Globus Maritime(GLBS) - 2023 Q2 - Quarterly Report

Introduction and Cautionary Statements This section outlines the scope of management's discussion and analysis, along with important disclosures regarding forward-looking statements and associated risks Management's Discussion and Analysis Scope This section provides a discussion and analysis of Globus Maritime Limited's financial condition and results of operations for the three-month periods ended March 31, 2023 and 2022, and should be read in conjunction with the unaudited interim condensed consolidated financial statements and the Annual Report on Form 20-F for the year ended December 31, 2022 - The discussion covers financial condition and results of operations for Q1 2023 and Q1 2022[2] - References to 'Company', 'we', or 'our' include Globus Maritime Limited and its subsidiaries[2] - Readers should review this analysis with the unaudited interim condensed consolidated financial statements and the 2022 Annual Report on Form 20-F[2] Forward-Looking Statements The report contains forward-looking statements regarding future operations, financial results, business expansion, and market conditions, which are subject to risks and uncertainties, cautioning readers not to place undue reliance on these statements as actual results may differ materially - Statements are forward-looking if they are predictive, depend on future events, or use words like 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'estimates,' 'projects,' 'forecasts,' 'may,' 'should,' and similar expressions[3] - Forward-looking statements cover future operating/financial results, economic/political conditions, vessel acquisitions, business strategy, capital/operating expenses, competition, shipping market trends, financial condition, liquidity, and vessel availability/construction[3] - Factors that might cause future results to differ include changes in governmental regulations, economic/competitive conditions (e.g., charter rates), off-hire periods, and other risks detailed in the Annual Report's 'Risk Factors' section[4][5] Company Overview This section provides an overview of Globus Maritime Limited's core business, operational structure, and management services Business Description and Structure Globus Maritime Limited is a Marshall Islands corporation primarily engaged in the ownership and operation of a fleet of dry bulk motor vessels for worldwide dry cargo transportation, with operations managed by its wholly-owned subsidiary, Globus Shipmanagement Corp., providing commercial, technical, cash management, and accounting services - Globus Maritime Limited's principal business is the ownership and operation of dry bulk motor vessels for global dry cargo transportation[6] - Operations are conducted through vessel-owning subsidiaries and managed by Globus Shipmanagement Corp., a wholly-owned Marshall Islands corporation[6][7] - The Manager provides commercial, technical, cash management, and accounting services for the fleet, with management fees eliminated on consolidation[7] Key Financial Measures and Definitions This section defines the company's revenue recognition policies and various expense categories, including operating, administrative, and finance costs Revenue Recognition The Company generates revenue primarily from time charters, recognized on a straight-line basis over the charter period, bifurcated into lease income (IFRS 16) and technical management services (IFRS 15), with the latter estimated using a residual approach based on crew, maintenance, and consumable costs - Revenues are generated from charter hire of vessels, primarily through time charters, and recognized on a straight-line basis[8] - Time charter revenues are treated as lease income (IFRS 16) and technical management services (IFRS 15)[8] - The technical management service component is estimated using a residual approach, based on crew expenses, maintenance, and consumable costs, which were approximately $4,620 in 2023 and $4,445 in 2022[9] Expense Categories This section defines various expense categories including time charter arrangements, voyage expenses (port, canal, bunker, commissions), vessel operating expenses (crew, insurance, maintenance), general and administrative expenses (officer services, public company costs), depreciation (straight-line over 25 years, adjusted scrap rate), interest and finance costs (LIBOR/SOFR-based debt), and gains/losses on derivative financial instruments (interest rate swaps measured at fair value) Time Charters - Under time charters, the charterer pays voyage expenses (port, canal, bunkers), while the owner pays vessel operating expenses (crewing, insurance, repairs, maintenance, spares, tonnage taxes)[11] - Time charter rates are usually fixed but fluctuate seasonally and annually, influenced by spot charter rates and vessel supply/demand[11] Voyage Expenses - Voyage expenses primarily include port, canal, and bunker expenses specific to a charter, paid by charterers under time charters or by the Company under voyage charters[12] - Brokerage commissions on revenue are also included in voyage expenses[12] Gain on sale of bunkers, net - Gain on sale of bunkers results from the difference in bunker value when a vessel is redelivered from a previous charter and when it is delivered to a new charterer[13] Vessel Operating Expenses - Vessel operating expenses include crew wages, insurance, repairs, maintenance, spares, consumable stores, tonnage taxes, and other miscellaneous owner-borne costs[14] - All vessel operating expenses are expensed as incurred[14] General and Administrative Expenses - General and administrative expenses consist of senior executive officer services and costs associated with being a public company, including public reporting, legal, accounting, compliance, board compensation, and investor relations[15] Depreciation - Vessel costs are depreciated on a straight-line basis over an estimated useful life of 25 years, after deducting residual value[16] - The estimated residual value (scrap rate) was adjusted from $380/ton to $440/ton during Q4 2022 due to increased worldwide scrap rates[16] Interest and Finance Costs - Interest expense and financing costs are incurred on debt used to finance the fleet[17] - Interest rates were based on three-month LIBOR until August 10, 2022, and on SOFR plus an applicable margin thereafter[17] Gain/(Loss) on derivative financial instruments - The Company uses interest rate swap agreements to manage interest rate risk, which are measured at fair value using discounted cash flow techniques[18] - Changes in the fair value of interest rate swaps are classified under 'Gain/(Loss) on derivative financial instruments' in the consolidated statement of comprehensive income[20] Selected Consolidated Financial Data This section presents key consolidated financial data, including statements of comprehensive income, balance sheets, cash flows, and operational metrics Consolidated Statements of Comprehensive Income Data For the three months ended March 31, 2023, total revenues decreased significantly to $8.58 million from $18.44 million in the prior year, primarily due to a sharp decline in voyage revenues, with operating income also falling substantially from $11.47 million to $3.30 million, leading to a total comprehensive income of $2.59 million, down from $12.08 million in Q1 2022 Consolidated Statements of Comprehensive Income Data (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 (unaudited) ($000's) | Three months ended March 31, 2022 ($000's) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Voyage revenues | $8,489 | $18,351 | | Management & consulting fee income | $90 | $90 | | Total Revenues | $8,579 | $18,441 | | Voyage expenses | $(1,614) | $(349) | | Gain on sale of bunkers, net | $- | $1,149 | | Vessel operating expenses | $(4,519) | $(4,355) | | Depreciation | $(1,275) | $(1,404) | | Depreciation of dry-docking costs | $(1,163) | $(951) | | Administrative expenses | $(944) | $(716) | | Administrative expenses payable to related parties | $(170) | $(359) | | Reversal of Impairment | $4,400 | $- | | Other income, net | $9 | $10 | | Operating income | $3,303 | $11,466 | | Interest income | $448 | $5 | | Interest expense and finance costs | $(920) | $(389) | | Gain / (Loss) on derivative financial instruments, net | $(211) | $967 | | Foreign exchange gains / (losses), net | $(34) | $34 | | Total finance gains/(costs), net | $(717) | $617 | | Total income and total comprehensive income for the period | $2,586 | $12,083 | | Basic & diluted income per share for the period | $0.13 | $0.59 | | EBITDA (unaudited) | $5,496 | $14,822 | | Adjusted EBITDA (unaudited) | $1,341 | $13,821 | EBITDA and Adjusted EBITDA Reconciliation EBITDA and Adjusted EBITDA are non-IFRS measures used to assess financial performance and debt servicing ability, with Q1 2023 EBITDA at $5.50 million (down from $14.82 million) and Adjusted EBITDA significantly decreased to $1.34 million (from $13.82 million), reflecting a substantial decline in profitability - EBITDA and Adjusted EBITDA are non-IFRS measures used to assess financial performance and a company's ability to service indebtedness[23][24] - These metrics have limitations, as they do not reflect cash expenditures, debt service requirements, working capital changes, and may not be comparable across companies[25][26][27] Total Comprehensive Income to EBITDA and Adjusted EBITDA Reconciliation (Q1 2023 vs Q1 2022) | Metric | 2023 (Unaudited) ($000's) | 2022 (Unaudited) ($000's) | | :------------------------------------------ | :--------------- | :--------------- | | Total comprehensive income for the period | $2,586 | $12,083 | | Interest and finance costs, net | $472 | $384 | | Depreciation | $1,275 | $1,404 | | Depreciation of drydocking costs | $1,163 | $951 | | EBITDA (unaudited) | $5,496 | $14,822 | | Loss / (Gain) on derivative financial instruments | $211 | $(967) | | Foreign exchange loss /(gains), net | $34 | $(34) | | Reversal of Impairment | $(4,400) | $- | | Adjusted EBITDA (unaudited) | $1,341 | $13,821 | Balance Sheets Data As of March 31, 2023, total assets slightly decreased to $224.16 million from $225.46 million at December 31, 2022, while total equity increased to $173.28 million from $170.70 million, and total liabilities decreased to $50.88 million from $54.76 million, primarily driven by a reduction in total debt Balance Sheets Data (As at March 31, 2023 vs December 31, 2022) | Metric | As at March 31, 2023 (Unaudited) ($000's) | As at December 31, 2022 ($000's) | | :------------------------------------------ | :------------------------------- | :---------------------- | | Vessels, net | $119,756 | $129,461 | | Advances for vessel acquisition | $31,896 | $28,172 | | Other non-current assets | $4,419 | $5,498 | | Total non-current assets | $156,071 | $163,131 | | Cash and bank balances and bank deposits (including restricted cash) | $47,509 | $55,211 | | Other current assets | $20,584 | $7,116 | | Total current assets | $68,093 | $62,327 | | Total assets | $224,164 | $225,458 | | Total equity | $173,284 | $170,698 | | Total debt net of unamortized debt discount | $42,725 | $44,325 | | Other liabilities | $8,155 | $10,435 | | Total liabilities | $50,880 | $54,760 | | Total equity and liabilities | $224,164 | $225,458 | Statements of Cash Flows Data For the three months ended March 31, 2023, the Company experienced a net cash outflow from operating activities of $2.56 million, a significant reversal from the $10.33 million generated in Q1 2022, with investing activities using $3.35 million primarily for vessel acquisition advances, and financing activities using $0.77 million Statements of Cash Flows Data (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 (Unaudited) ($000's) | Three months ended March 31, 2022 ($000's) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net cash (used in) / generated from operating activities | $(2,555) | $10,327 | | Net cash used in investing activities | $(3,354) | $(15) | | Net cash used in financing activities | $(767) | $(2,248) | Operational Metrics & TCE Reconciliation In Q1 2023, the Daily Time Charter Equivalent (TCE) rate significantly decreased by 63% to $8,780 per vessel per day from $23,643 in Q1 2022, reflecting a challenging market, while daily operating expenses increased by 4% to $5,579, and fleet utilization remained high at 99.3% Operational Metrics (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 (Unaudited) | Three months ended March 31, 2022 | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Ownership days | 810 | 810 | | Available days | 783 | 810 | | Operating days | 777 | 798 | | Fleet utilization | 99.3% | 98.5% | | Average number of vessels | 9.0 | 9.0 | | Daily time charter equivalent (TCE) rate | $8,780 | $23,643 | | Daily operating expenses | $5,579 | $5,377 | Voyage Revenues to Daily Time Charter Equivalent ("TCE") Reconciliation (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 (Unaudited) ($000's) | Three months ended March 31, 2022 ($000's) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Voyage revenues | $8,489 | $18,351 | | Plus: Gain on sale of bunkers, net | $- | $1,149 | | Less: Voyage expenses | $1,614 | $349 | | Net revenues | $6,875 | $19,151 | | Available days | 783 | 810 | | Daily TCE rate | $8,780 | $23,643 | - Daily TCE rate decreased by 63% from $23,643 in Q1 2022 to $8,780 in Q1 2023[30][31] Recent Developments This section details recent corporate activities, including new vessel construction contracts, updates to debt financing, and the sale of a vessel New Building Vessels Contracts The Company signed contracts in April and May 2022 for the construction and purchase of three fuel-efficient bulk carriers (one 64,000 dwt vessel from Japan and two 64,000 dwt sister vessels from China), with total consideration approximately $107.8 million, deliveries scheduled for 2024, and financing planned through a combination of debt and equity - On April 29, 2022, a contract was signed for one 64,000 dwt bulk carrier from Nihon Shipyard Co. (Japan) for approximately $37.5 million, with delivery in H1 2024[33] - On May 13, 2022, two contracts were signed for two 64,000 dwt sister bulk carriers from Nantong COSCO KHI Ship Engineering Co. (China) for approximately $70.3 million, with deliveries in Q3 and Q4 2024[34] - The Company intends to finance these new buildings with a combination of debt and equity, having made initial installments totaling $7.4 million (Japan vessel) and $20.7 million (China vessels) by March 2023[33][34] Debt Financing Update In August 2022, the Company amended its CIT loan facility, increasing it from $34.25 million to $52.25 million to finance the vessel Orion Globe and for general corporate purposes, changing the benchmark rate from LIBOR to SOFR, and decreasing the applicable margin from 3.75% to 3.35%, also entering a new swap agreement for the additional borrower - In August 2022, the CIT loan facility was increased from $34.25 million to $52.25 million[35] - The additional $18 million loan was for financing the vessel Orion Globe and for general corporate/working capital purposes[35] - The benchmark rate for the entire facility was amended from LIBOR to SOFR, and the applicable margin decreased from 3.75% to 3.35%[35] Vessel Sale On March 6, 2023, the Company agreed to sell the 2007-built vessel Sun Globe for a gross price of $14.1 million, with delivery to the new owners expected in June 2023, subject to standard closing conditions - The Company entered an agreement on March 6, 2023, to sell the 2007-built Sun Globe[36] - The gross sale price is $14.1 million, before commissions, to an unaffiliated third party[36] - The vessel is expected to be delivered to its new owners in June 2023[36] Management's Discussion of Financial Performance This section provides management's analysis of financial performance, including external impacts and detailed revenue/expense changes Impact of Russia-Ukraine Conflict The Russia-Ukraine conflict has caused global economic instability and volatility, potentially increasing Company costs and adversely affecting its business, including securing charters and financing, though currently there is no direct effect on the Company's operations - The Russia-Ukraine conflict has disrupted supply chains and caused global economic instability and volatility[37] - Potential adverse effects include increased costs and challenges in securing charters and financing on attractive terms[37] - Currently, there is no direct effect on the Company's operations[37] Total Comprehensive Income Analysis (Q1 2023 vs Q1 2022) Total comprehensive income for Q1 2023 significantly decreased to $2.6 million ($0.13 EPS) from $12.1 million ($0.59 EPS) in Q1 2022, primarily driven by a substantial decrease in voyage revenues, increased voyage expenses, and a reduction in gain on sale of bunkers, partially offset by a reversal of impairment - Total comprehensive income decreased from $12.08 million in Q1 2022 to $2.59 million in Q1 2023[38] - Basic and diluted income per share fell from $0.59 to $0.13[38] Factors Affecting Total Comprehensive Income (Q1 2023 vs Q1 2022) | Factor | Change ($000's) | | :------------------------------------------ | :-------------- | | Net income and total comprehensive income for 3-month period of 2022 | 12,083 | | Decrease in Voyage revenues | (9,862) | | Increase in Voyage expenses | (1,265) | | Decrease in Gain on sale of bunkers, net | (1,149) | | Increase in Vessels operating expenses | (164) | | Decrease in Depreciation | 129 | | Increase in Depreciation of dry-docking costs | (212) | | Increase in Total administrative expenses | (39) | | Increase in Reversal of Impairment | 4,400 | | Decrease in Other income, net | (1) | | Increase in Interest income | 443 | | Increase in Interest expense and finance costs | (531) | | Decrease in Gain/(loss) on derivative financial instruments | (1,178) | | Decrease in Foreign exchange gains/(losses) | (68) | | Net income and total comprehensive income for 3-month period of 2023 | 2,586 | Detailed Revenue and Expense Analysis Voyage revenues decreased by 54% due to lower time charter rates, while voyage expenses increased significantly, mainly from bunker costs, with no gain on sale of bunkers in Q1 2023 compared to $1.1 million in Q1 2022, vessel operating expenses saw a slight increase, and depreciation decreased due to a higher scrap rate, a $4.4 million impairment reversal was recognized from the sale of Sun Globe, interest expense more than doubled due to higher interest rates and increased borrowings, and derivative financial instruments shifted from a gain to a loss Voyage Revenues - Voyage revenues decreased by 54% to $8.5 million in Q1 2023 from $18.4 million in Q1 2022[41] - The decrease was mainly attributed to a 63% decline in the Daily Time Charter Equivalent (TCE) rate, from $23,643 in Q1 2022 to $8,780 in Q1 2023[41] Voyage Expenses - Voyage expenses increased significantly to $1.6 million in Q1 2023 from $0.3 million in Q1 2022[42] Voyage Expenses Breakdown ($000's) | Category | 2023 | 2022 | | :--------- | :--- | :--- | | Commissions | 114 | 288 | | Bunkers | 1,353 | - | | Other voyage expenses | 147 | 61 | | Total | 1,614 | 349 | - The increase was primarily driven by $1.35 million in bunker expenses in Q1 2023, compared to none in Q1 2022[42] Gain on sale of bunkers, net - No gain from bunkers was recognized in Q1 2023, compared to a gain of approximately $1.1 million in Q1 2022[43] Vessel Operating Expenses - Vessel operating expenses increased slightly to $4.5 million in Q1 2023 from $4.4 million in Q1 2022[44] Vessel Operating Expenses Breakdown (%) | Category | 2023 | 2022 | | :--------- | :--- | :--- | | Crew expenses | 51% | 49% | | Repairs and spares | 17% | 22% | | Insurance | 7% | 8% | | Stores | 16% | 13% | | Lubricants | 6% | 5% | | Other | 3% | 3% | - Average daily operating expenses increased by 4% to $5,579 per vessel per day in Q1 2023 from $5,377 in Q1 2022[44] Depreciation - Depreciation charge decreased to $1.3 million in Q1 2023 from $1.4 million in Q1 2022[45] - This decrease is mainly due to the increase of the scrap rate from $380/ton to $440/ton during Q4 2022[45] Total Administrative Expenses - Total administrative expenses, including related parties, remained stable at $1.1 million for both Q1 2023 and Q1 2022[46] Reversal of Impairment - Following the agreement to sell the m/v Sun Globe, the Company recognized a reversal of impairment amounting to $4.4 million[47][48] - This reversal was due to a significant increase in the vessel's market value, leading to an increase in its carrying amount to its recoverable amount (selling price less cost to sell)[48] Interest Expense and Finance Costs - Interest expense and finance costs increased to $0.9 million in Q1 2023 from $0.4 million in Q1 2022[49] Interest Expense and Finance Costs Breakdown ($000's) | Category | 2023 | 2022 | | :-------------------------------- | :--- | :--- | | Interest payable on long-term borrowings | 846 | 312 | | Bank charges | 6 | 23 | | Operating lease liability interest | 9 | 16 | | Amortization of debt discount | 49 | 35 | | Other finance expenses | 10 | 3 | | Total | 920 | 389 | - The increase is mainly due to a rise in the weighted average interest rate from 4.02% in Q1 2022 to 7.95% in Q1 2023 (driven by 3-month Term SOFR rates) and an increase in outstanding principal of the loan agreement[49] Gain/(Loss) on derivative financial instruments - The Company recognized a loss of approximately $104 thousand in Q1 2023 from interest rate swaps, compared to a gain of $967 thousand in Q1 2022[50] - An additional loss of approximately $107 thousand was recognized in Q1 2023 from a new swap agreement related to the increased CIT loan facility[51] Liquidity and Capital Resources As of March 31, 2023, cash and bank balances decreased to $50.6 million from $58.8 million at December 31, 2022, but the Company maintained a working capital surplus of $50.4 million and was in compliance with debt covenants, operating activities shifted from generating $10.3 million cash in Q1 2022 to using $2.6 million in Q1 2023, primarily due to decreased voyage revenues, investing activities used $3.4 million mainly for vessel construction advances, and financing activities used $0.8 million Cash and Working Capital - Cash and bank balances (including restricted cash) decreased to $50.6 million as of March 31, 2023, from $58.8 million as of December 31, 2022[52] - The Company reported a working capital surplus of $50.4 million as of March 31, 2023, including assets reclassified as held for sale[52] - The Company was in compliance with the covenants included in the CIT loan facility as of March 31, 2023[52] Going Concern Assessment - Management regularly assesses the Company's ability to continue as a going concern, considering future profitability, debt repayment schedules, compliance with debt covenants, and potential financing sources[53][54] - Assumptions for future cash flows are based on historical trends and future expectations regarding time charter equivalent rates, operating expenses, capital expenditures, fleet utilization, and general/administrative expenses[54] - Based on Q1 2023 comprehensive income, cash and cash equivalents, working capital surplus, and debt covenant compliance, the Company is expected to operate as a going concern[55] Cash Flow from Operating Activities - Net cash used in operating activities was $2.6 million in Q1 2023, a decrease from $10.3 million generated in Q1 2022[56] - This decrease was mainly attributed to the decline in Voyage revenues from $18.4 million in Q1 2022 to $8.5 million in Q1 2023[56] Cash Flow from Investing Activities - Net cash used in investing activities increased to $3.4 million in Q1 2023 from $15 thousand in Q1 2022[57] - The increase was mainly due to a $3.7 million advance for vessel construction and purchase in Q1 2023[57] Cash Flow from Financing Activities Net Cash Used in Financing Activities ($000's) | Metric | 2023 (Unaudited) | 2022 | | :------------------------------------------ | :--------------- | :----- | | Repayment of long-term debt | $(1,625) | $(1,250) | | (Increase)/decrease in restricted cash | $1,572 | $(541) | | Repayment of lease liability | $(77) | $(75) | | Interest paid | $(637) | $(382) | | Net cash used in financing activities | $(767) | $(2,248) | - Net cash used in financing activities was $0.77 million in Q1 2023, a decrease from $2.25 million used in Q1 2022[58] - Outstanding borrowings under loan agreements increased to $42.8 million as of March 31, 2023, from $30.5 million as of March 31, 2022[58] Unaudited Interim Condensed Consolidated Financial Statements This section presents the unaudited interim condensed consolidated financial statements, including comprehensive income, financial position, equity changes, and cash flows Unaudited Interim Condensed Consolidated Statement of Comprehensive Income The statement shows a significant decline in total comprehensive income for Q1 2023 to $2.59 million from $12.08 million in Q1 2022, primarily driven by a 54% decrease in voyage revenues and a shift from a gain to a loss on derivative financial instruments, partially offset by a $4.4 million reversal of impairment Unaudited Interim Condensed Consolidated Statement of Comprehensive Income (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 ($000's) | Three months ended March 31, 2022 ($000's) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Voyage revenues | $8,489 | $18,351 | | Management & consulting fee income | $90 | $90 | | Total Revenues | $8,579 | $18,441 | | Voyage expenses | $(1,614) | $(349) | | Gain on sale of bunkers, net | $- | $1,149 | | Vessel operating expenses | $(4,519) | $(4,355) | | Depreciation | $(1,275) | $(1,404) | | Depreciation of dry-docking costs | $(1,163) | $(951) | | Administrative expenses | $(944) | $(716) | | Administrative expenses payable to related parties | $(170) | $(359) | | Reversal of Impairment | $4,400 | $- | | Other income, net | $9 | $10 | | Operating income | $3,303 | $11,466 | | Interest income | $448 | $5 | | Interest expense and finance costs | $(920) | $(389) | | (Loss) / Gain on derivative financial instruments, net | $(211) | $967 | | Foreign exchange gains / (losses), net | $(34) | $34 | | TOTAL INCOME FOR THE PERIOD | $2,586 | $12,083 | | Other Comprehensive Income | $- | $- | | TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | $2,586 | $12,083 | | Basic and Diluted income per share for the period | $0.13 | $0.59 | Condensed Consolidated Statement of Financial Position As of March 31, 2023, total assets were $224.16 million, a slight decrease from $225.46 million at December 31, 2022, with non-current assets decreasing due to lower vessel values, while current assets increased, notably with $13.62 million classified as assets held for sale, total equity increased to $173.28 million, and total liabilities decreased to $50.88 million Condensed Consolidated Statement of Financial Position (As at March 31, 2023 vs December 31, 2022) | Metric | March 31, 2023 (Unaudited) ($000's) | December 31, 2022 ($000's) | | :------------------------------------------ | :------------------------- | :---------------- | | NON-CURRENT ASSETS | | | | Vessels, net | $119,756 | $129,461 | | Advances for vessel purchase | $31,896 | $28,172 | | Office furniture and equipment | $80 | $90 | | Right of use asset | $415 | $493 | | Restricted cash | $3,045 | $3,590 | | Fair value of derivative financial instruments | $869 | $1,315 | | Other non-current assets | $10 | $10 | | Total non-current assets | $156,071 | $163,131 | | CURRENT ASSETS | | | | Current portion of fair value of derivative financial instruments | $1,018 | $1,092 | | Trade receivables, net | $1,099 | $109 | | Inventories | $1,582 | $3,028 | | Prepayments and other assets | $3,268 | $2,887 | | Restricted cash | $1,352 | $2,378 | | Cash and cash equivalents | $46,157 | $52,833 | | Assets held for sale | $13,617 | $- | | Total current assets | $68,093 | $62,327 | | TOTAL ASSETS | $224,164 | $225,458 | | EQUITY | | | | Issued share capital | $82 | $82 | | Share premium | $284,406 | $284,406 | | Accumulated deficit | $(111,204) | $(113,790) | | Total equity | $173,284 | $170,698 | | NON-CURRENT LIABILITIES | | | | Long-term borrowings, net of current portion | $32,858 | $37,522 | | Provision for staff retirement indemnities | $175 | $148 | | Lease liabilities | $108 | $188 | | Total non-current liabilities | $33,141 | $37,858 | | CURRENT LIABILITIES | | | | Current portion of long-term borrowings | $9,867 | $6,803 | | Trade accounts payable | $3,596 | $3,548 | | Accrued liabilities and other payables | $3,129 | $5,814 | | Current portion of lease liabilities | $324 | $321 | | Deferred revenue | $823 | $416 | | Total current liabilities | $17,739 | $16,902 | | TOTAL LIABILITIES | $50,880 | $54,760 | | TOTAL EQUITY AND LIABILITIES | $224,164 | $225,458 | Unaudited Interim Condensed Consolidated Statement of Changes in Equity The statement shows that total equity increased to $173.28 million as of March 31, 2023, from $170.70 million at January 1, 2023, primarily due to the total comprehensive income of $2.59 million for the period, with no changes occurring in issued share capital or share premium during the period Unaudited Interim Condensed Consolidated Statement of Changes in Equity (Q1 2023 vs Q1 2022) | Metric | Issued share Capital ($000's) | Share Premium ($000's) | (Accumulated Deficit) ($000's) | Total Equity ($000's) | | :-------------------------------- | :------------------- | :------------ | :-------------------- | :----------- | | As at January 1, 2023 | $82 | $284,406 | $(113,790) | $170,698 | | Income for the period | $- | $- | $2,586 | $2,586 | | Other comprehensive income | $- | $- | $- | $- | | Total comprehensive income for the period | $- | $- | $2,586 | $2,586 | | As at March 31, 2023 | $82 | $284,406 | $(111,204) | $173,284 | | As at January 1, 2022 | $82 | $284,406 | $(138,070) | $146,418 | | Income for the period | $- | $- | $12,083 | $12,083 | | Other comprehensive income | $- | $- | $- | $- | | Total comprehensive income for the period | $- | $- | $12,083 | $12,083 | | As at March 31, 2022 | $82 | $284,406 | $(125,987) | $158,501 | Unaudited Interim Condensed Consolidated Statement of Cash Flows The statement shows a net decrease in cash and cash equivalents of $6.68 million for Q1 2023, resulting in an ending balance of $46.16 million, driven by net cash used in operating activities ($2.56 million), investing activities ($3.35 million, mainly for vessel advances), and financing activities ($0.77 million) Unaudited Interim Condensed Consolidated Statement of Cash Flows (Q1 2023 vs Q1 2022) | Metric | Three months ended March 31, 2023 ($000's) | Three months ended March 31, 2022 ($000's) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Income for the period | $2,586 | $12,083 | | Adjustments for: | | | | Depreciation | $1,275 | $1,404 | | Depreciation of deferred dry-docking costs | $1,163 | $951 | | Payment of deferred dry-docking costs | $(3,946) | $(891) | | Provision for staff retirement indemnities | $27 | $(2) | | Reversal of Impairment | $(4,400) | $- | | Loss / (Gain) on derivative financial instruments | $211 | $(967) | | Interest expense and finance costs | $920 | $389 | | Interest income | $(448) | $(5) | | Foreign exchange losses / (gains), net | $27 | $(31) | | (Increase)/decrease in: | | | | Trade receivables, net | $(990) | $88 | | Inventories | $1,447 | $(1,702) | | Prepayments and other assets | $(381) | $(948) | | Increase/(decrease) in: | | | | Trade accounts payable | $(891) | $2,382 | | Accrued liabilities and other payables | $439 | $(1,545) | | Deferred revenue | $406 | $(879) | | Net cash (used in) / generated from operating activities | $(2,555) | $10,327 | | Cash flows from investing activities: | | | | Advance for vessel acquisition | $(3,724) | $- | | Improvements | $(77) | $(19) | | Purchases of office furniture and equipment | $(1) | $(1) | | Interest received | $448 | $5 | | Net cash used in investing activities | $(3,354) | $(15) | | Cash flows from financing activities: | | | | Repayment of long-term debt | $(1,625) | $(1,250) | | (Increase)/decrease in restricted cash | $1,572 | $(541) | | Repayment of lease liability | $(77) | $(75) | | Interest paid | $(637) | $(382) | | Net cash used in financing activities | $(767) | $(2,248) | | Net (decrease) / increase in cash and cash equivalents | $(6,676) | $8,064 | | Cash and cash equivalents at the beginning of the period | $52,833 | $45,213 | | Cash and cash equivalents at the end of the period | $46,157 | $53,277 | Notes to the Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed notes to the financial statements, covering accounting policies, cash, related parties, vessels, share capital, earnings per share, debt, contingencies, commitments, and fair values Note 1. Basis of presentation and general information - Globus Maritime Limited, formed in Jersey in 2006, redomiciled to the Marshall Islands in 2010 and trades on NASDAQ[64] - The Company's principal business is owning and operating dry bulk motor vessels for worldwide dry cargo transportation, managed by its wholly-owned subsidiary, Globus Shipmanagement Corp[65][66] - The unaudited interim condensed consolidated financial statements are prepared under IAS 34 Interim Financial Reporting and should be read with the 2022 Annual Report[67][68] - The Company assesses its ability to continue as a going concern, and based on Q1 2023 results (total comprehensive income of $2.59 million, cash of $46.16 million, working capital surplus of $50.4 million, and debt covenant compliance), it is expected to operate as a going concern[70][71][72] - The Russia-Ukraine conflict has caused global instability, but currently has no direct effect on the Company's operations[73] Note 2. Changes in Accounting policies and Recent accounting pronouncements - No changes to significant accounting policies in Q1 2023, other than IFRS amendments adopted as of January 1, 2023, which had no impact on the interim financial statements[74][75] - The Company has not early adopted amendments to IAS 7, IFRS 7, IAS 1, IAS 8, and IAS 12, and is assessing their potential impact[75][78] - Non-current assets are classified as held for sale when IFRS 5 criteria are met, measured at the lower of carrying amount or fair value less cost to sell, and are not depreciated[76] Note 3. Cash and cash equivalents and Restricted cash Cash and Cash Equivalents ($000's) | Category | March 31, 2023 | December 31, 2022 | | :--------- | :------------- | :---------------- | | Cash on hand | $43 | $36 | | Cash at banks | $46,114 | $52,797 | | Total | $46,157 | $52,833 | - Restricted cash pledged for collateral requirements was $4.40 million as of March 31, 2023 ($3.05 million non-current, $1.35 million current), down from $5.97 million as of December 31, 2022[80] Note 4. Transactions with Related Parties - Details and nature of transactions with related parties remained unchanged in Q1 2023[81] - The balance due to related parties was $1.90 million as of March 31, 2023, a decrease from $2.20 million as of December 31, 2022, included in Trade accounts payables[81] Note 5. Vessels, net Vessels, net Reconciliation ($000's) | Metric | Vessels cost | Vessels depreciation | Dry docking costs | Depreciation of dry-docking costs | Net Book Value | | :-------------------------- | :----------- | :------------------- | :---------------- | :-------------------------------- | :------------- | | Balance at January 1, 2023 | $234,916 | $(113,009) | $23,365 | $(15,811) | $129,461 | | Additions | $77 | $- | $1,785 | $- | $1,862 | | Reversal of Impairment | $4,400 | $- | $- | $- | $4,400 | | Depreciation & Amortization | $- | $(1,187) | $- | $(1,163) | $(2,350) | | Transfer to Assets Held for sale | $(22,996) | $10,423 | $(3,517) | $2,473 | $(13,617) | | Balance at March 31, 2023 | $216,397 | $(103,773) | $21,633 | $(14,501) | $119,756 | - Total depreciation for Q1 2023 was $1.28 million, comprising vessel depreciation ($1.19 million), office furniture/equipment depreciation ($10 thousand), and right-of-use asset depreciation ($78 thousand)[82] - A $4.4 million reversal of impairment was recognized for the Sun Globe vessel due to a significant increase in its market value, and the vessel was reclassified as held for sale at $13.62 million[83] Note 6. Share Capital and Share Premium Authorized Share Capital ($000's) | Category | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | | 500,000,000 Common Shares of par value $0.004 each | $2,000 | $2,000 | | 100,000,000 Class B common shares of par value $0.001 each | $100 | $100 | | 100,000,000 Preferred shares of par value $0.001 each | $100 | $100 | - As of March 31, 2023, the Company had 20,582,301 issued and fully paid common shares, with no new shares issued during Q1 2023 or Q1 2022[88] - Total outstanding warrants as of March 31, 2023, were 19,701,120, classified in equity, with no exercises during the period[94] Note 7. Earnings per Share - Basic and diluted EPS are calculated by dividing net income attributable to shareholders by the weighted average number of shares outstanding[95][96] - Warrants were out-of-the-money during Q1 2023 and Q1 2022 and thus not included in diluted EPS computation to avoid anti-dilutive effects[97] Net Income per Common Share | Metric | March 31, 2023 | March 31, 2022 | | :-------------------------------- | :------------- | :------------- | | Income attributable to common equity holders ($000's) | $2,586 | $12,083 | | Weighted average number of shares – basic and diluted | 20,582,301 | 20,582,301 | | Net income per common share – basic and diluted | $0.13 | $0.59 | Note 8. Long-Term Debt, net Long-Term Debt, net ($000's) | Metric | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | | Loan Balance | $42,750 | $44,375 | | Unamortized Debt Discount | $(493) | $(541) | | Accrued Interest | $468 | $491 | | Total Borrowings | $42,725 | $44,325 | | Less: Current Portion | $(9,867) | $(6,803) | | Long-Term Portion | $32,858 | $37,522 | - As of March 31, 2023, the Company was in compliance with its loan covenants[100][104] - The CIT loan facility was increased to $52.25 million in August 2022, with the benchmark rate changed from LIBOR to SOFR and the margin reduced to 3.35%[101][102] - The remaining $3.86 million loan for the Sun Globe vessel was classified as current, as it is contractually required to be repaid upon the vessel's sale[103] Contractual Annual Loan Principal Payments to First Citizens Bank & Trust Company ($000's) | Year | Amount | | :----------- | :----- | | March 31, 2024 | $9,606 | | 2025 | $5,742 | | 2026 | $5,742 | | May 10, 2026 | $21,660 | | Total | $42,750 | Note 9. Contingencies - The Company is not aware of any material claims, suits, complaints, or contingent liabilities arising from its ordinary course of shipping business[106] Note 10. Commitments Future Net Minimum Revenues from Non-Cancellable Operating Leases ($000's) | Period | March 31, 2023 | December 31, 2022 | | :--------- | :------------- | :---------------- | | Within one year | $4,936 | $6,675 | | Total | $4,936 | $6,675 | - The lease component of voyage revenue was $3.87 million in Q1 2023, a significant decrease from $13.91 million in Q1 2022[108] - The Company has commitments for three new building vessels totaling approximately $107.8 million, with significant payments due in 2024[112][113] Contractual Annual Payments for Shipbuilding Contracts ($000's) | Subsidiary | April 1, 2023 to March 31, 2024 | April 1, 2024 to December 31, 2024 | | :---------------------- | :------------------------------ | :--------------------------------- | | Calypso Shipholding S.A. | $25,900 | $- | | Daxos Maritime Limited | $- | $24,785 | | Paralus Shipholding S.A. | $- | $24,785 | | Total | $25,900 | $49,570 | Note 11. Fair values Fair Values of Financial Instruments (March 31, 2023) | Metric | Carrying amount ($000's) | Fair value (Level 2) ($000's) | | :------------------------------------------ | :-------------- | :------------------- | | Financial assets measured at fair value: | | | | Non-current portion of fair value of derivative financial instruments | $869 | $869 | | Current portion of fair value of derivative financial instruments | $1,018 | $1,018 | | Financial liabilities not measured at fair value: | | | | Long-term borrowings | $42,750 | $43,919 | Fair Values of Financial Instruments (December 31, 2022) | Metric | Carrying amount ($000's) | Fair value (Level 2) ($000's) | | :------------------------------------------ | :-------------- | :------------------- | | Financial assets measured at fair value: | | | | Non-current portion of fair value of derivative financial instruments | $1,315 | $1,315 | | Current portion of fair value of fair value of derivative financial instruments | $1,092 | $1,092 | | Financial liabilities not measured at fair value: | | | | Long-term borrowings | $44,375 | $45,549 | - Derivative financial instruments (Interest Rate Swaps) are measured at fair value using discounted cash flow techniques (Level 2)[118] - Long-term borrowings, not measured at fair value, have their fair value determined using discounted cash flow techniques[119] - There were no transfers between Level 1, Level 2, and Level 3 fair value hierarchy during the period[120] Note 13. Events after the reporting date - No events occurred after the reporting date of March 31, 2023[121]