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MPC Container Ships ASA Interim / Quarterly Report 2019
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Interim / Quarterly Report
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MPC CONTAINER SHIPS INVEST B.V.
FINANCIAL REPORT
H1 2019
MPC CONTAINER SHIPS INVEST B.V.
SECOND QUARTER AND HALF-YEAR 2019 HIGHLIGHTS
- Total revenues in Q2 2019 were USD 29.2 million (Q1 2019: USD 28.7 million). For H1 2019, total revenues were USD 58.0 million.
- Net loss for Q2 2019 was USD -4.4 million (Q1 2019: net loss of USD -5.1 million). For H1 2019, total net loss was USD -9.6 million.
BUSINESS OVERVIEW AND CORPORATE DEVELOPMENT
MPC Container Ships Invest B.V. (the "Company", together with its subsidiaries the "Group") is a private limited liability company incorporated and domiciled in the Netherlands, with registered address at Strawinskylaan 835, World Trade Center, Tower B, 8th floor, Amsterdam 1077 NL, the Netherlands and Dutch enterprise number 69545103. The Company was incorporated on 6 September 2017 and operating activity commenced in September 2017. These consolidated financial statements comprise the Company and its subsidiaries. The principal activity of the Group is the investment in as well as operating and financing container vessels.
The Company is controlled by the MPC Container Ships ASA (the "Parent"), a public limited liability company incorporated and domiciled in Norway, with registered address at Dronning Mauds gate 3, 0250 Oslo, Norway and Norwegian enterprise number 918 494 316. The Group is included in the consolidated financial statements of the Parent. The shares of the Parent are listed on the Oslo Stock Exchange under the ticker "MPCC".
As at 30 June 2019, the Company's share capital is EUR 1 comprised by 1 share, with a nominal value of EUR 1. As at the same date, the Group is the owner of a fleet of total 39 container vessels between 966 TEU and 2,846 TEU after AS Fortuna was declared as a total constructive loss in H1 2019 and in June 2019 sold and delivered to its new owners.
SECOND QUARTER AND HALF-YEAR 2019 RESULTS
Financial performance
The Group's vessels are chartered out on time charter contracts to global and regional liner shipping companies. Time charter revenues were USD 29.2 million (Q1 2019: USD 28.7 million). The gross profit from vessel operations was USD 5.5 million (Q1 2019: USD 2.7 million).
The net result for the period was USD -4.4 million (Q1 2019: USD -5.1 million).
Financial position
The Group's total assets amounted to USD 411.2 million as at 30 June 2019 (USD 414.0 million as at 31 December 2018). Non-current assets in the amount of USD 378.9 million comprise of vessels taken over and restricted cash.
Total equity was USD 205.6 million as at 30 June 2019 (USD 208.3 million as at 31 December 2018) with minority interest of USD 0.7 million. As at 30 June 2019, the Group had interest-bearing financial loans in the amount of USD 194.5 million (USD 193.9 million as at 31 December 2018), the increase relates to amortization of capitalized loan fees.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
Cash flow
In the second quarter of 2019, the Group generated a positive cash flow from operating activities of USD 3.9 million (Q1 2019: negative cash flow of USD -5.0 million). The cash flow from investing activities was negative by USD -5.5 million (Q1 2019: positive by USD 5.3 million). The group had a cash flow from financing activities of USD 10.8 million after proceeds from shareholders compared to a cash flow in Q1 2019 of USD 0.0 million.
The total net change in cash and cash equivalents from 31 December 2018 to 30 June 2019 was USD 9.6 million, mainly due to proceeds from shareholders.
Cash and cash equivalents including restricted cash as at 30 June 2019 were USD 28.8 million, compared to USD 19.3 million as at 31 December 2018.
CONTAINER MARKET UPDATE
Charter rates for container ships in the Post-Panamax segment began to rise in March this year. In the following months, this development filtered through into the smaller segments, recently affecting also the feeder market. One determining factor for this development is the installation of exhaust gas cleaning systems (scrubbers) to meet the requirements set forth in the IMO 2020 regulation and the adhering need for replacement tonnage during retrofits. As a result, the idle container fleet grew from a low of 1.3% (April 2019) to 2.5% (August 2019) of the total fleet.
Container ship deliveries in H1 2019 reached a historically low level, while the newbuilding market was equally subdued. Scrapping activity in the feeder segment remained at a comparable high level in Q2 2019 as in the previous quarter.
Various economic and political circumstances had a dampening effect on global container trade, compelling analysts to lower their full-year growth forecasts. However, estimates for global container trade growth for FY 2019 ranges between 3% and 3.5% while growth in active container fleet capacity (fleet development less scrubber retrofits) is estimated to grow only 1.9%.
Demand
Global seaborne box trade was estimated to grow by 2% in H1 2019, but headwinds from the global economy put pressure on certain trade routes. Trade conflicts and other forms of geopolitical tensions, regionalisation and environmental concerns, as well as the combination of these factors have prompted analysts to lower their FY 2019 demand forecasts.
For FY 2019, Clarkson's Research expects global container trade to grow by 3.1% (2018: 4.2%). Intra-regional trades are, however, expected to grow by 4.6% (2018: 5.7%). Even in the event of a "domino effect" from other trade lanes due to US-Sino tensions, Clarkson's still predict 4.1% growth for FY 2019 (2018: 5.7%). Feeder ships below 3,000 TEU provide the majority of capacity on intra-regional container services. 34% of all container ships and 53% of all feeder container ships are currently deployed on intra-regional trades. What is more, the share of intra-regional trade as a portion of global trade has increased from 33% in 2001 to 42% in 2018.
Other trade lanes carry growth estimates below the aggregate 3.1% estimate for FY 2019. Next to the decreasing effect that the US-China trade conflict has on trade volumes for Transpacific routes, a trade diversion leads to increasing trade flows within Asia, already visible e.g. in the increased export and import volumes to and from Vietnam.
Fleet development
"Active" container ship fleet capacity growth, accounting for vessels being temporarily decommissioned to undergo scrubber retrofits, is estimated at 1.9% for FY 2019, while the overall full-year fleet capacity growth is forecasted at 3.1% (2018: 5.6%). This represents a 30% decline year-on-year and hence the second-lowest fleet growth in history.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
Total deliveries during H1 2019 stood at 76 units (0.51m TEU), with vessels larger than 12,000 TEU accounting for 0.39m TEU (76% of the total growth) while ships below 3,000 TEU accounting for remaining 0.07m TEU (14% of total growth).
H1 2019 container ship scrapping stood at 59 units totalling 120,000 TEU, on par with total boxship capacity recycled during all of FY 2018. Feeder container ships of less than 3,000 TEU accounted for more than half of the recycled capacity.
The introduction of low-sulphur fuel regulations in January 2020 may be perceived as creating a competitive advantage for larger vessels and modern eco tonnage. However, due to physical and logistical restrictions, regional trades continue to be dominated by feeder vessels which represent an appealing sub-segment of the overall fleet. Estimates of a slow-down in feeder fleet growth to around 0.3% for 1,000 - 2,000 TEU vessels additionally supports the market perspective of the smaller segment.
The container ship newbuilding market was generally quiet during Q2 2019. Overall, newbuild contracting activity in the first six months of 2019 amounted to 54 vessels totalling 0.26m TEU capacity, a decrease of 60% compared to H1 2018 in TEU terms. At present, the newbuilding orderbook amounts to approximately 11% of the fleet and hence is at its lowest level for years.
Asset prices
Newbuilding prices at the larger-sized container ships (except for special designs) remained stable, while quotes for feeder designs have in general remained unchanged. An impending reduction of the global orderbook across all vessel types will place downward pressure on shipyards' forward cover, the main driver of newbuild prices. Analysts thus expect a slight decline in newbuild prices during H2 2019.
Newbuilding prices in June 2019:
- 1,000 TEU: USD 19.5 million (up 3% year-to-date)
- 1,700 TEU: USD 26.25 million (up 1% year-to-date)
- 2,750 TEU: USD 34.5 million (down 1% year-to-date)
- 4,800 TEU*: USD 53.0 million (up 7% year-to-date)
- wide-beam design
Secondhand container ship values have been trending downwards since mid-2018, albeit based on a limited number of transactions. The recent improvement in charter rates for larger vessels has yet to have a significant impact on these values. At the end of June 2019, prices for most feeder vessels – with the exception of the smallest sizes – were noticeably lower compared to January.
In H1 2019, a total of 66 sales of secondhand tonnage were reported, totalling 0.26 million TEU. This represents a decrease of 46% compared to H1 2018, and secondhand activity remains at its lowest level since late 2016.
Once again, factors outside the secondhand container ship market have adversely affected market sentiment, dampened demand and led to prices dipping below the conventional correlation with earnings for most ship sizes.
Secondhand prices (10-year old) in June 2019:
- 1,000 TEU: USD 6.0 million (up 9% year-to-date)
- 1,700 TEU: USD 8.0 million (down 24% year-to-date)
- 2,750 TEU: USD 11.5 million (down 15% year-to-date)
- 4,300 TEU: USD 9.25 million (down 16% year-to-date)
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
Charter rates
As of March 2019, rates for the larger vessels have increased due to liner companies needing to cover trade routes while vessels are taken out of service for scrubber installations. Since scrubber systems are less frequently installed on smaller vessels, the dynamic has excluded feeder vessels from rate increases for most of Q2 2019.
At the end of June 2019, demand filtered through into the Panamax segment, and experts pointed towards a top-down support which should increase revenues in the feeder segments. This occurred only recently when the market successfully averted a traditional summer downturn with solid activity and improving rates for the smaller segments as well.
The idle container ship fleet has decreased sharply from 4.0% of total fleet (6.5% of the feeder fleet) in March 2019 to 1.3% (2.6%) in April, a development supported by a brisk Intra-Asian trade where new service offerings were particularly helpful for smaller segments. As per August, total idle fleet jumped to 2.5% on the back of vessels entering shipyards for scrubber retrofits. This trend is expected to continue over the coming months for vessels above 7,500 TEU, placing further pressure on the charter market.
Time charter rates (6 - 12 months) in June 2019:
- 1,000 TEU: USD 6,150 (down 3% year-to-date)
- 1,700 TEU: USD 8,300 (up 11% year-to-date)
- 2,750 TEU: USD 9,150 (down 4% year-to-date)
- 4,300 TEU: USD 9,400 (up 4% year-to-date)
Market outlook
On an overall macroeconomic level, the outlook for H2 2019 and the first months of 2020 will remain influenced by issues relating to IMO 2020, a complex economic situation as well as the associated possibility of escalating US-Sino trade disputes. Financial turmoil in emerging markets and a looming weakening of industrialized economies could all intensify.
The changes that will come along with the introduction of the IMO 2020 regulations in January are already beginning to show effect. Scrubber retrofit works presently being carried out have removed 31 vessels carrying 350,000 TEU from the market, six months before regulation enforcement, increasingly reducing the availability of chartered tonnage. It is expected that a meaningful number of scrubber retrofits will be postponed to Q4 2019 and continue well into H1 2020. As of late, it has become increasingly apparent that in many cases the originally envisaged installation time has been or will be exceeded, further improving the positive effects on the charter market. Adding to this is vessels without scrubbers sailing on lower operating speeds to reduce low-sulphur fuel consumption, and increased recycling of non-competitive vessels.
What is more, the upward trend of the various charter market indices point towards good activity and improving charter rates even during and after the usually quiet summer period. The Howe Robinson Container Index rose in late August to its highest value for the current week in 7 years. Thus far in Q3 2019, the index has risen 13%, the second strongest increase in 10 years.
As the supply side does not appear overly worrisome, with current estimates indicating moderate growth of 3% for 2019 and 2020 (2018: 5.6%), non-feeder vessels dominating the orderbook and feeder orders mainly being replacement tonnage or tailored for the fast-growing Intra-Asian market, a demand-supply rebalancing appears to hold up as a realistic scenario
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
FORWARD-LOOKING STATEMENTS
Forward-looking statements presented in this report are based on various assumptions. The assumptions are subject to uncertainties and contingencies that are difficult or impossible to predict. MPC Container Ships Invest B.V. cannot give assurances that expectations regarding the outlook will be achieved or accomplished
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
RESPONSIBILITY STATEMENT
Today, the Management Board have resolved the report and the interim condensed consolidated financial statements for MPC Container Ships Invest B.V. per 30 June 2019 and for the first half year of 2019.
The Management Board confirm, to the best of our knowledge, that the interim financial statements for the first half year of 2019 have been prepared in accordance with prevailing accounting standards, and that the information given in the financial statements gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results for the period. To the best of our knowledge, the Management Board's discussion and analysis for the first half year of 2019 gives a true and fair overview of the main activities in the period.
Amsterdam, 29 August 2019
The Management Board of
MPC Container Ships Invest B.V.
Lammert de Graaf
Constantin Baack
Hans Bouma
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
| In USD thousands | Notes | Q2 2019
(unaudited) | Q1 2019
(unaudited) | Q2 2018
(unaudited) | H1 2019
(unaudited) | H1 2018
(unaudited) |
| --- | --- | --- | --- | --- | --- | --- |
| Operating revenues | 3 | 29,237 | 28,729 | 32,974 | 57,967 | 52,555 |
| Commissions | | -1,095 | -993 | -1,294 | -2,088 | -2,085 |
| Vessel voyage expenditures | | -2,635 | -3,427 | -2,032 | -6,062 | -3,226 |
| Vessel operation expenditures | | -18,440 | -20,030 | -18,403 | -38,469 | -30,048 |
| Ship management fees | | -1,531 | -1,534 | -1,594 | -3,065 | -2,534 |
| Gross profit | | 5,536 | 2,746 | 9,651 | 8,282 | 14,661 |
| Administrative expenses | | -669 | -607 | -467 | -1,276 | -756 |
| Depreciation | 4 | -5,668 | -5,777 | -4,854 | -11,445 | -8,081 |
| Gain from disposal of vessels | | 460 | 2,669 | 0 | 3,129 | 0 |
| Other expenses | | -332 | -249 | -304 | -581 | -462 |
| Other income | | 120 | 70 | 277 | 189 | 496 |
| Operating result (EBIT) | | -553 | -1,149 | 4,303 | -1,701 | 5,859 |
| Finance income | | 99 | 123 | 49 | 221 | 166 |
| Finance costs | 6 | -3,909 | -4,094 | -3,858 | -8,003 | -6,580 |
| Profit/Loss before income tax (EBT) | | -4,364 | -5,119 | 494 | -9,483 | -555 |
| Income tax expenses | | -80 | 0 | 0 | -80 | 0 |
| Profit/Loss for the period | | -4,444 | -5,119 | 494 | -9,563 | -555 |
| Attributable to: | | | | | | |
| Equity holders of the Company | | -4,443 | -5,118 | 490 | -9,562 | -561 |
| Minority interest | | 0 | -1 | 4 | -1 | 6 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| In USD thousands | Notes | Q2 2019
(unaudited) | Q1 2019
(unaudited) | Q2 2018
(unaudited) | H1 2019
(unaudited) | H1 2018
(unaudited) |
| --- | --- | --- | --- | --- | --- | --- |
| Profit/Loss for the period | | -4,444 | -5,119 | 494 | -9,563 | -555 |
| Items that may be subsequently transferred to profit or loss | | -2,353 | -1,630 | 388 | -3,983 | 1,767 |
| Cash flow hedge reserve | | -2,353 | -1,630 | 388 | -3,983 | 1,767 |
| Foreign currency | | 0 | 0 | 0 | 0 | 0 |
| Items that will not be subsequently transferred to profit or loss | | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive profit/loss | | -6,797 | -6,750 | 882 | -13,546 | 1,212 |
| Attributable to: | | | | | | |
| Equity holders of the Company | | -6,797 | -6,749 | 878 | -13,545 | 1,206 |
| Non-controlling interest | | 0 | -1 | 4 | -1 | 6 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| In USD thousands | Note | 30 June 2019 (unaudited) | 31 March 2019 (unaudited) | 31 December 2019 (audited) |
|---|---|---|---|---|
| Assets | 411,159 | 409,406 | 414,040 | |
| Non-current Assets | 378,893 | 379,208 | 388,003 | |
| Vessels | 4 | 368,579 | 368,241 | 376,507 |
| Long-term restricted cash | 10,000 | 10,000 | 10,000 | |
| Other assets | 313 | 966 | 1,496 | |
| Current Assets | 32,267 | 30,198 | 26,037 | |
| Inventories | 2,922 | 2,758 | 3,545 | |
| Trade and other receivables | 10,505 | 17,859 | 13,240 | |
| Cash and cash equivalents | 18,840 | 9,582 | 9,252 | |
| Unrestricted cash | 18,840 | 9,582 | 9,252 | |
| Restricted cash | 0 | 0 | 0 | |
| Equity and Liabilities | 411,159 | 409,406 | 414,040 | |
| Equity | 205,570 | 201,947 | 208,306 | |
| Ordinary shares | 5 | 223,510 | 213,090 | 213,090 |
| Share capital | 0 | 0 | 0 | |
| Share premium | 223,510 | 213,090 | 213,090 | |
| Retained losses | -15,666 | -11,222 | -6,104 | |
| Other comprehensive income | -2,965 | -612 | 1,018 | |
| Minority interest | 691 | 691 | 302 | |
| Non-current Liabilities | 194,459 | 194,249 | 193,963 | |
| Interest bearing loans | 6 | 194,459 | 194,249 | 193,963 |
| Current Liabilities | 11,131 | 13,211 | 11,771 | |
| Trade payables | 4,090 | 5,771 | 6,419 | |
| Payables to affiliated companies | 4,178 | 4,384 | 2,789 | |
| Other liabilities | 2,863 | 3,056 | 2,562 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| In USD thousands | Share capital | Share premium | Retained losses | OCI | Total equity attributable to the equity holders of the Company | Minority interest | Total equity |
|---|---|---|---|---|---|---|---|
| Equity as at 1 Jan. 2018 | 0 | 126,150 | -2,951 | 139 | 123,338 | 152 | 123,490 |
| Contribution in kind | 86,940 | 86,940 | 86,940 | ||||
| Capital increase from non-controlling interest | 0 | 136 | 136 | ||||
| Result of the period | -3,153 | -3,153 | 13 | -3,140 | |||
| Cash flow hedge reserve | 865 | 865 | 865 | ||||
| Foreign currency translation | 14 | 14 | 14 | ||||
| Equity as at 31 Dec. 2018 | 0 | 213,090 | -6,104 | 1,018 | 208,004 | 302 | 208,306 |
| Equity as at 1 Jan. 2019 | 0 | 213,090 | -6,104 | 1,018 | 208,004 | 302 | 208,306 |
| Contribution in kind | 10,420 | 10,420 | 10,420 | ||||
| Capital increase from non-controlling interest | 0 | 390 | 390 | ||||
| Result of the period | -9,562 | -9,562 | -1 | -9,563 | |||
| Cash flow hedge reserve | -3,983 | -3,983 | -3,983 | ||||
| Foreign currency translation | 0 | 0 | |||||
| Equity as at 30 June 2019 | 0 | 223,510 | -15,666 | -2,965 | 204,880 | 691 | 205,570 |
CONSOLIDATED STATEMENT OF CASH FLOW
| In USD thousands | Notes | Q2 2019
(unaudited) | Q1 2019
(unaudited) | Q2 2018
(unaudited) | H1 2019
(unaudited) | H1 2018
(unaudited) |
| --- | --- | --- | --- | --- | --- | --- |
| Profit/Loss before taxes | | -4,364 | -5,119 | 494 | -9,483 | -555 |
| Income tax paid | | 0 | 0 | 0 | 0 | 0 |
| Finance expenses, net | | 3,811 | 3,971 | 3,809 | 7,782 | 6,414 |
| Interest paid | | -3,842 | -3,587 | -3,625 | -7,429 | -6,015 |
| Interest received | | 99 | 123 | 49 | 221 | 165 |
| Net change in current assets | | 6,799 | -3,831 | -1,543 | 2,967 | -5,653 |
| Net change in current liabilities | | -2,080 | 1,440 | 146 | -640 | 3,408 |
| Cash upfront payment for hedge instruments | | -1,700 | -1,100 | 0 | -2,800 | 0 |
| Depreciation | | 5,668 | 5,777 | 4,854 | 11,445 | 8,082 |
| Gain from disposal of vessels | | -460 | -2,669 | 0 | -3,129 | 0 |
| Cash flow from operating activities | | 3,931 | -4,996 | 4,184 | -1,065 | 5,845 |
| Proceeds from disposal of vessels | | 1,709 | 9,030 | 0 | 10,739 | 0 |
| Purchase of vessels | | 0 | 0 | -6,509 | 0 | -117,463 |
| Dry-docking and other investments | | -7,193 | -3,704 | -11,818 | -10,897 | -19,768 |
| Prepayment on vessels | | 0 | 0 | 0 | 0 | 0 |
| Cash flow from investing activities | | -5,484 | 5,326 | -18,327 | -158 | -137,231 |
| Proceeds from shareholder's contribution | | 10,810 | 0 | 0 | 10,810 | 34 |
| Gross proceeds debt financing | | 0 | 0 | 0 | 0 | 100,000 |
| Bond issuing costs | | 0 | 0 | -474 | 0 | -3,175 |
| Cash flow from financing activities | | 10,810 | 0 | -474 | 10,810 | 96,859 |
| Net change in cash and cash equivalents | | 9,258 | 330 | -14,617 | 9,588 | -34,527 |
| Net foreign exchange differences | | 0 | 0 | -8 | 0 | -8 |
| Cash and cash equivalents at beginning of period | | 19,582 | 19,252 | 39,638 | 19,252 | 59,548 |
| Cash and cash equivalents at the end of period¹ | | 28,840 | 19,582 | 25,013 | 28,840 | 25,013 |
¹ Whereof USD 10 million is restricted as at 30 June 2019 and as at 31 December 2018
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019 10
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019 11
NOTES
Note 1 - General information
MPC Container Ships Invest B.V. (the "Company", together with its subsidiaries the "Group") is a private limited liability company incorporated and domiciled in the Netherlands, with registered address at Strawinskylaan 835, World Trade Center, Tower B, 8th floor, Amsterdam 1077 NL, the Netherlands and Dutch enterprise number 69545103. The Company was incorporated on 6 September 2017 and operating activity commenced in September 2017. This consolidated financial report comprises the Company and its subsidiaries. The principal activity of the Group is the investment in as well as operating and financing of container vessels.
The Company is controlled by MPC Container Ships ASA (the "Parent"), a public limited liability company incorporated and domiciled in Norway, with registered address at Dronning Mauds gate 3, 0250 Oslo, Norway and Norwegian enterprise number 918 494 316. The Group is included in the consolidated financial statements of the Parent. The shares of the Parent are listed on the Oslo Stock Exchange under the ticker "MPCC".
Note 2 - Basis of preparation
The unaudited interim financial statements for the period ended 30 June 2019 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 ("EU"). The statements have not been subject to audit. The statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2018. The consolidated financial statements are presented in USD thousands unless otherwise indicated.
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.
The accounting policies adopted in the preparation of the condensed consolidated interim financial reporting are consistent with those applied in the preparation of the Group's consolidated financial statements for the period ended 31 December 2018 except for the new standards effective as of 1 January 2019.
The Company implemented IFRS 16 starting 1 January 2019. The new standard is replacing IAS 17 Leases. The Company has implemented the new standard using the modified retrospective approach for the implementation of IFRS 16 where comparative figures are not restated. The Company has used the practical expedients when applying the new standard to leases previously classified as operating leases under IAS 17. As the Group do not charter in any vessels and do not have any other lease agreements exceeding 12 months, there has been no material impacts from the implementation of the new standard.
Note 3 - Revenue
| In USD thousands | Q2 2018 | Q1 2019 |
|---|---|---|
| Time charter revenue | 16,992 | 18,190 |
| Pool charter revenue | 10,701 | 9,403 |
| Other revenue | 1,544 | 1,136 |
| Total operating revenues | 29,237 | 28,729 |
The Group's time charter contracts are separated into a lease element and a service element. The lease element of the vessel represents the use of the vessel without any associated performance obligations and are accounted for
in accordance with the lease standard. Revenues from time charter services (service element) and other revenue (e.g. bunkers and other services) are accounted for in accordance IFRS 15. The Group's performance obligation is to provide time charter services to its charterers.
| In USD thousands | Q2 2019 | Q1 2019 |
|---|---|---|
| Service element | 11,106 | 9,779 |
| Other revenue | 1,544 | 1,136 |
| Total revenue from customer contracts | 12,650 | 10,915 |
| Lease revenue | 16,588 | 17,814 |
| Total operating revenue | 29,237 | 28,729 |
Note 4 - Vessels
| In USD thousands | At 30 June 2019 (unaudited) | 31 December 2019 (audited) |
|---|---|---|
| Acquisition cost at 1 January | 396,851 | 150,032 |
| Contributions of fixed assets and capitalized investments | 0 | 86,940 |
| Disposals of vessels | -7,361 | 0 |
| Acquired vessels and capitalized investments | 10,879 | 159,879 |
| Acquisition cost at end of period | 400,369 | 396,851 |
| Accumulated depreciation 1 January | -20,344 | -1,646 |
| Depreciation for the year | -11,445 | -18,698 |
| Accumulated depreciation at end of period | -31,789 | -20,344 |
| Closing balance at end of period | 368,579 | 376,507 |
| Depreciation method | Straight-line | Straight-line |
| Useful life (vessels) | 25 years | 25 years |
| Useful life (dry docks) | 5 years | 5 years |
The disposal of vessel relates to the declaration of AS Fortuna as a total loss after her grounding in September 2018 and the subsequent sale of the vessel in June 2019. These events lead to a gain on disposals in H1 2019 of USD 3.1 million.
Note 5 - Share capital
| Number of shares | Share capital (USD) | Share premium (USD thousands) | |
|---|---|---|---|
| 1 January 2019 | 1 | 1 | 213,090 |
| Equity injections in H1 2019 | 0 | 0 | 10,420 |
| 30 June 2019 | 1 | 1 | 223,510 |
As at 30 June 2019, the share capital of the Company consists of 1 share with nominal value per share of EUR 1, paid on 13 October, 2017. Share premium represents the additional contributions made by the Parent (substantially through vessels and cash).
Note 6 - Interest-bearing loans
The Company has in 2017 and 2018 issued a senior secured bond with a total outstanding as at 30 June 2019 of USD 200 million. The bond is listed at Oslo Stock Exchange with ticker code "MPCBV". The Group has entered into fixed interest-rate swap agreements for USD 50 million of the bond loan. For the remaining bond loan of USD 150 million, the Group has entered into interest cap and collar agreements.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
In addition to customary protection rights for the benefit of the bond holders, the following financial covenants, as defined in the bond terms, are applicable at the level of the Parent's consolidated figures:
- The consolidated book-equity ratio of the Parent shall at all times be higher than 40%.
The following financial covenant, as defined in the bond terms, is applicable at the level of the Company's consolidated figures:
- The Group shall maintain a minimum liquidity of 5% of the consolidated financial indebtedness; and
- Vessel loan to value ratio of the Company and its subsidiaries shall not exceed 75%.
The Group is in compliance with all covenants as at 30 June 2019.
The bond is guaranteed by the Parent and all subsidiaries of the Company.
The bond terms contain voluntary call options to early redeem the bonds, which is currently not expected. In addition, there is also a mandatory put option upon change in controlling shareholder.
Note 7 - Group companies
The Group's consolidated financial statements include the financial reports of the Company and its subsidiaries listed in the table below:
| Name | Principal activity | Country of incorporation | Equity (interes) | Initial consolidation |
|---|---|---|---|---|
| "AS LAETITIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS LAGUNA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS PAULINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS PETRONIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS CLARA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS ANGELINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FATIMA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FLORETTA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FAUSTINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FABRIZIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FIORELLA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS COLUMBIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS CALIFORNIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FRIOA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS CALIFORNIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FIONA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS CONSTANTINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FORTUNA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS LAURETTA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS SAVANNA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019 14
| "AS FILIPPA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
|---|---|---|---|---|
| "AS SOPHIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS SERENA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS CLEMENTINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS SICILIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS SEVILLIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS PATRIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS PALATIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS CYPRIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS CARELIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS FABIANA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS FEDERICA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS FLORIANA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS RICCARDA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS RAGNA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS ROMINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS ROSALIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS SARA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS FLORA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2018 |
| "AS LAETITIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS LAGUNA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS PAULINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS PETRONIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS CLARA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS ANGELINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FATIMA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FLORETTA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FAUSTINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FABRIZIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FIORELLA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS COLUMBIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS CLARITA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FRIDA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS CALIFORNIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FIONA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS CONSTANTINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS FORTUNA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS LAURETTA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
| "AS SAVANNA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2017 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2019 15
| "AS FILIPPA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
|---|---|---|---|---|
| "AS SOPHIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS SERENA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS CLEMENTINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS SICILIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS SEVILLIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS PATRIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS PALATIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS CYPRIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS CARELIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS FABIANA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS FEDERICA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS FLORIANA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS RICCARDA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS RICCARDA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS RAGNA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS ROMINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS ROSALIA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS SARA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
| "AS FLORA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2018 |
Ownership rights equal voting rights in all subsidiaries.
Note 8 - Subsequent events
None.