This is the Chorus Call conference operator. Welcome, and thank you for joining the d'Amico International Shipping first quarter 2019 results conference call. As a reminder, all participants are on listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo d'Amico, CEO. Please go ahead, sir.
Good afternoon to everybody. Let's go straight to the main points. Then we'll go through the presentation. As you know, we set the share capital increase, which basically has been subscribed up to 97% of the authorized capital, in private placement, it's been finally subscribed to 100%. The net result of Q1 2019 is a net loss of $5.5 million. There is a technicality due to the IFRS 16, later on, our CFO, Carlos Balestra di Mottola, will explain to you better. Vessel disposal and sale and lease back. In January 2019, we finalized a Japanese operating lease, JOLCO, which has been one of the first transactions done on a European owner with an LR1, which has been generating around $10.2 million in net cash proceeds.
In April 2019, DM Shipping, which is a joint venture that we have with the Mitsubishi Group, we finalized the sale of one of the vessels. Are two vessels in joint venture, we sold one, generating approximately $12.3 million in net cash proceeds. In March 2019, this agreed the sale and lease back of one MR vessel built in 2014, generating at the vessel delivery, April 25, net cash proceeds of $9.6 million. We have an amendment of financial covenants on all bank loans guaranteed by DIS, because the application of IFRS 16 from January 2019, had a negative effect of 4.3% on DIS net worth total asset ratio.
To offset this impact of this new accounting standard, all of this bank agreed to amend the financial covenant on loans guaranteed by DIS with a reduction of a minimum threshold for this ratio to 25 from the 35 previously. Talking about the achieved rates. The daily spot rate has been $13,583 in Q1 2019, which has been 7% higher relative to the first quarter of last year, $858 per day, 26% better than the year 2018 as a whole average, which means $2,785 per day. This had 46.4 of its total employment days in Q1 2019, covered through time charter contracts at an average daily rate of $14.6. This achieved a total daily average rate of $14,057 in Q1 2019. Let's go back. Go to the fleet. There is no change here on the first quarter.
The sale of the JV ship happened in the second one. These numbers are, let's say, half a ship better than what it is today, in the sense that we have 49.5 ships on the fleet as per first quarter. We sold the 0.5 a little bit later on. As you already know, because these numbers have been repeated many times, we have a 22 new building program, which is coming to one end. The last ship, an LR1, is due to September this year. I have to add the fact that this LR1 is probably the only LR1 scrubber-fitted position for delivery in September, which should be extremely competitive for the market. We, as usual, maintain a top-quality time charter coverage book with the maximum AAA oil majors around. Even now, we are negotiating other contracts with first-class charterers.
Saying that, I give the floor to Carlos Balestra, I will be back to you with the market session.
Yes. Hello to everyone. As Paolo just described, we are arriving at the end of our new building program, which I would say is good news from a cash generation perspective going forward. It was a crucial, very important new building program for us. We are very happy to have these new building vessels, which were mostly acquired at attractive prices. They did drain a lot of cash over the last few years, which unfortunately were also not excellent years from a market perspective. The CapEx to take delivery of this last vessel corresponds to around $32 million, of which the equity we will have to invest is $11 million. The vessel is expected to be delivered in September, we are having very interesting conversations with charterers who are very keen to take the vessel on time charter. I must say there is a lot of interest.
There are not that many LR1s with scrubbers. I remind you, this is the only vessel we have that will have a scrubber, that are going to be delivered in September this year, in the last few months of this year. It's a very good timing in this respect. CapEx falls, therefore, drastically from 2020. The figure in 2020 for the maintenance CapEx, it's quite high relative to our usual investments for maintenance of vessels, that's because it's a coincidence we have a lot of vessels which turn 10 years old in 2020. Presumably, in a stronger market in which we expect from the second half of this year, some of these vessels will be sold, therefore the investments will be smaller than we indicate here, which is a steady state scenario in which we are showing not assuming any further vessel disposals.
Going on to the following page, we also show the drop in debt repayments. We have this facility with Intesa, which entails $15 million in reimbursements every year, which we will finalize reimbursement of in December 2019. Therefore, from 2020, our cash and LCNL breakeven would be pretty much aligned, and that also will help cash generation and deleveraging of our balance sheet. Page nine, we show recent fixtures. Many of these were closed at the end of last year. In the last months of last year, we took advantage of the spike in the market to fix a number of vessels, some of them on shorter TCs, because we were a bit concerned about potential weakness in the end of Q1 and Q2 this year associated with refinery maintenance, and some of them on longer contracts.
We fixed another vessel more recently, the vessel six here on this list, on a 29-month contract, plus six months option at $16,000 per day for the firm period, and $16,800 for the optional period. This was only closed recently as a contract, but actually, the negotiation began at the end of last year. It was quite a lengthy negotiation. I believe these rates today are lower than what we could achieve, because there is still very strong interest from charterers to take vessels for similar periods, The market is firming for rates for such periods. Going on to page 10, we show how our coverage evolved since our last presentation of the year-end results, it increased slightly for 2019. We are now 40% covered from Q2 to Q4.
In detail on the bottom right, we show on a quarterly basis the coverage. It is falling as it was before in the last part of the year. I would say it increased a bit more in Q3, Q2 is still quite low at 31%. We are still quite exposed to the spot market, which is intentional because we expect a stronger market in the second half of the year and especially in Q4, and we want to be open and have quite a number of open days to be able to benefit from the upswing in spot freight rates. On page 11, we show the fleet evolution also on not assuming any renewals of the TC-in vessels and the short-term TC-in vessels.
If that were the case, the fleet would fall, the average fleet controlled by us from 49 vessels in the last three quarters of 2019 to 41 vessels in 2021. Nonetheless, our exposure to the spot market and average number of vessels in the spot market would rise from around 29 to 37. At the bottom, we show our sensitivity for every $1,000 per day change in the TC equivalent earnings given our exposure to the spot market. In 2020, we show that if the market were to $3,000 per day increase in the spot rates, would translate into an increase in profits of $38 million. We don't have that many days covered to date 2020. They are slightly above our P&L breakeven for 2020. It's at $15,300. Our P&L breakeven in Q1 this year was around $14,900.
For the year, we assume that excluding non-recurring items, it should actually be slightly lower than $14 nine. 2020 is pretty much at the same levels, I would say. That is an easy back of the envelope calculation, assuming no positive contribution from the existing time charters, which is, let's say, a conservative assumption. If we were to earn around $18,000 per day on our spot vessels in 2020, we would be generating $38 million in profit. That is a way of also looking at interpreting this graph. Going on to the following page, we show our net financial position as at 31st of March, and our net financial position relative to the fleet market value. We show the ratio is at 76.4%, so it is slightly better than in December last year, but only marginally so. That is because of the rising asset values, especially for the younger vessels.
Pro forma for the proceeds of the capital increase, assuming the proceeds from the capital increase had come into the company on the 31st of March, we show that this ratio falls to 66.5%, and that our gross debt falls from $650 to $619, and our cash and equivalent rises from $29 million to $46 million. It is a much healthier position, also because the advance ratio on our new buildings usually is around that level, 65%-66%. This is a much healthier indebtedness ratio. Going on to page 13, we give a bit more information here, a bit more detailed information on the components of the net results for the quarter and the comparison with previous periods. As Paolo was mentioning, the net loss for the period was $5.5 million, which is higher than the net loss of 2018 of $3.6 million.
Nonetheless, if we exclude non-recurring items, in particular non-recurring financial items, which had a big impact in 2018 and 2019, the net results would have been of -$4.4 in this quarter, -$6.8 in the same quarter of last year. An improvement of $2.4 million. IFRS 16 had a negative impact on our results in this quarter. Nonetheless, this was mitigated by the fact that the application of IFRS 16 led also to the reversal of some onerous contracts with a positive impact of $0.7 million. The net negative impact from IFRS 16 was only $0.1 million. In Q2 2019, the negative impact should be closer to $0.8 million because we now have already reversed all these onerous contracts in this quarter.
Of course, this is only an accounting, let's say, adjustment, and this impact of IFRS 16 over the life of the contracts, which are being capitalized, is equal to zero on a P&L basis. It has initially a negative impact and then a positive impact towards the end of the contract. The IFRS 16, of course, a very big impact on our EBITDA, EBIT figures, which are not comparable anymore with those of Q1 2018, unfortunately. They have complicated the life of the investors and analysts, I would say, in analyzing our financials. Let's say the key advantage of the application of this new standard is that it probably gives a fairer, a truer picture of the financial risks of these contracts which were previously off balance sheet, and now we have to recognize them as assets and liabilities.
It led to an increase in our assets of $144 million and a similar increase in our liabilities of $146 million. There was an opening adjustment to the shareholders' equity, a negative $2 million, which corresponds to the effect which we would have had if we had applied IFRS 16 from the 1st of January 2018. It's the cumulative effect. Going on to page 14, we have a bit more detail here on the daily results of our vessels on a TC Equivalent basis. Once again, $13,500, $13,600 almost was the result of our vessels trading on the spot market. It's important to take into account that we have mostly conventional vessels trading on the spot market because our eco vessels are mostly fixed on time charter contracts.
That is one of the reasons why our results for the spot vessels looks weaker than some of our competitors, which you might have looked at. We benefit on the TC coverage rates, which are at more attractive levels, but we are penalized on the spot market because we only had 5.5 vessels on average, which are eco vessels trading on the spot market in Q1 2019. If we look only at the MRs which are eco in Q1 2019, their result was actually $15,200. That is much more aligned with the results of our peers. On page 15, we provide this detail. We look also take into account that the $13,600 includes also the results of Handy vessels. We have a number of Handy vessels, and that also depressed a bit the average.
On page 15, we show the average only for the MRs. The MRs trading spot conventional and eco of our fleet earned $13,900. Only the eco earned $15,200. The blended average including the TCs only for the MR vessels also was $14,100. The Clarksons average was $13,600 for MR vessels. There's a slight outperformance relative to the Clarksons average. Usually, it's much more pronounced. It must also be taken into account that there was, in this quarter, a number of misfortunate factors from a slightly higher number of vessels stopping for dry docks with associated deviations, from maybe a not very fortunate positioning of the vessels, and also adjustments to estimates on voyages which started in 2018, which had a negative effect of $330 per day on the results of our spot vessels in this quarter.
The results would have been stronger without, let's say, these unfortunate events which impacted the results of our vessels in this quarter. Now I pass it on to Paolo for the market section.
Going to the market overview. We still have a large potential upside to rates and asset value. If you look at the graph on the left, see that the one-year time charter and spot rate are respectively 54% and 72% below the last cycle peak. Looking at asset value, new building and second-hand are respectively 32% and 48% below the last cycle peak. We are improving on asset value and time charter rates. The one-year time charter conventional non-eco rate in 2016 was $12,000 something, just a few dollars over $12,000. Today, we are well over $14,000. The value of a five-year-old MR in 2016 was $22 million, and today we are talking $28 million. There is a demand growth overall, 3.6% since 2000. What is extremely interesting, I think, that the share of the total oil seaborne trade.
The product share in the total oil seaborne trade grew up from 25% in the year 2000 to 35% in the year 2020. The products are slowly growing more and more as a percentage of the total oil traded. The stocks which have been built in between 2014 and 2015, they are being absorbed, so inventories are down significantly. We have an expected surge in refining volume in the last part of 2019. We see a ramp up of the refineries going up to August. One thing I would like to stress is whatever is going to happen in terms of growth and consequently as positive results for us and for the industry, as you know, is very much linked on the second half of the year. We have a record growth of refinery capacity in 2019.
We are close to 3 million barrels per day increased capacity, but even here, this increased capacity is coming in force in the second half of the year. We are changing our refining landscape, which will be driving demand. This increase of refining capacity, 75%, will happen between Middle East and Far East. You will see, as a consequence of this, a displacement of the production of refined product and as a consequence, a major demand for ship transportation. The rebound in E&P should drive a surge in non-OPEC supply. We have rapid growth in the U.S. crude exports. Here again, second half of 2019, you have a strong increase in the pipeline capacity, which are going to connect Cushing down to the Gulf of Mexico or Texas, how you prefer. Mexico and Brazil will continue to be the stronger driving imports.
We have IMO 2020. I think IMO 2020 doesn't need to be presented too much because everybody who has been related to our industry, at least for the last six months, has been bombed about what it's all about. Here again, just to say it in a few words, we burn between 3 million-4 million barrels per day of fuel oil. This as bunkers, so as fuels for our ships. We have just to displace this quantity with a fuel which should have a stop sulfur content of 0.5%. Today, we are burning fuels which are in excess of 0.5%. To have that, we have two ways. One is a straight run, so a totally new product, and two, the blending of existing product with marine gas oil, which is 0.1% sulfur cap.
We have a totally new landscape on the bunkering side, which will be, of course, an element of cost because we expect, and already the few quotation of futures are telling this, we expect an increase of price, but also we expect, of course, an increase of demand. The increase of demand of middle distillates due only to this fact has been forecasted between 1 million to 1.1 million barrels per day. This should jump on, and we have that if you look at page 28, we look to the positive broker's view on IMO 2020. If you look at the bearish one, which is Deutsche Bank, expect an 8% increased demand for product carriers in 2020, only due to IMO. The most bullish one is Morgan Stanley, and is expecting something between 10% and 14% of the global product tanker fleet increased demand.
We are talking of big numbers. Against these numbers, there is a slowing fleet growth of around in excess of 1%, 1.5%, 1.4%. Another thing, there are a lot of ships which are getting over 15 years of age, which have been sold for local trade, where, let's say the world fleet is not trading today. Basically for us, it's like a demolition fleet because the coastal trade of Africa, coastal trade of India, is absorbing a number of old ships, but we never trade there. For us, it's like ship lost. Limited new building orders. The liquidity is not, thanks God, on the new building who are keeping the price rather high, but we are very much concentrated on ship built between 2009 and 2010 because those ones were making more sense with today's rates. We expect, of course, a tighter market.
Here again, we see a strong improvement on the second half of 2019. Not us only, but also those brokers that we see in the presentation. I said so, I leave to Carlos for the final words.
The final slide here on showing our NAV evolution. As usual, we measured it as at the end of the quarter, 31st of March. The right line, we show our NAV of our fleet, which increased from December at $218 million to $230 million. The NAV per share also rose from $0.33 to $0.35. At the end of the quarter, we were at a very deep discount to NAV 72%. Following the capital increase, the NAV rose from $230 to $279. That is, of course, assuming vessel values haven't changed between March and May. Then the NAV per share, because of the dilutive effect of the capital increase, fell from $0.35 to $0.23. At the share price of $0.10, that corresponds to a discount of 55% to NAV. It is still a very important discount.
We assume, as previously mentioned, this discount tends to fall once the market shows some convincing signs of improvement. We expect that once we start generating profits again, investors are going to be able to benefit not only from an increasing NAV, but also from a reduction in the discount to our NAV. We have had also brief periods in the past where we traded at a premium to NAV. That cannot be ruled out again. Thank you very much for your time, and we pass it. Please let us know if you have any questions.
Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Matteo Bonizzoni of Kepler. Please go ahead.
Yes, thank you, good afternoon. I have two question. One is to help us extrapolating the impact of IFRS 16 for the full year. In the first quarter, you say that on the EBITDA, the positive impact was $7.9 million. I would guess that in the full year, it is something in the region of $30 million, if you can confirm. On the EBIT, you said in the press release that the impact was +$1.5 million. I want to ask you because if I look at the P&L statement, there is a -$8.48 depreciation of right of use. If on the EBITDA is +$7.9 and the depreciation of the right of use is -$8.48, I would calculate a slightly negative impact. If you can help us. On the net profit, you have said, if I'm correct, -$0.8 million.
On the financial liability is around $145. If you can elaborate on the three line of the P&L, so EBITDA, EBIT, and profit and financial position. The second question is just on the outlook and on the current market situation. Clearly you have said that for several reasons, you expect a strengthening of the market as of the second half of this year. Currently, we are experiencing, if I'm right, some softness in the rate because we are probably slightly below $10,000 per day compared to stronger rates between end of 2018 and the beginning of the year. Can you elaborate on the reason why currently the rates are experiencing a renewed weakness? Thank you very much.
We can touch on your market. If you don't mind, I'll start from the second question. Carlos will be back to you on the first one. What is happening today and the reason why in the first half of this year, things are by far softer from what we expect to be in the second half is due to the fact that all the refining industry is passing through. Now we have America slowly coming back on force, and we have the Far East going into maintenance. The maintenance this year, for all the refiners, is going to be a very special one. It's not to be the usual spring and fall maintenance, what happened since the refiners are around.
This year, due to IMO 2020, understanding that refiners have to go on full run on the late part of the year, all the refiners are trying to maximize the maintenance on the first half of this year. Maintenance periods are longer, are more complicated, and this, of course, as a direct consequence, it ends up in a lower demand for us because we have less cargo movements around. This is what basically is affecting the market today. Of course, this on the second half, it should slowly start recuperate, and as we said, with next fall, we should be in full force. I hope this satisfy you as an answer.
Yeah, thanks.
Yeah. On your more technical question relating to the impact of IFRS 16, you should look at our financial statements, page 32 of the notes. We have actually published for both the balance sheet and the P&L for the mainline items, what they would have looked like in Q1 2019 if we had not applied IFRS 16. You can see there for the EBITDA, for example, in Q1 2019, it amounted to $22.4 million. Without the application of IFRS 16, it would have amounted to $14.5 million, and in Q1 2018, it amounted to $10.1 million. We are already adjusting there for the impact of IFRS 16.
On the bottom line, you can see line by line on the time charter higher cost, what was the impact, what was the impact on the either direct operating cost, and on the depreciation that we had to recognize because of the IFRS 16. On the bottom line, what you have to take into account is that there was this reversal of the onerous contract. Part of this reversal, we would have had anyway in the first quarter, and part of it is an additional reversal because of the application of IFRS 16, the accounting principle, which forces to recognize these onerous contracts doesn't apply anymore. Therefore, we have to reverse the provisions previously made for these contracts, fully reverse the provisions. There was an additional reversal.
Net of the reversal of all the onerous contracts, the impact was negative by $0.1 million in the quarter, and it would have been negative $0.8 million. Net of the additional reversal that we had to make, the impact was negative around $0.3 million only. That explains in detail the differences.
Okay, thanks.
Yeah.
The next question is from Luigi De Bellis of Equita. Please go ahead.
Yes, good afternoon. Two quick question for me. The first one, what do you see in terms of spot rate in second quarter? If you can elaborate for NDMR separately. Second question, could you elaborate on the price trend of the vessels, both new building and second-hand? Thank you.
As far as the rate, April has been substantially very much in line with the first quarter. We are seeing some improvements, of course, now in May because the refineries are coming in. I am talking now about America mostly, so the Gulf of Mexico. We are start seeing volumes increasing from that. To put a number on it would be not very prudent because there are still a number of ships around, so there is a little bit of supply to be absorbed. As far as a differential between an Handy and an MR, average of the average, because also in NDs, you have eco ones and conventional ones. I would put historically at around $4,000 a day.
Thank you.
Gentlemen, there are no more questions registered at this time. I will turn the conference back to you.
Thank you very much, and we go for the next meeting and the next conf call. Thank you for participating, and I hope we satisfied all your questions. Thank you.