Business context and reporting period
GasLog Partners LP’s Form 20-F is an annual report for the fiscal year ended December 31, 2021, not a standalone fourth-quarter filing. The Marshall Islands partnership owns and operates LNG carriers, primarily under time charters, and reports under IFRS. At year-end it had 14 owned vessels and one vessel operated under a five-year bareboat leaseback; six vessels were on long-term charters and nine traded under short-term or spot arrangements.
Financial and operating highlights
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $326.1 million | $333.7 million |
| Operating profit | $40.5 million | $122.5 million |
| Net profit | $5.7 million | $56.9 million |
| Operating cash flow | $233.4 million | $218.4 million |
| Cash and cash equivalents at year-end | $145.5 million | $103.7 million |
| Borrowings at year-end | $1,085.8 million | $1,285.5 million |
- Operating margin was approximately 12.4% and net margin approximately 1.8% in 2021, compared with approximately 36.7% and 17.0%, respectively, in 2020.
- Vessel operating costs were $75.3 million, depreciation $85.5 million, and financial costs $37.3 million. The average daily hire rate declined to $62,265 from $64,339.
- Net cash used in financing was $289.8 million. Investing activities generated $98.2 million, largely reflecting the GasLog Shanghai sale-and-leaseback proceeds.
- Current assets were $161.1 million and current liabilities $175.5 million, a negative working-capital position of $14.4 million. Current liabilities included $28.3 million of advance charter hire recorded as unearned revenue.
- Year-end lease liabilities were $55.9 million, including $10.3 million current. Borrowings due within one year were $99.3 million. Total indebtedness including lease liabilities and derivative liabilities was $1,150.9 million, or 54.0% of total assets.
- Cash distributions to common unitholders remained $0.01 per unit quarterly; aggregate common-unit distributions paid in 2021 were $2.0 million. The Partnership also paid quarterly distributions on its Series A, B and C preference units.
Material changes versus 2020
- Revenue fell 2.3%, mainly because several higher-rate multi-year charters expired and scheduled dry-dockings increased off-hire days. Improved spot-fleet performance partly offset the decline.
- Operating profit fell by $82.0 million. The principal driver was a $104.0 million non-cash impairment charge on all five Steam vessels, compared with $23.9 million of impairment in 2020.
- Net profit decreased by $51.1 million. Lower operating profit was partly offset by a $13.7 million reduction in financial costs and a $17.4 million swing in derivative results, from a $14.9 million loss to a $2.5 million gain.
- Operating cash flow increased $15.0 million. Borrowings declined by $199.8 million year over year, while year-end cash increased $41.8 million.
- In October 2021, the Partnership sold the GasLog Shanghai for $120.0 million gross and leased it back for five years, with no repurchase option or obligation. Net proceeds were $117.6 million; the transaction reduced debt and added $55.9 million of lease liabilities.
- The Partnership repurchased and cancelled 464,429 Series B and 269,549 Series C preference units for $18.4 million, including commissions. It also issued 3.2 million common units through its ATM program at a weighted-average price of $3.19, raising $10.0 million net.
Outlook, management commentary and risks
- Management’s capital-allocation priorities are deleveraging, lowering fleet cash break-even and strengthening the balance sheet. It also stated that preference-unit repurchases may be made opportunistically. The common distribution was expected to remain at $0.01 per unit for the foreseeable future; no numeric earnings or distribution-growth guidance was provided.
- Management reported $257.1 million of contracted revenue for 2022 and approximately $305.0 million thereafter, as of December 31, 2021. These amounts depend on charterers’ performance and exclude optional charter extensions.
- Charter renewals are a central risk: multiple vessels had charter expirations in 2022, including the Solaris in March. Management said the fleet would remain exposed to spot-market volatility unless new term charters were secured. Steam vessels face particular competition from newer, more fuel-efficient carriers.
- Shell subsidiaries generated 55.7% of 2021 revenue. A loss of a major charterer, charter termination, or reduced charter rates or utilization could materially affect cash flow and debt-covenant headroom.
- The $104.0 million Steam-vessel impairment depended on uncertain long-term charter-rate and discount-rate assumptions. The filing reports an average assumed re-chartering rate of $35,000 per day and a 7.5% discount rate; a $5,000-per-day rate change would alter impairment by about $41.6 million.
- Other key risks include debt refinancing and collateral-value covenants, floating interest rates and the transition from LIBOR, COVID-19-related operating disruption, geopolitical and energy-market volatility, and evolving emissions and environmental rules. The filing also notes the Russia-Ukraine conflict as a source of uncertainty.
- Management believed available cash and operating cash flow, with potential capital-market access if needed, would cover liquidity needs and covenant compliance for at least 12 months from the report date. This is an expectation, not assurance; the filing also identifies negative working capital and potential financing constraints.
- The financial statements received an unqualified audit opinion, and management and the auditor concluded internal control over financial reporting was effective. No material pending litigation or debt default was reported.
Most important facts for investors to verify
- Current charter status, renewal rates and actual utilization for vessels whose charters expired or were due to expire in 2022, especially the Solaris and the Steam fleet.
- Whether operating cash flow and cash reserves remain sufficient for scheduled debt amortization, minimum-liquidity requirements and collateral-value covenants.
- Realized vessel values and the impairment sensitivity of the five Steam vessels to charter rates, utilization and discount rates.
- Revenue concentration and counterparty exposure, particularly Shell’s share of revenue and charterers’ payment and renewal performance.
- The ongoing cost and obligations of the GasLog Shanghai leaseback, and the balance between debt repayment, preference-unit repurchases and common-unit distributions.