Globus Maritime Limited — FY2017 Form 20-F
Reporting period: Fiscal year ended December 31, 2017; filed March 9, 2018. This is an annual report, not a standalone fourth-quarter report. Financial statements are audited and prepared under IFRS as issued by the IASB. Amounts below are U.S. dollars; financial statement figures are generally in millions unless noted.
Business context and key financial metrics
Globus owns and operates dry-bulk vessels transporting commodities worldwide. At year-end it owned five vessels—four Supramaxes and one Panamax—with 300,571 dwt capacity. Average fleet size was 5.0 vessels in 2017.
| Metric | FY2017 | FY2016 |
|---|---|---|
| Total revenue | $14.423 million | $9.018 million |
| Operating loss | $4.015 million | $7.228 million |
| Net loss | $6.475 million | $9.825 million |
| Adjusted EBITDA (non-IFRS) | $1.701 million | $(3.466) million |
| Operating cash flow | $0.631 million | $(3.600) million |
| Cash and cash equivalents at year-end | $2.756 million | $0.163 million |
| Total equity | $43.968 million | $20.760 million |
Voyage revenue was $14.392 million; management and consulting fee income was $31,000. Reported operating and net margins, calculated from the filing figures, were approximately negative 27.8% and negative 44.9%, respectively. Adjusted EBITDA is a company-defined, unaudited non-IFRS measure and is not a substitute for operating cash flow or net income.
- Daily TCE rate increased to $6,993 from $3,962; fleet utilization was 97.6%, versus 97.1%.
- Gross borrowings were approximately $41.7 million at year-end; IFRS carrying debt was $41.538 million net of unamortized discounts. All was classified current because the company lacked an unconditional right to defer settlement for at least 12 months.
- Current assets were $4.230 million and current liabilities $47.553 million, producing a $43.3 million working-capital deficit. Restricted cash was $0.210 million.
- Financing cash flow was $2.225 million; investing cash flow was $(0.263) million. No common dividends were declared in 2017.
Material changes versus FY2016
- Revenue increased about 60%, principally from higher TCE rates, despite fewer ownership and operating days. Operating cash flow moved from use of $3.6 million to generation of $0.6 million.
- Net loss narrowed by $3.350 million. The 2016 operating result included a $2.257 million gain on the sale of Kelty Marine, the owner of m/v Energy Globe; 2017 had no comparable disposal gain.
- Borrowings declined from $65.8 million to $41.7 million, reflecting debt repayment and the 2017 financing transactions. Interest and finance costs fell to $2.221 million from $2.676 million.
- Equity increased following share issuances and debt-related transactions, while weighted-average common shares rose to 25.75 million from 2.60 million. Accordingly, the reported loss per share improved to $0.25 from $3.77, but the sharp change in share count makes per-share comparisons less informative.
- Daily vessel operating expense rose to $5,005 from $4,533, and the fleet’s weighted-average age increased to 9.8 years from 8.8 years.
Outlook, risks, contingencies and unusual items
- Going concern: Management and the independent auditor identified substantial doubt about the company’s ability to continue as a going concern. Cash and projected operating cash flow were not expected to cover liquidity requirements and scheduled debt payments for the following 12 months. Management was considering lender waivers or debt restructuring, equity financing and asset sales; none was assured.
- Covenants and debt maturity: Year-end compliance depended on amendments and waivers. The HSH waiver was stated to run through March 3, 2018 and the DVB waiver through April 1, 2018. The report warned that failure to extend waivers or meet covenant terms could trigger default, cross-default, acceleration and foreclosure on substantially all assets. The filing does not establish the post-filing outcome.
- Market exposure: Dry-bulk rates and vessel values are volatile. The company cited a 2017 rate recovery but described the market as still volatile and depressed; it stated that prevailing spot rates could be insufficient for profitable operations. Near-term charters were short, leaving exposure to repricing and counterparty performance.
- Near-term employment: At the filing date, all five vessels were reported on time charters, generally expiring between March and April 2018. Disclosed gross daily rates ranged from $6,800 to $10,500, with one charter linked to the Baltic Dry Index.
- Equity dilution and control: 2017 private placements raised $7.5 million in cash and issued 7.5 million shares, alongside debt releases exchanged for shares. Warrants outstanding at year-end could cover up to 43.4 million shares at $1.60 per share, subject to their terms. The chairman beneficially controlled a majority of shares on the basis described in the filing.
- Related parties and expenses: The report discloses related-party financing, consulting arrangements, office rent, and unpaid balances, including $471,000 of rent owed to an entity owned by the chairman at year-end.
- Iran port calls: The company reported 59 vessel-days in Iranian ports during 2017 and approximately $476,700 of associated gross revenue. It stated that it did not believe the activity was sanctionable, while noting ongoing sanctions-related uncertainty.
- Asset values: No impairment was recorded in 2017, but management estimated that the aggregate market value of the five vessels was approximately $32.0 million below their carrying values. The no-impairment conclusion relied on discounted cash-flow assumptions, including 90% utilization and estimated future charter rates.
- Other risks: Risks include charterer concentration and default, interest-rate and currency movements, vessel age and maintenance, environmental regulation, insurance gaps, Nasdaq listing compliance and potential additional dilution. No material pending legal proceedings or off-balance-sheet arrangements were reported.
Most important facts for investors to verify
- Whether HSH and DVB covenant waivers were extended, debt restructured, or defaults or acceleration notices occurred after the stated waiver dates.
- Current cash, available committed financing, debt installments, and the company’s ability to meet liquidity requirements and continue as a going concern.
- Actual charter coverage, achieved rates, and subsequent fleet utilization compared with the short-term charter schedule disclosed at filing.
- Warrant exercises, share issuance and dilution, resale registrations, and the resulting voting control and public float.
- Vessel market values and the sensitivity of impairment conclusions to charter rates, utilization, operating costs and discount rates.
- Related-party balances and transactions, including unpaid rent and executive/director compensation, and the status of disclosed Iran-related activity under applicable sanctions.