Good evening, everybody. I'm very pleased to be with you today to present to you the 2018 results, while exactly five years after the IPO of GTT. So it's a very right time to look at what we achieved over these past five years and to what we can do in the coming years. So while just some words to briefly introduce you to the company and to what we achieved in 2018. You can see that the turnover has reached a figure of EUR 246 million in 2018, which represents an increase of about 6% compared to 2017.
And the income has come to EUR 143 million, representing an increase of about 13% compared to 2017. So, that represents, in fact, the fact that more and more the world is recognizing that GTT is a global leader in technology for containment systems. Well, some key highlights, we obtained 51 orders in 2018, 48 LNG carriers, 2 FSRUs, 1 onshore storage. We delivered in 2018 42 ships, so less than the number of ships we signed for. Since the beginning of this year, in fact, we signed for 11 new ships, so I would say that we are continuing on the very positive trend of 2018.
Also, we had several FEED, Front-End Engineering and Design studies for the GST. It's a technology we launched in 2017, and as soon as 2018, it has attracted a lot of interest for the industry as we had already these 2 study contracts. We signed for 3 license agreement, one with Sembcorp in Singapore, one with Keppel for a shipyard in China, and one with Hyundai Mipo, a subsidiary of Hyundai, building small ships of very small ships. We obtained an authorization in principle from Bureau Veritas for our latest technology, NO96 Flex, on which we are working. If we want to look at LNG, first of all, gas, we have to recall it remains like that, and it's even increasing.
Gas is the only fossil fuel which sees its share in the worldwide energy mix increasing. And more and more gas is exported thanks to LNG. So the fundamentals here are strong and positive. If we look at the demand for LNG over the coming years, we can see that whether forecasts are coming from oil and gas majors, banks, or independent analysts, all of them are very pretty bullish and are very consistent. So I will- I would say that it's pretty much comforting. Also, the LNG demand forecasts keep rising. You can see over the past years, when we look at that, whatever the terms are, it's increasing.
So like also, it's a quite comforting element. We see that at work, and when we look at the imports of LNG in some parts of the world, and especially in Asia, we see that it's increasing, it's increasing quite strongly by 12% last year, with a country like China, which saw its import its import increasing by 44%. And China has overtaken last year Korea as the second largest importer of LNG. Supply and demand, that is coming this study is coming from or this graph is coming from Wood Mackenzie.
We can see that, if we want to cope with the increase of the demand, looking at the depletion of the existing fields and looking at what is currently in construction, we've got to come with new facilities quickly, in order to cope with this demand. That's a graph that we are presenting to you every six months. Some years ago, in fact, people were seeing a kind of a crossroads between demand and supply by 2023. Now, it's earlier, which just shows what we talked about before, which is a very strong demand from the market. So, we need new LNG, and for that, we need investment decisions on liquefaction facilities.
Some have been decided last year. We had the third train for Corpus Christi. We had the LNG Canada, a project led by Shell, which is a huge project. We have a Tortue FLNG in Mauritania, and we have a Golden Pass, which is a regasification terminal converted into a liquefaction facility in Texas. So we have several of them, and some are the things you can see here, the names. So I'm not in the secret of board rooms, so I cannot tell you the projects which are going to be decided and when they are going to be decided, but many projects are ready to be decided.
We think that in the two coming years, we are going to see many of them decided, leading to a need for LNG carriers to transport these new LNG quantities. In fact, if we look at the shipping market, we can see on these two graphs, on the left-hand side, left-hand side, we can see the spot rates. We saw in 2018 a big bump, a big jump in the spot rates, which were reaching almost $200,000 a day, which is a lot. And which, well, it went down, but that shows that, in fact, there are very few ships available for spot markets. So this market is very, very volatile. Well, it may be...
I would say, it's quite exciting, of course, for the people who are on this market. But it shows that, in order to satisfy the requirement for LNG spot trading, there is a need for more vessels. When we look at one-year charter rates, we still saw a kind of jump, not as significant as for spot trading, but a significant jump. And in any case, figures now are above the cost of the ships. So, in fact, it's a healthy market, which can attract newcomers or can decide existing LNG carrier owners to further invest in LNG carriers.
If we look at the existing ships, we see, before year 2000, there were very few ships, in fact, delivered. LNG was born in the '60s, but up to the beginning of the past decade, few ships were delivered, and most of these ships are still in operations. They are smaller than the existing ones, and they have a fairly high boil-off rates, which means that even though they have low rates, low prices, to be, they are fairly affordable to chart, their economics are not that compelling on very long routes, such as Gulf of Mexico to Asia, where the shipping segment is weighing a lot on the cost of the delivered molecule.
A ship on this trade is performing 5 voyages about a year, and so the cost of shipping is very significant in the cost of the delivered molecule. So what we think is that, the, as time goes on, these ships will have to be replaced, and that's something we did not factor in, in our market forecasts up to now, and that we have to take into account. So, looking at our, our core business and talking about, our estimates of the market, we consider that over the next 10 years, there should be for GTT, between 300...
280-310 LNG carriers, taking into account, of course, the more positive forecasts about LNG and the need for replacing old existing ships. For FSRUs, we are between 30 and 40 FSRUs. We saw many decided in 2017, two in 2018. We think that as LNG is proving that it's an affordable and fairly clean energy, having FSRUs will be, as it has been, a very attractive proposition. For FLNG, we see 5 FLNGs to be decided in the next 10 years. And we have a new aggregate, where we add 2 onshore tanks, GBS, because that's not so far away. It's a kind of onshore tank that we put at sea near shore.
And we plan to receive between 10 and 15 units over the next 10 years, so a certain increase compared to what we were planning before. So, looking at new businesses, you know that we are getting close to January 1, 2020, when the global sulfur cap is going to enter into force. The only way to fully cope with that is easily LNG. And you can see, compared to all the other solutions, that LNG is a very compelling story as far as emissions are concerned. Also a new factor, for the time being, a lot of shipowners are equipping their ships with scrubbers, which are cleaning up the emissions.
Cleaning up the emissions in terms of sulfur dioxide, not in terms of nitrogen oxide, nor that much in terms of particles. Now, more and more places around the world are forbidding the open loop scrubbers. So it means the scrubbers which are dumping into the sea the acid muds that they get from the scrubbers. Of course, that is not that bad for water. So I think it's an element which should be considered, because making this investment for not being able to use it so much in some areas is penalizing the return on investment.
If we look at the logistics, if you want to switch to LNG, you need to be able to get LNG. You need to be able to bunker LNG. There are more and more bunkering ships, LNG bunkering ships, around the world. You can see that we got some. And so the logistics is being put in place for supplying LNG to vessels, which is a kind of chicken and egg issue, which begins to be broken. In 2018, we entered or we broke into two new market segments in LNG as a fuel.
The bunker ships, we had a bunker barge in the US. Here it's a real sea-going vessels for bunkering the CMA CGM container ships, an 18,500 cubic meter ship built in China for MOL. And we broke also into the cruise ship segment with the Ponant cruise vessel that we are going to equip with tanks. So we don't guide on the size or our expectations on LNG as a fuel. It's too early to say, and we would not like to mislead you. We just give you some, we just would like to give you some elements on this market.
There are the big container ships between 3 and 20,000 TEUs boxes. The bulkers more than 100,000 tons of deadweight. Oil tankers, bigger oil tankers, and there are about 260 of them ordered each year. Now, also the cruise ships, the car and truck carriers, and where capacity, the space you occupy with the tank is absolutely critical. There are about 40 a year, and you have the figure of the total fleet. So we expect- we see, we see finally, a fairly significant market with about 2,600 ships, new ships, new oceangoing ships ordered this year.
We are particularly focusing on about 300 ships, or if there are some others coming, we would be very pleased. So we are working on that, keeping on trying to work into new segments, as we did in 2018, and in order to make sure that whenever the conditions are ready, so probably in 2020, with a sufficient gap between heavy fuel oil and LNG prices, then our solutions can take off. We are quite confident on that. We are working hard on further refining our technologies to be able to address this market. So we keep on developing our services. Originally, we wanted to assist LNG carrier owners. That is working well.
Now we see a great merit in this portfolio of services in order to make the switch to LNG as a fuel as easy as possible. You need to think about your designs, you can work with us. You need to train your crews, you can work with us. You need assistance for LNG operations, for bunkering LNG, you can rely on us. You need emergency hotline 24/7 with very skilled people, we have that. You need sensors on the ships in order to optimize the way you operate the ships, we have the solution. You need maintenance, you need to repair something, we can do that. You need to test our systems, we developed that. So we have the solutions.
Of course, we are going to keep on working on that, but what we have in mind is to make the switch to LNG as a fuel as easy as possible. Well, our strategic roadmap, I would like to apologize here because in fact, it's the same slide as in July last year, or as in February a year ago, or as in 2017, and probably as before. So we are just sticking to our strategy, working on it, and making sure that we can achieve something thanks to that. We are investing in the future. We are bullish on LNG, and we are not alone there.
I would say that, we've always been, and, but now a lot of people are convinced about that and are sharing this conviction. So we are keeping on investing and working on the new developments. Here you have, well, new technologies, and in particular, high-density foam in order to cope with the liquid motions you can have in LNG as a fuel, where you have all kind of filling levels in the tanks. You have the brick, which is a block, you can deliver to a third-party shipyard, which has not to learn the membrane technologies. LNG as a fuel, various LNG as a fuel solutions. We have LPG applications on which we are keeping on working. We have GBS, I talked about that earlier.
Well, we are keeping on working on all that and investing on these developments to prepare the future. In fact, you know, you may see us as an engineering company, but basically before providing detailed designs on our tanks, we develop technologies. It's at the origin of the company, and we still have this DNA. We are still working on various technologies while we keep also our model where we are lean and fit. We keep spending money on that.
Well, just to give you an idea on the performances over the recent years, over the last 8 years, we divided by, in fact, a bit more than 2, we divided in half the boil off ratio, which is one of the fundamental characteristics of LNG containment system. We are trying also to deploy a digital strategy. So why do we do that? First of all, we are working on that for several years, since 2013, where we began to work on several software applications. We think that softwares can help owners to switch to LNG. Whether we are relying on expertise of crews as on LNG carriers, a lot of things could be done by software.
So we are working on that. We think also that in order to be more efficient, ships should rely more on data management. You can collect a lot of data on the performances of the ship, on the engines, on the consumption, of course, on the crews, on the route, and you can optimize the performances, the energy performances of the ship. So that's what sustain our digital strategy. So we acquire Ascenz in Singapore, which is a company which was offering software systems for ships. We know LNG... Well, to make a long story short, we know LNG...
Quite well, in fact, they know digitalization for ships. They are doing that for about 20 years. They know how to install that on ships. They know how ships behave. And combining our two expertises, we think that we can provide a state-of-the-art solutions for the future, in particular, aiming in mind the switch to energy as a fuel. Marc, the floor is yours.
Thank you, Philippe. I think, Philippe, you mentioned in the beginning of your speech, 51 orders in 2018, 50 vessels, plus an onshore tank. Well, clearly, that translates very strongly in our order book, which is increasing by 31% to EUR 524 million. In addition, in addition to this, this provides a lot of visibility on our revenues for 2019 and 2020, respectively, at EUR 251 million and EUR 224 million. Now, a look at our 2018 numbers, which are not yet impacted by the 50 orders, but still a strong performance. In terms of revenues, we have an increase of 2.2% at EUR 246 million.
Increase, which is split between, I would say, the core business royalties, an increase of 1.7%, and on services, we have an increase of almost 10%, which is mainly due to the contribution of Ascenz. It was included in our account from closing in early February, on the first of February. In terms of EBITDA, we have an increase of 11.5% in the EBITDA at EUR 168.7 million. This has been helped a little bit by the reversal of a provision we had made last year for a fiscal subject of EUR 15.2 million. If you adjust the EBITDA for that amount, you would have an EBITDA margin of EUR 62.4 million.
Net result, 142.8. Obviously, a result of the above, but also we had a tax income relating to the cancellation of the tax, the 3% tax on dividend, which reduced our tax line by EUR 5.7 million. Free cash flow, strong cash generation. Free cash flow increases by 71%. This is the first effect, of course, of the 50 orders, which have obviously improved working capital. We have a positive impact of EUR 60.3 million, which by and large, is linked to the down payments we receive on our new orders. CapEx at 11.6, that includes the acquisition of Ascenz for just under EUR 10 million.
And the cash position as a result of all this now stands at EUR 173.2 million, an increase of 73%. A word on the cost base. Of course, the increase in number of orders does generate additional work, clearly, so we have to adjust our resources. So although we are very lean and you know are very careful about our cost, clearly, the increase in work does require additional resources. If you look at the split between the two main elements of our cost base, staff costs and external costs, both actually have increased by roughly 11%. On the staff cost side, we have also the impact of the inclusion of Ascenz, about 35 people, which contributes, of course, to the consolidated staff costs.
But on the external costs, the main increase is the subcontracting, subcontracted costs. As you know, this is a way we use to adjust our cost base, depending on the level of activity. So these costs have increased by 18.2% at EUR 14.9. Although, on the other hand, we're still trying to reduce costs here and there, in particular, travel expenditure. External costs have increased, but this is also, in a way, linked to our investments in the future Philippe was just talking about, and in particular, we've been filing more patents than previously, so that increase increases the external costs. So last and not least, the dividend.
We have an available profit for distribution, which is EUR 144.4 million. We had guided last year on a dividend of at least EUR 2.66 million, but we also have an underlying distribution policy of 80% of net profit. And on this occasion, we have chosen to use that indicator, and we'll be paying a total dividend, at least subject to the AGM's approval. We will be paying a total dividend of EUR 3.12 per share. We paid an interim of 1.33, and the balance of 1.79 will be paid on the twenty-ninth of May. In summary, strong order book, strong profit, strong cash generation, and increased dividend. With that, I hand back to Philippe for the outlook.
Thank you, Marc. So our outlook for 2019, first, in terms of revenue, we are estimating that our revenues should be between EUR 255 million and EUR 270 million. Our EBITDA for 2019 should be in a range between EUR 150 million and EUR 160 million. And, for 2019 and 2020, our payout should be at least 80% of our distributable results. So now, if you have questions, we are available for answering to them.
Thanks very much. Jean-Pierre Dmirdjian from MainFirst. I have two questions, if I may. Start with the first one. It's about your revised ten-year estimate for LNGC orders. It's been revised by about 60 additional vessels, if I look at the midpoint of the range you communicated. Could you please split this between the replacement markets and your more optimistic view for the LNG markets?
Well, we consider that for the replacement market, there should be up to 50 ships in this estimate. So you can see that for the new orders, we are on a figure higher, but still quite consistent with what we've given you before.
Okay. And, a follow-up on this one. So on average, you have, you are targeting about, let's say 30, vessels, LNGC per year, but, it's unlikely to be, evenly spread, I suspect, over the next 10 years. We saw notably last year, a strong increase in LNGC order. It was, 50 vessels. Could you provide us more color on your view about the phasing of, those, new orders, on the- for the next 10 years? Do you think it's, that this year could be, as, impressive as, was 2018 for LNGC, orders? And, what's your view for the next, let's say, 2 to 3 years?
It's a very difficult question. It's a very difficult question because, in fact, we announce contracts when they are sure, they've been notified, they've been financed. So at a fairly late stage, and maybe a shipyard is going to sign for a contract in November, and we are going to announce it the year after. And what I would like to say is, in 2016, we had five orders, and 2018 or 2019 was supposed, according to people, to be low years in terms of turnover. And in fact, 2018, you can see that it has not been a low year, and 2019 is not going to be a bad year as well.
So in fact, what I want to say is that you may have some bad years with 5 ships, and you may have some good years with 50 ships, but finally, the number of ships shipyards are capable to deliver in a year, it's not 5 or 50, it's about 35, it's about 40. And so you equalize or you spread the number of orders over several years of delivery. It's why, finally, even though the demand has been very bumpy for many, many years, even though this demand has been very bumpy, we've been able to maintain a turnover which is slightly increasing, a turnover consistent, slightly increasing, with no significant variations since you follow the company and over this decade.
A net result, which is also very regular, and a dividend, which is also very regular, increasing. We began in 2014 at EUR 2.5. We jumped to EUR 2.66, and this year, with an exceptional element, of course, we are jumping to EUR 3.12.
And a last question from me, it's about a recent important news in the sector. It's about the proposed merger between the two largest South Korean shipyards, namely, Hyundai and Daewoo, that was announced just a few weeks ago. As those are among your top customers, I wonder whether you could provide us your take on the potential risks or opportunities for GTT, notably, regarding your pricing policy?
I would say, it's too early to say. Now there is a process, because basically the first shipyard in the world merging with the second one. It's they are our customers, mainly in 2018, our first customer and our second customer. So we know them. We know also how to deal with them. So we have, I would say, an exceptional partnership with current shipyards, which is proving to be tremendously successful for them and for us. So whether there are three or two, of course, it's a change, but a bit too early to say what are going to be the consequences.
Good morning, Jean-Luc Romain from CM CIC Market Solutions. You announced last year studies for two GBSs. My understanding is Saipem was awarded by Novatek a big contract to build those GBS structures. Should we expect an announcement from GTT might provide the technology licenses for those GBSs? That's my first question. The second is about the evolution of competition. Could you maybe make a point on where the competition is? I understand they have quite strong difficulties.
Well, we don't comment on contracts or negotiations to the point a contract is signed, a contract is formally notified. We are allowed to communicate on it, and even more, the contract is financed. So when you look at all these provisos, you just wonder how we can announce contracts. So I would not make any comments on Saipem. Saipem is a public company, and they've announced something. We are not in a situation to announce a contract for GBS. For competition, competition is always there. Maybe while we saw some difficulties, but competition is always there.
I would say that, if you look at what we try to do, we try to address many segments. For the time, for example, on LNG as a fuel, there are other solutions, and we are not going to be able to address any segment, any needs of the LNG as a fuel. We see, and on the energy carriers, there are people trying different things. We look at that. We have, of course, an expertise on that, and we look at that. It's keeping on challenging us to— First, it's recalling us that people are keeping on working, and also it's challenging us in terms of performances.
So I would say that it's not because we saw in 2018 some difficulties that we are thinking that competition is not working hard to catch up with us.
Good morning, Jean-Philippe Desmartin , Edmond de Rothschild Asset Management. Two short questions, the first one dealing with services. Services do represent something like 5% of your turnover. For the future, do you plan to increase or is that stable? And my second question is regarding your order backlog in 2018. Could you precise the diversification of your backlog between South Korea, China, United States, for instance, and how you see the evolution in the future and potential geographical diversification, please?
Okay.
Thank you.
So services, it's something which is a twofold. First, of course, we are, first of all, it's very strategic, how to help the industry of energy carriers transporting energy. But it brings a certain turnover which is not to be neglected, and how to help the shipping industry to switch to LNG as a fuel. So that is the strategy. If we see opportunities of development, we will take them. And for the time, for example, we see several things to do in terms of LNG as a fuel, so we will, we are on, in terms of digitalization. So we are going to work on that.
We are going to see whether it could represent a significant increase of turnover over the next years. The fundamentals, it's strategy, how to assist the energy carrier industry and the shipping industry.
Jean-François Granjon from Oddo BHF. Four questions, please. The first one concerns the EBITDA guidance for 2019. So this guidance seems quite poor compared to the strong level of the order book. You expect between EUR 150 million and EUR 160 million only, compared to probably EUR 153 million last year, except the exceptional contribution, so it's a limited growth for the EBITDA. Could you explain why? And more specific, could you, what do you expect for the staff costs and probably external costs in 2019 to probably explain this limited level of EBITDA?
The second question is concerned the depreciation last year in 2018, you mentioned a EUR 5.5 million depreciation on the P&L. Could you explain what is it exactly? A third question, you mentioned on the press release, a cancellation of one LNG carriers dating from 2015, so could you give us more explanation? And the last one, Robin, concerned the tax rate with a very limited level in 2018. What do you expect for the normative tax rates this year and next year? Thank you.
Okay. Well, I'll perhaps I'll take these questions because they're more in my, in my camp. First of all, the guidance. First of all, the guidance on revenues, I mean, clearly, yes, you see here that the order book does sustain almost the bottom of the guidance, if only for the core business. But you have to bear in mind that, coming back to these 50 orders for ships, there may be a risk that, at some point you will have delays in construction. We also mentioned the merger between the two big shipyards, which may cause some social disturbance, and could therefore also potentially cause some delays. So we have taken a little bit of caution in this guidance.
Now, of course, bad news does not necessarily happen, but at least we have taken some prudence there. In terms of the EBITDA, I mean, clearly, I mentioned the increase in activity, which is going to continue in 2019, because we'll still be working on this high level of orders in our core business, and more orders are coming in. As you've seen, 11 orders have been taken, have been announced already this year. So that will imply additional costs, but also, as Philippe mentioned, we also intend to take, in fact, advantage of this very good climate and very good, and the consequences for GTT, which are very positive, to invest even further in our development.
And we have, in particular, mentioned that we would increase our R&D expenses by 25% next year. So that has obviously some impact on EBITDA, which is why the guidance is in this range. In terms of depreciation, yes, we have written depreciation in the amount of approximately EUR 5 million, which is a depreciation of the goodwill on Ascenz, our acquisition. Again, here, Ascenz has had not an excellent year, let's say, in 2018. And we have been looking at revising the business plan and have passed this depreciation. I should point out that, again, Ascenz is an investment for the future and for the immediate future, because it is an element of our digital strategy.
As far as the tax rate is concerned, yes, as you mentioned, it is lower because of this one-off effect of the cancellation of the infamous 3% tax on dividends. We should revert to a more tax rate, which is more in line with what we saw in the previous years, although perhaps there will be an impact on the reduction on the rate, the tax rate on royalty-based income from 15%-10%. But that should be mitigated by the fact that we have a lot of tax withheld from the revenues we gained from Korea and China. So all in all, we should be back in the same kind of tax rate as we've had in the previous years.
Yes. Guillaume Delaby from Société Générale. Two questions, if I may. First, regarding the contract with Vard, I know you do not speak specifically on contracts, but first question, is it included in your order book? And what are your plans? Do you plan to try to take other EPC contracts like that? My second question is, regarding LNG bunkering and clean fuel, and last year, you announced a partnership with Wärtsilä. Could you elaborate a little bit about where we are today? Is it successful? Is it important for you? That's it for me. Thank you.
Thank you, Guillaume. Well, on the first question on Vard, yes, this is in our order book. The second point, do we intend to continue? We are very pragmatic. If it's interesting, yes, we will do it. If we saw too high a risk, we'll stop. The basic idea behind that is that we would like to break into new ship segments. So thanks to this contract, we've been able to break into the cruise ships, which is a segment where energy is making sense because basically passengers don't want to smell emissions.
You may know that in Marseille, in Genova, in Venice, for people in these cities, emissions are a concern. So, we will to do that. And the second point on LNG as fuel—
Wärtsilä.
Wärtsilä, yes. With Wärtsilä, basically, with Wärtsilä, we worked on the Ponant. And, so it has, it has already, brought some fruits. But, it sends back to the issue of how you make the switch easy. Well, this industry is the shipping industry is looking at LNG as something which is not that easy. They had a fuel, they knew it for ages, HFO. It was dirty and simple. And now they have to switch to something which is cleaner and a bit more complicated.
So, in this, the industry, the, shipbuilding industry, the technology, companies like us, or the, engine companies like, Wärtsilä, have got to do something to make it easy. So that's what we do, and, we can, we can go and see, an owner or a shipyard, telling them, "Well, we are going... We're here. We are going to, help you. We, we have the solution. It, it, it's working on LNG carriers. We are going to bring these, solutions, to, your segments, and to help you to enter into this, energy of the future." So that's what we do. I would like to recall that it's on a non-exclusive basis, so we can work with the other engine manufacturers, as Wärtsilä can work with other containment systems.
But at least we can present ourselves together as good friends, having some records of success.
Good morning, Martin Beresexam. A quick one-
Marc, Marc would like to add something.
Yes, I just wanted to make a slight correction in terms of the order book. The presentation you saw showing EUR 5,524 million in the order book does not include LNG as a fuel, nor services. So it's only core business, so it does not include the forecast.
The Wärtsilä contract, whatever its value, is not included in the EUR 521 million.
Yes, exactly.
Sorry for that.
That's a bit on you.
That's why I thought I should correct.
Yes, a quick one. Can you just tell us the proportion of third series vessels among 2018 orders, please? Thank you. Compared to repeat orders, knowing that there is some rebate or discount that can be applied on price.
In fact, there were not so many. There were not so many new orders. There were some. And you may have a feeling on that whenever you have the names, and you look at the quantity and the shipyard, and you see whether they were ordered already, these ships or not. So, and also in the past years, they signed for contracts with options. And with the rebound of the market in 2018, they were trying to exercise these options as quickly as possible before they elapsed, in order to benefit from previous prices.
Yes. Good morning, Kevin Roger from Kepler. Two questions on my side, please. The first one is related to the commercial dynamic, which has been very impressive since the beginning of the year. Just in terms of contacts with your clients, would you say that the level of activity in terms of contact is the same one today than three or six months ago? Or that the recent fall in charter rates at shipowners have impacted it, and maybe also the still uncertain political uncertainty in U.S., China, Europe, have impacted also the commercial dynamic for future awards? And second question is related to pricing. Can you give us the trends in terms of your selling price per square meter for LNG cargo, please?
Well, the, the, in terms of, contacts, well, we maintain constant contacts with, shipowners, and, that it's, helping them in their, thinking, their, strategic planning. So, we, we, we've changed on, especially on the investment decisions which are taken. For example, two weeks ago, there was Golden Pass. A lot of people were saying Qatar is going to invest. No, Qatar has invested in the U.S., in the Golden Pass, project. So it's an element of discussion, because, in fact, to go to, Northeast Asia, 75% of the market, the route, the shipping route is much longer from Gulf of Mexico, to Northeast Asia than from Qatar to Northeast Asia.
It may be a consequence of the politics, where Qatar is rather preferring to invest in the U.S., rather to invest in Qatar. So, of course, there are a lot of politics in that, and but, I would say that the fundamentals are positive. You may suffer from politics, or you may benefit from politics at a certain point of time, but the company has the capacity to look at long term. I mean, it's not we are not if we suffer from politics one year, we are going to recover the year after, and our figures basically are not going to be affected. So, we not much concerned about that. No, they are by rates.
I mean, rates are for the time being, they are making money. They did not make money for many, many years while they were keeping on investing. And at a certain point of time in the life of LNG carrier, which can last for 40 years, they make a lot of money. So that the art of shipping. I was talking to a very important ship owner recently, to the owner, the head of the family, and who told me with a kind of euphemism, "We know how to manage the cycle." So I love this expression. We know how to manage the cycle. It means they have a lot of resources, and they can stand lawyers. And your second question, Kevin?
The evolution of short-term prices per square meter.
Oh, yeah, it's price per square meter. We scale it according to indexes, cost of labor in France, and we don't modify our price per square meter. We are very bad at that.
Okay.
Any more question?
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Thank you. Hi, thanks for taking my question, and congratulations on the fifth year anniversary of your listing. I have three question. The first question is, have you seen any, like, old inefficient LNG carriers that's being removed from market right now, or you expect it to be more of a 2021, 2022 kind of story? And then, the second question is, in the past year, what have you learned in terms of the LNG fuel business? As in, like, what more things that you need to solve before people will adopt this more widely? And for this year, do you think we should see more names in term- that will adopt your technology, and, and, and there will be more order for, for this business? And the third question is a short question.
Can you just remind me what's your R&D spend for 2018? Yeah, that's all from me.
Okay, could I ask you to repeat your first question, please?
The first question is, like, do you see any inefficient LNG carriers that are being removed from the market last year?
Well, in fact, thank you very much. In 2018, we saw 5 ships which have been sent for scrapping. It's the largest figure the industry has ever seen. So even though the industry was needing ships, as the charter rates has demonstrated it, 5 ships, a very large number of ships, have been sent for scrapping. If you wanted an example to illustrate the fact that old ships are becoming less and less active, less and less demanded and less and less needed through this figure, you would have a clear illustration. Your second point, LNG as a fuel, yes, we are working on that and on...
We did not have yet a contract in 2019. But we are expecting that this market is going to take off. I said that first of all, in 2020, when the global sulfur cap is going to enter into force, owners are going to see it's real, it's real, and they will have to do something. The second point is, you need a sufficient gap, a sufficient spread between HFO prices and LNG prices. And I was always very clear about that from presentations to presentations. The point is, probably breakeven point is probably at $75 per mile.
For the time being, we are a bit low, but it does not deter us to keep on working hard. Your third point about 2018, it was?
I can take that. It was the question on the R&D spend-
Yeah.
for 2018. As you know, we spend pretty much all of our R&D, R&D costs. We're talking of people mainly. In 2018, the amount was EUR 18 million. This does not include some CapEx also, because we will probably be investing in testing equipment, so that will add a bit of CapEx also next year.
Okay, great. Thank you.
Thank you very much. Any other questions?
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