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Our Performance in 2016

Our core dry bulk business generated a net loss of US$87.6 million (2015: net loss US$34.7 million) in a record weak year for dry bulk shipping. In the challenging market conditions, we generated daily earnings that outperformed the BHSI and BSI indices and continued to maintain good control of our vessel operating costs.

DRY BULK OPERATING PERFORMANCE

US$ Million 1H16 2H16 2016 2015 Change
Handysize Contribution
Supramax Contribution
Post-Panamax Contribution
(30.2)
(6.8)
2.7
(6.9)
3.5
2.8
(37.1)
(3.3)
5.5
(8.4)
22.6
5.5
>-100%
>-100%
-
Dry Bulk operating performance before overheads
Overheads
Tax
(34.3)
(25.6)
(0.5)
(0.6)
(26.1)
(0.5)
(34.9)
(51.7)
(1.0)
19.7
(53.5)
(0.9)
>-100%
+3%
-11%
Dry Bulk net loss
Dry Bulk vessel net book value
(60.4)
1,577.9
(27.2)
1,653.4
(87.6)
1,653.4
(34.7)
1,577.8
>-100%
+5%
+/- Note:


In our tabulated figures, positive changes represent
an improving result and negative changes represent
a worsening result.

OUR DRY BULK CARGO VOLUMES IN 2016

KEY PERFORMANCE INDICATORS

Performance vs Market


  • Our 34% and 14% outperformance in 2016 compared to spot market indices reflects the value of our fleet scale and cargo book, and our ability to optimise cargo combinations and match the right ships with the right cargoes to maximise our utilisation and vessel earnings.

Profitability


  • We generated Handysize daily earnings of US$6,630 with daily costs of US$7,320 on 47,590 revenue days. Our Handysize earnings were under pressure in the historically weak market resulting in a negative Handysize contribution despite our strong premium.

  • Our Supramax business generated a smaller loss than Handysize, benefitting in the weak market from its larger proportion of short-term inward chartered ships.

    As part of our business model, we charter in vessels for short periods for combination with cargoes with the aim of making a margin irrespective of whether the market is high or low. In low markets as in 2016, these short-term positions generally lower our reported TCE earnings while in fact making a valuable positive contribution. If we exclude the vessel days attributable to these short-term operated ships and factor their positive margin into the TCE results of our core owned and long-term fleet, then our restated 2016 Handysize and Supramax daily earnings would improve to US$6,720 on 41,220 days and US$7,940 on 14,230 days respectively.


  • We operated an average of 130 Handysize and 81 Supramax ships resulting in an 8% reduction and 27% increase in our Handysize and Supramax revenue days respectively.

  • Our Handysize capacity has reduced as we redelivered expiring medium and long-term chartered vessels to gradually lower our charter-in costs, relying instead on our growing fleet of owned ships and low-cost shorter-term and index-linked charters.

Future Earnings and Cargo Cover


  • We have covered 44% and 71% of our 39,950 Handysize and 15,970 Supramax revenue days currently contracted for 2017 at US$8,200 and US$8,680 per day net respectively.

    (Cargo cover excludes revenue days related to inward-chartered vessels on variable, index-linked rates)

  • While ship operators such as ourselves typically face significant exposure to the spot market, our contract cover provides a degree of earnings visibility.

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