Q4 2019 Earnings Call

[noise]. Please hold and then operator will be with you shortly.

[music]. Please hold and then operator will be wiki shortly.

Oh going inside each navigator.

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First name David.

The last name Brown.

Thanks.

IRA A.I.E.R.A.

Yeah.

Just.

Thank you.

And I'm sorry.

Actual results may differ significantly from forward looking information.

So for cat.

Additional information about those factors and assumptions.

No not annual and quarterly reports filed with the Securities Securities and Exchange Commission.

The first let me apologize for the late reporting about resolved.

I know this may have caused some concern.

The nature of the delays stems from the decision made almost two years ago to change our auditors KPMG too.

We made this decision based upon corporate governance.

And it's practice and often.

Local counting classical.

We fully understood that in doing so it would likely result.

To possibly three week delay in getting all year round audit complete.

Exactly what happened, but unfortunately the.

It's delay pushed us into a quarantine shutdown.

London Office.

And for everyone, including the all the work at all.

Consequence of every on working from home, resulting in a much delayed audit process.

Today I'll speakers will include Howard Dean.

President CEO, Niall Nolan navigate as Chief Financial Officer, not Chief commercial officer.

Well, even London them.

Well, let me pass the call over to Harry was amazing.

Introductory comments.

Harry.

Thank you David.

Good morning to help you want to Nicole.

You're all well and keeping say.

Well once a completely different place today compared to when we lost about used to be coal in November 2019.

Since then the Cold was 19 Pond, then that's what the globe with as far reaching consequences for human health.

Social interaction and of all the quarterly.

The first economics effects were felt in China before spreading to the rest of Asia I know to utilize the Americas and beyond.

All markets experiencing huge volatility.

Precedented turbulence with considerable headwinds in many sectors.

However, amongst the oldest and that off some glimmers of hope with China slowly on purposefully stuff seems to be talking to some degree of normality.

Manufacturing them on gradually starting to recover.

As we speak several navigate the vessels or <unk> to China, and southeast Asia, with LPG and petrochemical cargoes.

Oh, no if it gets a gas safety security on welfare, a whole lot colleagues as parliament, whether that be on lung or see.

We successfully tested the business resilience procedures last month.

Unfolding government advice, and both UK and Poland, We decided on the 18th of March to temporarily closed all their offices onto one of the business remotely.

Well just over to the half weeks, though we've been running a business operations remotely.

Option.

I'm very pleased the old business continued to preparations have been able to seamless transition.

Through the use of technology, we've increased the level on frequency or communications was between our onshore and sleep stuff [noise].

Of course, not sure based activity is only part of the equation of seat for those continue to crew safely operate a 50 vessels, which as we speak applying to seize delivering the right. So cargoes of gases to a customers across oceans and between coincidence.

So doing or keeping the global economy movement.

This is normally feet as we like many companies have experienced considerable operational challenges brought on by the pandemic.

Both the vessels, we have stepped up with infection protection uncontrolled precautions, we've implemented increased hygiene measures on increased <unk> health screening and medical supplies.

Given the numerous traveled was split since the company on the third party managers have temporarily suspended all through changes until it's both safe on feasible to resume them.

I would like to say side Q.

Pay tribute to your hardworking dedicated unprofessional see for those who are currently separated from the families for extended periods. This difficult time.

We are there for increased the level support on advice for all employees to protect the overall well being a mental health.

Well, providing increased incidence system capacity Tilo crew members to keep it coincides with the loved ones.

Our teams have been working with a plug states the classification societies. The various inspection institutions on of course up Chaucer's took the sports a role to Monday through dry dockings on inspections, obviously become Jude.

Let's put lasik approach coupled with the additional measures a course of coal puts in place I wasn't sure. The operations continued with a any major disruptions on a comparable levels to 2019.

The late December last year.

Definitely John you do this year the initial phase of our Morgan's point joint venture ethylene tablet with stuff to go up.

What's the first cargo bethlem, leaving on the navigate the Europa both for China on the so John Julie.

Especially a phase one is like once you complete with phase two namely the construction of the stories tight proceeding safely on time under the budget.

We expect to talk to be operational by the end of November this year.

Let's talk is really taking shape as you can see in the slides in the supplemental information Park.

However, the key to fill operational effectiveness of our export terminal is dependent on the completion of the underground ethylene still he's traveling currently being built by enterprise.

No Bellevue.

This upstream Calvin will commingle ethylene from of what I took the juices and directed dug into our joint tariff in an orderly manner.

I was just Coleman and these types of infrastructure investments the conditioning and commissioned by enterprise of the copper has taken a lot longer than expected.

We totally understand these works well not be completed in the next few days or last few weeks with noticed given to initiate the terminal will take or pay calling trucks.

Shortly thereafter.

That being the case these contracts you take effect the lifted by the end of Q2.

Therefore, the time that we'll have a limited throughput until these contracts for the effective.

A few weeks ago, we were very excited to announce a lit up to what creates a big gossip Pacific gas, which will provide customers with increased flexibility on improved access to ethylene ready vessels.

The pillars expected to be operations and the second quarter Twentytwenty.

Oh vessel utilization rates in January.

97.3 per Se and continued where Q4 left all.

However, since the scale to cope with 19 pandemic on its economic impacts became apart our utilization rate. So subsequently dropped on a run they know running mid 80% levels levels last seen in mid 2019.

What's the Lynparza results in Q1, and probably Q2.

Finally, Tc rates would be pretty resilient so far.

I have held up better than expected in the face of the economic slowdown.

How long this will continue remains to be seen given the problem unprecedented economic turbulence.

Rest assured.

The management team navigator gas upticking old necessary steps to reduce discretionary spend while minimizing working capital in capex, and thus preserving cash and liquidity.

Oh, so many of these interventions are outlined in the supplemental information Park.

I'm confident that give enough scale, our geographical spread coupled with a pull that flexibility on a fantastic counterparty relationships that navigator gas as well placed to whether the current economic turbulence demolish the uncertainties and we'll come out of the stronger.

Well these few them off I would like to handle what tariffs CFO Niall Nolan Niall.

Thank you.

Good morning old.

Revenue for the fourth quarter was $76.1 million, an increase of $1 million from the $75.6 million generates enjoying last quarter, Q3, 2019, but down 2.8% or $2.2 million from the fourth quarter of 2018.

Revenue for the 12 months ended December 31st was $301.4 million also reduction of 2.8% some of the $310 million generates during 2018.

Net revenue that is revenue after deducting passes voyage expenses was $63.9 million for the fourth quarter, an increase from both the 62.2 million generates last quarter under 62.8 million generated a year ago.

Utilization increased significantly from 86.3% a year ago to 92.7% during the fourth quarter generating 4.3 million of additional revenue.

December in particular, so utilization that's 96.3% despite higher utilization continued as Harry mentioned into January 2020, with utilization of 90, 397.3% before falling away in February and March two levels around 85% largely as a result.

The impact of calls at 19.

For the full year 2019 utilization was 86.8% against 89.

89% for the 12 months of 18.

Although utilization increased during the fourth quarter average charter rates reduced slightly from Q3, two never just $20204 per day for $614500 per month in the fourth quarter compared to $20920 per day for the fourth quarter 2018.

Average charter rates for the 12 months of 19 were $20831 an increase from the average rate.

$2284 achieved for the full year of 2018.

Turning to 2019, the company and it took a total of nine drydockings, taking an aggregate of 262 days to complete which includes the time taken to sale to the respective yards and costing approximately $11 million.

These three of these dockings were completed during the fourth quarter, taking a total of 80 days.

We are scheduled to guide up 10 vessels during Twentytwenty, that's a provision cost of approximately $12.2 million. Although as we've mentioned there are certain challenges in dry docking vessels at the moment as a result of pulls at 19, including the inability of service engineers and technical Super attendance attending such dockings.

Well, we believe that although some dockings, maybe delayed with the consent like statins specifications societies, we do not believe the cost of such dockings wouldn't it wouldn't be materially higher than anticipated.

That's an operating expenses were 27.7 million for three months of the fourth quarter, an increase of just 2.4% from the comparative quarterly 2018.

Topics for the full year.

Well 2019 was 111 million <unk> hundred $11.5 million or eight hasn't been $37 per day compared to $106.7 billion or $7694 per day for too far 2018.

The compound annual growth in Opex over the past 10 years has been just wouldn't 0.04%.

General and then minutes administrative costs increased by 10.3% year on year, principally as a number of employees increase to enable additional vessels to be taken into in house technical management, we know technically manage a total of 17 of our 38 vessels in house.

Interest costs for the fourth quarter were $12.2 million, which is similar to the $12 million incurred during the fourth quarter of 2018.

Total interest expense increased from $44.9 million during 2000 $18 million to $49 million in 2019, primarily as a result of interest on the not bonds issued in November 2018.

In addition, we capitalized interest in 2019 of $4.8 million associated with capital contributions made for the construction of the ethylene marine export travel.

I'm sorry, you mentioned determines the mens loading its inaugural toggle navigator Europe in December.

So tell me what accounted for a book loss of $900000 during the fourth quarter.

And then a charge of 1.1 million for the full year thing navigator is 50% Sheryl stop loss.

We are not anticipating a profit from determined lunches volumes from the to put agreements ramp up in the second quarter over this year.

We reported a net loss for the fourth quarter of $2.8 million or a loss of 8.5 cents per share, including the $900000 relating to the tender.

Marginally better than the last generation during the third quarter and better than the 3.9 million dollar loss made during the fourth quarter of 2018.

Full loss for the year of 2019 was 16.7 million compared to a loss of 5.7 million for 12 months of 2018.

With respect to the balance sheet cash stood at $66.1 million at December 31st against the maximum required to could liquidity covenant from bank loans and buttons on $44.5 million.

Somebody was in compliance with all financial covenants on old its facilities at December 31st 2019, we do not currently foresee any covenant breaches in the near term.

Over the company does provide cash collateral as security it gets unrealized losses on this cross currency interest rate swap and then the event at the Norwegian kroner weakens further against the U.S. dollar additions cash security was need to be placed into the collateral account those providing less headroom on our liquid she mentioned this covenant.

During the fourth quarterly contributors, a total of 12 and <unk> million dollars towards the construction of the <unk> of the ethylene marine exports ever taken token contributions to date to $125.5 million against as anticipated total cost of $150 million.

As mentioned the ethylene refrigeration units and then sort of Repiping loading arms et cetera, now complete an operation and the construction of the 30000 tonne ethylene storage tank is expected to be completed later this year.

The total loan facility for maximum $75 million remains fully undrawn, some of which would be drawn to fund the remaining capital contributions of approximately $24.5 million. The amounts available for drawdown are dependent on the level of throughput agreements in place and currency. The banks have agreed availability of $36 million.

Based on the first three off take agreements with compliance requirements on going to increased as well known to $52 million as a result of the fourth off take agreements signed late last year.

As discussed on the last earnings call at the end of October we undertook the refinancing of one of our vessels navigator Aurora through a sale leaseback back transaction to sell price of $77.5 million provided cash of $69.75 million after a seller's credit of 10%.

44.5 million of which was used to repay the prior loan and the vessels and the remaining $25.25 million available for corporate purposes, and further strengthen our balance sheet.

And the changes with the sale of the company entered into a bareboat charter for the vessel for up to 13 years with a company, having a break closes out years, five seven and Ted.

At December 31st total debt stood at $889.5 million, which incorporates fives bank loan facilities. The unsecured 100 million dollar Norwegian buttons on the 600 million knocked denominated Norwegian bond, which equates to approximately $71.7 million.

Well its headline gross debt to equity raise it was 48.6% at December 31st if we want to separate separate out the debt associated with the marine export terminal, which is 100% debt financed the racier relating to the business shipping business reduces default.

The 4.8%.

And we pay approximately $70 million those 8% of total debt per year in regular quarterly repayments, but.

No debt to equity would reduce below 40% at the end of Twentytwenty, all those things being equal.

I was referred to in the 6K published last night. The company does not have any debt facilities maturing during twentytwenty and there's only wouldn't debt instrument maturing in 2020 100 million dollar Norwegian bond.

Matures in February 2021.

Company has had considered refinancing this bond with a like for like buttons prior to the outbreak of covert 19, but due to the current disruption couple markets. The company is now also considering alternatives in the event at the effects of the virus last longer than anticipated.

Considers such considerations include seeking an extension to the maturity of the bond seeking to raise capital to repay the been by means of Fargo sale lease back for a number of the company's fences, Alternatively, raising additional debt alternative that using available unsecured vessels.

And with that I'll hand, you over to isn't.

Thank you nice.

Good morning old.

The Clarksons 12 month time charter assessment for Handysize semi refrigerated gas carriers increased by 20% during the fourth quarter.

$540000 a month at the beginning to 645000 goes a month.

End of December.

As one would expect in a rising markets our utilization across the fleet. Some similarly rose from an average of 85%.

During third quarter to an average of 92.7% during fourth quarter <unk>.

Increased utilization, but generally due to an uplift in the transportation need of LPG during the first winter months.

Yes, the proportion of earning dates rose by 4%.

2104 days during the quarter compared to previous quarter.

Amounting to two thirds of our total fleet, earning days.

Deep sea petrochemical voyages similar similarly pickup in demand.

Referred back to the more traditional trading.

It's selling from U.S. to Asia.

Abuse of dying from Europe, Asia, bringing additional ton miles to the Handysize segment.

The Chinese petrochemical and manufacturing them on gross during this period in order to replenish inventory levels prior Chinese lunar new year.

Yes resulted in our petrochemical earning days during the quarter derived by 26%.

Hundreds and 77 days compared to the previous quarter.

As you heard earlier in the cool.

And I forget your apartment filed alongside Morgan's point terminal during the Christmas period to commence the inaugural ethylene commissioning cargo for the enterprise navigator ethylene joint venture.

She successfully completed loading operation so for 11500 tons of ethylene.

Or in American speak 25 million pounds of ethylene.

Delivered on specification ethylene to Taiwan, and the 10th of February since then the terminal I just know that for additional vessels.

In the run up to our expectation of sort of utilization of the ethylene terminal I mean, I moved to creates a larger and broader props form of Handysize ethylene vessels, we announced the formation of the living up who last month.

Cool and neighbor folks to provide a better service our customers in the form of flexibility into deep sea petrochemical trades for critical mass mattress.

Who will have 14, handysize ethylene vessels at its disposal to serve as varies existing and new potential contract some customers.

At the beginning of Twentytwenty started off on a good no retail to utilization unemployment across the fleet.

I've ever seen her and experiencing within manifestation of Koby 19 virus and its global impact we started seeing a dampening effect from shipping demand from February on burts.

Manufacturing the mom decreased alongside consumer demand, resulting in high feedstock enrollments funeral inventories.

And price volatility.

Many market participants chose not to move cargo secured multiple cargoes during the month of February and March meaning less demand for seaborne transportation, which in turn no surprise to me I see impacts our utilization rate.

Does that impact is manifesting itself more into petrochemicals segment due to do Threed set association with GDP as opposed to LPG for Handysize cargoes are generally associated with domestic consumption of course eating and cooking and that should be less impacted by effect so to virus.

[music].

Somewhat surprisingly, though argues report earlier this week that petrochemical crackers globally have yet to reduce operating rates as a results of the mom or March in Reais.

And despite price falls short of finished products Argus, if your fourq enough producers that steelmaking a reasonable margin.

With the cracker operating rates holding firm in Europe and U.S.

In a weak domestic demand environment products, such as ethylene abusive dawn are being exported to Asia as we speak.

As an example, Europe exports of nearly 50000 tons of ethylene during the month of much funding for you destinations.

Ethylene fob pricing in Europe, and U.S. is currently about.

Good and $75, Tom and $200 respectively.

Asian buying the mine hovering above.

The $450 to $500 per ton range.

Within this range still makes possible to justify deep sea petrochemical shipments between the continents, albeit the margins have narrowed considerably.

Over the last two months, Mickey making it slightly more challenging.

Just slightly Cogs in news.

He is a China reopening manufacturing sites lifting travel bans loving walkers to return to their jobs.

China manufacturing PMI rose to 52 in March.

From a record low of 35.7 in February.

This should stimulate some form of petrochemical petrochemical demand in the near future. However, it is slightly too early to see the effect of these yet.

Now I will hand, you back to David.

We can open the call up for the Q in a cash if that's okay with you.

Thank you.

Ask a question.

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[laughter] question.

Next question.

Given some Jefferies.

Your question.

Ladies and gentlemen.

How are you all good thank you.

Yes.

Thank you yet circuit.

Right. So starting on the sitting side you know your press release, the or the company is not so I'm just gonna be cool charter and that's far but your goodson has fallen out 97% from January to make.

Earnings. So couple of question, what kind of harvest levels or you've seen or heard a spot you know cooking or Android occurring sex and then what was the I upgrades universalism for one can claim to resist maybe pick the midpoint of then 97 mid 80 percents around nine.

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God around.

So.

You have the utilization rates for the quarter.

The press release there but.

I think.

Back end of January.

Quote the time charter.

Earnings from Clarksons for at its peak at $695000 a month. So that was at end of January.

End of last week.

It was close to the 660 fives so.

Down tablets, but we're not seeing Oh dropbox to clear keeps that was the question. So I'd say, it's a it's a slight reduction from its peak at the end of January.

As to what we're seeing today.

It's smaller so that the rates are impacted less so but this utilization. That's you picked up on which is somewhat lower than what we had in December and January because of just dampening effect from on the demand side.

Sure.

All right. Thanks that Oregon, and then a question for now you know looking good sale leaseback, that's indexing freed up around or burden <unk> liquidity I never got creeping up.

And specific use for those could see that's just kind of staying on the balance sheet and or two other questions. What is the effective interest rate on that transaction.

And our at good to know sale leasebacks kind of ER isn't available options that market still open could possibly we could have that hundred million on next February.

Yeah. So they are the existing sale leaseback transactions first this is ER with ocean deal the Norwegian outfit the rate was 4.3% plus LIBOR.

We.

We have a 25.25 million as I mentioned, Oh surface gosh, that's really just a strengthening the balance sheet, providing additional liquidity.

But we did in there so that transaction was closed in October last year October 28.

Last year with respect to ER I.

Any future sale leaseback said, we're considering to pay off the the.

Hundred million dollar abundant event that the market stays close or a couple markets stay closed.

We're looking at alternatives to market certainly the Japanese or leasing market is very much openness has remained open throughout and the rates would probably do the less than than the 4.3 that I mentioned in the relating to the existing.

Leaseback.

Perfect time, there for that and then or one more topics to cover here for ethylene export terminal or.

I know, there's still kind of commercial acceptance and burst thinker hopefully coming segment.

They use if not we.

With that.

I'm kind of the that's a good EBITDA guidance update for or the second quarter or I'm, just a four year Corning Corning and then current when it goes on for your 2021, and then can you remind that could be cornel stuck on navigator has grown its books for the terminal.

Oh I'm not happy to start also not the debts that at least the payments that we have our $125 million, so far which is which is all debt.

We expect to pay the other 24.5 million generally threw out 2020 this year.

They are those payments principally relate to the tank, which as Harry mentioned is due to come on in November of this year.

In terms of I didn't mention that we're not expecting to be profitable from not terminal until the throughput agreements ramp.

Right ballpark come into play after which we would expect to be.

We've given guidance before about the full operations also terminal in mid teens or around the 20 to 23 million dollar I tried to get studies to 23 million dollar EBITDA level, that's based on on the school million ton capacity or.

C O C a treatment when the tank comes into play.

[noise], that's Oh, my goodness is making sure that that range still intact and I guess you mentioned that there. So last question for me any updates on the remaining 25% capacity in terms of contracts.

Thank you you ready for the next question.

Hi, Harry <unk> did you want to answer that question.

Hi, I'm always said it was with why even but my have dropped off yeah. We're still in its still work in progress Rondi, we're still trying to get I'm not sure. If you remember a phase one is already sold <unk> and its phase two we're talking about once it the tight comes on stream a war.

Oh, even in the team on the people enterprises and lots of discussions are those discussions were up into that whole to be honest given the cool, but a 19 situation, but we're still hopeful that we'll get the terminal. So they are imminently.

Yeah, I think your best answer for that Randy would be what Jim Teague at Enterprise had said that James conference call that they were very close.

Very close to signing Alas document that would.

Result in that general being sold out completely.

Now you know since they had conference call that they had a month to month in half ago.

Depend a lot of changes in the world.

I think knowing the background of those comments I would suggest that that interest and that potential signature on the documents will be coming.

I think no one is in a rush to put their name on the document right now so I think it's coming there's a lot of confidence that Ah that that will be sign, but it's not signed yet.

Okay, where got does there come off working so well cover I kind of thanks for that and health system.

Catherine if there was another question. Your next question comes online as shown there on from Evercore. Please ask your question.

Well I guess.

Yeah, Shaun Morgan so the the unrealized.

Loss on the cross currency for the interest rate swaps you guys had to cash collateralized that what was the total amount that'd be posted and is there sort of like and an upward limit that would need to be posted in how much liquidity head room, you have sort of Ah you taking into account.

So we see a the loss at the end of these the and unrealized loss at the end of ER December was $6.3 million.

And the hedge provides our bears the first $5 million.

We had two.

Put up to $1.3 million into collateral account.

And the reason there isn't actually a headroom there isn't a a cap on that.

Okay. So it's sort of like a dollar for dollar that you have to match to the on on realized loss or for go up another five you'd have to post another five exactly correct yeah.

Okay.

And then you talked a little bit about the sort of spotty demand you're seeing around the world and maybe a little bit of improvement in China with India, I think I read that they're they're now planning to do subsidies for Indian retail consumers for cooking gas is that going to be able in your opinion to be able to offset some of the some of the law.

Demand from the industrial sector, India, or Ah, So I guess to make or are you sort of thinking this is going to be negative for a while in india or possibly improving demand there.

Hi, Sean its a good question it's complicated question so.

Okay.

At least what do you subsidized it's for.

Marginally.

Economic people in India. So they use LPG for domestic so for most of my sheeting, perhaps but for cooking.

So the demand is still there.

Just on changed is just let it get subsidized.

Uh huh, another impact salveen, guys sets or petrochemical industry or the downstream demand in India is lower.

So the Indian production.

Define them out, but elsewhere in Asia and have some knock on effect on on how the trade.

But for LPG in India.

He said, there's a security of supply on the national interests, which is important so what we've seen over the last couple of weeks product and national oil companies in India have gone out to secure.

Roger stems of LPG.

It is security of supply into the various ports. So they won't get caught short and in this current I look style.

I think for Handysize net effect.

It's a neutral.

And there's not that much handysize LPG business and between the Middle East and India. There's a couple of ships, but those will be on the affected.

And the more impact is that there are new petrochemical cargoes being quoted from India, and we'll go to Asia, which has a positive effects will be a smaller volume so.

I think net net is mostly neutral shaul, so not not too big impact cost minus.

Okay. That's helpful. Thanks, I'm going to turn it over.

Yes.

Yes.

Your next question comes line of Omar Nokta from Clarkson Platou. Please ask your question.

Hi, David.

Ill.

And.

Yeah, I hope you and your families are safe and as well there too.

Thank you you know you guys have given a very good overview I thought.

Obviously the comment.

Sorry question. There can you ask your question again. It appears your line is that's dropped off please press star one again thank you.

Yes, maybe you can take the next one in if all my I can hear rice he'll call back where this question.

Thank you wouldn't ask I can't continue with this question.

Theory, yes, now we can thank you okay, yeah, sorry about that I'm not sure what would happen I just wanted to just take up the fog.

It is it's going around.

Maybe just first off.

But the operational challenges and this is definitely something that's industry wide that there should mix.

What is facing and that is you know the crew changes and needing to delay that.

When you guys think about it how long do you think it's feasible.

To because you guys have specialize vessels and it very sophisticated equipment on board Yeah. How long do you think it's feasible to keep the crews on board without making a change this.

Weeks, a number of weeks type thing or can this go on for months.

Oh, you will moderate Saudi is more like I'll take that one.

Omar and in many respects if it's supposed to be at the moment as old one of our vessels.

To be honest and tells you a question yeah can go on indefinitely, but as countries stopped to open up in this flight start moving again number what we're trying to seek to refresh the crews as quickly as possible.

Yeah, Okay. Thanks, Thanks for that.

And then just as a point.

Mentioned, the utilization being down into the mid eighties.

At this point would would you say that I'd say, a blended average across the spot and time charters that just see the spot market utilization.

But that is a blend the.

Across the whole fleet.

It's railways.

Quote our utilization members basis.

Okay. Thank you.

And then just one other thing I wanted to ask and.

Clearly the sale leaseback you unlock the good amount of cash and.

Yeah.

Just thinking about it looking at the the way, it's classified and the balance sheet I mean, I've missed it but is there a reason why it appears to me that it looks like it's a related party transactions is that the case with this.

Yeah. This this is Ah lisanti, Fortunately is that a consequence of U.S. GAAP because the vessel is owned by a.

Company, which has no equity involvement by navigator, but navigator is the sole beneficiary of that that company.

Because we've got a by options at the end of various years. Five 710, we are required to consolidate that subsidiary into our books there forwards on the balance sheet. Its colds a related I related party and on the income statement there is an amount.

Net income attributable to the non controlling interest which is again this sale lease back so it's it's.

The most bizarre.

Accounting treatments that that we've come across to date is not so I FRS accounts for sale lease backs.

But it's it's a real club and dose of a U.S. GAAP, but you're right. The the non controlling interest does does relate to this sale leaseback.

Okay, all right so.

But effectively just from a big picture, obviously ocean yield.

There's no.

There is absolutely zero or come another three or not forget <unk> equity participation in that subsidiary correct and effectively for the balance sheet perspective look on the balance sheet amount as the amount of de outstanding loan.

Yeah Okay.

I'll do that and.

I know bouncing around I just wanted to ask one more thing.

Thank you gave a good overview.

The drop off and oil prices are there still is fairly.

He said gap between ethylene or petrochemical prices in the U.S. Europe and Asia.

From what you're seeing right now in the market you know, it's all everything is changing and it's dynamic, but basic based off of that spread and yes, it's come in or you're still seeing a good amount of movements or has that had sort of the overall pandemic really started to impact.

Lets face off of this ER.

This pricing.

Yeah, I mean the.

Downstream the moms in far east.

There's not helping because obviously, it's called come off and big time in February and March a little marches mixing slightly better than February.

But to the point woke up there were filling up.

Hey.

Far east <unk> companies were filling up their storage is.

Before to Chinese student.

During the year commenced so there were already their inventories were already school.

So and then you have February March come in downstream demand was no because workers for at home and so forth nobody we're consuming [noise].

So that's had an impact on the inventory management on the availability of where you could place cargoes and that's the same time you have Europeans.

And the American still running their crackers, that's a high high right. So they're producing their domestic situation similar to in.

Right, so they're ramping up inventory so.

As soon as we see.

Rich being of it both in Asia the cargoes.

We didn't move and they haven't been moving, albeit a little bit some reduced scale.

So as I mentioned it was 50000 tons of ethylene going from Europe to Asia in March and that is quite unprecedented so.

But the pricing.

The narrowing of the AR is also a challenge so on paper grade works today.

But producers and end users and traders they have to then find.

Oh image, so wet and your drop off 12000 tons of ethylene, which is a big cargo.

And they go to one place or did they have to mix up and go to two or three locations.

And what the pricing due in the meantime, because.

You know there voyages are quite long. It takes some you know do you get to the destination is Turkey 40 days.

So you have a lot of complexity is in those trades, but they haven't stopped.

But of course, the Corona situation doesn't make it easier.

Yeah does.

Just to that end is.

I think storage any sort of a is that a viable option and these trades.

Or is that we had been yeah. We haven't seen we haven't seen that yet now we have some larger ships being available on the spot market and that could take 20000 tons and that might come.

So, but we haven't seen I see in those market Kohl's yet.

I think.

Looking storage situation as more and more applicable in purely commodities, so if he's propane or crude or something like this when you come to petrochemicals is a refined products. So.

It's less of a scope.

Two.

For floating storage.

Okay got it well appreciate the color guys. Thank you very much in the if they say good to hear from me.

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Thank you gentlemen, any interest the time and I'd like turn the conference back to feel cleansing statements.

Well great.

Troubling in difficult times.

He said, even I'm, making this conference call. This then a challenge so I hope, we're being forgive them for that as well.

Well pull what do our next quarterly call, which I hope. It's not is delayed is this a yearend call. One thank you for joining us.

Thank you that does conclude I'll come to sit today. Thank you participating you may now disconnect [noise].

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