Globus Maritime Limited Reports Financial Results for the Quarter and Six Month Period Ended June 30, 2014

The “Sun Globe” is currently on a T/C with Cosco Qingdao until January 2015 at $16,000 per day gross.

The “Jin Star” is on a bareboat charter with Eastern Media International and Far Eastern Silo & Shipping, which began during June 2010, for a period of five years at $14,250 per day gross.

Assuming all charter counterparties fully perform under the terms of the respective charters, and based on the earliest redelivery dates, as of the day of this press release, the Company has secured employment for approximately 29\% of our fleet days for the rest of 2014.

Management Commentary

George Karageorgiou, President, Chief Executive Officer and Chief Financial Officer of Globus Maritime Limited, stated: “Despite the continued weakness in the dry bulk market during the second quarter 2014, we remain optimistic about the prospects for the industry for the remainder of this year and expect a stronger spot market in the 4th quarter. If this happens, with approximately 70\% of our fleet days exposed to the spot market for the remainder of 2014, we can realize an increase in our time charter equivalent rate, versus the $9,218 achieved for the first half 2014 and at the same time, take advantage of the stronger rate environment by reducing our almost 100\% exposure to the spot market in 2015, by securing part of our fleet on period charters. With net fleet growth in 2014 and 2015 expected to be at its lowest levels in quite some time and combined with strong dry bulk demand, the recovery in charter rates is in sight. Going forward, we remain confident in our ability to deliver profitable results and our intention is to grow the size of our fleet through sound acquisitions.”

Management Discussion and Analysis of the Results of Operations

Second quarter of the year 2014 compared to the second quarter of the year 2013

Total comprehensive loss for the second quarter of the year 2014 amounted to $1.2 million or $0.14 basic loss per share based on 10,232,076 weighted average number of shares. If adjusted for the $1.7 million impairment loss, total adjusted comprehensive income for the period becomes $0.5 million or $0.02 basic earnings per share.

Total comprehensive loss for the second quarter of the year 2013 amounted to $1.1 million or $0.13 basic loss per share based on 10,213,475 weighted average number of shares. If adjusted for the $1.0 million impairment loss, total adjusted comprehensive loss for the period becomes $0.1 million or $0.03 basic loss per share.

During the second quarters of 2014 and 2013 we declared a preferred dividend of $86.54 per share and $63.46 per share respectively to the holders of our Series A Preferred Shares, paid during May 2014 and July 2013 respectively. There are 2,567 Series A Preferred Shares issued and outstanding as of today.

Revenue
During the three month periods ended June 30, 2014 and 2013 our Revenue reached $7.2 million and $6.8 million respectively. The 6\% increase in Revenue was mainly attributed to the 4\% increase in operating days from 593 during the second quarter of 2013 to 619 days during the quarter under discussion.

Voyage expenses
Voyage expenses increased by $0.1 million to $1.1 million during the three month period ended June 30, 2014 from $1.0 million during the respective period in 2013. Voyage expenses during both quarters included approximately $0.7 million, attributed to the cost of bunkers consumed during periods that our vessels were travelling seeking employment. As a consequence our time charter equivalent rates during the second quarter of 2014 and 2013 were $9,189 per vessel per day and $8,838 per vessel per day respectively corresponding to an increase of 4\%, in line with the increase in our revenue as discussed above.

Vessel operating expenses
Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance, and repairs, increased by $0.1 million or 4\% to $2.7 million during the three month period ended June 30, 2014 compared to $2.6 million during the three month period ended June 30, 2013. It is important to note that longer periods of time are more accurate in basing conclusions on, rather than on a quarter over quarter basis.

Average daily operating expenses during the three month periods ended June 30, 2014 and 2013 were $5,002 per vessel per day and $4,791 per vessel per day respectively.

Amortization of fair value of time charter attached to vessels
Amortization of fair value of time charter attached to vessels during the three month periods ended June 30, 2014 and 2013 were $0.2 and $0.4 million respectively. Amortization refers to the fair value of above market time charters attached to the vessels m/v Moon Globe and m/v Sun Globe acquired during the second half of 2011, which is amortized on a straight line basis over the remaining period of the time charters. The time charter attached to m/v Moon Globe expired during June 2013.

Impairment loss
During the second quarter of 2014 we recognized an impairment loss of $1.7 million corresponding to the change in the fair value less cost to sell of the vessel Tiara Globe, which is classified as vessel held for sale since December 2012. During the second quarter of 2013 we recognized and impairment loss of $1.0 million with respect to the aforementioned vessel which had its Special Survey during that period, amounting to $0.8 million while its fair value less cost to sell as of June 30, 2013 decreased by $0.2 million.

Gain on derivative financial instruments
Gain or loss on derivative financial instruments referred to the changes on the fair market value of our interest swap agreements the valuation of which was affected by the prevailing interest rates at that time. Both our interest rate swap agreements entered back in 2008 of a total notional amount of $25.0 million, reached their maturity during November 2013. During the last three years of the swap period we were swapping six month Libor for a fixed rate of 3.60\% on a notional amount of $10.0 million and three month Libor for a fixed rate of 3.64\% on a notional amount of $15.0 million.

Interest expense and finance costs
Interest expense and finance costs decreased by $0.4 million to $0.5 million during the second quarter of 2014 from $0.9 million during the respective period last year, mainly due to the termination of both our five year swap agreements during November 2013 and the sharp decrease in our average debt outstanding during the second quarter of 2014 of $87.2 million compared to the average debt outstanding during the second quarter of 2013 of $100.0 million. The weighted average interest rate during the second quarter of 2014 reached 2.02\% compared to 3.33\% during the same period last year including the effect from our interest rate swap agreements in effect at that time.

First half of the year 2014 compared to the first half of the year 2013

Total comprehensive loss for the first half of the year 2014 amounted to $0.2 million or $0.04 basic loss per share based on 10,230,117 weighted average number of shares. If adjusted for the $1.7 million impairment loss, total adjusted comprehensive income for the period becomes $1.6 million or $0.13 basic earnings per share.

Total comprehensive income for the first half of the year 2013 amounted to $0.2 million or approximately $nil basic earnings per share based on 10,210,994 weighted average number of shares. If adjusted for the $1.0 million impairment loss recognized during June 2013, total adjusted comprehensive income for the period becomes $1.2 million or $0.10 basic earnings per share.

Revenue
For the six month periods ended June 30, 2014 and 2013 our Revenue reached $14.6 million and $14.3 million respectively. The 2\% increase in Revenue was mainly attributed to the 2\% increase in operating days from 1,220 during the first half of 2013 to 1,248 days during the first half of 2014.

Voyage expenses
Voyage expenses increased by $0.8 million to $2.3 million during the six month period ended June 30, 2014 from $1.5 million during the respective period in 2013. Voyage expenses during the first half of 2014 included $1.4 million, attributed to the cost of bunkers consumed during periods that our vessels were travelling seeking employment compared to $0.8 million during the respective period last year. As a consequence our time charter equivalent rates during the first half of 2014 and 2013 were $9,218 per vessel per day and $9,712 per vessel per day respectively, corresponding to a decrease of 5\%.

Vessel operating expenses
Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance, and repairs, increased by $0.3 million or 6\% to $5.0 million during the six month period ended June 30, 2014 compared to $4.7 million during the six month period ended June 30, 2013.

Average daily operating expenses during the six month periods ended June 30, 2014 and 2013 were $4,561 per vessel per day and $4,333 per vessel per day respectively. Average daily operating expenses for the years (twelve month periods) ended June 30, 2014 and 2013 were $4,693 per vessel per day and $4,652 per vessel per day respectively.

Amortization of fair value of time charter attached to vessels
Amortization of fair value of time charter attached to vessels during the six month periods ended June 30, 2014 and 2013 were $0.4 and $0.9 million respectively. Amortization refers to the fair value of above market time charters attached to the vessels m/v Moon Globe and m/v Sun Globe acquired during the second half of 2011, which is amortized on a straight line basis over the remaining period of the time charters. The time charter attached to m/v Moon Globe expired during June 2013.

Impairment loss
During the first half of 2014 we recognized an impairment loss of $1.7 million corresponding to the change in the fair market value less cost to sell of the vessel Tiara Globe which is classified as vessel held for sale since December 2012. During the first half of 2013 we recognized and impairment loss of $1.0 million with respect to the aforementioned vessel which had its Special Survey during that period amounting to $0.8 million, while its fair value less cost to sell as of June 30, 2013 decreased by $0.2 million.

Gain on derivative financial instruments
Gain or loss on derivative financial instruments referred to the changes on the fair market value of our interest swap agreements the valuation of which was affected by the prevailing interest rates at that time. Both our interest rate swap agreements entered back in 2008 of a total notional amount of $25.0 million, reached their maturity during November 2013. During the last three years of the swap period we were swapping six month Libor for a fixed rate of 3.60\% on a notional amount of $10.0 million and three month Libor for a fixed rate of 3.64\% on a notional amount of $15.0 million.

Interest expense and finance costs
Interest expense and finance costs decreased by $0.8 million to $1.1 million during the first half of 2014 from $1.9 million during the respective period last year mainly due to the termination of both our five year swap agreements during November 2013 and the sharp decrease in our average debt outstanding during the first half of 2014 of $88.4 million compared to the average debt outstanding during the first half of 2013 of $100.8 million. The weighted average interest rate during the first half of 2014 reached 2.29\% compared to 3.35\% during the same period last year including the effect from our interest rate swap agreements in effect at that time.

Liquidity and capital resources

Net cash generated from operating activities for the three month periods ended June 30, 2014 and 2013 was $4.5 million and $3.2 million, respectively.

Net cash used in financing activities during the three month period ended June 30, 2014 amounted to $5.9 million and consisted of $5.4 million of scheduled loan installments, $0.5 million of interest and other finance costs paid, $0.2 million of preferred dividend paid less $0.2 million net proceeds drawn from our Firment credit facility. Net cash used in financing activities during the three month period ended June 30, 2013 amounted to $9.8 million and consisted of $8.8 million of debt repayment and $1.0 million of interest and other finance costs paid.

Net cash generated from operating activities for the six month periods ended June 30, 2014 and 2013 was $7.3 million and $6.5 million, respectively.

Net cash used in financing activities during the six month period ended June 30, 2014 amounted to $7.5 million and consisted of $6.2 million of scheduled loan installments, $1.1 million of interest and other finance costs paid, $0.4 million of preferred dividend paid less $0.2 million net proceeds drawn from our Firment credit facility. Net cash used in financing activities during the six month period ended June 30, 2013 amounted to $12.0 million and consisted of $10.2 million of debt repayment, and $1.8 million of interest and other finance costs paid.

Amendment to the Credit Suisse revolving credit facility
During April 2014, the company reached an agreement with Credit Suisse on permanently revising certain terms of our credit facility as listed below:

The company to maintain cash and cash equivalents of not less than $5.0 million (instead of at least $10.0 million “minimum liquidity requirement”) conditional to the company not declaring and paying dividends to common shareholders. In the event of dividend payment, the minimum liquidity requirement will increase to $7.0 million and will have to be met prior to the subject payment and during a continuous period of at least three months following such payment. Past this minimum period, we are entitled to switch to the $5.0 million minimum liquidity requirement.

From March 31, 2014 onwards the facility to bear interest at LIBOR plus a margin of 1.20\%.

The company is prohibited from paying dividends to the holders of Series A preferred shares in an amount that will exceed $0.5 million per fiscal year when the liquidity is below the $7.0 million threshold.

Reduction in the minimum liquidity requirement from DVB Bank
During the second quarter of 2014, DVB Bank agreed to temporarily reduce its minimum liquidity requirement to $5.0 million (instead of the lesser of $10.0 million and $1.0 million per vessel owned by Globus) valid until December 31, 2014 subject to the company not declaring and paying dividends to common shareholders.

As of June 30, 2014, our cash and bank balances and bank deposits were $5.7 million and we had available $1.8 million of undrawn committed borrowing facility with respect to the Firment Credit Facility agreement. Our outstanding debt was $85.5 million gross of unamortized debt discount.

As of June 30, 2014 we were in compliance with all covenants arising from our loan and credit facilities.

Major vessel repairs
We anticipate one vessel namely m/v Sky Globe to be dry-docked during the second half of the year 2014. We budget 20 days per dry-docking per vessel. Actual length varies based on the condition of each vessel, shipyard schedules and other factors.
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