HELLENIC CARRIERS LIMITED
Hellenic Carriers Limited, ("Hellenic" or the "Company") (AIM: HCL), an international provider of marine transportation services, which owns and operates through its subsidiaries a fleet of six dry bulk vessels that transport iron ore, grain, steel products and minor bulk cargoes, reports today its Interim Unaudited Results for the six months ended 30 June 2014.
The Company's management team will be holding a conference call and webcast for analysts on Thursday, 18
September 2014, at 1pm (London), 3pm (Athens) and 8am (New York) to discuss the results.
167% increase in revenue: US$10.4 million (H1 2013: US$3.9 million)
260% increase in EBITDA[1]: US$0.8 million positive (H1 2013: US$0.5 million negative)
26% reduction in operating loss: US$3.4 million (H1 2013: US$4.6 million)
22% reduction in net loss: US$5.3 million (H1 2013: US$6.8 million)
Gearing ratio[2] at 60.6% as of 30 June 2014 (53.4% as of 31 December 2013)
Total cash including restricted cash US$12.7 million as of 30 June 2014 (US$27.7 million as of 31 December
2013)
H1 2014 OPERATIONAL HIGHLIGHTS Doubling of the fleet size: operation of 5.7 vessels on average compared to 3.0 vessels in H1 2013
Improving the age profile of vessels: weighted average age of fleet is 10.4 as of 30 June 2014 (30 June 2013:
16.0 years)
Achieving higher time charter rates: Time Charter Equivalent (TCE)-gross rate of US$10,914 (H1 2013: US$7,735)
Outperforming the Panamax and Supramax Average: The TCE-gross rate outperformed both the Panamax
Average of US$8,399 and Supramax Average of US$10,328 for H1 2014
Keeping the daily operating expenses stable: Average daily vessel operating expenses of US$5,205 (H1
2013: US$5,260)
[1] EBITDA has been calculated as follows: Operating profit + Depreciation + Depreciation of dry-docking costs + Impairment charge - Gain on sale of vessel - Other operating income
[2] Gearing ratio is defined as Net Debt to total capitalisation (debt, net of deferred financing fees less cash and cash equivalents to net debt and stockholders' equity) Management Commentary
Fotini Karamanli, Chief Executive Officer of Hellenic Carriers Limited, stated:
"The market recovery which commenced in the 4th quarter of 2013 has not gained the anticipated momentum to date. However, experience dictates that an upward trend may not always be a straight line and any rapid improvement, such as the one experienced in the latter part of 2013, may at times be followed by a downward correction. Volatility has prevailed with constantly varying and unstable geopolitical conditions, policy changes in exporting and importing countries, fluctuating currencies and commodity prices being some of the factors, which have impacted and may continue to have an impact on the global shipping market.
Notwithstanding this volatile environment, the Company still managed to deliver better results compared to last year. As a result of a carefully expanded and younger fleet revenues more than doubled, EBITDA turned positive, high utilization rates were maintained and operating costs were reduced. The ships were employed mainly under short term period fixtures or for single time charter trips, achieving on average a gross daily rate, which outperformed the average Panamax and Supramax daily rate for the period. In the short term and assuming market conditions remain similar, the chartering strategy will not change thereby avoiding longer term commitments at distressed rates, since in a volatile market it is important to be in a position to take advantage of the pockets of opportunity which invariably arise both on the chartering as well as on the sale and purchase front.
Going forward, we consider that the fundamentals of the dry bulk shipping market remain positive. The pace of fleet growth has been steadily decelerating since 2013, while demand growth remains consistently strong. Despite a slowing Chinese GDP growth rate, imports of iron ore into China are 17% higher year on year. With Australian and Brazilian iron ore production capacity also set to grow and Chinese iron ore producers closing down due to competitiveness, the prospects of increased shipments of iron ore into China remain realistic. At the same time India has been absorbing ever growing shipments of imported thermal coal. During the second quarter of 2014, thermal power generation in India increased by 10% year on year, while mining output increased only by 5%. In the shorter term, a strong US harvest is expected to support the grain trade affecting mainly the Panamax and Supramax sectors.
In light of the aforementioned combination of factors and adding an element of seasonality, we expect that we will experience a firming rate environment during the fourth quarter of 2014. Our Company is well positioned to take advantage of such a development. However, as mentioned above, although the fundamentals are solid, the road towards recovery may not always be smooth, hence we will continue to be vigilant and flexible in order to secure efficient operations and proactive in order to take advantage of market opportunities as they arise."
For the six months ended 30 June 2014, the Company operated through its subsidiaries a fleet of 5.7 vessels on average compared to 3.0 vessels for the six months ended 30 June 2013. Following the purchase of two newbuilding Kamsarmax vessels (M/V Odysseas and M/V Konstantinos II) in the second half of 2013 and one second-hand Supramax vessel (M/V Pistis) in January 2014, the operating fleet in H1 2014 includes one Panamax, two Supramax, one Handymax and two Kamsarmax vessels with an aggregate carrying capacity of 384,864 dwt and a weighted average age of 10.4 years as of 30 June 2014.
M/V Pistis, a Supramax vessel, was delivered on 7 January 2014 at a contract price of US$16.16 million. Fleet details as on the date of the announcement:
As of 30 June 2014, total bank debt (divided into three facilities) was reported at US$98.2 million compared to US$97.3 million at 31 December 2013. The amount of US$2.5 million was drawndown during H1 2014 to partly finance the acquisition of M/V Pistis. Scheduled principal payments during H1 2014 amounted to US$1.7 million and a further US$1.7 million is scheduled to be paid during H2 2014. The Company's loan facilities mature in August
2019, May 2020 and May 2023.
During H1 2014 the performance of the dry bulk freight market was not as strong as anticipated with rates coming under pressure from factors including: the reduction of coal shipments into China and Europe, the ban on Indonesian exports of minor metal ores, the disruption in grain shipments out of South America (and in particular Argentina) and finally lower port congestion combined with the continued supply of new tonnage entering the market. These factors had a heavier impact on the sub-capesize sectors, the panamaxes and supramaxes, where Hellenic is active.
During this period the Company decided to avoid locking in the vessels for the long term and focused on trading in the spot market and under short term period fixtures thus taking advantage of pockets of opportunity presented due to the freight market volatility.
In particular, at the end of February 2014 the M/V Pistis was employed for a period of 3 to maximum 6 months at a gross hire rate of US$12,600 per day. The M/V Konstantinos D was employed from March 2014 until June 2014 under a short-term period time charter contract at a gross daily rate of US$12,500, while in April 2014 the M/V Hellenic Horizon was employed under a time charter agreement for 5 to 7 months at a gross daily rate of US$11,000. For the remainder of the period the fleet traded in the spot market and performed single time charter trips. The H1
2014 Time Charter Equivalent-gross rate amounting to US$10,914 outperformed the Panamax Average of 4 T/C Routes (US$8,399) and the Supramax Average of 6 T/C Routes (US$10,328) as well as their combined average of
US$9,364 for the same period.
For the six months ended 30 June 2014, Hellenic reported total revenues of US$10.4 million compared to US$3.9 million for the same period of 2013. The fleet utilisation during the period was reported at 95.3% compared to 98.6% in H1 2013. The increase in revenues is mainly attributed to the increase in the number of vessels operated during the period in conjunction with higher dry bulk freight rates during H1 2014 compared to H1 2013.
During H1 2014 the Company, through its subsidiaries, operated 5.7 vessels which earned on average net earnings (TCE-net) of US$8,596 per day compared to 3.0 vessels and average net earnings of US$7,038 per day in H1 2013. Although average gross earnings (TCE-gross) achieved amounted to US$10,914 per day compared to US$7,735 per day in H1 2013, the ships in H1 2014 had to perform greater ballast legs in search for more profitable routes and as a result the cost of bunkers (included in voyage expenses) was increased.
As a result of the bigger fleet operated during H1 2014, vessel operating expenses increased to a total of US$5.6 million from a total of US$2.9 million in H1 2013. Average daily vessel operating expenses (OPEX) during H1 2014 were reduced to US$5,205 compared to US$5,260 incurred in H1 2013, demonstrating the effect of an efficiently run younger fleet. The analysis of the main categories of OPEX as a percentage of total OPEX during H1 2014 and H1
2013 is presented below:
H1 2014 | H1 2013 | |
Crew expenses | 61% | 62% |
Insurance | 10% | 11% |
Repairs and spares | 10% | 7% |
Lubricants | 9% | 10% |
Stores | 8% | 8% |
Other | 2% | 2% |
Operating loss amounted to US$3.4 million for H1 2014 compared to an operating loss of US$4.6 million for the same period of 2013.
The net loss for H1 2014 amounted to US$5.3 million representing a loss per share of US$0.12 calculated on
45,616,851 weighted average number of shares, whereas, the net loss for H1 2013 amounted to US$6.8 million representing a US$0.15 loss per share. We note that depreciation of US$5.4 million included in the net loss for H1
2014 is by US$1.3 million higher compared to depreciation of US$4.1 million included in the net loss for H1 2013.
Earnings before Tax, Interest, Depreciation and Amortisation (EBITDA) was reported positive at US$0.8 million for the six months ended 30 June 2014 compared to US$0.5 million negative for the same period of 2013.
(US$ in 000's except per share data) | 30.06.2014 | 30.06.2013 |
Revenue | 10,390 | 3,937 |
EBITDA (1) | 830 | (502) |
Operating loss | (3,391) | (4,597) |
Net Loss | (5,312) | (6,780) |
Weighted average shares (basic & diluted) | 45,616,851 | 45,616,851 |
Loss per share (basic & diluted) | (0.12) | (0.15) |
(US$ in 000's except per share data) | 30.06.2014 | 31.12.2013 |
Total assets | 157,747 | 161,116 |
Long-term debt, net of unamortised arrangement fees | 98,211 | 97,326 |
Total equity | 55,565 | 60,877 |
(US$ in 000's except per share data) | 30.06.2014 | 30.06.2013 |
Cash flows provided by/ (used in) operating activities | 1,869 | (836) |
Cash flows used in investing activities | (15,694) | (1,784) |
Cash flows provided by/ (used in) financing activities | 4,286 | (4,943) |
(1) EBITDA has been calculated as follows: Operating profit + Depreciation + Depreciation of dry-docking costs + Impairment charge - Gain on sale of vessel - Other operating income
Fleet Operating Data:H1 2014 | H1 2013 | |
Fleet data: | ||
Average number of operating vessels | 5.7 | 3.0 |
Number of operating vessels at period end | 6.0 | 3.0 |
Total dwt at period end | 384,864 | 169,116 |
Ownership days (1) | 1,080 | 543 |
Available days (2) | 952 | 509 |
Operating days (3) | 907 | 502 |
Fleet utilisation (4) | 95.3% | 98.6% |
Average daily results (in US$): | ||
TCE rate - Gross (5) | 10,914 | 7,735 |
TCE rate - Net (6) | 8,596 | 7,038 |
Average daily vessel operating expenses (7) | 5,205 | 5,260 |
(1) Ownership days are the cumulative days in a period during which each vessel is owned by the respective vessel owning company.
(2) Available days are ownership days less the days that the vessels are at scheduled off-hire for maintenance or vessel repositioning.
(3) Operating days are the available days less all unforeseen off-hires.
(4) Fleet utilisation is measured by dividing the vessels' operating days by the vessels' available days.
(5) Time Charter Equivalent (TCE)-Gross is defined as vessels' total revenues divided by the number of the available days for the period.
(6) TCE-Net is defined as vessels' total revenues less voyage expenses divided by the number of the available days for the period.
(7) Average daily vessel operating expenses is defined as vessel operating expenses divided by ownership days.
H1 2014 Financial Position / Capitalisation
Debt as of 30 June 2014 amounted to US$98.2 million compared to US$97.3 million as of 31 December 2013.
As of 30 June 2014, debt (debt, net of deferred financing fees) to total capitalisation (debt and stockholders' equity) amounted to 63.9% compared to 61.5% as of 31 December 2013. Net debt (debt less cash and cash equivalents) to total capitalisation amounted to 60.6% on 30 June 2014 compared to 53.4% on 31 December 2013.
Total cash, including restricted cash amounted to US$12.7 million as of 30 June 2014 and US$27.7 million as of 31
December 2013. Restricted cash as of 30 June 2014 amounted to US$4.0 million, decreased from US$9.5 million reported on 31 December 2013 mainly due to the use of the pledged amount of US$5.3 million (M/V Hellenic Sea
sale proceeds) to partly finance the acquisition of M/V Pistis in January 2014.
In order to reinforce the Company's liquidity and optimize the use of cash as market opportunities arise, the Directors of the Company did not recommend payment of an interim dividend.
Conference Call details
The Company's management team will be holding a conference call and webcast on Thursday, 18 September 2014, at
1pm (London), 3pm (Athens) and 8am (New York) to discuss the results.
Participants should dial into the call 10 minutes prior to the scheduled time using the following numbers: 0800-953-
0329 (UK Toll Free Dial-in), 00800-4413-1378 (Greece Toll Free Dial-in), 1-866-819-7111 (U.S. Toll Free Dial-in), or +44 (0)1452-542-301 (Standard International Dial-in). Please quote "Hellenic Carriers".
A telephonic replay of the conference call will be available until 25 September 2014 by dialling 0800-953-1533 (UK Toll Free Dial-in), 1-866-247-4222 (US Toll Free Dial-in), or +44 (0)1452-550-000 (Standard International Dial-in). Access Code: 36347958#
There will also be a live and then archived webcast of the conference call, accessible through the Hellenic Carriers website (www.hellenic-carriers.com). Participants to the live webcast should register on the website approximately
10 minutes prior to the start of the webcast.
Fotini Karamanli, Chief Executive Officer
Alkis Papadopoulos, Chief Financial Officer
E-mail: info@hellenic-carriers.com +30 210 455 8900
Nominated Adviser & Broker
Mark Taylor +44 (0) 207 149 6000
Carl Holmes +44 (0) 207 149 6000
Nicolas Bornozis +1 212 661 7566 (New York)
Maria Chercheletzi +44 (0) 20 3206 1320 (London) E-mail: helleniccarriers@capitallink.com
Hellenic Carriers Lirnited oVlls and trades through its subsidiaries a fleet of dry bulk vessels that transport iron ore, coal, grain, steel products, cement, alumina, and other chy bulk cargoes worldwide. The fleet consists of six vessels, comprising one Panamax, two Supramax, one Handymax and two Kamsannax vessels with an aggregate carrying capacityr of 384,864 dwt and a weighted average age of 10.6 years.
Hellenic Carriers is listed on the AIM ofthe London Stock Exchange rmder t:icker HCL.
INTERIM CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2014 (Amounts expressed in thousands of U.S. Dollars, except share and per share data) 30 JuneUS$'000 US$'000
Expenses and other income Voyage expenses | (2,102) | (355) |
Voyage expenses - related parties | (104) | - |
Vessel operating expenses | (5,621) | (2,856) |
Management fees - related parties | (1.080) | (396) |
Depreciation | (4,730) | (3,376) |
Depreciation of dry-docking costs | (677) | (719) |
General and administrative expenses | (653) | (832) |
Other operating income | 1,186 | - |
Operating loss | (3,391) | (4,597) |
Finance expense | (1,916) | (2,485) |
Finance income | 9 | 295 |
Foreign currency (loss)/ gain, net | (14) | 7 |
(1,921) | (2,183) | |
Loss for the period | (5,312) | (6,780) |
Loss per share (US$): Basic and diluted LPS for the period | (0.12) | (0.15) |
Weighted average number of shares | 45,616,851 | 45,616,851 |
30 June
Loss for the period | 2014 Unaudited US$'000 | 2013 Unaudited US$'000 |
Loss for the period | (5,312) | (6,780) |
Net gain on cash flow hedges | - | 958 |
Other comprehensive income | - | 958 |
Total comprehensive loss for the period | (5,312) | (5,822) |
30 June 31 December
2014 2013
Unaudited Audited
US$'000 US$'000
Vessels, net 136,615 124,701
Advances for vessels acquisition - 1,616
Office furniture and equipment 1 1
136,616 126,318
Current assets
Inventories 1,307 458
Trade receivables, net 1,689 1,701
Claims receivable 1,135 238
Available for sale investments, net of impairment - - Due from related parties 3,765 3,845
Prepaid expenses and other assets 562 852
Restricted cash 4,033 9,525
Cash and cash equivalents 8,640 18,179
21,131 34,798
EQUITY AND LIABILITIES Shareholders' equity | ||
Issued share capital | 46 | 46 |
Share premium | 54,355 | 54,355 |
Capital contributions | 10,826 | 10,826 |
Accumulated deficit | (9,662) | (4,350) |
Total equity | 55,565 | 60,877 |
Non-current liabilities Long-term debt | 94,956 | 94,081 |
Current liabilities | 94,956 | 94,081 |
Trade payables | 2,473 | 1,320 |
Current portion of long-term debt | 3,255 | 3,245 |
Accrued liabilities and other payables | 1,300 | 1,325 |
Deferred revenue | 198 | 268 |
7,226 | 6,158 | |
Total Liabilities | 102,182 | 100,239 |
TOTAL EQUITY AND LIABILITIES | 157,747 | 161,116 |
.
Total Number of Par value capital premium Contributions reserves earnings equityshares US$
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Loss for the period - - - - - - (6,780) (6,780)
Other comprehensive income - - - - - 958 - 958
Loss for the period - - - - - - (5,312) (5,312) Other comprehensive income - - - - - - - -
2014 | 2013 | |
Unaudited | Unaudited | |
US$'000 | US$'000 | |
Operating activities | ||
Loss for the period Adjustments to reconcile loss to net cash flows: | (5,312) | (6,780) |
Depreciation | 4,730 | 3,376 |
Depreciation of dry-docking costs | 677 | 719 |
Finance expense | 1,916 | 2,485 |
Finance income | (9) | (295) |
2,002 | (495) | |
Increase in inventories | (849) | (61) |
Increase in trade receivables, claims receivable, prepaid expenses and other assets | (596) | (394) |
Decrease in due from related parties | 80 | 56 |
Increase in trade payables, accrued liabilities and other payables | 1,302 | 55 |
(Decrease)/ Increase in deferred revenue | (70) | 3 |
Net cash flows provided by/ (used in) operating activities | 1,869 | (836) |
Investing activities | ||
Acquisition/ improvement of vessels Advance payments for vessels under construction | (15,241) - | - (992) |
Dry-docking costs | (464) | (1,126) |
Interest received | 11 | 334 |
Net cash flows used in investing activities | (15,694) | (1,784) |
Financing activities | ||
Proceeds from issue of long-term debt | 2,500 | - |
Repayment of long-term debt | (1,720) | (2,300) |
Restricted cash | 5,492 | (159) |
Finance expenses paid | (1,986) | (2,484) |
Net cash flows provided by/ (used in) financing activities | 4,286 | (4,943) |
Net decrease in cash and cash equivalents | (9,539) | (7,563) |
Cash and cash equivalents at 1 January | 18,179 | 28,468 |
Cash and cash equivalents at 30 June | 8,640 | 20,905 |
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