Globus sees higher revenue on improved charter rates

Globus

Globus Maritime, a dry bulk shipping company, today reported its unaudited consolidated operating and financial results for the six month period ended June 30, 2018.

  • In H1 2018, Total revenues increased by about 33% compared to H1 2017 .
  • In Q2 2018, Total revenues increased by about 20% compared to Q2 2017.
  • Increase in costs due to general upgrading of the fleet and emergency repairs.
Financial Highlights
Three months ended Six months ended
June 30, June 30,
(Expressed in thousands of U.S dollars except for daily rates and per share data) 2018 2017 2018 2017
Total revenues 4,194 3,502 8,132 6,097
Adjusted EBITDA (1) 894 656 1,282 283
Total comprehensive loss (938) (1,383) (2,473) (3,725)
Basic loss per share (2) (0.03) (0.05) (0.08) (0.17)
Daily Time charter equivalent rate (TCE) (3) 9,353 7,173 8,689 6,133
Average operating expenses per vessel per day 5,928 4,710 5,837 4,794
Average number of vessels 5.0 5.0 5.0 5.0  

 

(1) Adjusted EBITDA is a measure not in accordance with generally accepted accounting principles (“GAAP”). See a later section of this press release for a reconciliation of EBITDA to total comprehensive (loss) and net cash (used in)/ generated from operating activities, which are the most directly comparable financial measures calculated and presented in accordance with the GAAP measures.

(2) The weighted average number of shares for the six month period ended June 30, 2018 was 31,961,612 compared to 22,353,211 shares for the six month period ended June 30, 2017. The weighted average number of shares for the three month period ended June 30, 2018 was 32,025,735 compared to 27,630,651 shares for the three month period ended June 30, 2017.

(3) Daily Time charter equivalent rate (TCE) is a measure not in accordance with generally accepted accounting principles (“GAAP”). See a later section of this press release for a reconciliation of Daily TCE to Voyage revenues.

Current Fleet Profile

As of the date of this press release, Globus’ subsidiaries own and operate five dry bulk carriers, consisting of four Supramax and one Panamax.

Vessel Year Built Yard Type Month/Year Delivered DWT Flag
Moon Globe 2005 Hudong-Zhonghua Panamax June 2011 74,432 Marshall Is.
Sun Globe 2007 Tsuneishi Cebu Supramax Sept 2011 58,790 Malta
River Globe 2007 Yangzhou Dayang Supramax Dec 2007 53,627 Marshall Is.
Sky Globe 2009 Taizhou Kouan Supramax May 2010 56,855 Marshall Is.
Star Globe 2010 Taizhou Kouan Supramax May 2010 56,867 Marshall Is.
Weighted  Average Age: 10.3 Years as of June 30, 2018 300,571

Current Fleet Deployment

All our vessels are currently operating on short term time charters (“on spot”).

Management Commentary

“In the first half of 2018, we experienced TCE rates as high as $17K per day representing an overall increase of 41.7% when compared to the first half of 2017. We were pleased with our results which were affected positively by the spike in rates and expect the positive momentum to continue throughout next month with the market retaining its upward movement.

“In anticipation of the seasonally stronger quarters, we carried out emergency repairs and general upgrading of the fleet.

“At present we are focusing our strategy in further improving our balance sheet and formulating a policy to start the renewal of our fleet.

“We continue to look into accretive transactions such as vessel acquisition and disposals as well as debt refinancing, which will increase our net asset value while we remain firm in our commitment to enhance our shareholder value as well as maintain the safety of our vessels.”

Management Discussion and Analysis of the Results of Operations

Second quarter of the year 2018 compared to the second quarter of the year 2017

Total comprehensive loss for the second quarter of the year 2018 amounted to $0.9 million or $0.03 basic loss per share based on 32,025,735 weighted average number of shares, compared to total comprehensive loss of $1.4 million for the same period last year or $0.05 basic loss per share based on 27,630,651 weighted average number of shares.

The following table corresponds to the breakdown of the factors that led to the decrease in total comprehensive loss during the second quarter of 2018 compared to the second quarter of 2017 (expressed in $000’s):

2nd Quarter of 2018 vs 2nd Quarter of 2017
Net loss for the 2nd quarter of 2017 (1,383)
Increase in voyage revenues 692
Decrease in Voyage expenses 47
Increase in Vessels operating expenses (554)
Decrease in Depreciation 87
Increase in Depreciation of dry docking costs (86)
Decrease in Total administrative expenses 29
Decrease in Other expenses, net 24
Increase in Interest expense and finance costs (17)
Increase in Foreign exchange gains 223
Net loss for the 2nd quarter of 2018 (938)

Voyage revenues

During the three-month period ended June 30, 2018 and 2017, our Voyage revenues reached $4.2 million and $3.5 million respectively. The 20% increase in Voyage revenues was mainly attributed to the increase in the average time charter rates achieved by our vessels during the second quarter of 2018 compared to the same period in 2017. Daily Time Charter Equivalent rate (TCE) for the second quarter of 2018 was $9,353 per vessel per day against $7,173 per vessel per day during the same period in 2017 corresponding to an increase of 30%.

Voyage expenses

Voyage expenses reached $0.2 million during the second quarter of both 2018 and 2017. Voyage expenses include commissions on revenues, port and other voyage expenses and bunker expenses. Bunker expenses mainly refer to the cost of bunkers consumed during periods that our vessels are travelling seeking employment. Voyage expenses for the second quarter of 2018 and 2017 are analyzed as follows:

In $000’s  2018  2017
Commissions 71 63
Bunkers expenses 45 152
Other voyage expenses 75 23
Total 191 238

Vessel operating expenses

Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance, and repairs, increased by $0.6 million or 29% to $2.7 million during the three month period ended June 30, 2018 compared to $2.1 million during the same period in 2017. The breakdown of our operating expenses for the quarters ended June 30, 2018 and 2017 was as follows:

 2018  2017
Crew expenses 44% 53%
Repairs and spares 35% 22%
Insurance 4% 8%
Stores 8% 7%
Lubricants 5% 7%
Other 4% 3%

Average daily operating expenses during the three month period ended June 30, 2018 and 2017 were $5,928 per vessel per day and $4,710 per vessel per day respectively, corresponding to an increase of 26%. We deem this to be extraordinary event with no lasting impact on our operating expenses which we expect to decrease throughout the year.

Interest expense and finance costs

Interest expense and finance costs reached $0.5 million for the second quarter of 2018 and 2017. Interest expense and finance costs for the second quarter of 2018 and 2017 are analyzed as follows:

In $000’s  2018  2017
Interest payable on long-term borrowings 508 447
Bank charges 7 9
Amortization of debt discount 18 21
Other finance expenses 2 41
Total 535 518

First half of the year 2018 compared to the first half of the year 2017

Total comprehensive loss for the first half of the year 2018 amounted to $2.5 million or $0.08 basic loss per share based on 31,961,612 weighted average number of shares, compared to total comprehensive loss of $3.7 million for the same period last year or $0.17 basic loss per share based on 22,353,211 weighted average number of shares.

The following table corresponds to the breakdown of the factors that led to the decrease in total comprehensive loss during the first half of 2018 compared to the first half of 2017 (expressed in $000’s):

1st half of 2018 vs 1st half of 2017
Net loss for the 1st half of 2017 (3,725)
Increase in voyage revenues 2,066
Decrease in Management fee income (31)
Increase in Voyage expenses (85)
Increase in Vessels operating expenses (944)
Decrease in Depreciation 188
Increase in Depreciation of dry docking costs (89)
Decrease in Total administrative expenses 65
Decrease in Other income, net (72)
Increase in Interest expense and finance costs (39)
Decrease in Foreign exchange losses 193
Net loss for the 1st half of 2018 (2,473)

Voyage revenues

During the six-month period ended June 30, 2018 and 2017, our Voyage revenues reached $8.1 million and $6.1 million respectively. The 33% increase in Voyage revenues was mainly attributed to the increase in the average time charter rates achieved by our vessels during the first half of 2018 compared to the same period in 2017. Daily Time Charter Equivalent rate (TCE) for the first half of 2018 was $8,689 per vessel per day against $6,133 per vessel per day during the same period in 2017 corresponding to an increase of 42%.

Voyage expenses

Voyage expenses reached $0.6 million during the first half of 2018 compared to $0.5 million during the same period last year. Voyage expenses include commissions on revenues, port and other voyage expenses and bunker expenses. Bunker expenses mainly refer to the cost of bunkers consumed during periods that our vessels are travelling seeking employment. Voyage expenses for the first half of 2018 and 2017 are analyzed as follows:

In $000’s  2018  2017
Commissions 130 103
Bunkers expenses 322 341
Other voyage expenses 158 81
Total 610 525

Vessel operating expenses

Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance, and repairs, reached $5.3 million during the first half of 2018 compared to $4.3 million during the first half of 2017. The breakdown of our operating expenses for the six month period ended June 30, 2018 and 2017 was as follows:

 2018  2017
Crew expenses 46% 53%
Repairs and spares 30% 23%
Insurance 5% 8%
Stores 11% 7%
Lubricants 5% 6%
Other 3% 3%

Average daily operating expenses during the six-month periods ended June 30, 2018 and 2017 were $5,837 per vessel per day and $4,794 per vessel per day respectively, corresponding to an increase of 22%. We deem this to be an extraordinary event with no lasting impact on our operating expenses which we expect to decrease throughout the year.

Interest expense and finance costs

Interest expense and finance costs reached $1 million during the first half of both 2018 and 2017. Interest expense and finance costs for the first half of 2018 and 2017 are analyzed as follows:

In $000’s 2018 2017
Interest payable on long-term borrowings 971 874
Bank charges 15 18
Amortization of debt discount 38 43
Other finance expenses 3 53
Total 1,027 988

Liquidity and capital resources

As of June 30, 2018 and 2017, our cash and bank balances and bank deposits were $1.6 million and $0.8 million respectively.

Net cash generated from operating activities for the three month period ended June 30, 2018 was $1.1 million compared to net cash used in operating activities of $0.1 million during the respective period in 2017. The increase in our cash from operations was mainly attributed to the positive movement of working capital during the second quarter of 2018 compared to the negative one during the respective period in 2017.

Net cash generated from operating activities for the six month period ended June 30, 2018 was $1.2 million compared to net cash used in operating activities of $0.7 million during the respective period in 2017. The increase in our cash from operations was mainly attributed to the increase in our adjusted EBITDA from $0.3 million during the first half of 2017 to $1.3 million during the six month period under consideration.

Net cash (used in)/generated from financing activities during the three month and six month period ended June 30, 2018 and 2017 were as follows:

Three months ended

June 30,

Six months

ended June 30,

In $000’s 2018 2017 2018 2017
Proceeds from issuance of share capital 11 600 5,011
Repayment of long term debt (1,550) (2,244) (1,406)
Restricted cash (140) 210
Interest paid (392) (635) (920) (2,230)
Net cash (used in)/generated from financing activities (2,082) (624) (2,354) 1,375

As of June 30, 2018 and 2017 we and our vessel-owning subsidiaries had outstanding borrowings under our Loan agreement with the Loan agreement with DVB Bank SE and the Loan agreement with HSH Nordbank AG of an aggregate of $39.4 million and $44.4 million respectively gross of unamortized debt discount.

Exercise of Warrants

In January 2018, an investor partially exercised his warrant by purchasing 375,000 of the Company’s common shares for aggregate gross proceeds to the Company of $600,000. For guidance please refer to our last published Annual Report discussing in detail t the Company’s Share and Warrant Purchase Agreement of February 8, 2017 (“February 2017 private placement”).

As of June 30, 2018, in connection with the February 2017 private placement, the February 2017 Warrants outstanding were exercisable for an aggregate of 30,523,209 common shares.

Receipt of Nasdaq Notice of Deficiency

On May 4, 2018, we announced that we had received written notification from The Nasdaq Stock Market (“Nasdaq”) dated April 30, 2018, indicating that because the closing bid price of our common stock for the last 30 consecutive business days was below $1.00 per share, we no longer meet the minimum bid price continued listing requirement for the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance is 180 days, or until October 29, 2018.

We intend to monitor the closing bid price of our common stock between now and October 29, 2018 and are considering our options, including a potential reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement. We can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event we do not regain compliance within the 180‐day grace period and we meet all other listing standards and requirements we may be eligible for an additional 180‐ day grace period.

We intend to cure the deficiency within the prescribed grace period. During this time, our common stock will continue to be listed and trade on the Nasdaq Capital Market. Our business operations are not affected by the receipt of the notification.

SELECTED CONSOLIDATED FINANCIAL & OPERATING DATA

Three months ended Six months ended
June 30, June 30,
2018 2017 2018 2017
(in thousands of U.S. dollars, except per share data) (unaudited) (unaudited)
Consolidated statement of comprehensive loss data:
Voyage revenues 4,194 3,502 8,132 6,066
Management fee income 31
Total Revenues 4,194 3,502 8,132 6,097
Voyage expenses (191) (238) (610) (525)
Vessel operating expenses (2,697) (2,143) (5,282) (4,338)
Depreciation (1,147) (1,234) (2,281) (2,469)
Depreciation of dry docking costs (281) (195) (494) (405)
Administrative expenses (279) (333) (676) (758)
Administrative expenses payable to related parties (132) (107) (267) (250)
Share-based payments (10) (10) (20) (20)
Other (expenses)/income, net 9 (15) 5 77
Operating (loss)/profit before financing activities (534) (773) (1,493) (2,591)
Interest expense and finance costs (535) (518) (1,027) (988)
Foreign exchange (losses)/gains, net 131 (92) 47 (146)
Total finance costs, net (404) (610) (980) (1,134)
Total comprehensive loss for the period (938) (1,383) (2,473) (3,725)
Basic & diluted loss per share for the period(1) (0.03) (0.05) (0.08) (0.17)
Adjusted EBITDA (2) 894 656 1,282 283

(1) The weighted average number of shares for the six month period ended June 30, 2018 was 31,961,612 compared to 22,353,211 shares for the six month period ended June 30, 2017. The weighted average number of shares for the three month period ended June 30, 2018 was 32,025,735 compared to 27,630,651 shares for the three month period ended June 30, 2017.

(2) Adjusted EBITDA represents net earnings before interest and finance costs net, gains or losses from the change in fair value of derivative financial instruments, foreign exchange gains or losses, income taxes, depreciation, depreciation of dry-docking costs, amortization of fair value of time charter acquired, impairment and gains or losses on sale of vessels. Adjusted EBITDA does not represent and should not be considered as an alternative to total comprehensive income/(loss) or cash generated from operations, as determined by IFRS, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is not a recognized measurement under IFRS.

Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and because we believe that it presents useful information to investors regarding a company’s ability to service and/or incur indebtedness and it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. Some of these limitations are:

  • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
  • Adjusted EBITDA does not reflect changes in or cash requirements for our working capital needs; and
  • Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business.

The following table sets forth a reconciliation of Adjusted EBITDA to total comprehensive (loss) and net cash (used in)/ generated from operating activities for the periods presented:

Three months ended Six months ended
June 30,  June 30,
(Expressed in thousands of U.S. dollars) 2018 2017 2018 2017
(Unaudited) (Unaudited)
Total comprehensive loss for the period (938) (1,383) (2,473) (3,725)
Interest and finance costs, net 535 518 1,027 988
Foreign exchange losses/(gains) net, (131) 92 (47) 146
Depreciation 1,147 1,234 2,281 2,469
Depreciation of dry docking costs 281 195 494 405
Adjusted EBITDA 894 656 1,282 283
Share-based payments 10 10 30 20
Payment of deferred dry docking costs (170) (49) (290) (176)
Net (increase)/decrease in operating assets 207 (106) (612) 136
Net (decrease)/increase in operating liabilities 180 (375) 831 (946)
Provision for staff retirement indemnities 1 1 2 2
Foreign exchange (losses)/gains net, not attributed to cash & cash equivalents 7 (14) (23)
Net cash (used in)/generated from operating activities 1,129 137 1,229 (704)
Three months ended Six months ended
June 30,  June 30,
(Expressed in thousands of U.S. dollars) 2018 2017 2018 2017
(Unaudited) (Unaudited)
Statement of cash flow data:
Net cash (used in)/generated from operating activities 1,129 137 1,229   (704)
Net cash (used in)/generated from investing activities (16) (1) (43) (8)
Net cash (used in)/generated from financing activities (2,082) (624) (2,354) 1,375
As of June

30,

As of December

31,

(Expressed in thousands of U.S. Dollars) 2018 2017
(Unaudited)
Consolidated condensed statement of financial position:
Vessels, net 85,587 87,320
Other non-current assets 60 53
Total non-current assets 85,647 87,373
Cash and bank balances and bank deposits 1,588 2,756
Other current assets 1,876 1,474
Total current assets 3,464 4,230
Total assets 89,111 91,603
Total equity 42,125 43,968
Total debt net of unamortized debt discount 39,333 41,538
Other liabilities 7,653 6,097
Total liabilities 46,986 47,635
Total equity and liabilities 89,111 91,603

Consolidated statement of changes in equity:

(Expressed in thousands of U.S. Dollars) Issued share Share (Accumulated Total
Capital Premium Deficit) Equity
As at December 31, 2017 126 139,571 (95,729) 43,968
Loss for the period (2,473) (2,473)
Issuance of common stock due to exercise of warrants (1) 2 598 600
Share-based payments 30 30
As at June 30, 2018 128 140,199 (98,202) 42,125

(1) Following the “February 2017 private placement”, warrants to buy 375,000 common shares were exercised in January 2018.

Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
Ownership days (1) 455 455 905 905
Available days (2) 428 455 866 904
Operating days (3) 417 451 847 882
Fleet utilization (4) 97.6% 99% 97.8% 97.7%
Average number of vessels (5) 5.0 5.0 5.0 5.0
Daily time charter equivalent (TCE) rate (6) 9,353 7,173 8,689 6,133
Daily operating expenses (7) 5,928 4,710 5,837 4,794

Notes:

(1) Ownership days are the aggregate number of days in a period during which each vessel in our fleet has been owned by us.

(2) Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys.

(3) Operating days are the number of available days less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances but excluding days during which vessels are seeking employment.

(4) We calculate fleet utilization by dividing the number of operating days during a period by the number of available days during the period.

(5) Average number of vessels is measured by the sum of the number of days each vessel was part of our fleet during a relevant period divided by the number of calendar days in such period.

(6) TCE rates are our voyage revenues less net revenues from our bareboat charters less voyage expenses during a period divided by the number of our available days during the period excluding bareboat charter days, which is consistent with industry standards. TCE is a measure not in accordance with GAAP.

(7) We calculate daily vessel operating expenses by dividing vessel operating expenses by ownership days for the relevant time period excluding bareboat charter days.

Voyage Revenues to Daily Time Charter Equivalent (“TCE”) Reconciliation

Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
(Unaudited) (Unaudited)
Voyage revenues 4,194 3,502 8,132 6,066
Less: Voyage expenses 191 238 610 525
Net revenues 4,003 3,264 7,522 5,541
Available days net of bareboat charter days 428 455 866 904
Daily TCE rate 9,353 7,173 8,689 6,133

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