Globus Maritime Q2 & Six Month Results

Friday, September 10, 2010

Globus Maritime Limited (AIM: GLBS) (LSE: GLBS), a company with subsidiaries that own and operate Supramax, Panamax, and Kamsarmax dry bulk vessels, reported its unaudited consolidated interim operating and financial results for the three months (Q2-10) and six months (H1-10) period ended June 30, 2010, and declares an interim cash dividend of GB 7.3 pence (US 11.29 cents) per share. All the following figures are in United States Dollars, except for the dividend which is in British Pence.

First Half 2010 Highlights versus First Half 2009

Globus had five vessels at the end of June 2010 versus seven vessels at the end of June 2009. Taking into consideration the reduction in the size of the fleet and the prevailing market conditions:
-- Gross Revenues were $11.6 million (H1-09: $26.5 million);
-- Net Revenues were $10.8 million (H1-09: $24.5 million);
-- Operating Expenses were $2.6 million (H1-09: $5.7 million);
-- EBITDA reached $5.9 million with zero impairment charge versus -$2.7 million due to the impairment charge of $18.8 million in H1-09;
-- Cash flow from operations reached $5.9 million versus $16.9 million in H1-09;
-- Net Income was $1.0 million versus a Net Loss of $11.6 million in H1-09;
-- Average Time Charter Equivalent ("TCE") rate of $20,060 per vessel per day with an average 2.97 vessels operating, versus an average TCE of $19,484 per vessel per day with an average of 7 vessels operating during H1-09;
-- Fleet utilization of 98.3% (H1-09: 98.7%).

Second Quarter 2010 Highlights versus Second Quarter 2009:
-- Gross Revenues reached $5.8 million (Q2-09: $14.8 million);
-- Net Revenue was $5.4 million (Q2-09: $13.8 million);
-- Operating Expenses were $1.3 million (Q2-09: $2.9 million);
-- EBITDA of $2.9 million with zero impairment charge versus -$9.8 million due to the impairment charge of $18.8 million in Q2-09;
-- Cash flow from operations of $3.2 million versus $9.2 million in Q2-09;
-- Net Income of $0.6 million versus a Net Loss of $14.1 million in Q2-09;
-- Average TCE rate of $20,724 per vessel per day with an average 2.9 vessels operating, versus an average TCE of $22,065 per vessel per day with an average of 7 vessels operating during Q2-09;
-- Fleet utilization of 100% (Q2-09: 98.9%).

Dividend Declaration
In implementation of the company's dividend policy, the Directors declare an interim cash dividend of GB 7.3 pence per share (US 11.29 cents per share), amounting to $0.8 million in total, for the six months ended June 30, 2010.

This interim dividend will be payable on or about September 24, 2010 to all shareholders on record on September 17, 2010.

Reverse Stock Split
Following the 1-for-4 reverse stock split which took effect on July 29, 2010, the issued share capital as of the date of this release is 7,240,852 shares of $0.004 each.

Fleet Development
In February 2010, the mid-1990s-built Handymax vessels "Sea Globe" and "Coral Globe" were delivered to their new owners, two unaffiliated third parties, generating net cash proceeds of $33.0 million in total.

In March 2010 the company agreed to purchase en-bloc, from an unaffiliated third party, two dry bulk sistership geared and grab-fitted Supramax vessels for $32.85 million each. The vessels, named "Sky Globe" (built in November 2009) and "Star Globe" (built in May 2010), were delivered to Globus in May 2010.

In June 2010 the company agreed to purchase from an unaffiliated third party the dry bulk Kamsarmax vessel "Jin Star" (built in January 2010) for $41.1 million, with an attached bareboat charter agreement at the gross daily rate of $14,250. The vessel was delivered to Globus on June 29, 2010.

On the date of this release, the company's subsidiaries own five modern dry bulk carriers, consisting of three Supramaxes, one Panamax, and one Kamsarmax. On June 30, 2010 the fleet had an aggregate carrying capacity of 319,913 DWT and a weighted average age of approximately 3.4 years, which is a 72% reduction from the weighted average age of 12.1 years at June 30, 2009.

Fleet Deployment
The Panamax "Tiara Globe" is currently on a time charter with Transgrain Shipping that began in February 2010 and is scheduled to expire in a minimum of 24 months -- maximum of 26 months from such date, at the gross rate of $20,000 per day.

The Supramax "Star Globe" is currently on a time charter with Transgrain Shipping that began in May 2010 and is scheduled to expire in a minimum of 11 months -- maximum of 13 months from such date, at the gross rate of $22,000 per day.

The Supramax "Sky Globe" is currently trading in the spot market. The Supramax "River Globe" is currently on a time charter with Eastern Bulk Carriers A/S that is scheduled to expire in September 2010 (maximum November 2010) at the gross rate of $25,000 per day.

The Kamsarmax vessel "Jin Star" is on a bareboat charter with Eastern Media International and Far Eastern Silo & Shipping for a period of five years (which can be extended for one year at the charterer's option, and thereafter extended one additional year at the Company's option), at the gross rate of $14,250 per day. As of the day of this press release, we have secured under fixed employment 73% of our fleet days for the remaining of 2010 and 51% for 2011.

Management Commentary
George Karageorgiou, Chief Executive Officer of Globus Maritime Limited, said: "Taking into consideration both the reduced size of our fleet during the reporting period and the prevailing market conditions, we are happy to report healthy results for the three month and six month periods ended June 30, 2010.

"During the first six months of 2010 we continued with our fleet renewal and expansion strategy enhancing the foundation of long term growth for our company. We sold two 'older Handymaxes' and acquired three 'newer and larger' vessels, expanding the operational versatility of our fleet with the addition of a Kamsarmax vessel. We now have a modern fleet of five dry bulk carriers comprised of three Supramaxes, one Panamax and one Kamsarmax with a weighted average age of just 3.4 years, which is a 72% reduction from the weighted average age of 12.1 years at June 30, 2009.

"As of today, we have secured under fixed employment 73% of our fleet days for 2010 and 51% for 2011.

"We are also pleased to reinstate the dividend, and have declared an interim dividend of GB 7.3 pence per share, consistent with our dividend policy.

"We are currently evaluating strategies that can enhance shareholder value for the long term. In July 2010, we consolidated our shares through a 4-for-1 reverse split, in preparation of a possible listing on a U.S. Stock Exchange. As announced, we believe that listing Globus on U.S. Exchange may result in our shares trading at a more favorable price relative to their net asset value than has recently been the case. In addition, we also believe that through a U.S. listing our Company would be in a better position to raise funds for its future development.

"We remain committed to pursue further accretive expansion opportunities, while safeguarding the strength of our balance sheet maximizing shareholder value. With a modern fleet, a strong balance sheet, a clear strategy and experienced management team we believe that Globus is strategically positioned to take advantage of the positive long term fundamentals of dry bulk shipping."

Elias Deftereos, Chief Financial Officer, added: "Our results for the reporting period reflect the smaller size of our fleet and the continued volatility of market conditions. Taking into consideration the reduced size of the fleet we report a net income of $1.0 million during the period compared to a net loss of $11.6 million in the corresponding period in 2009.

"Our company is in a strong financial condition. As of today, total bank debt outstanding is $102.2 million while our restricted and unrestricted cash balances are $27.1 million. Our net debt to net book capitalization (net debt plus equity) stands at 40%, a moderate figure for our industry, enabling us to pursue further fleet growth opportunities."

Review of Results for the Second Quarter 2010 -- unaudited
Globus began the second quarter of 2010 operating only two vessels, the "River Globe" and the "Tiara Globe". The sistership vessels "Sky Globe" and "Star Globe" were delivered to Globus in May 2010, and the vessel "Jin Star" was delivered on June 29, 2010. Consequently during Q2-10 Globus had an average of 2.9 vessels in its fleet whereas during Q2-09 the average number was 7.0 vessels.

Gross revenues were $5.8 million during Q2-10 compared to $14.8 million during Q2-09. Net revenues reached $5.4 million in Q2-10 compared to $13.8 million a year ago. The decrease is attributable to the decrease in the size of the fleet. Furthermore, during Q2-10 the vessels earned an average TCE of $20,724 per vessel per day as opposed to Q2-09 during which they earned an average TCE of US$22,065.

Voyage expenses decreased by $0.6 million, or 60%, to $0.4 million in Q2-10 compared to $1.0 million in 2009. This decrease is attributable to the decrease in revenues and the reduction of the size of the fleet.

Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance, and repairs, decreased by $1.6 million, or 55%, and came to $1.3 million for Q2-10 versus $2.9 million a year ago, a decrease mainly due to the smaller fleet. While crew salaries were paid in U.S. dollars, a significant portion of other vessel operating expenses are regularly paid in currencies other than the U.S. dollar.

Average daily operating expenses reached $5,146 in Q2-10 compared to US$4,491 for the same period in 2009. The increase in the average daily operating expenses is mostly due to the initial supplies for the vessels "Sky Globe" and "Star Globe" which were delivered to Globus in May 2010.

Administrative expenses for Q2-10 decreased by $1.3 million or 62% to $0.8 million, compared to $2.1 million in 2009. The decrease is due to the decrease of share-based payments.

Interest expenses amounted to $0.4 million versus $0.8 million in Q2-09, attributable primarily to the lower level of debt.

Moreover, the results for the second quarter of 2010 include a $0.4 million non-cash loss from the change in the fair value of interest rate derivatives compared to a $0.2 million non-cash gain in the second quarter of 2009. The valuation of these interest rate swaps at the end of each quarter is affected by the prevailing interest rates at that time. The changes in the fair values of interest rate swaps are recorded in income as they do not meet the criteria for hedge accounting.

Foreign exchange losses amount to $0.2 million for Q2-10. Foreign exchange losses resulted primarily from currency exchanges to pay for operating expenses of the fleet and general and administrative expenses, a material portion of which were in currencies other than the U.S. dollar.

Three newly-established 100% subsidiaries of the Company bought the vessels "Sky Globe", "Star Globe", and "Jin Star" in Q2-10; cash used in investing activities was $106.1 million in the second quarter of 2010.

Review of Results for Six Months Ended June 30, 2010 -- unaudited
Globus began the year operating four vessels. The vessels "Sea Globe" and "Coral Globe" were sold in February 2010, the vessels "Sky Globe" and "Star Globe" were delivered to Globus in May 2010, and the vessel "Jin Star" was delivered on June 29, 2010. Consequently, during H1-10 the Company had an average of 2.97 vessels in its fleet whereas during H1-09 the average number was 7.0 vessels. The ownership days came to 538 versus 1,267 ownership days in H1-09, a reduction of 58%.

For the six months ended June 30, 2010, as a result of the decrease in the number of vessels in the Company's fleet, gross revenues amounted to $11.6 million versus $26.5 million in the corresponding period of 2009. Net revenues in H1-10 came to $10.8 million versus $24.5 million a year ago, a reduction by 56%.

During the first half of 2010 the vessels were earning an average TCE of $20,060 per vessel per day as opposed to H1-09 when they were earning an average TCE of US$19,484.

Voyage expenses decreased by $1.3 million, or 62%, to $0.8 million in H1-10 compared to $2.1 million in 2009. This decrease is attributable to the decrease in revenues and the reduction of the size of the fleet.

Vessel operating expenses decreased by $3.1 million, or 54%, and came to $2.6 million for H1-10 versus $5.7 million a year ago, a decrease mainly due to the smaller fleet. While crew salaries were paid in U.S. dollars, a significant portion of other vessel operating expenses are regularly paid in currencies other than the U.S. dollar.

Average daily operating expenses reached $4,922 compared to US$4,481 during the same period in 2009. This 10% increase in the average daily operating expenses is mostly due to the initial supplies for the vessels "Sky Globe" and "Star Globe" which were delivered to Globus in May 2010.

Depreciation decreased by $4.2 million to $2.8 million for H1-10, compared to $7.0 million for 2009. Amortization of drydocking costs decreased by $0.5 million to $0.3 million compared to $0.8 million for 2009. The decrease is directly the result of the decrease in the number of vessels in the fleet.

Total administrative expenses for H1-10 (including administrative expenses payable to related parties and non-cash share-based payments) decreased by $1.3 million or 43% to $1.7 million, compared to $3.0 million in 2009. The decrease is largely due to the decrease of non-cash share-based payments. Non-cash share-based payments of $0.1 million for the six months ended June 30, 2010 relate to the amortization of the cost recognized for vested share awards issued to executive officers and employees under the Company's incentive plan.

In H1-09 the Company had incurred a non-cash impairment charge of $18.8 million. There was no impairment charge in H1-10.

Interest income decreased by $0.3 million to $0.2 million in 2010, as compared to $0.5 million in the same period in 2009. The decrease is attributable to the lower prevailing LIBOR rates.

Interest expense decreased by $0.6 million or 38%, to $1.0 million in 2010, compared to $1.6 million in 2009. The decrease is attributable to the decreased average loan balances. All of the Company's bank loans are denominated in U.S. dollars.

Moreover, the results for the first half of 2010 include a $0.6 million non-cash loss from the change in the fair value of interest rate derivatives compared to a $0.3 million non-cash gain in the same period of 2009. The changes in the fair values of interest rate swaps are recorded in income as they do not meet the criteria for hedge accounting.

Foreign exchange losses amount to $1.0 million for H1-10. Foreign exchange losses resulted primarily from the change in the fair value of cash deposits in Euro, as well as currency exchanges to pay for vessel operating expenses and general and administrative expenses, a material portion of which were in currencies other than the U.S. dollar.

Net Income for H1-10 came to $1.0 million versus a Net Loss of $11.6 million for the first six months of 2009.

Two subsidiaries of the Company sold the vessels "Sea Globe" and "Coral Globe" for $33.0 million in total in Q1-10, and three newly-established subsidiaries of the Company bought the vessels "Sky Globe", "Star Globe", and "Jin Star" for $106.1 million in total in Q2-10; cash used in investing activities was $72.7 million in the first half of 2010.

Financing Activities & Cash Management
Outstanding bank debt at December 31, 2009 was $43.6 million to Credit Suisse and $27.0 million to Deutsche Schiffsbank, or $70.6 million in total. In addition, at December 31, 2009, the Company had committed undrawn funds up to $36.4 million under the facility with Credit Suisse.

In February 2010, Globus fully repaid the $27.0 million loan to Deutsche Schiffsbank upon the sale of the vessels "Sea Globe" and "Coral Globe". The Bank released $5.0 million from the deposit that was pledged as security for this loan.

In April 2010 Globus repaid early to Credit Suisse the regular semi-annual installment of $3.6 million (due in May) and reduced the committed undrawn funds to $35.5 million.

In May 2010 the Company drew the $35.5 million from Credit Suisse to finance the vessels "Sky Globe" and "Star Globe".

In June 2010 a subsidiary of the Company agreed a new facility with Deutsche Schiffsbank for $26.7 million, which it drew to finance the acquisition of the vessel "Jin Star".

Globus paid $0.4 million in interest for its bank loans during Q2-10, bringing the total interest paid for H1-10 to $0.9 million.

Cash provided by financing activities was $58.0 million in Q2-10 and $35.5 million in H1-10.

At June 30, 2010, total debt to the two banks amounted to $102.2 million while no amount remained undrawn.

Cash at June 30, 2010 was $22.7 million. Cash on the date of this release is $27.1 million.

10. Ryder Promotes Gallo-Aquino to VP & Controller
Ryder System, Inc. (NYSE: R) announced the appointment of Cristina Gallo-Aquino as Vice President and Controller. In this position, Gallo-Aquino serves as the company's principal accounting officer and is responsible for corporate accounting and planning, internal and external financial reporting, vehicle administration, as well as accounting for insurance, benefits, payroll and sales tax. In addition, Gallo-Aquino will continue to serve as a member of Ryder's Diversity & Inclusion Council.

Prior to this appointment, Gallo-Aquino served as Assistant Controller, where she was responsible for Ryder's Corporate Accounting, Benefits Accounting and Payroll Accounting departments. She joined Ryder from LNR Property Corporation in 2004 as Director of Technical Accounting, and later served as Director of Corporate Accounting and then Senior Director of Corporate Accounting.

Gallo-Aquino began her accounting career in KPMG's audit practice, where she spent seven years serving primarily Ryder as well as other corporate accounts. She received her bachelor of accounting degree (cum laude) from Florida International University, where she later earned a master of business administration degree.

In assuming the role of the company's controller, Ms. Gallo-Aquino succeeds Art A. Garcia, who was recently named Executive Vice President and Chief Financial Officer of Ryder.
 

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