the combined financial statements at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis. When such derivatives do not qualify for hedge accounting, the Company recognizes their fair value changes in current period earnings. |
(s)Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(q) |
Fair value of financial instruments: |
In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
|
Quoted market prices in active markets for identical assets or liabilities |
Level 2: |
|
Observable market based inputs or unobservable inputs that are corroborated by market data |
Level 3: |
|
Unobservable inputs that are not corroborated by market data. |
(t) |
Recent accounting pronouncements: On May 28, 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard is effective for public entities with reporting periods beginning after December 15, 2016. Early adoption is not permitted. The Company has not yet evaluated the impact, if any, of the adoption of this new standard. |
On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. For public business entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, on a retrospective basis. Early adoption is permitted. We have not early adopted this standard. The effect from the adoption of this standard would be the presentation of the debt issuance costs as a direct deduction of the related debt liability instead of as a non-current asset.
(r) |
Recent accounting pronouncements: There are no recent accounting pronouncements the adoption of which would have a material effect on the Company’s combined financial statements in the current period or expected to have an impact on future periods. |
|
Vessel Owning Subsidiaries
Subsidiary |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(1) |
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Grendon Tanker LLC |
|
PGC |
|
LPG Grendon |
|
1996 |
|
5,000 |
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
Newbuild Vessel Owning Subsidiaries(3)
Subsidiary |
|
Type of |
|
Hull |
|
Vessel’s Name |
|
Estimated |
|
CBM(1) |
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
S749 |
|
Cougar |
|
Q2 2015 |
|
84,000 |
Dorian Houston LPG Transport LLC |
|
VLGC |
|
S750 |
|
Cobra |
|
Q2 2015 |
|
84,000 |
Concorde LPG Transport LLC |
|
VLGC |
|
2660 |
|
Concorde |
|
Q2 2015 |
|
84,000 |
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
S753 |
|
Continental |
|
Q3 2015 |
|
84,000 |
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
S755 |
|
Constitution |
|
Q3 2015 |
|
84,000 |
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
S751 |
|
Commodore |
|
Q3 2015 |
|
84,000 |
Constellation LPG Transport LLC |
|
VLGC |
|
2661 |
|
Constellation |
|
Q3 2015 |
|
84,000 |
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
2336 |
|
Cresques |
|
Q3 2015 |
|
84,000 |
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
S756 |
|
Cheyenne |
|
Q3 2015 |
|
84,000 |
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
S752 |
|
Clermont |
|
Q4 2015 |
|
84,000 |
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
S754 |
|
Chaparral |
|
Q4 2015 |
|
84,000 |
Commander LPG Transport LLC |
|
VLGC |
|
2662 |
|
Commander |
|
Q4 2015 |
|
84,000 |
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
2337 |
|
Cratis |
|
Q4 2015 |
|
84,000 |
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
2338 |
|
Copernicus |
|
Q4 2015 |
|
84,000 |
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
S757 |
|
Challenger |
|
Q4 2015 |
|
84,000 |
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
S758 |
|
Caravelle |
|
Q1 2016 |
|
84,000 |
Management Subsidiaries
Subsidiary |
|
Incorporation |
Dorian LPG Management Corp |
|
July 2, 2013 |
Dorian LPG (USA) LLC (incorporated in USA) |
|
July 2, 2013 |
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
November 18, 2013 |
Dorian LPG Finance LLC |
|
January 16, 2015 |
Dormant Subsidiaries
Subsidiary |
|
Incorporation |
SeaCor LPG I LLC |
|
April 26, 2013 |
SeaCor LPG II LLC |
|
April 26, 2013 |
Capricorn LPG Transport LLC |
|
November 15, 2013 |
Constitution LPG Transport LLC |
|
February 17, 2014 |
Occident River Trading Limited (incorporated in UK) |
|
January 9, 2015 |
(1)CBM: Cubic meters, a standard measure for LPG tanker capacity
(2)Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”)
(3)Represents newbuild vessels not yet delivered as of December 31, 2014
(4)Represents calendar year quarters
Vessel owning Company |
|
Date of |
|
Type of |
|
Vessel’s name |
|
Built |
|
CBM(2) |
Cepheus Transport Ltd. (Cepheus) (1) |
|
March 17, 2004 |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
Lyra Gas Transport Ltd (Lyra) (1) |
|
January 30, 2005 |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
Cetus Transport Ltd. (Cetus) (1) |
|
January 27, 2004 |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
Orion Tankers Limited (Orion) (1) |
|
October 26, 2005 |
|
PGC |
|
Grendon |
|
1996 |
|
5,000 |
(1) |
Incorporated in Republic of Liberia. |
(2) |
CBM: Cubic meters, a standard measure for LPG tanker capacity. |
(3) |
Very Large Gas Carrier (“VLGC”), Pressurized Gas Carrier (“PGC”) |
Charterer |
|
% of revenue |
|
Statoil ASA |
|
27 |
% |
Royal Dutch Shell plc |
|
19 |
% |
Itochu Corporation |
|
14 |
% |
Indian Oil Corporation Ltd. |
|
12 |
% |
Maritime Pressx Limited |
|
11 |
% |
Charterer |
|
% of revenue |
|
Statoil ASA |
|
51 |
% |
Naftomar Shipping and Trading Co. Ltd |
|
13 |
% |
Kuwait Petroleum Corporation |
|
10 |
% |
|
|
% of total revenues |
|
||
Charterer |
|
April 1, 2013 |
|
Year ended |
|
Statoil Hydro ASA |
|
49 |
|
53 |
|
Petredec Ltd. |
|
18 |
|
19 |
|
E1Corp. |
|
19 |
|
17 |
|
Astomos Energy Corporation |
|
12 |
|
— |
|
|
|
|
April 1, 2013 |
|
Year ended |
|
(i) Charter hire commissions , included in Voyage expenses—related party |
|
198,360 |
|
505,926 |
|
(ii) Management fees |
|
601,202 |
|
1,824,000 |
|
|
|
|
Cost |
|
Accumulated |
|
Net book Value |
|
Balance, July 1, 2013 |
|
— |
|
— |
|
— |
|
Vessel acquisitions through business combinations (Refer Note 4) |
|
201,082,529 |
|
— |
|
201,082,529 |
|
Other |
|
307,606 |
|
— |
|
307,606 |
|
Depreciation |
|
— |
|
(6,555,269 |
) |
(6,555,269 |
) |
Balance, March 31, 2014 |
|
201,390,135 |
|
(6,555,269 |
) |
194,834,866 |
|
Additions |
|
240,415,534 |
|
— |
|
240,415,534 |
|
Impairment(1) |
|
(2,625,000 |
) |
1,193,182 |
|
(1,431,818 |
) |
Depreciation |
|
— |
|
(13,842,529 |
) |
(13,842,529 |
) |
Balance, March 31, 2015 |
|
439,180,669 |
|
(19,204,616 |
) |
419,976,053 |
|
(1) |
We recognized a non-cash impairment loss of $1.4 million for the year ended March 31, 2015 and no impairment losses for the period ended March 31, 2014. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable. |
|
|
Vessel cost |
|
Accumulated |
|
Net book |
|
Balance, April 1, 2012 |
|
252,023,353 |
|
(53,743,681 |
) |
198,279,672 |
|
Vessel improvements |
|
469,929 |
|
— |
|
469,929 |
|
Depreciation |
|
— |
|
(11,671,879 |
) |
(11,671,879 |
) |
Balance, March 31, 2013 |
|
252,493,282 |
|
(65,415,560 |
) |
187,077,722 |
|
Vessel improvements |
|
90,492 |
|
— |
|
90,492 |
|
Depreciation |
|
— |
|
(3,839,271 |
) |
(3,839,271 |
) |
Balance, July 28, 2013 |
|
252,583,774 |
|
(69,254,831 |
) |
183,328,943 |
|
|
|
|
Financing |
|
Drydocking |
|
Equity |
|
Total deferred |
|
On inception , July 1, 2013 |
|
— |
|
— |
|
— |
|
— |
|
Additions |
|
1,516,847 |
|
600,394 |
|
1,304,343 |
|
3,421,584 |
|
Amortization |
|
(800,807 |
) |
(65,103 |
) |
— |
|
(865,910 |
) |
Balance, March 31, 2014 |
|
716,040 |
|
535,291 |
|
1,304,343 |
|
2,555,674 |
|
Additions |
|
13,411,075 |
|
323,623 |
|
760,680 |
|
14,495,378 |
|
Amortization |
|
(830,899 |
) |
(189,209 |
) |
— |
|
(1,020,108 |
) |
Transferred to APIC |
|
— |
|
— |
|
(2,065,023 |
) |
(2,065,023 |
) |
Balance, March 31, 2015 |
|
13,296,216 |
|
669,705 |
|
— |
|
13,965,921 |
|
|
|
Financing |
|
Drydocking |
|
Total |
|
April 1, 2012 |
|
310,662 |
|
1,302,458 |
|
1,613,120 |
|
Amortization |
|
(48,307 |
) |
(352,950 |
) |
(401,257 |
) |
March 31, 2013 |
|
262,355 |
|
949,508 |
|
1,211,863 |
|
Amortization |
|
(15,437 |
) |
(116,038 |
) |
(131,475 |
) |
July 28, 2013 |
|
246,918 |
|
833,470 |
|
1,080,388 |
|
|
Ship-owning entity |
|
Date of incorporation |
Cetus Transport Ltd. |
|
March 17, 2004 |
Lyra Gas Transport Ltd. |
|
January 30, 2005 |
Cepheus Transport Ltd. |
|
January 27, 2004 |
Orion Tankers Limited |
|
October 26,2005 |
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Voyage charter revenues |
|
$ |
77,331,934 |
|
$ |
11,210,785 |
|
Time charter revenues |
|
26,098,290 |
|
17,602,137 |
|
||
Other revenues |
|
698,925 |
|
820,778 |
|
||
Total |
|
$ |
104,129,149 |
|
$ |
29,633,700 |
|
|
|
April 1, 2013 |
|
Year ended |
|
Time charter revenue |
|
8,850,543 |
|
24,143,606 |
|
Voyage charter revenue |
|
6,236,525 |
|
13,581,561 |
|
Other income |
|
296,048 |
|
936,679 |
|
Total |
|
15,383,116 |
|
38,661,846 |
|
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Bunkers |
|
$ |
15,678,905 |
|
$ |
5,271,126 |
|
Port charges and other related expenses |
|
3,603,707 |
|
552,634 |
|
||
Brokers’ commissions |
|
1,703,589 |
|
386,244 |
|
||
Security cost |
|
709,035 |
|
298,820 |
|
||
War risk insurances |
|
146,320 |
|
37,001 |
|
||
Other voyage expenses |
|
240,300 |
|
125,146 |
|
||
Total |
|
$ |
22,081,856 |
|
$ |
6,670,971 |
|
|
|
April 1, 2013 |
|
Year ended |
|
Brokers commission |
|
396,720 |
|
1,025,761 |
|
Bunkers |
|
2,755,445 |
|
6,678,660 |
|
Port charges and other related expenses |
|
391,091 |
|
746,574 |
|
Security cost |
|
206,940 |
|
582,112 |
|
War risk insurances |
|
26,673 |
|
111,626 |
|
Other voyage expenses |
|
45,363 |
|
112,450 |
|
Total voyage expenses |
|
3,822,232 |
|
9,257,183 |
|
|
|
|
Year ended |
|
July 1, 2013 |
|
||
Crew wages and related costs |
|
$ |
14,529,018 |
|
$ |
5,306,441 |
|
Spares and stores |
|
2,666,100 |
|
1,395,287 |
|
||
Insurance |
|
1,343,071 |
|
566,021 |
|
||
Repairs and maintenance costs |
|
1,315,028 |
|
502,424 |
|
||
Lubricants |
|
964,951 |
|
480,279 |
|
||
Miscellaneous expenses |
|
437,997 |
|
144,507 |
|
||
Total |
|
$ |
21,256,165 |
|
$ |
8,394,959 |
|
|
|
April 1, 2013 |
|
Year ended |
|
Crew wages and related costs |
|
2,519,315 |
|
7,932,836 |
|
Spares and stores |
|
1,284,161 |
|
1,502,111 |
|
Lubricants |
|
176,502 |
|
686,375 |
|
Insurance |
|
298,249 |
|
942,847 |
|
Repairs and maintenance costs |
|
279,921 |
|
848,576 |
|
Miscellaneous expenses |
|
80,577 |
|
126,181 |
|
Total |
|
4,638,725 |
|
12,038,926 |
|
|
Derivatives not designated as hedging |
|
Location of gain/(loss) recognized |
|
Year ended |
|
July 1, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
1,331,954 |
|
$ |
2,623,456 |
|
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(5,291,157 |
) |
(3,727,457 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
(3,959,203 |
) |
$ |
(1,104,001 |
) |
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
April 1, 2013 to July 28, 2013 |
|
Year ended March 31, 2013 |
|
||
Interest Rate Swap—Change in fair value |
|
Gain/(loss) on derivatives, net |
|
$ |
4,684,007 |
|
$ |
(13,680 |
) |
Interest Rate Swap—Realized loss |
|
Gain/(loss) on derivatives, net |
|
(1,853,802 |
) |
(5,574,799 |
) |
||
Loss on derivatives—net |
|
|
|
$ |
2,830,205 |
|
$ |
(5,588,479 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|