The Board of Directors' Report

Financial Performance

Our operating revenue was US$522 million in FY 2018 vs US$492 million in FY 2017 with differential mainly driven by an increasing freight market, despite a decrease in fleet size of 7.5%. Our TCE income decreased to US$301 million in 2018 from US$335 million in 2017 mainly due to the decrease in fleet size and the expiration of high yielding contracts, with an average daily rate of US$33,900, in 2017. The impact to BW LPG’s fleet daily TCE was nominal as we generated TCE earnings of US$18,400 per day in 2018 vs US$18,600 per day in 2017. This affirms our active strategy to reduce our contract coverage in line with an increasing freight market throughout the year where the average Baltic 2018 increased to US$34.5 per mt from an average Baltic 2017 of US$27.8 per mt.

Charter hire expenses decreased to US$67 million in FY 2018 (US$69 million in FY 2017) due to overall lower hire rates for charter-in vessels. Other operating expenses decreased to US$133 million in FY 2018 (US$147 million in FY 2017) mainly due to an overall smaller fleet.

BW LPG recognised an impairment charge of US$34 million on its vessels in FY 2018 due to a decline in asset values from a slower than expected recovery of the market. BW LPG reported a loss after tax of US$72 million in FY 2018 (loss after tax of US$45 million in FY 2017).

Parent Company Accounts

Vessels and related assets, as well as external debt financing, are held in subsidiary companies within BW LPG. The investment holding company’s balance sheet includes primarily receivables from subsidiaries as well as shareholders’ equity, trade payables and accrued expenses. Total assets are US$989 million, shareholders’ equity is US$989 million, and total liabilities are US$0.2 million. Income of US$8 million is solely from dividends from our subsidiary and expenses of US$5 million, which consists of overhead and other costs related to the operations of the investment holding company as a listed entity.


Safety is top priority at BW LPG and the Board is conscious that safety performance is a continuous process. BW LPG has active programmes in place with a focus on ‘Zero Harm’ for all employees, vessels and cargo. In 2018, our LTIF (Lost Time Injury Frequency per million working hours) rate was 0.65 and our TRCF (Total Recordable Case Frequency) in 2018 stands at a rate of 1.43 compared to our baseline target of 1.50.

Corporate Governance

The Board of Directors has adopted a corporate governance policy reflective of BW LPG’s commitment to good governance and taking into account standards of Corporate Governance in the Norwegian Code of Practice for Corporate Governance (the Code). Deviations from the Code are addressed in the corporate governance section of this Annual Report. The Board held five meetings in 2018.


BW LPG is exposed to various market, operational, and financial risks. The most significant risks are set out in the IPO (Initial Public Offering) prospectus issued in November 2013. That document and other information on risks are available on the Company’s website at

BW LPG employs an enterprise-wide risk assessment process to analyse and evaluate risk exposures and to allocate appropriate resources to risk mitigation activities. BW LPG’s risk mitigation activities take into account the unpredictability of shipping and financial markets. BW LPG’s main risks relate to the inherently cyclical nature of the shipping industry and the consequent inherent volatility of financial performance; the potential for oversupply of shipping capacity to negatively impact freight rates and asset values; and the dependence on continued export volumes of relevant hydrocarbons to maintain demand for shipping.

The freight rates remained at low levels through 2018 due to continued vessel overcapacity. In the third quarter of 2018, VLGC charter rates increased above our break-even levels, indicating that the vessel market was closer to a market balance. However, rates fell again in the fourth quarter of 2018 exacerbated by the global fall in oil prices and very cold temperatures particularly in the US.

U.S. LPG production and exports continued to grow strongly in 2018, and according to the EIA Short Energy Outlook from December 2018, total LPG exports (including exports over land) grew 15% in 2018 and is expected to grow a further 23% in 2019. Sustained U.S. LPG production growth and no further newbuild orders are key to reopening global price spreads and lead to a rebound in freight levels.

Newbuild ordering continued in 2018 with 16 new VLGC orders placed. 10 newbuilds were delivered in 2018, and five VLGCs were sent to recycling. In 2019 we expect 18 newbuild deliveries and in 2020, we expect 19 newbuild deliveries.

Significant Events After 31 December 2018

One LGC was recycled in January 2019.

On 25 February 2019, BW LPG established a Product Services Division to support its core shipping business, with the objective to improve fleet utilisation and better returns for shareholders.

Going Concern

In light of BW LPG's liquidity position, balance sheet strength, assets, employment, and continuing cash flow from operations, the Board confirms that the going concern assumption, upon which BW LPG’s accounts are prepared, continues to apply.

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