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Mercator Lines (Singapore) Ltd.
Stock Code: EE6
Q3 FY 2014 ResultsPeriod ended December 31st 2013
Mercator Lines (Singapore) Ltd.
PRESENTATION OUTLINE
Financial Highlights
Market Review & Outlook
Company Overview
Mercator Lines (Singapore) Ltd.
Financial Highlights
13.9
21.4 23.2
0
10
20
30
Revenue (USD in millions)
Q1 FY 2014
Q2 FY 2014
Q3 FY 2014
3.44.8
7.4
0
2
4
6
8
EBITDA (USD in millions)
Q1 FY 2014
Q2 FY 2014
Q3 FY 2014
FINANCIAL HIGHLIGHTS - CONTINUING THE TREND OF IMPROVEMENT
REVENUE EBITDA
DEBT TO EQUITY RATIO
The Company has shown consistent improvement on a quarter on quarter basis in its financials for the nine months ending 31 December 2013
APPROX. DAILY AVERAGE EARNINGS
9,407 10,548
11,728
-
5,000
10,000
15,000
Approx Daily Average Earnings (USD)
Q1 FY 2014
Q2 FY 2014
Q3 FY 2014
0.61 0.61
0.59
0.58
0.59
0.60
0.61
0.62
Debt to Equity Ratio (Times)
Q1 FY 2014
Q2 FY 2014
Q3 FY 2014
5
FINANCIAL HIGHLIGHTS FOR 9 MONTHS ENDING 31 DECEMBER 2013
REVENUE
Revenue at USD 58.5 mn. as compared to USD 84.2 mn. for the corresponding
period previous year
EBITDA
EBITDA at USD 15.6 mn. as compared to USD 21.0 mn. for the corresponding
period previous year
INCOME
Net Loss at USD 15.4 mn. as compared to a Net Loss of USD 72.7 mn. for the corresponding period previous year
OPERATING DAYS
Operating days at 3761 days as compared to 4401 days for the period
previous year
Note : FY /Financial Year refers to the period from April 1st of current year to March 31st of following year
• Decrease in Revenue and Income mainly due to weaker spot markets, disposal of a vessel and new contracts at rates lower than previous rates.
• Decrease in operating days due to lower number of Chartered-in vessel and owned vessel days.• Vessel related costs for the period decreased by 33% to USD 40.1 million as compared to USD 59.5 million for the
corresponding period previous year• One of the vessels which was on long term contract has been redelivered by the Charterers. Company has deployed the
Vessel immediately on spot basis and has initiated legal actions against the Charterer.
6
Balance Sheet Highlights
(In USD millions) 31 December 2013 31 December 2012
Cash & Bank Balances 8.7 5.0
Trade Receivables 31.5 27.9
Vessel, Property & Equipment
483.7 518.9
Debt 182.9 236.6
Trade Payables 27.7 29.5
Shareholders Equity 309.4 318.8
Debt Equity Ratio 0.59 0.74
Market Price per share SGD 0.104* 0.125
EPS (for 9 months ended) SGD (0.014) SGD (0.066)
* As on January 22, 2014
7
Particulars FY 2011 FY 2012 FY 2013 9 months ended FY 2014
Revenue (USD mn.) 155.4 147.7 109.1 58.5
EBITDA (USD mn.) 75.8 55.1 26.9* 15.6
Net Profit (USD mn.) 31.1 7.8 (76.8) (15.4)
Approx. TCE Earnings per day (in USD)
26,049 20,600 13,800 11,728
Average Baltic Panamax TC rate (USD per day)
21,276 12,290 7,449 10,267
Operating days 5,543 6,259 5,724 3,761
Revenue and earnings have been impacted due to weak markets
However, the Company has continued to perform much better than the industry average rate
Historical Financial Performance
*EBITDA for FY 2013 does not include impact of one time charges to the P&L of USD 55.9 mn
8
9 months ending 31 December 2013
9 months ending 31 December 2012
Owned vessels
Number of vessels 13 14
Operating days 3414 3582
Fleet utilization % 98.0% 96.4%
Chartered-in vessels*
Number of vessels 3 4
Operating days 346 819
Fleet utilization % 100% 95.4%
Total fleet
Number of vessels 16 18
Operating days 3761 4401
Fleet utilization % 98.2% 96.2%
TCE Revenue (US$’000s) 44,104 62,213
Approx. TCE Rate (US$ per day) 11,728 14,136
“TCE Revenue” is defined as revenue less voyage expenses before taking into account revenues attributable to vessels chartered- in on a voyage charter.
* Company charters in vessels on short term basis to maximize earnings out of its contract.
Fleet Utilisation
HIGH CAPACITY UTILIZATION
Consistently outperformed the market in terms of Time Charter Equivalent (TCE) earnings per day
0
5000
10000
15000
20000
25000
30000
FY 2010 FY 2011 FY 2012 FY 2013 9 months endedFY 2014
MLS TCE per day rate
Average Baltic Panamax TCrate
Daily TCE earnings vs. Market9
USD per day
10
3 Months inFY 2014
FY 2015 FY 2016 FY 2017
1.0
20.724.5
21.8
US$113.5
Our debt repayment commitments are structured to ensure cash flow flexibility
Note: 1. Schedule as on 31 December 2013.2. Amounts in US$ Millions3. Repayment schedule is towards principal payments for long term loans (excludes for working capital facility)4. Repayments include scheduled balloon loan repayments of US$ 1.9 mn in FY 2016 and US$ 8.5 mn in FY 2015 which could be refinanced
Favorable long term debt repayments
FY 2018 onwards
Mercator Lines (Singapore) Ltd.
Market Review & Outlook
12
0.0010.0020.0030.0040.0050.0060.0070.0080.0090.00
100.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Panamax 76K Bulkcarrier 5 Year OldSecondhand Prices
Panamax 75K Bulkcarrier 10 Year OldSecondhand Prices
Panamax 73K DWT 15 Year OldSecondhand Prices
Panamax Vessel Values
2,277
3,344
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20
04
-01-
02
20
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-03-
26
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-06
-28
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-09
-22
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-12
-15
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05-
03-
16
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05-
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-15
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05-
09
-02
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05-
11-1
7
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-02
-09
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-04
-28
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-07-
17
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-10
-02
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06
-12
-15
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07-
03-
12
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07-
05-
31
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07-
08
-15
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07-
11-0
1
20
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-01-
24
20
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-04
-11
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-06
-30
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-09
-15
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-11-
28
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-02
-20
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-05-
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-07-
28
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-10
-13
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10-0
1-0
5
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10-0
3-2
2
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10-0
6-1
0
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10-0
8-2
5
20
10-1
1-10
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11-0
2-0
2
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11-0
4-1
9
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7-11
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11-0
9-2
6
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11-1
2-0
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3-0
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12-0
5-2
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8-1
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0-2
6
20
13-0
1-18
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13-0
4-0
8
20
13-0
6-2
5
20
13-0
9-1
0
20
13-1
1-2
5
Current BDI vs 10 year Average
BDI
Average BDI
Market Fundamentals: Improving trend
BDI inching towards its 10 year historic average and improvement in vessel values are strong indicators of recovery in the dry bulk shipping industry
13
Supply update
Source: Bancosta
Supply expected to remain low in the coming years
Source: Bancosta
Demand Story: Dry bulk seaborne trade1414
Demand Update:
Trade in 2008 was 30% higher than in 2003. Trade in 2016 is forecast to be 23% higher than in 2011.
Source: Braemar Seascope
Mercator Lines (Singapore) Ltd.
Company Overview
History of repeat contracts from major customers
Blue Chip customer base including Tata Power, Arcelor Mittal Group, Cargill,
Bunge, Noble, Vitol, Louis Dreyfus, Rio Tinto, Marubeni etc.
The Board and Key Management Personnel have collective industry
experience of close to 200 years.
Having an experienced dedicated technical management company ensures
delivery of high quality service to our customers together with minimising
operating expenses and maximising operational efficiencies
Management
Customer base
Fleet Young modern fleet with average age below the industry average.
Largest fleet owner of geared Panamaxes amongst Indian-Owned
Shipping Companies.
Providing customized logistics solutions from the load port to the point of
usage to its customers in India.
The Company has won high revenue generating contracts due to this
unique advantage
Logistics solutions
Company Highlights16
Specialisation in transportation of all types of major dry bulk commodities across the world
Ship voyage
Barges
Trucks/ Rail
Trucks/ Rail
Port loading with geared vessels
Port unloading with geared vessels
Jetty Stock Yard User Site
Mercator Singapore Mercator India
Coal
Together with Mercator India, we provide logistics solutions from load port to point of usage to customers.
Deploy substantial portion of fleet capacity on long term contracts to hedge against freight volatility
Focus on high growth markets in dry bulk trade from China and India
To provide customized end-to-end logistics solutions
Leverage strong and continued relationships with existing customers
Our Strategy17
18
Emerging India Awards 2010 Singapore Corporate Awards
Winning awards for consecutive four years in a row in the Singapore Corporate Awards emphasizes our drive towards better corporate governance and Investor Relations
Singapore Corporate Awards
Mercator Lines (Singapore) Limited
Global Entrepreneur of the Year 2010
Best Annual Report in 2009 (Silver) and 2010 (Bronze) amongst Singapore listed
companies
Ranked amongst the top public listed
companies in Governance and
Transparency Index (GTI)
Ranked 16th in overall performance amongst
listed shipping companies in the world –Marine Money June/July
2012
Best Investor Relations 2011 (Silver)
DEMONSTRATING STRONG CORPORATE GOVERNANCE
TRACKRECORD
Singapore Corporate Awards
Best Investor Relations 2012 (Gold)
Awards and recognition
20
S. No Owned Vessels IMO No. Type DWT Year Built
Shipyard
1 Sri Prem Varsha 9311165 Geared Kamsarmax 82,379 2006 Tsuneishi Corp, Japan
2 Sri Prem Vidya 9326275 Geared Kamsarmax 82,273 2006 Tsuneishi Corp, Japan
3 Sri Prem Aparna 9239991 Geared Panamax 73,461 2001 Tsuneishi Corp, Japan
4 Kalpana Prem 9212254 Geared Panamax 73,652 2000 Imabari Shipyard, Japan
5 Kesari Prem 9130963 Geared Panamax 69,186 1997 Tsuneishi Corp, Japan
6 Kanak Prem 9130975 Geared Panamax 69,286 1997 Tsuneishi Corp, Japan
S. No Chartered vessels IMO No. Type DWT Year Built Built
1 Maria Laura Prem 9450894 Gearless Post Panamax 91,945 2010 South Korea
Chartered-in Vessel
Owned Geared Panamax Vessels
Fleet profile
S. No Owned Vessels IMO No. Type DWT Year Built
Shipyard
1 Chitra Prem 9426049 Gearless Post Panamax 93,270 2010 New Yangzi, China
2 Sri Prem Veena 9336373 Gearless Kamsarmax 82,459 2007 Tsuneishi Corp, Japan
3 Garima Prem 9349320 Gearless Panamax 74,456 2007 Hudong, China
4 Gauri Prem 9318369 Gearless Panamax 74,405 2007 Hudong, China
5 Garv Prem 9386251 Gearless Panamax 74,444 2006 Hudong, China
6 Gaurav Prem 9305142 Gearless Panamax 73,901 2005 Jiangnan, China
7 Aarti prem 9087738 Gearless Panamax 69,087 1994 Imabari Shipyard, Japan
Owned Gearless Panamax Vessels
PANAMAXES
(GEARLESS)
PANAMAXES (GEARED)
KAMSARMAXES KAMSARMAXESPOST PANAMAXES
• Gaurav Prem
• Garv Prem
• Aarti Prem
• Chitra Prem
• Maria Laura Prem
• Sri Prem Veena
• Sri Prem Varsha(Geared)
• Sri Prem Vidya(Geared)
CONTRACT OF AFFREIGHTMENT
- Geared Panamaxes
- Geared Kamsarmaxes
TIME CHARTER
- Geared and Gearless Panamaxes
- Geared Kamsarmax
- Post Panamaxes
- Gearless Kamsarmax
BAREBOAT CHARTER
- Gearless Panamax
DIVERSIFICATION BY TYPE
DIVERSIFICATION BY CONTRACT DIVERSIFICATION BY CARGO
• Sri Prem Aparna
• Kesari Prem
• Kanak Prem
• Kalpana Prem
Fleet diversification21
16%
60%
13%
12%Grain
Coal
Iron Ore
Others
22
FREIGHT VOLATILITY
- Long term contracts
- Forward Freight Agreements (FFAs)
BUNKER FUEL COSTS
- Appropriate Bunker adjustment factor in all long term voyage charter contracts
-Bunker cost borne by Charterer in Time Charter Contracts
CURRENCY RISKS
- Income, expenses and reporting in USD
ACCIDENT RISKS
- Insured all vessels adequately
- Successful implementation of safety management practices
Multifaceted risk management strategy
attuned to market volatility
Risk management
Explore growth opportunities in low end of the market cycle
Strong balance sheet and disciplined investment
approach
Strong dedicated technical management. Low operational costs
More than 25 years of industry experience.
Expertise in end to end logistics solution
Strong relationship with reputable end use customers
In house group cargo availability. Well positioned to
leverage the China, India growth story
Good corporate governance
Better positioned to overcome the current industry challenges and explore growth opportunities
Mercator - Current Positioning23
24
Glossary
•Under a COA, the ship owner provides capacity to transport a certain amount of cargo within a specified period from one place to a destination designated by the customer. Typically all of the ship`s operating, voyage**and capital expenses are borne by the ship owner. Freight rate normally is agreed on a per cargo ton basis.
Contract of Affreightment(COA)
•A charter under which a vessel is chartered to a customer for a fixed period of time at a rate that is typically fixed. The charterer pays all voyage costs. The owner of the vessel receives monthly or semi monthly charter payments on a per day basis and is typically responsible for providing the crew and paying all vessel operating expenses(including maintenance, repair and docking) and capital costs of the vessel.
Time Charter (TC)
•A standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company`s performance despite changes in the mix of chartered types.
Time Charter Equivalent (TCE)
**Voyage Expenses - Expenses incurred due to a Vessel`s travelling from a loading port to a discharging port, such as fuel (bunker) costs, port expenses, agents` fees, canal dues, extra war risk insurance and commissions.
Mercator Lines (Singapore) Ltd.
THANK YOU
Investor Relations Contact:Tel: +65 6220 9320
Email : [email protected]
