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Analysis of Daily Vessel Costs

The cost of owning and operating dry bulk ships is the major component of our Group’s total costs, and our ability to maintain good control of our “daily vessel costs” has a significant bearing on our operating margins and our financial performance overall. We provide below a short analysis of our daily vessel costs for a better understanding of their components and development.

Opex – The daily opex element of our vessel costs decreased 6% for Handysize mainly due to crewing and procurement cost efficiencies, while increasing 1% for Supramax.

Depreciation – Daily Handysize depreciation (including capitalisation of dry-docking costs) decreased due to the redelivery on expiry in December 2015 of finance leased vessels with higher depreciation costs.

Finance costs– Our owned Handysize vessels’ daily P/L and cash finance costs were US$1,000 and US$790 respectively, and our Supramax daily P/L and cash finance costs were US$1,120 and US$1,030 respectively. The difference between the P/L and cash finance costs reflects the difference between the coupon and effective interest rate of our convertible bonds. Our Handysize daily finance costs reduced compared to 2015 while Supramax daily finance costs increased. This was due to the allocation of more convertible bonds interest to this vessel type as more Supramax owned newbuildings delivered.

Charter-hire – Our chartered Handysize vessels’ daily P/L and cash charter-hire costs were US$6,730 and US$7,590 respectively, and our Supramax daily P/L and cash charterhire costs were US$6,380 and US$6,720 respectively. The difference between the P/L and cash charter-hire costs reflects the write-back of onerous contract provisions made in 2014 relating to the 2016 element of our charter commitments.

Chartered-in days represented 47% and 80% of our total Handysize and Supramax vessel days respectively. Our Handysize chartered-in days decreased 18% to 22,530 days (2015: 27,480 days) while our Supramax chartered-in days increased 34% to 23,640 days (2015: 17,670 days). Our Supramax fleet benefitted in the weak market from its larger proportion of low-cost short-term chartered-in ships and the redelivery of more expensive vessels.

Daily cash cost – Our average blended owned and chartered daily cash cost excluding overheads was US$6,090 (2015: US$6,570) for our Handysize fleet and US$6,390 (2015: US$7,720) for our Supramax fleet.

Overheads – Our dry bulk direct staff overheads and office costs, along with all overheads categorised as indirect overheads, reduced to US$51.7 million (2015: US$53.5 million) in spite of operating more owned ships. Spread across our vessel days, the aggregate overheads translated into a daily cost of US$660 per ship per day (2015: US$710 per day).

The Group’s total administrative expenses including our remaining towage activities amounted to US$52.9 million (2015: US$56.6 million). The year-on-year saving of US$3.7 million reflects a range of cost savings initiatives undertaken during the year.

During the year, we secured 3,050 Handysize vessel days (2015: 7,040 days) and 330 Supramax vessel days (2015: 1,240 days) via variable-rate, inward charters with rates linked to the Baltic Handysize and Supramax indices. These index-linked vessels represented 14% and 1% of our chartered Handysize and Supramax vessel days respectively.

Our fleet of owned dry bulk vessels experienced on average 2.6 days (2015: 2.2 days) per vessel unplanned technical off-hire during the year.


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