Portfolio Management

 

With nearly thirty years of experience in the shipping business Marsoft has studied the cycles of success, growth, and (sometimes) failure in the shipping business.  Shipping is unique in some ways in that it is possible to start from an investment in an investment in a single vessel and through success and some luck grow from that start of a large fleet and substantial wealth.

 

Growing to success in this fashion is made up of many small steps, each one of which has its own investment thesis and rationale.  Each one of those steps must be made in a careful and deliberate fashion to ensure that it contributes positively to overall performance.

 

But at some point the ability to successfully execute a single investment is no longer sufficient to maintain growth and profitability.  That point may come when the complexity or scale of the fleet makes it difficult to manage all the information necessary to be successful.  Or it may be driven by the need to communicate the performance of a fleet or portfolio to investment experts that do not have the expertise or interest in understanding the performance of individual vessels.

 

In some cases (for example in the insurance business) an investment only makes sense in the context of a portfolio.  Diversifying risk across multiple projects may have such dramatic benefits that it is the only sensible strategy.

 

Marsoft’s portfolio management systems are designed to help owners and financial institutions successfully manage large fleets of vessels and/or loans.  They focus directly on the issues of tracking the necessary information, evaluating the aggregate performance of a business, and board-level reporting of critical success factors.

 

 

Credit and Loan Portfolio Management Systems

Marsoft’s portfolio management systems for financial institutions provide a range of tools for tracking the performance of individual projects as well as performance by category and overall portfolio.  Our Loan Administration Module (LAM), Vessel Insurance Module (VIM), and Report Generator (RG) are fully integrated with Marsoft’s project evaluation systems and provide a seamless flow of data on vessel values, earnings, risks, and related information through to portfolio management

 

• At the project level the LAM provides a detailed profile of a project, including collaterals, loan terms and cash flows, loan covenants, loan administration (status, contact information, account management details, etc.), as well as syndication information.  Account officers can input data directly or Marsoft can provide a “bridge” to existing databases to download project information.
• The LAM provides a wide range of standardized reports including portfolio composition by vessel type and age and debt outstanding against each vessel category, portfolio evolution reports showing scheduled repayments and drawdowns and consequences for the overall portfolio size and composition, ratings distribution, etc.  All these reports are dynamic – the “as of” date for which the report is created can be shifted to future dates and the reports filtered by loan officer, office, and other dimensions.
• The RG gives users the ability to create their own reports from information stored in the LAM database.  The user can select which data to include in a report, how it should be consolidated and organized, and export the information to an excel spreadsheet.
• The VIM tracks all relevant insurances as well as renewal dates, contact information, and coverage by vessel and provides a comprehensive diary report listing all renewal dates over selected periods.
• User privileges and security information is managed centrally and access to each module can be managed separately.  Password management meets demanding security standards.  An activity log monitors selected activity by module and user name, to facilitate tracking changes to the portfolio.

 

Marsoft’s portfolio management systems are used by leading shipping banks to manage their portfolios.  They are available “off the shelf” but can also be customized to meet each bank’s requirement.  Marsoft’s provide a proven and cost-effective solution to the challenges of portfolio management in the very volatile shipping markets.

 

For more detail see Credit and Loan Portfolio.

Corporate Financial Reporting

Marsoft has worked with some of the largest shipowners to provide financial reporting systems that consolidated detailed information at the vessel level to meaningful financial reports at the group level.  Our experience with those owners is the foundation for Marsoft’s fleet financial reporting services.

 

However, our services go beyond the simple consolidation of financial performance.  Specifically we include models and analytics for corporate valuation and peer group performance comparison analysis.  We also include acquisition track record models, showing how the acquisitions made by our clients in the past (and contemplated in the future) compare to those of its peer group.

 

These additional features because they focus directly on a key strategic issue for our clients – access to capital at the low cost.  Focusing on how investor[MK1] s value our clients and their peers facilitates the process of communicating with the investment community and demonstrating the contribution to value of its investment program.  Demonstrating performance relative to its key competitors will raise the price of its shares and increase liquidity.

 

Approach

The cornerstone of the proposed approach is the existing Marsoft Project Evaluation Management (PEM) system.  Versions of this system are in place at most of the world’s leading shipping banks and are also used by shipowners for financial modeling and analysis.  The PEM includes a database of vessel values and earnings, both historically (from 1980) and forecast (five years of supply/demand based forecast scenarios and 25 years based on historical averages as specified by the user).  It also includes a database of sale & purchase transactions and Marsoft’s proprietary valuation algorithms that allow the PEM to track the earnings and value of a specific ship (not just a pre-defined benchmark vessel).  The PEM databases are updated on a quarterly basis to ensure they are always up-to-date.

 

The PEM also includes essential reporting tools that allow cash flows to be run on different collections of ships and loans and thus readily account for new investments and financing, and thereby evaluate the impact on an average and marginal basis.

 

The PEM includes a standard set of financial statements that translate the vessel cash flows into a profit and loss, balance sheet, and sources and uses statement.  We also integrate proprietary financial models. 

 

We devote time in to refine the review and refine the analytics with senior management and demonstrate how they can be used in investor presentations.  As part of that process we will tap into the experience of Marsoft’s corporate financial consulting experts.

 

Finally, we note the need requirement for detailed operating expense analysis, to complement the basic (daily running cost and drydock/survey expenses) available in the PEM.  We accommodate this requirement with a separate operating cost model that allows our clients to include detailed estimates for all major categories of expenses.  The output of that module will be linked to the PEM so that the consolidated costs become inputs to the overall financial analysis.

 

We propose to treat the historical accounting information in a similar fashion.  (The existing PEM does store historical cash flows on vessel and loan-specific basis.)