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Gram Car Carriers ASA
Quarterly Report • Apr 24, 2024
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Quarterly Report
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Q1 2024 Interim report Gram Car Carriers ASA
Gram Car Carriers in brief
GCC is the world's third-largest tonnage provider within the Pure Car Truck Carriers (PCTCs) segment with 18 vessels, across the Distribution, Mid-size and Panamax segments. The Company serves as a trusted provider of high-quality vessels and logistics solutions ensuring safe, efficient and punctual shipment of vehicles for a network of clients comprising of major global and regional PCTC operators.
Investment highlights
- Unique investment opportunity in leading PCTC tonnage provider
- Attractive market fundamentals
- Multi-year contract coverage and good earnings and cashflow visibility
- Policy of returning 75% of net profit to shareholders in quarterly dividends
Q1 2024 highlights
- Board of Directors approved ninth consecutive quarterly dividend of USD 0.819 per share for Q1 2024
- Equal to 75% of the net profit of USD 31.2 million
- Q1 2024 revenue of USD 54.9 million and EBITDA of USD 40.8 million
- Q1 2024 average TCE rate per day: Panamax USD 56,700, Mid-size USD 30,270 and Distribution USD 25,830
- Total revenue backlog of USD 794 million at end Q1 2024
- Refinancing of Viking Adventure at competitive terms
- Sale of Viking Amber (4,200 CEU, 2010) to capture high second-hand values
- Favourable market outlook with high charter rates and long contract durations
Georg A. Whist, CEO of Gram Car Carriers ASA:
"We deliver another strong quarter through execution on our substantial revenue-backlog, value-creating vessel transactions and reduced debt margins. We maintain our focus on operational performance and customer service which are key drivers for profitable growth and value creation for our shareholders."
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Key figures Q1 2024 (Q4 2023)
USD 54.9 million (USD 56.4 million)
USD 40.8 million (USD 41.6 million)
USD 31.2 million (USD 37.8 million)
USD 23.74 million (USD 28.37 million)
USD 33,720 (USD 32,300)
94% (99%)
49/57 days (8/1 days)
USD 17,860 (USD 17,720)
Revenue Average TC rate1 Revenue backlog added - (-)
EBITDA Utilisation Revenue backlog1/2 USD 794 million (USD 851 million)
Net profit Planned/unplanned off-hire Open revenue days 2024/25/262 -/6%/34% (-%/6%/34%)
Dividend proposed Average cash break-even3 Average contract duration4 3.1 years (3.4 years)
1 On straight-line basis in accordance with IFRS.
2 As per end of reporting period, assuming mid-point charter party redelivery.
3 Current cash break-even comprise of vessel running expenses, insurance, administrative expenses and debt servicing based on
prevailing implied 3m SOFR forward rates and next 12 months' debt amortisation schedule. Capex not included.
4 Average contract duration in the revenue backlog as per reporting date.
Review of operations
| Q1'24 (Q4'23) |
Distribution | Mid-size | Panamax | Fleet total |
|---|---|---|---|---|
| Average TC rate1 | USD 25,830 (USD 21,620) |
USD 30,270 (USD 29,840) |
USD 56,700 (USD 50,570) |
USD 33,720 (USD 32,300) |
| Utilisation | 81% (98%) |
94% (100%) |
99% (100%) |
94% (99%) |
| Planned/unplanned off-hire days |
31/21 days (8/- days) |
18/32 days (-/1 days) |
-/4 days (-/- days) |
49/57 days (8/1 days) |
On 12 February, the Viking Queen was delivered to the new charterer, commencing a five-year timecharter (TC). With the vessel on its new contract, the average daily earnings (TCE) for the four Panamax vessels in the GCC fleet increased from USD 50,750 to USD 56,700.
In the first quarter, the Mid-size vessel Viking Drive had a planned Intermediate docking and special survey. The off-hire period was longer-than-expected due to the impact of Chinese New Year celebrations on yard efficiency, more steel replacements than anticipated and required follow-up repairs.
The Distribution vessel Höegh Caribia completed its planned special survey and bow repairs. The net financial impact is approximately USD 1.5 million after insurance, reflecting off-hire and incident related costs.
GCC's vessels remain restricted from passing through the Red Sea after the Norwegian Maritime Authority in December raised the security level in the southern part of the Red Sea to the highest level. GCC monitors the situation closely and will review and update this policy when appropriate based on recommendations from relevant authorities.
The average fleet TCE was USD 33,720 per day in the first quarter, an increase from USD 32,300 in the fourth quarter of 2023. The higher TCE was mainly a function of the Viking Queen starting its new charter in February.
Contract overview
GCC's revenue backlog amounted to USD 794 million at 31 March 2024. The decrease from USD 851 million at the end of 2023 reflects the contract revenue in the period.
At 31 March, the Panamax vessels had average contract duration of 4.3 years. The revenue backlog on the four Panamax vessels was USD 390 million representing 49% of the total revenue backlog. The Mid-Size vessels' average contract duration was 3.0 years and the share of backlog was 43.5%. Average contract duration for the full fleet was 3.1 years. Since the listing in early 2022, the average contract duration for new charters has been 4.5 years.
1 On straight-line basis in accordance with IFRS
| CEU | Min-Max | Q4'23 | Q1'24 | Q2'24 | Q3'24 | Q4'24 | 2025 | 2026 | 2027 | 2028 | 2029 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Viking Amber | 4.200 | Feb '24 – Apr '24 | USD 23,000 | Sold | TIME CHARTER | |||||||
| Viking Passero | 5,000 | May '25 – Jul '25 | USD 27,700 | OPTION | ||||||||
| Mediterran, Sea | 5,000 | Jun 25 - Aug 25 | USD 25,500 + Scrubber premium | |||||||||
| Hoegh Caribia | 2,000 | Nov 1 25 - Mar '26 |
USD 22,000 | |||||||||
| Viking Drive | 3,500 | '26 - Mar '26 Jan |
USD 26,550 | |||||||||
| Viking Coral | 4,200 | Mar '26 -May'26 | USD 30,527 | |||||||||
| City of Oslo | 2,000 | '26 – Jun '26 Apr |
USD 27,750 | |||||||||
| Viking Odessa | 2,000 | May '26 – Jul '26 | USD 27,750 | |||||||||
| Viking Emerald | 4,200 | Apr '27 – Jun'27 | USD 28,000 | |||||||||
| Viking Sea | 4,200 | Sep '27 - Jan '28 |
USD 30,612 | |||||||||
| Viking Ocean | 4,200 | Jan '28 - Mar '28 |
USD 35,000 | |||||||||
| Viking Diamond | 4.200 | Jan '28 - Mar '28 |
USD 35,000 | |||||||||
| Viking Destiny | 6,700 | Jan '28 – Apr '28 | USD 65,000 | |||||||||
| Viking Adventure | 6,700 | '28 - Jun' 28 Mar |
USD 56,074 | |||||||||
| Viking Paglia | 5,000 | May '28 – Jul '28 | USD 33,300 | |||||||||
| Viking Bravery | 6,700 | Jul '28 Jul '31 | USD 64,900 | USD 48,000 | ||||||||
| Viking Passama | 5,000 | Oct '28 - Dec '28 | USD 33.300 | |||||||||
| Viking Queen | 7.000 | Dec '28 – Feb '29 | USD 16,300 > USD 62,300 |
Cash-flow break-even
The Company estimates an average cash flow breakeven rate of USD 17,860 per day per vessel going forward, little changed from USD 17,720 in the previous quarter.
Corporate and financing
On 8 January 2024, the Distribution vessel Viking Princess was delivered to the new owner. GCC realised a book gain of USD 5.6 million from the divestment.
On 25 January, GCC repurchased the Panamax vessel Viking Adventure by exercising a purchase option under the existing lease. The leasing debt has been replaced by a new USD 41 million senior secured credit facility with a leading Japanese bank. The loan has a duration matching the vessels current charter ending in mid-2028 and a margin of SOFR +1.73%.
On 6 February, the Company announced the sale of the Mid-size vessel Viking Amber (4,200 CEU, built 2010) for a total cash consideration of USD 64.6 million. The vessel will be delivered to the new owner in April. GCC expects to recognise a net book gain of USD 36.5 million upon completion of the sale in the second quarter of 2024. The transaction is in line with GCC's strategy of creating additional value in a strong car shipping market with historically high charter rates and asset values.
GCC's main credit facility is subject to a net interest-bearing debt (NIBD)/EBITDA grid-based pricing. At 31 March 2024, NIBD/EBITDA was 1.56, equalling a margin of SOFR + 2.40%. When NIBD/EBITDA decreases below 1.5, when the margin will reduce to SOFR + 2.25%. The Company continues to pursue attractive refinancing opportunities.
Market update
Macro and auto trends
The global development in car sales has historically been correlated with economic activity and global GDP growth. In the April 2024 economic outlook, the IMF forecasts a GDP growth of 3.2% during 2024 and 2025, the same pace as in 3 in 2023.
For 2024, GlobalData (previously LMC Automotive) estimates 3.9% growth in global light vehicle sales, according to a report at the end of the first quarter. 2025 sales are expected to grow a further 3.7%. This compares to a 9.9% increase in 2023 vs. 2022.
In the first two months of 2024, Chinese vehicle exports increased 22% year-over-year, extending the strong growth in 2023 which ended with a record export of 5.0 million for the year and China overtaking Japan as the largest exporter out of Asia in the fourth quarter. The 12-month rolling electric vehicle (EV) share of Chinese exports was stable at approximately 30% in January and February. South Korea and Japan recorded year-on-year export growth of 5% and 17%, respectively, for the first two months of 2024. In 2023, total South Korean exports amounted to 3.5 million units and Japanese exports was 5.8 million units.
The combination of China's rapid ascension to become the largest global exporter of light vehicles over the past three years, strong growth in South Korean exports and a Japanese auto industry in full recovery, led to 49% growth in total Far East vehicle exports when measuring 2023 against the pre-covid level of 2019. Longhaul Far East exports have for some time been the main demand driver for the car carrier market. The growth in seaborne volumes out of Asia has come at a time with limited open car carrier capacity and before planned supply of new tonnage has been delivered to the market.
The accelerating electrification of the global vehicle fleet is poised to be a major driver for the demand growth in coming decades. However, consumer uptake remains heavily incentivised and therefore dependent on Government policies around the world. In recent months, certain cuts in incentives have slowed the growth in EV sales, particularly in developed markets such as Germany.
Currently, China represents around 50% of the global EV sales and Chinese OEM's have built a highly competitive position based on a world-leading EV value chain and manufacturing capabilities. The OEMs have started to expand operations towards key European and North American consumer markets. However, Chinese built EVs still represent only a small fraction of total vehicle imports to Europe and the US. Furthermore, the competitive edge is important as EV prices continue to decrease and the incumbent car manufacturers such as Toyota are steadily increasing their EV sales targets and fuelling future competition.
In early 2024, the global car shipping market continued to reflect limited capacity supply for vehicle transportation, extending the imbalances from 2023 and 2022. While new vessels are being delivered by the shipyards, the impact on the market will gradual over time. With cargo volumes remaining high, and tonnage availability low, shipments of vehicles continue on less efficient container, drybulk and multi-purpose vessels.
Fleet development
Shipyard ordering activity has continued at a high level into 2024, extending the recorded number of orders placed in 2022 and 2023 due to the strong car shipping market. With shipyard capacity remaining limited, recent new orders have been made for delivery in the second half of 2027. This newbuilding activity follows almost ten years of a flat to slightly decreasing global PCTC fleet.
Currently, 163 vessels are scheduled to be delivered from shipyards before end-2026. The total order book comprises 206 vessels with planned deliveries up until 2028. These will lead to a gradual increase in the PCTC fleet which is expected to be absorbed in the market over the coming years. In the current PCTC fleet, 147 vessels are older than 20 years and candidates for recycling.
The global car carrier fleet amounted to 770 vessels at 31 March, according to Clarksons. The global order book was 39% of the current capacity. This compares to a historical average of 17%. The delivery schedule of the PCTC order book is still expected to be insufficient to meet the estimated demand growth, at least through 2025.
The global fleet controlled by PCTC tonnage providers amounted to 190 vessels at end of the first quarter, up four vessels since year-end 2023. Currently, 13 vessels controlled by tonnage providers are left open for contract renewal in 2024 and 35 vessels are open in 2025, including newbuildings to be delivered. This compares to 42 vessels fixed in 2023 and 65 vessels fixed in 2022, including forward fixtures.
Time charter rates
TC rates have remained stable at historically high levels into 2024, following the increase in the fourth quarter of 2023, due to continued strong demand and limited near term open vessel supply.
The 12-month TC contract rates for Panamax vessels were estimated at USD 115,000 per day at the end of March 2024, according to data from Clarksons.
The 12-month TCE rates for Mid-size vessel remains at USD 95,000 per day.
The Company estimates the current 12-month TCE for Distribution vessels remains at USD 30,000 per day.
Financial review
Key figures
| In USD thousands | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | 2023 |
|---|---|---|---|---|---|---|
| Operating revenue | 54,850 | 56,432 | 54,910 | 48,448 | 41,146 | 200,935 |
| EBITDA | 40,834 | 41,618 | 40,489 | 32,898 | 27,702 | 142,707 |
| EBIT | 38,629 | 46,373 | 32,345 | 25,139 | 20,060 | 123,918 |
| Profit for the period | 31,247 | 37,828 | 24,933 | 18,143 | 13,121 | 94,025 |
| Cash flow from operating activities | 41,427 | 48,154 | 45,377 | 37,987 | 25,378 | 156,895 |
| 31 Mar | 31 Dec | 30 Sep | 30 Jun | 31 Mar | 31 Dec | |
| In USD thousands | 2024 | 2023 | 2023 | 2023 | 2023 | 2023 |
| Cash and cash equivalents | 41,822 | 59,481 | 28,615 | 30,000 | 23,701 | 59,481 |
| Interest-bearing debt | 265,344 | 297,401 | 320,169 | 308,314 | 319,213 | 297,401 |
| Equity ratio | 49% | 46% | 43% | 43% | 42% | 46% |
Financial performance
First quarter 2024 operating revenue of USD 54.9 million reflected improved average time charter rates for the Distribution and Panamax segments compared to the prior quarter. This was offset by off-hire relating to the drydocking of the Distribution vessel Hoegh Caribia and Mid-size vessel Viking Drive, resulting in a slight decrease compared to fourth quarter of 2023.
Vessel operating expenses amounted to USD 11.3 million. Administrative expenses were USD 2.7 million and included non-cash expenses of USD 0.7 million relating to long-term employee incentive programs.
EBITDA was USD 40.9 million, down slightly from USD 41.6 million in the fourth quarter of 2023. EBIT was USD 38.6 million, including the USD 5.6 million Viking Princess gain. Net financial expenses of USD 7.4 million reflected mainly interest expense on vessel loans and leases, as well as USD 1.5 million in non-recurring costs in connection with vessel refinancing activities. Net profit for the quarter was USD 31.2 million, equal to earnings of USD 1.08 per share.
Financial position
On 31 March 2024, GCC had a cash position of USD 41.8 million and USD 76.6 million in available undrawn credit lines. Interest-bearing debt, including lease liabilities amounted to USD 265.3 million. Total assets and book equity were USD 602.5 million and USD 294.2 million, respectively, equivalent to a book equity ratio of 49%. The net interest-bearing debt (NIBD)/EBITDA ratio at 31 March 2024 was 1.56. Once the ratio goes below 1.5 the margin on the USD 332 million credit facility will reduce from 2.40% to 2.25%.
Cash flow
Cash flow from operating activities was USD 41.4 million. Cash flow generated from investing activities of USD 7.5 million reflected mainly the sale of the Viking Princess. Cash flow from financing activities was negative with USD 66.6 million and reflects the quarterly dividend paid to shareholders in February, net proceeds from refinancing activity, interest payments, scheduled instalments under the Group's debt facilities and leases
and down payment of USD 35 million on revolving credit facilities. Net decrease in cash and cash equivalents was USD 17.7 million for the quarter.
Dividend
The Board of Directors has approved a cash dividend of USD 0.819 per share for the first quarter of 2024, in line with policy. This is the ninth consecutive quarterly distribution from the Company to shareholders. The distribution shall constitute a repayment of the Company's paid in capital. In February, GCC paid a dividend of USD 0.979 per share for the fourth quarter of 2023.
Outlook
GCC is well positioned in a historically strong market with long-term favourable supply demand dynamics. The Company has rechartered its vessels on contracts setting new industry standards in terms of dayrates and duration. This is reflected in a near record revenue backlog and expectations for long-term stable earnings and cashflow going forward, supported by improved vessel financing terms.
Oslo, 23 April 2024 Board of Directors and Chief Executive Officer, Gram Car Carriers ASA
| /sign/ | /sign/ | /sign/ |
|---|---|---|
| Ivar Hansson Myklebust | Hans Nikolaus Schűes | Clivia Breuel |
| Chair | Deputy Chair | |
| /sign/ | /sign/ | /sign/ |
| Christine Rødsæther | Nils Kristoffer Gram | Gaby Bornheim |
| /sign/ | /sign/ |
Alasdair James Dougall Locke Georg Alexander Whist
Chief Executive Officer
Condensed interim financial statements
Consolidated statement of income (unaudited)
| In USD thousands | Notes | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|---|
| Operating revenue | 6 | 54,850 | 41,146 | 200,935 |
| Vessel operating expenses | (11,310) | (11,133) | (47,960) | |
| Administrative expenses | (2,707) | (2,311) | (10,268) | |
| Operating profit before depreciation (EBITDA) | 40,834 | 27,702 | 142,707 | |
| Gain from sale of vessel | 5,566 | - | 13,057 | |
| Depreciation | (7,771) | (7,642) | (31,846) | |
| Operating result (EBIT) | 38,629 | 20,060 | 123,917 | |
| Financial income | 786 | 153 | 1,856 | |
| Financial expenses | (8,167) | (7,092) | (31,732) | |
| Profit before tax (EBT) | 31,247 | 13,121 | 94,041 | |
| Income tax expense | - | - | (16) | |
| Profit for the period | 31,247 | 13,121 | 94,025 | |
| Attributable to: | ||||
| Equity holders of the parent company | 31,247 | 13,121 | 94,025 | |
| Non-controlling interests | - | - | - | |
| 31,247 | 13,121 | 94,025 | ||
| Earnings per share (USD): | ||||
| Basic earnings per share | 1.08 | 0.45 | 3.23 | |
| Diluted earnings per share | 1.06 | 0.43 | 3.18 |
Consolidated statement of comprehensive income (unaudited)
| In USD thousands | Notes | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|---|
| Profit for the period | 31,247 | 13,121 | 94,025 | |
| Exchange differences on translation of foreign | ||||
| operations | 59 | 16 | 94 | |
| Total comprehensive income | 31,307 | 13,137 | 94,119 | |
| Attributable to: | ||||
| Equity holders of the parent company | 31,307 | 13,137 | 94,119 | |
| Non-controlling interests | - | - | - |
Consolidated statement of financial position (unaudited)
| In USD thousands | Notes | 31 Mar 2024 | 31 Dec 2023 |
|---|---|---|---|
| Assets | 602,484 | 630,534 | |
| Non-current assets | 550,636 | 560,610 | |
| Vessels and other tangible assets | 7 | 548,661 | 558,567 |
| Right-of-use assets | 1,465 | 1,534 | |
| Other non-current assets | 509 | 509 | |
| Current assets | 51,848 | 69,924 | |
| Inventories | 1,814 | 2,176 | |
| Trade and other receivables | 4,702 | 5,282 | |
| Intangible assets | 234 | - | |
| Cash and cash equivalents | 41,822 | 59,481 | |
| Other current assets | 3,276 | 2,984 | |
| Equity and liabilities | 602,484 | 630,534 | |
| Equity | 10 | 294,153 | 290,739 |
| Non-current liabilities | 218,658 | 253,267 | |
| Interest-bearing debt | 8 | 217,239 | 252,010 |
| Lease liabilities | 1,167 | 1,257 | |
| Other non-current liabilities | 252 | - | |
| Current liabilities | 89,673 | 86,529 | |
| Interest-bearing debt | 8 | 46,589 | 43,792 |
| Lease liabilities | 349 | 342 | |
| Trade and other payables | 13,370 | 13,344 | |
| Deferred income | 29,365 | 29,050 |
Consolidated statement of changes in equity (unaudited)
| Retained | Share | ||||||
|---|---|---|---|---|---|---|---|
| earnings/ | based | ||||||
| Share | Share | Treasury | (acc. | Other | payments | ||
| In USD thousands | capital | premium | share | losses) | equity | reserve | Total |
| Equity at 1 January 2024 | 9,742 | 129,405 | (4,552) | (48,792) | 202,139 | 2,797 | 290,739 |
| Share-based payments | - | - | - | - | - | 424 | 424 |
| Total comprehensive | |||||||
| income for the period | - | - | - | 31,247 | 59 | - | 31,307 |
| Dividend paid | - | (28,317) | - | - | - | - | (28,317) |
| Equity at 31 March 2024 | 9,742 | 101,088 | (4,552) | (17,545) | 202,198 | 3,221 | 294,153 |
| Equity at 1 January 2023 | 9,822 | 173,051 | - | (142,818) | 202,522 | 902 | 243,481 |
| Share-based payments | - | - | - | - | - | 1,895 | 1,895 |
| Treasury shares | (80) | - | (4,552) | - | - | - | (4,632) |
| Total comprehensive | |||||||
| income for the period | - | - | - | 94,025 | 94 | - | 94,119 |
| Effect of liquidation Old | |||||||
| Group | - | - | - | - | (478) | - | (478) |
| Dividend paid | - | (43,646) | - | - | - | - | (43,646) |
| Equity at 31 December 2023 | 9,742 | 129,405 | (4,552) | (48,792) | 202,139 | 2,797 | 290,739 |
Consolidated statement of cash flows (unaudited)
| In USD thousands | Note | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|---|
| Profit for the period | 31,247 | 13,121 | 94,025 | |
| Financial (income)/ expenses | 6,869 | 6,876 | 29,886 | |
| Depreciation | 7,771 | 7,642 | 31,846 | |
| Gain on disposal of vessel | (5,566) | - | (13,057) | |
| Share-based expenses | 424 | 604 | 1,895 | |
| Income tax expense | - | - | 16 | |
| Cash flow from operating activities before | ||||
| changes in working capital | 40,746 | 28,243 | 144,611 | |
| Changes in working capital: | ||||
| Trade and other receivables | 362 | 98 | (774) | |
| Inventories | 581 | (250) | 35 | |
| Other current assets | (292) | (588) | 659 | |
| Trade and other payables | (538) | (2,553) | (488) | |
| Deferred income | 315 | 427 | 12,852 | |
| Other non-current liabilities | 252 | - | - | |
| Cash flow from operating activities | 41,427 | 25,378 | 156,895 | |
| Income tax paid | - | - | - | |
| Net cash flow from operating activities | 41,427 | 25,378 | 156,895 | |
| Investment in vessels and other tangible fixed | ||||
| assets | (727) | (2,680) | (9,962) | |
| Proceeds from disposal of vessel | 8,496 | - | 34,712 | |
| Purchase of intangible assets | (234) | - | - | |
| Investment in affiliated company | - | (3) | (22,187) | |
| Cash flow from/ (used in) investing activities | 7,535 | (2,684) | 2,563 | |
| Dividend paid | (28,317) | (4,917) | (43,646) | |
| Purchase of treasury shares | - | - | (4,632) | |
| Proceeds from issue of debt | 41,000 | - | 50,000 | |
| Repayment of debt | (39,057) | (20,538) | (92,411) | |
| Proceeds/(repayment) of revolving credit facilities | (35,000) | - | (15,000) | |
| Repayment of lease liability | (83) | (99) | (295) | |
| Interest paid on interest-bearing debt | (5,189) | (3,739) | (24,443) | |
| Interest paid on lease liabilities | (33) | (4) | (73) | |
| Other financial items | 59 | 16 | 236 | |
| Cash flow used in financing activities | (66,620) | (29,280) | (130,264) | |
| Net change in cash and cash equivalents | (17,659) | (6,586) | 29,194 | |
| Cash and cash equivalents at beginning of period | 59,481 | 30,287 | 30,287 | |
| Cash and cash equivalents at end of period | 41,822 | 23,701 | 59,481 |
Notes to the condensed interim consolidated financial statements (unaudited)
Note 1 General information
Gram Car Carriers ASA (the 'Company') is a public limited liability company (Norwegian: allmennaksjeselskap) incorporated and domiciled in Norway, with registered address at Bryggegata 9, 0250 Oslo, Norway. The Company was incorporated on 3 August 2021. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the 'Group'). The principal activities of the Group is to invest in and to operate maritime assets in the pure car and truck carrier ('PCTC') shipping segment.
The shares of the Company are listed on Oslo Børs under the ticker 'GCC' and also traded on OTCQX Best Market under the ticker 'GCCRF'.
As per 31 March 2024 the Group owned and operated 18 PCTC vessels.
Note 2 Basis for preparation
The condensed interim consolidated financial statements for the period 1 January 2024 – 31 March 2024 are prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union.
The financial statements have not been subject to audit and do not include all information and disclosures required in the annual financial statements.
The financial statements are based on historical cost except as disclosed in the accounting.
The financial statements are presented in US Dollar (USD), which is the functional currency of the Company and the Group. Amounts are rounded to the nearest thousand, unless otherwise stated.
The interim consolidated financial statements are prepared based on the assumption of going concern.
Only standards and interpretations that are applicable to the Group have been included and the Group reviews the impact of these changes in its financial statements. The Group will adopt the relevant new and amended standards and interpretations when they become effective, subject to EU approval before the consolidated financial statements are issued. No new standards were effective 1 January 2024, with significant impact on the Group.
Note 3 Material accounting policies
The accounting policies adopted in preparing the condensed interim consolidated financial statements are consistent with those applied in the preparation of the Group's consolidated financial statements for the 12-month period ended 31 December 2023.
Note 4 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the condensed interim consolidated financial statements for the Group and application of the accounting policies requires judgements, estimates and assumptions to be made about the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and other factors considered to be relevant. Actual outcomes may differ from these estimates and assumptions and could require a material adjustment to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed on an on-going basis.
Judgements
Management is of the opinion that any instances of application of judgement are not expected to have a significant effect on the amounts recognised in the financial statements apart from those involving estimations, which are disclosed below.
Assumptions and estimation uncertainties
The following assumptions and estimation uncertainties can have a significant risk of resulting in a material adjustment to the carrying amounts of assets:
Depreciation, useful lives and residual values of vessels
Depreciation is based on estimates of the vessels' useful lives, residual values, scrapping costs and depreciation method, which are reviewed at each balance sheet date. Useful lives may change due to technological developments, market conditions and changes in regulations. The Group is committed to recycling its vessels in compliance with the Hong Kong convention and Norwegian Shipowners Association guidelines. In the assessment of residual value there is a considerable degree of uncertainty in estimating prevailing market prices for green recycling. Any changes in estimated useful lives and/or residual values impact the depreciation of the vessels prospectively.
Note 5 Segment information
All the Group's vessels can be categorised in the pure car and truck carrier (PCTC) shipping segment and exhibit similar technical, trading, economic and financial characteristics.
The top four customers of the Group represent 25.3%, 16.2%, 11% and 10.8% of the Group's total time charter revenue during the three months' period ended 31 March 2024 (2023: 25.1%, 10.7%, 10.4% and 10.4%). No other customers represent more than 10% of total time charter revenue.
Charter parties entered into with customers are typically for global operation of the vessels. Time charter revenue originate from customers geographically located as follows:
| In USD thousands | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|
| Asia | 25,991 | 27,228 | 117,638 |
| Europe | 22,887 | 7,486 | 59,978 |
| Other | 6,067 | 7,309 | 26,595 |
| Total time charter revenue | 54,944 | 42,023 | 204,211 |
Note 6 Operating revenue
| In USD thousands | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|
| Time charter revenue | 54,944 | 42,023 | 204,211 |
| Time charter hire commissions | (907) | (736) | (3,383) |
| Management fees and time charter | |||
| hire commissions | - | - | 212 |
| Other income | 812 | (141) | (105) |
| Total operating revenue | 54,850 | 41,146 | 200,935 |
The Group's vessels earn revenue from time charter parties entered into with operators providing services related to the seaborne transportation of vehicles and equipment.
Other income of USD 812,000 in 2024 relate to receivables under loss of hire insurance.
Note 7 Vessels and other tangible assets
Details of the Group's vessels and other tangible assets at 31 March 2024 are as follows:
| In USD thousands | Vessels | Equipment | Total |
|---|---|---|---|
| Acquisition cost at 1 January 2024 | 855,625 | 231 | 855,855 |
| Additions – Drydocking | 601 | - | 601 |
| Additions – Technical upgrade | 64 | - | 64 |
| Additions | - | 62 | 62 |
| Disposal of vessel | (13,292) | - | (13,292) |
| Acquisition cost 31 March 2024 | 842,998 | 292 | 843,290 |
| Acc. depreciation and impairment at 1 January 2024 | (297,257) | (31) | (297,288) |
| Depreciation for the period | (7,692) | (11) | (7,703) |
| Disposal of vessel | 10,363 | - | 10,363 |
| Acc. depreciation and impairment at 31 March 2024 | (294,587) | (42) | (294,629) |
| Carrying amount at 31 March 2024 | 548,410 | 251 | 548,661 |
| Acquisition cost at 1 January 2023 | 857,279 | 39 | 857,318 |
| Additions – Drydocking | 2,735 | - | 2,735 |
| Additions – Technical upgrade | 7,035 | - | 7,035 |
| Additions – vessel through acquisition | 33,548 | - | 33,548 |
| Additions | - | 192 | 192 |
| Disposal of vessel | (44,973) | - | (44,973) |
| Acquisition cost 31 December 2023 | 855,625 | 231 | 855,855 |
| Acc. depreciation and impairment at 1 January 2023 | (289,092) | (15) | (289,107) |
| Depreciation for the period | (31,483) | (16) | (31,499) |
| Disposal of vessel | 23,318 | - | 23,318 |
| Acc. depreciation and impairment at 31 December 2023 | (297,257) | (31) | (297,288) |
| Carrying amount at 31 December 2023 | 558,367 | 200 | 558,567 |
As at 31 March 2024, the Group owned and operated 18 PCTC vessels.
In January2024 , the Group sold the PCTC vessel Viking Princess for USD 8,500,000, recognising a gain of USD 5,566,000.
Vessels include dry-docking and technical upgrades. The carrying amount for dry-docking was USD 11,367,000 at 31 March 2024 (31 December 2023: USD 11,788,000).
Vessels with carrying value of USD 548,410,000 at 31 March 2024 have been pledged to secure the various credit facilities (31 December 2023: USD 558,367,000), ref note 8.
At each reporting date, the Group evaluates whether there is an indication that an asset may be impaired. An assessment of the recoverable amount is made when an impairment indicator exists. At 31 March 2024 no such indicators have been identified.
Note 8 Interest-bearing debt
Details of the Group's interest-bearing debt at 31 March 2024 are as follows:
| Facility | Out | ||||
|---|---|---|---|---|---|
| USD thousands | Currency | amount | Margin | Maturity | standing |
| USD 332 million senior secured credit facility | USD | 332,000 | SOFR +2.40% | Jan 2027 | 186,338 |
| USD 15 million senior secured credit facility | |||||
| (Viking Drive/Viking Princess) | USD | 15,000 | SOFR +4.20% | Apr 2025 | 6,753 |
| USD 35 million senior secured credit facility | |||||
| (Viking Bravery) | USD | 35,000 | SOFR +1.65% | Jul 2028 | 35,000 |
| USD 41 million senior secured credit facility | |||||
| (Viking Adventure) | USD | 41,000 | SOFR +1.73% | Jun 2028 | 41,000 |
| 269,091 | |||||
| Amortised debt issuance costs | (5,262) | ||||
| Total interest-bearing debt at 31 March 2024 | 263,828 |
In Q1 2024, the Group completed a refinancing of the PCTC vessel Viking Adventure, whereby the Group exercised a purchase option under the lease agreement and entered into a USD 41 million senior secured credit facility agreement to finance the vessel.
The USD 332 million senior secured credit facility includes revolving credit facilities of USD 110.7 million. As at 31 March 2024 USD 76.6 million of the revolving credit facilities were undrawn (31 December 2023: USD 41.6 million).
As per 31 March 2024, the Group is in compliance with all financial covenants and value maintenance tests, including value adjusted equity of minimum 35% and at all times USD 50 million; minimum cash of no less than the greater of 5% of total interest-bearing debt outstanding and USD 10 million; and fair market value of at least 130% of interest-bearing debt outstanding (125% for Viking Adventure).
Details of the Group's contractual maturities of interest-bearing debt on a non-discounted basis as at 31 March 2024 are as follows:
| Due within | |||||
|---|---|---|---|---|---|
| USD thousands | 12 months | 1-3 years | 4-5 years | >5 years | Total |
| Interest-bearing debt | 46,589 | 175,404 | 47,098 | - | 269,091 |
Details of the Group's interest-bearing debt at 31 December 2023 are as follows:
| Facility | Out | ||||
|---|---|---|---|---|---|
| USD thousands | Currency | amount | Margin | Maturity | standing |
| USD 332 million senior secured credit facility | USD | 332,000 | SOFR +2.40% | Jan 2027 | 228,963 |
| USD 15 million senior secured credit facility | |||||
| (Viking Drive/Viking Princess) | USD | 15,000 | SOFR +4.20% | Apr 2025 | 7,835 |
| USD 15 million senior secured credit facility | Mar | ||||
| (Mediterranean Sea) | USD | 15,000 | SOFR +3.20% | 2026 | - |
| USD 35 million senior secured credit facility | |||||
| (Viking Bravery) | USD | 35,000 | SOFR +1.65% | Jul 2028 | 35,000 |
| Lease (Viking Adventure) | USD | 70,000 | SOFR +4.26% | Jan 2030 | 29,610 |
| 301,408 | |||||
| Amortised debt issuance costs | (5,606) | ||||
| Total interest-bearing debt at 31 December 2023 | 295,802 |
Details of the Group's contractual maturities of interest-bearing debt on a non-discounted basis as at 31 December 2023 are as follows:
| Due within | |||||
|---|---|---|---|---|---|
| USD thousands | 12 months | 1-3 years | 4-5 years | >5 years | Total |
| Interest-bearing debt | 43,792 | 217,440 | 28,191 | 11,985 | 301,408 |
Reconciliation of movements in Group's interest-bearing debt for the three-months' period ending 31 March 2024 and 12-months' period ending 31 December 2023:
| USD thousands | Q1 2024 | 2023 |
|---|---|---|
| Interest-bearing debt (current and non-current) at beginning of period | 295,802 | 339,316 |
| Issuance of new debt | 41,000 | 50,000 |
| Repayment of debt | (38,318) | (90,736) |
| Proceeds/(repayment) of revolving credit facilities | (35,000) | (15,000) |
| Debt issuance costs | (739) | (1,675) |
| Loan through acquisition | - | 11,318 |
| Non-cash amortisation of debt issuance costs | 1,083 | 2,578 |
| Interest-bearing debt (current and non-current) at end of period | 263,828 | 295,802 |
Note 9 Transactions with related parties
The Group has entered into technical ship management agreements with Reederei F. Laeisz G.m.b.H. under which the Group purchases technical ship management services for three PCTC vessels. Reederei F. Laeisz G.m.b.H. is a company controlled by the vice chair of the Board, Nikolaus H. Schües and family.
The Group makes use of commercial brokerage services from Martini Dry Chartering GmbH & Co. KG for which the Group pays charter hire commissions. Martini Dry Chartering GmbH & Co. KG is a Company controlled by the vice chair of the Board, Nikolaus H. Schües and family.
In consideration for acting as commercial adviser for Global Auto Carriers AS and its subsidiaries (GAC) in connection with four newbuilds ordered by GAC, the Group will receive commissions equal to 1% of the gross contract price for the vessels. Global Auto Carriers AS is controlled by shareholders of GCC and therefore considered a related party.
The Group has entered into a trademark license agreement with P D Gram & Co AS for the Group's use of the "Gram" wordmark, name and figurative mark. P D Gram & Co AS, a company controlled by the Gram family, hereunder Head of Projects Harald Mathias Gram, Board Member Nils Kristoffer Gram and the Group's founder Peter D. Gram.
Details of the Group's transactions with related parties are as follows:
| In USD thousands | Related party | Q1 2024 | Q1 2023 | 2023 |
|---|---|---|---|---|
| Technical ship management | ||||
| fees | Reederei F. Laeisz GmbH | (358) | (131) | (641) |
| Martini Dry Chartering | ||||
| Charter hire commissions | GmbH | (107) | (106) | (429) |
| Corporate and administrative | ||||
| services fee | Global Auto Carriers Group | - | - | 38 |
| Trademark license | P D Gram & Co AS | (49) | (50) | (200) |
All related party transactions are carried out at market terms.
Note 10 Share capital
| Share | ||
|---|---|---|
| In USD thousands | No. of shares | capital |
| 1 January 2023 | 29,285,022 | 9,822 |
| 31 December 2023 | 29,285,022 | 9,822 |
| 1 January 2022 | 10,000,000 | 125 |
| Reverse split (26.497:1) | (9,622,605) | - |
| Share capital increase 17 January 2022 | 10,774,182 | 3,623 |
| Share capital increase 17 January 2022 | 17,570,227 | 5,909 |
| Share capital increase 28 November 2022 | 563,218 | 166 |
| 31 December 2022 | 29,285,022 | 9,822 |
At 31 March 2024 the share capital of the Company consists of 29,285,022 shares with par value per share of NOK 2.9147. All issued shares are of equal rights and are fully paid up.
At 31 March 2024 the Company held 300,000 treasury shares, all of which had been acquired during 2023.
Alternative performance measures and glossary
The Group's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The Group presents certain financial measures using alternative performance measures (APMs) not defined in the IFRS reporting framework. The Group believes these APMs provide meaningful information about operational and financial performance. Relevant APMs include the following and are defined below.
Time charter (TC): A contract for the hire of a vessel for a specific period; the owner supplies the vessel and crew, the charterer selects the ports, route and vessel speed. The charterer pays for all fuel the vessel consumes, port charges, commissions, and a daily hire (TC-rate) to the owner of the vessel.
Average time charter (TC) rate per day/ time charter equivalent (TCE): Average TC rate per day or TCE represents charter revenue divided by the number of trading days for the Group's vessels or a selection of the Group's vessels during a given reporting period. Trading days include all days whilst the vessel is under the Group's ownership except days when the vessel is idle or off-hire and not generating revenue.
Average operating expense ('OPEX') per day: Average OPEX per day is calculated as total operating expenses for the Group's vessels or a selection of the Group's vessels during a given reporting period (including vessel running expenses and insurance premiums) divided by days during the period.
Break-even TC rate per day: Break-even TC rate per day represents average OPEX per day (including insurance) with the addition of debt servicing costs, including interest and principal repayments applicable for the relevant vessels and an allocation of administrative expenses.
Utilisation: Represents total vessel trading days (idle and off-hire days not included) divided by total days during the relevant period.
Planned/unplanned off-hire: Planned off-hire includes planned off-hire days in connection with dry docking and also three days off-hire per vessel per year to carry out repairs and maintenance that cannot be carried out during normal trading of the vessels.
Contract backlog: The aggregate value of firm contracts with agreed time charter rate, terms and/or conditions and where revenue is yet to be recognised.
EBITDA: Profit/(loss) for the period before net financial items, income tax expense, depreciation and amortization.
Firm contract: Customer commits to a fixed long-term contract at a specified time charter rate
PCC/PCTC: Pure car carrier/Pure car and truck carrier
CEU: Car Equivalent Units
Panamax: Capacity 6,000+, serving east-west trade-lanes crossing the canals and major oceans
Mid-size: Capacity 3,500-5,999 CEU, serving north-south trade-lanes intra continents
Distribution ships: Capacity up to 3,500 CEU, serving regional markets like Northern Europe and Caribbean
Forward looking statement
This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, the Company uses words such as "ambition", "continue", "could", "estimate", "expect", "believe", "focus", "likely", "may", "outlook", "plan", "strategy", "will", "guidance" and similar expressions to identify forward-looking statements. All statements other than statements of historical fact, including, among others, statements regarding plans and expectations with respect to Gram Car Carrier's development and returns, balance sheet and long-term underlying earnings growth; market outlook and future economic projections and assumptions; capital expenditure guidance; cost guidance; development and construction activities; accounting decisions and policy judgments; expected dividend payments; estimated provisions and liabilities; planned acquisitions and divestments; and the projected impact or timing of administrative or governmental rules, standards, decisions or laws, including with respect to and future impact of legal proceedings are forward-looking statements.
You should not place undue reliance on these forward- looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing; price and availability of alternative fuels; currency exchange rate and interest rate fluctuations; the political and economic policies of operating countries; general economic conditions; political and social stability and economic growth in relevant areas of the world; global political events and actions; economic sanctions, security breaches; changes or uncertainty in or non-compliance with laws and governmental regulations; an inability to exploit growth or investment opportunities; ineffectiveness of crisis management systems; adverse changes in tax regimes; the development and use of new technology; technical difficulties; operational problems; operator error; inadequate insurance coverage; the lack of necessary transportation infrastructure and other transportation problems; the actions of competitors; the actions of partners; the actions of governments; counterparty defaults; natural disasters and adverse weather conditions, climate change, and other changes to business conditions; an inability to attract and retain personnel; relevant governmental approvals; industrial actions by workers and other factors discussed elsewhere in this report. For additional information on risk factors see the most recent annual report and the prospectus dated 30 November 2022 available at www.gramcar.com.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot assure that its future results, level of activity, performance or achievements will meet these expectations. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, the Company undertakes no obligation to update any of these statements after the date of this report, whether to make them either conform to actual results or changes in our expectations or otherwise.
Gram Car Carriers ASA Bryggegata 9 (Aker Brygge), 0250 Oslo, Norway Phone: +47 22 01 74 50 E-mail: [email protected]
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