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MPC Container Ships ASA Interim / Quarterly Report 2021
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Interim / Quarterly Report
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MPC CONTAINER SHIPS INVEST B.V.
FINANCIAL REPORT
H1 2021
MPC CONTAINER SHIPS INVEST B.V.
SECOND QUARTER AND HALF-YEAR 2021 HIGHLIGHTS
- Total revenues in Q2 2021 were USD 41.1 million (Q1 2021: USD 31.8 million).
- Net profit for Q2 2021 was USD 5.3 million (Q1 2021: net loss of USD 1.0 million).
- In Q2 2021, the Group, consisting of MPC Container Ships Invest B.V. and its subsidiaries, delivered AS Laguna to its new owners on 22 April 2021. The Group also acquired the two vessels AS Selina and AS Rafaela in June 2021 for respectively USD 17.3 million and USD 12.1 million from an associated company within the MPCC Group.
COMMENT FROM THE MANAGEMENT BOARD
The positive momentum in the container market is strengthening, supported by very strong fundamentals resulting in a further tightening of the availability of assets. Due to the upward trend in global trade and growing inefficiencies in the logistical chains there are no indications whatsoever of a weakening market before at least well into 2022.
In these market conditions the Group has completed a number of new fixtures and thereby locking in favourable rates and consequently improving the EBITDA backlog.
SECOND QUARTER AND HALF-YEAR 2021 RESULTS
Financial performance
The Group's vessels are chartered out on time charter contracts to global and regional liner shipping companies. Operating revenues were in Q1 USD 41.1 million (Q1 2021: USD 31.8 million). The gross profit from vessel operations was USD 19.2 million (Q1 2021: USD 10.8 million). The increase in operating revenues and gross profit compared to the previous quarter is driven by the recovery in the charter market and container demand, in turn leading to reduced idle time and increased charter rates for the Group's fleet.
The Group reports a profit of USD 5.3 million in Q2 2021 compared to a loss of USD 1.0 million in Q1 2021.
For the first half-year 2021, the Group reported operating revenues of USD 72.8 million (H1 2020: 53.8 million) and gross profit of USD 30.0 million (H1 2020: USD 6.4 million). The increase in gross profit compared to previous year is mainly due to the improvements in supply and demand balance in the container charter market leading to higher charter rates and reduced idle times. The Group reported a net profit of USD 4.4 million (H1 2020: Net loss of USD 18.7 million).
Financial position
The Group's total assets amounted to USD 394.8 million as at 30 June 2021 (USD 390.6 million as at 31 December 2020). Non-current assets in the amount of USD 364.8 million comprises of vessels. The increase in vessels compared to 31 March 2021 relates to the acquisition in June 2021 of the vessels AS Rafaela and AS Selina from subsidiaries of the Parent. Total equity was USD 175.5 million as at 30 June 2021 compared to USD 177.7 million as at 31 December 2020, with minority interest of USD 0.7 million. As at 30 June 2021, the Group had interest-bearing loans in the amount of USD 202.7 million (USD 200.3 million as at 31 December 2020), the increase relates to amortization of capitalized loan fees.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
Cash flow
In the second quarter of 2021, the Group generated a positive cash flow from operating activities of USD 18.6 million (Q1 2021: cash flow of USD 6.9 million). The cash flow from investing activities was negative by USD 31.4 million (Q4 2020: positive by USD 1.4 million) due to dry-dockings and other upgrades of USD 5.9 million and intra-group acquisition of vessels of USD 29.4 million, partly offset by the disposal of AS Laguna of USD 3.9 million. The group had a net cash flow from financing activities of USD 0.0 million compared to a negative cash flow in Q1 2021 of USD 0.1 million.
For the first half-year 2020, the Group reports a positive operating cash flow of USD 25.6 million (H1 2020: positive by USD 1.0 million), where the increase is mainly caused by the strong container market in H1 2021. The Group had a negative cash flow from investing activities by USD 30.0 million (H1 2020: negative by USD 13.6 million) due to intra-group vessel acquisition of vessels, and dry docking and other investments on the vessels, partly offset by proceeds from disposed vessels of USD of USD 3.9 million. The cash flows from financing activities was negative by USD 0.1 million (H1 2020: positive by USD 8.8 million).
The total net change in cash and cash equivalents from 31 December to 30 June 2021 was negative by USD 4.6 million.
Cash and cash equivalents including restricted cash as at 30 June 2021 were USD 0.2 million, compared to USD 21.4 million as at 31 December 2020. The decrease relates to use of the proceeds on the blocked account during first half of 2021 related to internal relocation of vessels between different funding structures in the Group.
CONTAINER MARKET UPDATE
Surging Container Vessel Market with no normalization in sight
With the recovery from the COVID-19 implications in H2 2020, the container vessel market sees an extraordinary boom with sky-rocking prices, rates and volume growth. The pandemic has had an impact, as the Ever Given had and the COVID-19 disruptions of Yantian and now Vung Tau, but it was not the single nor the main determinant of the boom. Isolated accidents and port troubles have all been seen and weathered before. And even though the IMF recently revised global GDP growth upwards due to the COVID-19 vaccination progress in industrialized economies, there is no global trade or demand boom. Demand more or less shows a normal development over the past years.
The current market boom can be traced back to a supply web problem, where several age-old dysfunctions have been revealed simply with the legitimate boom of one single trade: the Transpacific eastbound. With an unexpected strong bounce-back in container trade demand between Asia and the US, port and hinterland congestions occurred and led to a shortage of trade equipment around the globe. What followed consequently was an unseen supply shortage with tight capacity characterizing the container vessel market since then.
As a result, key industry parameters like e.g. freight rates or time-charter rates explore unseen historical territory week-by-week and the commercial idle statistics decreased to record low levels. Regardless of the already historic high level achieved, the latest month-on-month increase of time-charter rates in July has been one of the strongest in history. Currently, every market participant, from liners over non-operating vessel owners to shippers, asks the same question: "When will this end and when will markets start to normalize?" The only true answer to this question is, as soon as capacity tightness vanishes and supply and demand equalize again. But nobody can predict when this will be. During the last couple of weeks, terminal congestions have even been getting worse, reaching new heights. Analysts and liners meanwhile argue that the surge may continue for months, well into 2022. First voices even say that a normalization will not be seen before 2023. And even when we find an answer to the question "when" the situation normalizes, nobody is able to say what the new "normal" will look like.
Beneath the current market spike, industry fundamentals are in good shape, especially for smaller container vessels.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
The strong market momentum encouraged investors. US-listed shipping stocks started 2021 with a roar (+12.8% on average only in week one, 2021), outperforming other indices. Secondhand transactions and new-build orders increased and so did secondhand prices and meanwhile also newbuilding prices. The increase in new-build orders since October 2020 is strongly biased towards larger sized vessels, so that smaller vessels below 5.2k TEU still see a manageable orderbook-to-fleet ratio. The vessel age in the smaller segments is relative high, what may lead to an increase in scrapping numbers as soon as markets normalize, and demand forecasts for intra-regional trades (the main home for smaller vessels) are relative strong. Global demand and production developments like a changed consumer behavior (from non-tradable local services to consumption goods) and a change in global sourcing patterns towards more regional diversification add to the good demand forecasts for intra-regional trades.
Overall, analysts expect an excess demand situation for the coming two years at least, significantly pronounced for vessels serving intra-regional trades. The new orderbook spike will start to be delivered in 2023 and the market will then see an increase in new-build deliveries of larger sized vessels. It will then get important to monitor possible cascading flows closely. However, as intra-regional trades have natural physical and logistical boundaries that prevent larger vessels to serve those markets and as volume forecasts for intra-regional trades are promising, we see encouraging market conditions for smaller-sized vessels also going forward.
The next paragraphs will discuss the current market dynamics in greater detail.
Container Demand
The implications of the COVID-19 lockdown turned 2020 into one of the worst years for the global economy and container trade in particular (-1.7% global TEU demand growth). The economic recovery, however, occurred fast and significant so that analysts expect a 7.8% TEU throughput growth in 2021. Full year demand expectations are even stronger for intra-regional trades with 7.9%. Those strong numbers base on a strong recovery and a good performance of the global economy. In light of good vaccination progress in industrialized economies, the IMF revised its global GDP growth forecasts for 2021 and 2022 upwards to 6% and 4.9%, respectively.²
Mid-term demand forecasts for the Container Vessel Market are encouraging as well. Demand growth is currently estimated with an average annual growth rate of 5.1% until the end of 2024. Numbers are even more favorable for smaller and intermediate vessels as demand growth on intra-regional trades (the main deployment of vessels smaller 5.2k TEU) is relative strong with an average annual growth rate of 5.7%.³ (See Fig. 1) The rethinking of global sourcing patterns towards more regional diversification can be expected to have additional positive implications on intra-regional trades (especially in Asia) and to increase the need for small and flexible container vessels.
Fig. 1: Mid-Term Demand Forecasts
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
Fleet Development
Regarding the supply side of the container vessel market, the global container fleet comprises currently 5,520 vessels with a total capacity of 24.2 million TEU. The feeder fleet (1k to 3k TEU) amounts to 2,029 vessels with a total capacity of 3.7 million TEU. $^{4}$
In light of the current container vessel market boom with charter vessels achieving record daily earnings, scrapping came to a halt. In 2021 year-to-date, only 13 vessels with a capacity of 10k TEU have been scrapped. Thereof, 10 vessels with 6k TEU have been demolished in the segment $< 1$ k TEU and 3 vessels with 4k TEU in the size class 1-2k TEU. In 2020, the container vessel market saw 188k TEU deletions, with scrapping of 12k TEU (15 vessels) in the size segment $< 1$ k TEU. The feeder segment (1-3k TEU) saw 66k TEU scrapped (44 vessels). In the classic panmax segment (3-6k TEU), 16 vessels with 79k TEU capacity have been scrapped. 4 deleted vessels with 30k TEU have been larger than 6k TEU. $^{5}$ (See Fig. 2)
As $45\%$ of vessels (in terms of TEU) are older than 14 years with a strong bias towards smaller tonnage, a significant increase in scrapping numbers is expected when the current market surge eases. It is, however, not possible to predict when this will happen. In the mid-term, also environmental regulation may show an increasing impact on scrapping numbers in the smaller segments.[6]
Fig. 2: Scrapping
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
New build deliveries have been very low in 2020. 140 container vessels with a capacity of 860k TEU have been added to the market. Even though numbers for 2019 have already been relative low (164 container vessel deliveries with 1.1m TEU capacity). In the feeder segment (1k to 3k TEU) 93 vessels have been delivered in 2020 (with 191k TEU capacity) compared to 83 vessels delivered in 2019 (152k TEU). Only 6 vessels with 21k TEU have been delivered in the size segment of 3k to 6k TEU. The number is comparably low as in 2019, where 7 vessels with 24k TEU have been delivered. In 2021 delivery numbers increased slightly. 2021 year-to-date already saw 96 vessels delivered 607k TEU. Thereof, 57 vessels (111k TEU) have been delivered in the feeder segment (1k to 3k TEU) and 5 vessels with 15k TEU in the size segment 3k to 6k TEU. $^{7}$ (See Fig. 3)
Fig. 3: Deliveries
A historic low container vessel orderbook was observed in October 2020 with $8\%$ of the total fleet and only 1.9m TEU capacity on order. Due to the extraordinary strong market momentum since then, new build orders increased significantly. In 2021 year-to-date, 347 container vessel orders have been placed with 3.3m TEU capacity. The total orderbook-to-fleet ratio thus increased to $21.3\%$ with 5.2m TEU capacity on order. As the recent increase in new orders has been biased strongly towards larger tonnage, the Feeder Orderbook (1k to 3k TEU) is still at relative low levels with 384k TEU on order ( $10\%$ of the feeder fleet). $^{8}$
Compared to the total fleet, feeder orders increased relative low in 2021 year-to-date. We observed 91 vessel orders with a capacity of 169k TEU. In the Classic Panmax segment (3k to 6k TEU), 69 vessels have been ordered in 2021 year-to-date (283k TEU), what is quite a number especially as new build orders have been negligible since 2014. Despite the surge in new orders, the orderbook-to-fleet ratio in this segment is still very low at around $7\%$ (See Fig. 4) and the average age of the sailing fleet relative high with $45\%$ of vessels older than 14 years. $^{10}$
Fig. 4: Orderbook Development and Orderbook Structure
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
Fig. 5: Supply / Demand Development (Total and Intra-Regional Trades)
The current age of the total fleet is 14 years. In 2011, the current fleet age was nine years. Smaller vessels (<3k TEU) are aging more notably: 891 vessels are currently 20 years or older (29%).
Supply / Demand Balance
As the forecasted strong TEU demand will meet a moderate fleet growth in the coming years, an excess demand situation is expected. Demand growth is assumed to be 7.8% in 2021 for the total market, outperforming the expected supply growth of 4.4%. In 2022, the total container fleet is expected to grow only with 2.6%, compared to a strong 5% TEU demand growth. An even stronger excess demand is expected for vessels serving intra-regional trades. Demand growth on intra-regional trades is forecasted with 7.9% in 2021 and vessels smaller 5.2k TEU (which carry 93.4% of the intra-regional TEU tonnage) are expected to grow with only 1.9% in 2021. In 2022, the growth of vessels smaller 5.2k TEU is even expected to be negative with -0.3%, intra-regional trade demand by contrast is forecasted with as strong growth of 6.6%. (See Fig. 5)
Charter Market
The current container vessel market boom is especially visible on the charter market, where tight capacity led to a sharp decrease in the idle statistics and time-charter rates increased to record high levels. With the market power moving to vessel owners, the min-max redelivery windows of time-charter contracts got minimized and charter periods increased significantly. As a consequence, forward vessel availability on the charter market diminished. While there are usually around 1,200 to 1,500 open positions for six months ahead, there are currently only around 500 vessels coming open in the next six months.
With the strong rebound of Transpacific TEU volumes and the following congestions and equipment shortages everywhere, competition amongst shippers for open slots increased sharply and pushed freight rates to record high
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
numbers. First on the Transpacific trades, but Asia-Europe and North South trades followed in tandem slightly afterwards. The SCFI Comprehensive increased from 1,050 in July 2020 to 4,196 at the beginning of August 2021.¹³
Freight rates also increased on Intra-Regional trades, where the media put not much attention on. Rates on Intra-Asia trades e.g. are with 1,484 USD/ 40ft in June 2020 76% higher in a year-on-year comparison. Box rates on Intra-Europe trades increased from 930 USD/ 40ft in May 2020 to meanwhile 2,030 USD/ 40ft.¹⁴
As freight rates, also time-charter rates increased to record high numbers. The surge in time-charter rates still continues and has not been experienced such strong and fast since 2002. The HARPEX Time-Charter Rate Index increased from 412 points in June 2020 to 3,549 points in April 2021 (+761%).¹⁵
Time charter rates (6-12 months) at 30 April 2021:¹⁶ (See Fig. 5)
1,000 TEU grd: USD 33,500 (+509% YoY)
1,700 TEU grd: USD 42,500 (+580% YoY)
2,750 TEU: USD 56,000 (+583% YoY)
3,500 TEU: USD 70,000 (+540% YoY)
Idle numbers decreased significantly since June 2020. While at the peak of the COVID-19 induced crisis, 550 vessels have been counted as commercially idle, the number decreased to a very low level of only 60 vessels at the beginning of January 2021. Since then, the idle statistics moved more or less sideways. As of 19 July, 51 vessels are counted as commercially idle (162k TEU and 0.7% of the total fleet). In the feeder segment (1k-3k TEU), there are currently 23 vessels counted as idle.¹⁷ (See Fig. 5)
Fig 6: Time-Charter Rates and Idle Statistics
With the surge in the charter market, also the charter duration and the min/ max redelivery spread became more favourable for vessel owners. The average charter period for smaller vessels (1,000 to 5,100 TEU) increased from 4.2 months in June 2020 to 30 months in July 2021. The redelivery spread decreased from 3.4 months in June 2020 to 0.9 months in July 2021.¹⁸
Asset Prices
With the improvement of the container vessel market momentum, also the second hand market and the new build market improved substantially.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
While 201 container vessels changed owner in 2020 (820k TEU), 2021 year-to-date already saw 288 container vessel sales (991k TEU). Second hand prices increased from USD 4 million for a 15 year old 1.7k TEU vessel in June 2020 to USD 19.5 million in August 2021 (+388%). For a 15 year old 2.8k TEU vessel, the price increased from USD 5.5 million in June 2020 to USD 36 million in August 2021 (+555%) and from USD 6 million to USD 42 million for a 15 year old 3.4k TEU vessel (+600%).[19]
With a lag of a few months, new-building prices also started to increase. The increase in new-build prices is, however, not as pronounced as the increase in second hand prices. For a 3.8k TEU vessel, the new-building price increased from USD 40 million in September 2020 to USD 47 in August 2021 (+18%). For a 2.8k TEU vessel, the new building price increased from USD 30 million to USD 36.5 million (+22%). And for a 1.7k TEU vessel from USD 23 million to USD 26m (+13%).[20]
Fig. 7: Second Hand and New Build Prise Development
Market Outlook
COVID-19 and the imposed lockdowns led to a severe global recession in 2020, affecting all major economies and a wide range of industries. While the markets started to recover stepwise in H2 2020, the container vessel industry and the container vessel charter market in particular saw an unexpected strong and fast rebound and experience an unseen boom since then, with rates and prices reaching record high numbers week-by-week.
Main drivers of the current market boom are neither the pandemic, nor global demand. The boom was initiated by strong Transpacific trade volumes that unrevealed dysfunctions in the global supply web. The strong rebound of Transpacific volumes led to port and hinterland congestions and subsequent equipment shortage on main trading hubs. Proper market fundamentals add to the momentum and created a very tight capacity supply situation.
The question that every market participant asks these days is when the market will normalize and what will then be the new "normal". It is not possible to answer these questions now. Current news, however, show that terminal congestions have even been getting worse, reaching new heights in the US and that new COVID infections in Ningbo and Shanghai lead to unprecedented congestions also China. Analysts and liners meanwhile argue that the capacity tightness may continue for months, well into 2022, possibly also into 2023.
The current market boom attracted new build orders that will be delivered in 2023 and onwards. The orderbook is, however, significantly biased towards larger tonnage. Industry fundamentals are encouraging for smaller tonnage (<5.2k TEU). There, the orderbook of less than $10\%$ is manageable, the fleet is relative old what will lead to an extended scrapping activity after markets normalize, fleet growth in the coming years is expected to be even negative and Intra-Regional trades, where most of these smaller vessels trade, are expected to see relative strong trade growth numbers.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
In 2023, when the freshly ordered larger vessels hit the water, cascading flows and scrapping activities need to be monitored closely, even if intra-Regional trades are characterized by physical and logistic boundaries that prevent larger vessels to serve these markets. There are still plenty of uncertainties to sort out what will happen in 2023, but one might expect that larger tonnage may move into North-South trades and replace 7,000 to 12,000 TEU vessels. A portion of these vessels may be good scrapping candidates because of their age. Environmental regulation will add to this momentum.
Overall, we expect the encouraging market situation for vessels smaller 5.2k TEU to continue also after markets normalize and after delivery of the larger tonnage in 2023 and 2024.
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 2021
RESPONSIBILITY STATEMENT
We confirm that, to the best of our knowledge, the consolidated financial statements presented in this report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and give a true and fair view of the Group's assets, liabilities, financial position and profit or loss as a whole. We also confirm to the best of our knowledge that the Management Board' discussion and analysis for the first half of 2021 gives a true and fair overview of the main development and performance of the business and the position of the Group.
18 August 2021
The Management Board of MPC Container Ships Invest B.V.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
| in USD thousands | Notes | Q2 2021 (unaudited) | Q1 2021 (unaudited) | Q2 2020 (unaudited) | H1 2021 (unaudited) | H1 2020 (unaudited) |
|---|---|---|---|---|---|---|
| Operating revenues | 3 | 41,052 | 31,787 | 24,980 | 72,839 | 53,789 |
| Commissions | -1,525 | -1,331 | -839 | -2,856 | -1,891 | |
| Vessel voyage expenditures | -1,277 | -568 | -3,690 | -1,845 | -8,616 | |
| Vessel operation expenditures | -17,619 | -17,620 | -17,178 | -35,239 | -33,736 | |
| Ship management fees | -1,451 | -1,475 | -1,538 | -2,926 | -3,130 | |
| Gross profit | 19,180 | 10,793 | 1,734 | 29,973 | 6,416 | |
| Administrative expenses | -773 | -808 | -616 | -1,582 | -1,172 | |
| Depreciation | 4 | -8,246 | -8,060 | -7,921 | -16,305 | -15,249 |
| Impairment | 0 | 0 | -1,500 | 0 | -1,500 | |
| Other expenses | -600 | -192 | -204 | -792 | -205 | |
| Other income | 31 | 1,369 | 335 | 1,400 | 440 | |
| Operating result (EBIT) | 9,592 | 3,102 | -8,173 | 12,693 | -11,269 | |
| Finance income | 5 | 2 | 13 | 8 | -6 | |
| Finance costs | 6 | -4,190 | -4,068 | -3,640 | -8,258 | -7,436 |
| Profit/Loss before income tax (EBT) | 5,407 | -963 | -11,800 | 4,443 | -18,711 | |
| Income tax expenses | -64 | -29 | 4 | -93 | 3 | |
| Profit/Loss for the period | 5,342 | -993 | -11,796 | 4,350 | -18,708 | |
| Attributable to: | ||||||
| Equity holders of the Company | 5,333 | -996 | -11,788 | 4,337 | -18,697 | |
| Minority interest | 10 | 3 | -8 | 13 | -11 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| in USD thousands | Notes | Q2 2021 (unaudited) | Q1 2021 (unaudited) | Q2 2020 (unaudited) | H1 2021 (unaudited) | H1 2020 (unaudited) |
|---|---|---|---|---|---|---|
| Profit/Loss for the period | 5,342 | -993 | -11,796 | 4,350 | -18,708 | |
| Items that may be subsequently transferred to profit or loss | 233 | 280 | -26 | 513 | -4,634 | |
| Cash flow hedge reserve | 191 | 278 | -22 | 469 | -4,630 | |
| Foreign currency | 42 | 2 | -4 | 44 | -4 | |
| Items that will not be subsequently transferred to profit or loss | 0 | 0 | 0 | 0 | 0 | |
| Total comprehensive profit/loss | 5,576 | -712 | -11,821 | 4,863 | -23,342 | |
| Attributable to: | ||||||
| Equity holders of the Company | 5,566 | -715 | -11,813 | 4,850 | -23,332 | |
| Non-controlling interest | 10 | 3 | -8 | 13 | -11 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| in USD thousands | Notes | 30 June 2021 (unaudited) | 31 Dec. 2020 (audited) |
|---|---|---|---|
| Assets | 394,825 | 390,552 | |
| Non-current Assets | 364,767 | 354,159 | |
| Vessels | 4 | 364,767 | 354,159 |
| Vessels held for sale | 0 | 3,900 | |
| Current assets | 30,058 | 32,493 | |
| Inventories | 2,347 | 2,047 | |
| Trade and other receivables | 10,911 | 9,068 | |
| Restricted cash | 217 | 9,206 | |
| Cash and cash equivalents | 16,583 | 12,172 | |
| Equity and liabilities | 394,825 | 390,552 | |
| Equity | 175,494 | 177,652 | |
| Share capital | 5 | 0 | 0 |
| Share premium | 261,295 | 261,295 | |
| Other paid-in equity | -7,019 | 0 | |
| Retained losses | -73,003 | -77,340 | |
| Other comprehensive income | -6,448 | -6,961 | |
| Minority interest in equity | 670 | 657 | |
| Non-current Liabilities | 202,740 | 200,318 | |
| Interest bearing long-term debt | 6 | 202,740 | 200,318 |
| Other liabilities | 0 | 0 | |
| Current Liabilities | 16,591 | 12,582 | |
| Trade and other payables | 7,657 | 8,604 | |
| Payables to affiliated companies | 801 | 1,941 | |
| Other liabilities | 8,133 | 2,037 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| in USD thousands | Share capital (unaudited) | Share premium (unaudited) | Other paid-in equity (unaudited) | Retained losses (unaudited) | Foreign currency effects (unaudited) | Hedging reserves (unaudited) | Minority interest (unaudited) | Total equity (unaudited) |
|---|---|---|---|---|---|---|---|---|
| Equity as at 1 Jan. 2021 | 0 | 261,295 | 0 | -77,340 | -10 | -6,951 | 657 | 177,652 |
| Result of the period | 0 | 0 | 0 | 4,337 | 0 | 0 | 13 | 4,350 |
| Accounting effect from intragroup vessel acquisition | 0 | 0 | -7,019 | 0 | 0 | 0 | 0 | -7,019 |
| Cash flow hedge reserve | 0 | 0 | 0 | 0 | 0 | 469 | 0 | 469 |
| Foreign currency translation | 0 | 0 | 0 | 0 | 44 | 0 | 0 | 44 |
| Equity as at 30 June 2021 | 0 | 261,295 | -7,019 | -73,003 | 34 | -6,482 | 670 | 175,494 |
| in USD thousands | Share capital (audited) | Share premium (audited) | Other paid-in equity (audited) | Retained losses (audited) | Foreign currency effects (audited) | Hedging reserves (audited) | Minority interest (audited) | Total equity (audited) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Equity as at 1 Jan. 2020 | 0 | 232,273 | 0 | -31,987 | -4 | -2,745 | 683 | 198,220 |
| Contribution in kind | 0 | 29,022 | 0 | 0 | 0 | 0 | 0 | 29,022 |
| Capital increase from non-controlling interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Result of the period | 0 | 0 | 0 | -45,353 | 0 | 0 | -26 | -45,379 |
| Cash flow hedge reserve | 0 | 0 | 0 | 0 | 0 | -4,206 | 0 | -4,206 |
| Foreign currency translation | 0 | 0 | 0 | 0 | -6 | 0 | 0 | -5 |
| Equity as at 31 December 2020 | 0 | 261,295 | 0 | -77,340 | -10 | -6,951 | 657 | 177,652 |
CONSOLIDATED STATEMENT OF CASH FLOW
| in USD thousands | Notes | Q2 2021 (unaudited) | Q1 2020 (unaudited) | Q2 2020 (unaudited) | H1 2021 (unaudited) | H1 2020 (audited) |
|---|---|---|---|---|---|---|
| Profit/Loss before taxes | 5,407 | -963 | -11,800 | 4,443 | -18,711 | |
| Income tax paid | 0 | 0 | 0 | 0 | 0 | |
| Finance expenses, net | 4,185 | 4,065 | 3,627 | 8,250 | 7,442 | |
| Interest paid | -2,575 | -2,544 | -3,006 | -5,119 | -6,400 | |
| Net other Interest paid | -300 | -267 | -229 | -567 | -219 | |
| Net change in current assets | 4,377 | -1,243 | 2,308 | 3,134 | 2,840 | |
| Net change in current liabilities | -901 | -443 | 583 | -1,344 | 4,196 | |
| Cash upfront payment for hedge instruments | 191 | 278 | -60 | 469 | 320 | |
| Repayment of MTM value | 0 | 0 | 0 | 0 | -5,243 | |
| Depreciation and impairment | 8,246 | 8,060 | 9,421 | 16,306 | 16,748 | |
| Cash flow from operating activities | 18,630 | 6,943 | 844 | 25,572 | 973 | |
| Proceeds from disposals of vessels | 3,900 | 4,606 | 0 | 8,506 | 0 | |
| Purchase of vessels | -29,375 | 0 | 0 | -29,375 | 0 | |
| Dry-docking and other investments | -5,923 | -3,241 | -4,611 | -9,164 | -13,596 | |
| Prepayment on vessels | 0 | 0 | 0 | 0 | 0 | |
| Cash flow from investing activities | -31,398 | 1,365 | -4,611 | -30,033 | -13,596 | |
| Proceeds from shareholder's contribution | 0 | 0 | 3,000 | 0 | 9,022 | |
| Bond issuing costs | 0 | -118 | 0 | -118 | -222 | |
| Cash flow from financing activities | 0 | -118 | 3,000 | -118 | 8,800 | |
| Net change in cash and cash equivalents | -12,768 | 8,190 | -767 | -4,579 | -3,823 | |
| Net foreign exchange differences | 0 | 0 | 0 | 0 | 0 | |
| Cash and cash equivalents at beginning of period | 29,568 | 21,378 | 12,754 | 21,378 | 15,810 | |
| Cash and cash equivalents at the end of period21 | 16,800 | 29,568 | 11,987 | 16,800 | 11,987 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021 15
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 Oever 5, 3161 GR Rhoon 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 Munkedamsveien 45 A, 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 2021 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 2020. 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 2020. There are no new standards effective as at 1 January 2021 with a significant impact on the Group.
Note 3 - Revenue
| in USD thousands | Q2 2021 (unaudited) | Q2 2020 (unaudited) |
|---|---|---|
| Time charter revenue | 26,767 | 16,199 |
| Pool charter revenue | 13,143 | 6,824 |
| Other revenue | 1,142 | 1,957 |
| Total operating revenue | 41,052 | 24,980 |
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.
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021 16
Note 4 - Vessels and vessels held for sale
| In USD thousands | 30 June 2021 (unaudited) | 31 December 2020 (unaudited) |
|---|---|---|
| Acquisition cost at 1 January | 426,862 | 426,748 |
| Acquisition of vessels | 22,356 | 0 |
| Disposals of vessels | -8,783 | -16,593 |
| Capitalized dry-docking, scrubbers and other investments | 9,164 | 24,860 |
| Vessel held for sale | 0 | -8,153 |
| Acquisition cost at end of period | 449,598 | 426,862 |
| Accumulated depreciation 1 January | -72,703 | -45,291 |
| Disposal of vessels | 4,177 | 7,671 |
| Depreciation for the year | -16,305 | -31,341 |
| Impairment for the year | 0 | -7,996 |
| Vessel held for sale | 0 | 4,253 |
| Accumulated depreciation at end of period | -84,831 | -72,703 |
| Closing balance at end of period | 364,767 | 354,159 |
| Depreciation method | Straight-line | Straight-line |
| Useful life (vessels) | 25 years | 25 years |
| Useful life (dry docks) | 5 years | 5 years |
| Useful life (scrubbers) | Remaining useful life vessel | Remaining useful life vessel |
In June 2021, the Group acquired the vessels AS Selina and AS Rafaela from subsidiaries of the Parent. The vessels has been accounted for at continuing values.
The vessel AS Laguna, which was classified as held for sale per 31 March 2021, was delivered to its new owners on 26 April 2021. The vessel AS Frida was delivered to its new owners on 12 March 2021.
At each reporting date, the Group evaluate 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 30 June 2021, no such indicators are identified hence no impairment assessment is performed.
Note 5 - Share capital
| Number of shares | Share capital (USD) | Share premium (USD) | |
|---|---|---|---|
| 31 December 2020 | 1 | 1 | 261,295 |
| Equity adjustments in H1 2021 | 0 | 0 | 0 |
| 30 June 2021 | 1 | 1 | 261,295 |
As at 30 June 2021, 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 2021 of USD 202.7 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.
| In USD thousands | 30 June 2021 (unaudited) | 31 December 2020 (audited) |
|---|---|---|
| Nominal value of issued bonds | 204,056 | 204,056 |
| Issuance costs | -1,316 | -3,738 |
| Interest-bearing debt | 202,740 | 200,318 |
On 3 July 2020, the Company received support from the majority of its bondholders for certain amendments under the bond agreement, which included among others a waiver of the loan-to-value covenant and reduced minimum liquidity restrictions until but excluding 31 December 2021, including a six month extension of the maturity. The book-equity ratio of the Parent Group is reinstated at 20% for the period commencing on 31 March 2021 to December 2021 and reinstated at 40% for any period thereafter.
Accordingly, the following main financial covenants are applicable as at 30 June 2021 in accordance with the terms for the bond loan:
- The Group, shall maintain a minimum liquidity of USD 7.5 million
- The Parent Group shall maintain a minimum equity ratio of 20%
As at 30 June 2021, the Company is in accordance with the covenants under the bond agreement. Outstanding bonds as at 30 June 2021 are USD 204 million.
The bond is guaranteed by the Parent and all subsidiaries of the Company.
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 interest | Initial consolidation |
|---|---|---|---|---|
| "AS SELINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2021 |
| "AS RAFAELA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2021 |
| "AS LAETITIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS LAGUNA" ShipCo C.V. | Empty shelf company | 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 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021
18
| "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 CLARITA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FRIDA" ShipCo C.V. | Empty shelf company | Netherlands | 99.9% | 2017 |
| "AS CALIFORNIA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FIONA" ShipCo C.V. | Empty shelf company | Netherlands | 99.9% | 2017 |
| "AS CONSTANTINA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "AS FORTUNA" ShipCo C.V. | Empty shelf company | Netherlands | 99.9% | 2017 |
| "AS LAURETTA" ShipCo C.V. | Empty shelf company | Netherlands | 99.9% | 2017 |
| "AS SAVANNA" ShipCo C.V. | Ship-owning entity | Netherlands | 99.9% | 2017 |
| "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 FELICIA" 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 |
MPC CONTAINER SHIPS INVEST B.V. FINANCIAL REPORT H1 2021 19
| "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 |
| "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 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 |
| "AS SELINA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2021 |
| "AS RAFAELA" OpCo B.V. | General partner entity | Netherlands | 100.0% | 2021 |
Ownership rights equal voting rights in all subsidiaries.
Note 8 - Subsequent events
There are no subsequent events identified which are relevant for the Group.