GPRT.L Regulatory News (GPRT)

Goldenport Holdings Inc.

Athens, 21 March 2013

Final Results for the Year Ended 31 December 2012

Goldenport Holdings Inc. ("Goldenport" or "the Company"), (LSE: GPRT) the international shipping company that owns and operates a fleet of container and dry bulk vessels, today announces the results for the year ended 31 December 2012.

Financial Highlights (amounts in US$ '000 except per share data)

§ Revenue of US$ 78,271, -27.1% decrease (2011: US$ 107,329)

§ EBITDA of US$ 24,285, -52.1% decrease (2011: US$ 50,673)

§ Adjusted Net Loss of US$ 16,826 (2011: Adjusted Net Profit of US$ 2,339)

§ Impairment loss of US$ 47,600 (2011: nil)

§ Net Loss of US$ 65,339 (2011: Net Profit of US$ 2,339)

§ Earnings per share of US$ (0.71) calculated on 92,306,453 shares (2011: US$ 0.03 calculated on 91,179,150 shares)

§ Total cash as 31 December 2012 of US$ 22,789 (31 December 2011: US$ 42,018)

§ Net debt to book capitalisation, including the effect of impairment, as at 31 December 2012, 49% (31 December 2011: 47%)

Debt Financing Update

The Company has entered into supplemental agreements with the majority of its lenders providing for the reduction of principal repayments and the relaxation of certain financial and security coverage ratio covenants for the period up to the end of 2014. The ability of the Company to successfully complete these negotiations was due to the credibility and financial stability established since its IPO seven years ago, the long established reputation of the management with all of its lenders and the continued successful operation of its fleet with the maintenance of high utilisation rates, despite the very challenging conditions in the shipping markets.

Overall upon completion of our debt modification plan, debt repayment requirements have been reduced by US$17,890 and US$9,250 for the years 2013 and 2014 respectively. Furthermore we have obtained a relaxation of financial covenants including minimum security cover ratio, maximum leverage, interest cover ratio and minimum net worth for more than 80% of our loan portfolio.

During 2012 we have effected loan repayments of US$ 67,955 representing 24% of the outstanding debt in the beginning of the year.

The loan modification agreements along with the accelerated repayments effected in 2012 decreases the Company's breakeven rates and provides an appropriate level of headroom within our banking covenants for the next two years providing for the fleet's efficient operation even with the current challenging market fundamentals.

Acquisition of a Container vessel

The Company has agreed the acquisition of M/V Gallia, a 2,500TEU geared container vessel, built in 1998 at Thyssen Shipyard. The purchase price is US$ 6,010 and the vessel will be delivered ex Drydocking with estimated delivery in May 2013. The vessel has already been chartered for 6-8 months and will start her employment immediately after the completion of the scheduled repairs.CEO Statement (amounts in US$'000):

John Dragnis, Chief Executive Officer of the Company commented:

For the year ended 31 December 2012 excluding all one-off non-cash items, the Company reported a net loss of US$ 16,826 or US$ 0.18 per share. Our EBITDA was US$ 24,285, while we reported a net loss of US$ 65,339, which was mainly due to a non-cash impairment loss of US$ 47,600, related to the write down of the carrying amounts of certain vessels to their estimated recoverable amount.

In 2012, the dry market has experienced the worst recorded year in quarter of a century (BDI average 920p), dropping by 40% compared to 2011 (66% compared to 2010). Asset Values in response to poor earnings have bottomed out as well (in inflation adjusted terms). The container market remained under severe pressure for a fourth year with earnings remaining at depressed levels and close to all time low's; asset values for second hand vessels reduced further over the course of 2012 offering investment opportunities for the future. We retain our cautious view on the short-term performance of the markets while being optimistic for a recovery in the medium to long term. Already we have seen asset prices and rates bottoming out with slight upward trends. We expect that 2013 will allow us to employ our vessels at better terms than 2012.

We are pleased to announce the completion of our debt modification plan, instigated by us, which accompanied the disposal of a major part of our older tonnage as part of our strategy to progressively deleverage the Company whilst preserving sufficient levels of liquidity and headroom within our banking covenants so that we can confidently trade through this difficult market. During 2012 we proceeded with accelerated loan repayments of US$ 67,955, which represent a 24% decrease in bank debt since the beginning of the year. 

Taking advantage of our liquidity headroom and the low asset prices prevailing at the market, we proceeded with the acquisition of MV Gallia, which is an EBITDA and cash flow accretive addition in our fleet.

As part of our current strategy of maximising available liquidity the Board has reviewed the Company's dividend policy and has decided that it is prudent not to pay a 2012 final dividend. We will continue to closely monitor this position and remain committed to the maximisation of Shareholder Value. Management remains a large shareholder and a strong supporter in Goldenport which we feel guarantees its viability and future success.

Despite the prevailing market conditions we retain high vessel utilisation levels, with no vessel in our fleet currently idle. Our modified loan profile, the fact that we have no further capital commitments, the stabilisation of both charter rates and asset values and our tight control of operational costs will enhance our cash reserves and position us to take advantage of the eventual market recovery.

Fleet Developments:

Vessels disposals (amounts in US$ '000)

On 16 March 2012, the Company agreed the sale of the 52,315 DWT, 1989-built vessel "Alex D", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 6,486 cash and the vessel was delivered to the new owners on 26 March 2012. The gain resulting from the sale of the vessel was US$ 3,397.

On 9 May 2012, the Company agreed the sale of the 3,032 TEU, 1986-built vessel "MSC Finland", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 7,010 cash and the vessel was delivered to the new owners on 24 May 2012. The gain resulting from the sale of the vessel was US$ 4,223.

On 18 June 2012, the Company agreed the sale of the 52,266 DWT, 1990-built vessel "Lindos", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 5,259 cash and the vessel was delivered to the new owners on 6 July 2012. The gain resulting from the sale of the vessel was US$ 1,502.

On 10 October 2012, the Company agreed the sale of the 52,266 DWT, 1991-built vessel "Tilos", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 5,704 cash and the vessel was delivered to the new owners on 31 October 2012. The loss resulting from the sale of the vessel was US$ 2,183.

On 2 November 2012, the Company agreed the sale of the 3,720 TEU, 1988-built vessel "Pos Yantian", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 7,619 cash and the vessel was delivered to the new owners on 14 November 2012. The gain resulting from the sale of the vessel was US$ 938.

On 25 November 2012, the Company agreed the sale of the 52,266 DWT, 1992-built vessel "Limnos", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 5,507 cash and the vessel was delivered to the new owners on 6 December 2012. The loss resulting from the sale of the vessel was US$ 2,663.

On 30 November 2012, the Company agreed the sale of the 3,720 TEU, 1993-built vessel "Bosporus Bridge", to an unaffiliated third party. The sale was concluded at a net consideration of US$ 7,271 cash and the vessel was delivered to the new owners on 14 December 2012. The loss resulting from the sale of the vessel was US$ 3,803.

Operational vessel acquisition (amounts in US$ '000)

On 29 August 2012, the Company took delivery of the M/V 'Thira' (ex 'Conti Seattle'), a container vessel of 2,100 TEU built in 1997, which was acquired for US$ 5,162.

Impairment

As a result of the impairment testing performed, the Company concluded that an adjustment of the book value of its fleet was appropriate. An impairment loss of US$47,600 was recognised by the Group for the year ended 31 December 2012. This is a non-cash item and has no impact on our lending arrangements. The impairment loss for 2011 was US$ nil.

Fleet Forward Coverage: 

The percentage of available days of the fleet already fixed under contracts as of 20 March 2013 assuming the earliest charter expiration is as follows:

(1) Percentage of available days of the fleet fixed under contract as reported on 01 March 2013, being the date of the previous trading update, is given in brackets

2013 Financial Calendar:

Conference Call and Webcast:

The Company's management will hold a conference call today Thursday 21 March at 2:00 P.M. (BST), 4:00 P.M. (Athens), 10:00 A.M. (EDT), to discuss the results.

 Conference Call details: 

Participants should dial into the call 10 minutes prior to the scheduled time using the following numbers: 0800-953-0329 (from the UK), 1-866-819-7111 (from the US) or +44 (0)1452-542-301 (all other callers). Please quote "Goldenport Holdings" to the operator.

 A telephonic replay of the conference call will be available until 28 March 2013 by dialing 0800-953-1533 (from the UK), 1-866-247-4222 (from the US) or +44 (0)1452-550-000 (all other callers). Access Code: 6906584#

 Slides and Audio Webcast:

There will also be a live and then archived webcast of the conference call, accessible through the Goldenport Holdings website (www.goldenportholdings.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Enquiries:

Goldenport Holdings Inc.:

John Dragnis, Chief Executive Officer +30 210 8910500

Konstantinos Kampanaros, Interim Chief Financial Officer +30 210 8910500

Investor Relations Coordinators:

Capital Link:

Ioanna Messini - London +44 203 206 1322

Nicolas Bornozis - New York +1 212 661 7566

E-mail: goldenport@capitallink.com

info@goldenport.biz

Market Outlook:

Current Market Outlook:

Containers:

As of January 2013 the containership fleet comprised around 5,665 ships of about 16.6 million TEU capacity. In terms of TEU carrying capacity the container fleet increased by 5.5% last year whilst the number of vessels in the fleet increased by 0.5% which is indicative of the larger size of vessel now being deployed by the major liner companies. The average age of the container fleet, as at 31 December 2012, was around 11 years.

The new-building market remained active in 2012 with 85 new orders placed (477,000 TEU capacity). In February 2013 the orderbook stood at 2,785 million TEU / 420 vessels (around 16.8% of the existing fleet in TEU terms) for delivery within the next 1-2 years. Based upon current schedules 2013 new-building deliveries are estimated at 1.8 million TEU or 10.8% of the existing fleet with 1.13m TEU (or 63% of 2013 scheduled deliveries) of the order-book representing vessels in excess of 8,000 TEU.

Demand as measured by port handling movements has increased at an average annual growth rate of 7.8% since 2000. Last year (2012) demand for containers only increased by 3.2%. Demand for containers is almost entirely reliant on the fortunes of the US and EU economies from which 65% of effective demand is derived.

With the estimated expansion of the container fleet in 2013 of 5.5% (after allowing for scrapping) expected to slightly exceed the estimated growth in demand in 2013 of 4.5% the outlook for freight rates in this sector will remain stable. We are confident that the container sector will recover as a result of increasing demand, a reduced newbuilding orderbook and increased scrapping of older vessels but the timing of this recovery is difficult to predict.

Dry Cargo Market

As of January 2013, the worldwide dry bulk carrier fleet of vessels in excess of 15,000 DWT comprised 10,161 vessels representing approximately 693 million DWT. The average age of the dry bulk carrier fleet as at 31 December 2012 was approximately 11 years (by DWT).

In 2012 35.2 million DWT of dry cargo vessels were scrapped compared to newbuilding deliveries of 101 million DWT. The number of new orders placed within the year was 22 million DWT compared to 60 million DWT in 2011. The net result for the world dry cargo fleet was an increase amounting to about 11.5% (in DWT terms) and 13.5% in the number of vessels (14% in 2011). 

Newbuilding tonnage on order as at 31 December 2012 was approximately 1,270 vessels of about 95.7 million DWT which constitutes approximately 13.8% of the world's existing fleet by DWT. There are 143 Capesize, 416 Panamaxes and Post-Panamaxes, 346 Supramax/Handymaxes and 365 Handysize scheduled for delivery between 2013 and 2015.

Dry bulk shipping demand is a "derived" demand (measured in tons x miles) depending upon the distance over which cargo is transported and determined by the underlying demand for commodities transported (mainly raw materials). Overall in 2012 about 3.6 Billion tons of dry bulk cargoes were shipped. Three of the most important cargoes are iron ore, coal and grain.

As of 1st March 2013 the Forward market average rates for the balance of the year (March - December 2013) per sector were as follows:

S P O T F F A

Capesize US$4,236 US$10,100

Panamax US$8,281 US$8,100

Supramax US$8,170 US$9,300

With the large number of newbuildings scheduled for delivery this year and global industrial production still recovering, the outlook for the dry bulk market, is similar to that for the container sector.

Summary of Selected Financial and Operating Data:

See Appendices, for Notes on the Summary of Selected Financial and Operating Data, for detailed Fleet Employment profile, for Notes on the Summary of Selected Financial and Operating Data, for forward looking statements and for full set of financial statements.

Financial review (amounts in US$ '000, except the per day data)

Timeand Voyage Charter Revenues:

Revenues decreased by US$ 29,058 or 27.1% to US$ 78,271 for 2012 (2011: US$ 107,329). The main reason for this was the significant decrease in average freight rates generated by the fleet (measured in daily time charter equivalent rates). TCE rates decreased by US$ 3,223 or 28% to US$ 8,278 (2011: US$ 11,501).

Voyage expenses total:

Voyage expenses increased by US$ 2,901 or 41.7% to US$ 9,859 for 2012 (2011: US$ 6,958) mainly due to the increased cost of bunkers consumed during idle or ballast days.

Vesseloperating expenses:

Vessel operating expenses decreased by US$ 4,723 or11.4% to US$ 36,679 for 2012 (2011: US$ 41,402). The decrease is mainly attributed to the disposal of older tonnage, consistent with the Company's fleet renewal strategy as well as to the Company's focus on cost control.

On a per day basis operating expenses decreasedby US$ 491 per day or 10.5% to US$ 4,177 per day (2011: US$ 4,668 per day).

General and administrative expenses:

The General and administrative expenses decreased by US$ 984 or 23.9% to US$ 3,127 (2011: US$ 4,111). The decrease is mainly attributed to the decrease of the total Directors remuneration expense driven by the cessation of employment of two board members within 2012 and control of general remuneration levels.

Depreciation:

The vessels' depreciation charge decreased by US$ 5,268 or 13.8% to US$ 32,844 for 2012 (2011: US$ 38,112) due to the impairment charge posted within 2012 decreasing the average daily depreciation rate of the fleet compared to previous years. In addition, vessel MSC Accra was fully depreciated within first half of 2012.

Depreciationof dry-docking costs:

Depreciation of dry-docking costs decreased by US$ 1,714 or 32.4% to US$ 3,582 for 2012 (2011: US$ 5,296) mainly due to decreased capitalised costs in 2012 as compared to the previous year as well as the disposal of seven vessels within 2012.

Gain from vessel disposals:

In 2012 the Company disposed of seven vessels, Alex D, MSC Finland, Lindos, Tilos, Pos Yantian, Limnos and Bosporus Bridge, realizing a net profit of US$ 1,411, while in 2011 the Company disposed one vessel, Grand Vision realizing a profit of US$ 349.

Financing costs:

Interest expense slightly increased by US$ 19 or 0.3% to US$ 7,449 for 2012 (2011: US$ 7,430). This is mainly due to the accelerated amortization of upfront financing costs due to early repayment of specific loans, which was counterbalanced by the reduction of interest costs due to the large loan repayments during the year.

Cash and cash equivalents:

As of 31 December 2012, the Company had US$ 16,775 of unrestricted cash and cash equivalents (2011: US$ 38,012). The cash balance as of 31 December 2012 includes the cash flows provided by the investing activities which include the net proceeds from the disposal of vessels as well as the cash flows used in financing activities such as repayment of long term debt.

Restricted Cash:

The Company as of 31 December 2012 had US$ 6,014 of restricted cash (2011: US$ 4,000) representing part of the amount drawn in 2011 for the delivery instalment of the vessel 'D Skalkeas' as well as cash restricted in use, subject to improvement of loan to value ratio by the bank.

APPENDIX 1:

Fleet Employment Profile

New charters arranged since the last update on 1 March 2013, are as follows:

APPENDIX 2:

Notes on Summary of Selected Financial and Operating Data:

(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period.

(2) Ownership days are the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

(3) Available days are the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

(4) Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(5) We calculate fleet utilisation by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilisation to measure a company's efficiency in finding suitable employment for its vessels and minimising the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.

(6) Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.

(7) TCE rates are defined as our time and voyage charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel oil and diesel oil) expenses, canal charges and commissions. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters are generally expressed in such amounts.

(8) Net debt to book capitalisation is defined as total debt minus cash over the carrying amount of vessels.

(9) Adjusted Net Loss is defined as the Net loss for the period decreased by the one-off non-cash impairment loss and the provision for doubtful trade receivables for the same year.

APPENDIX 3:

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect the current views of Goldenport Holdings Inc. ("the Company") with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in the Company's operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. The Company does not assume, and expressly disclaims, any obligation to update these forward-looking statements.

This press release is not an offer of securities for sale in the United States. The Company's securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person absent registration pursuant to, or an applicable exemption from, the registration requirements under U.S. securities laws.

APPENDIX 4:

Goldenport Holdings Inc.

Consolidated Financial Statements

31 December 2012

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Goldenport Holdings Inc.

We have audited the accompanying consolidated financial statements of Goldenport Holdings Inc. and its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 31 December 2012 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal controls as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union.

Ernst & Young (Hellas) Certified Auditors - Accountants S.A

20 March 2013

GOLDENPORT HOLDINGS INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2012

The accompanying notes 1 to 24 are an integral part of these consolidated financial statements.

GOLDENPORT HOLDINGS INC.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2012

The accompanying notes 1 to 24 are an integral part of these consolidated financial statements.

GOLDENPORT HOLDINGS INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2012

The accompanying notes 1 to 24 are an integral part of these consolidated financial statements

GOLDENPORT HOLDINGS INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2012

The accompanying notes 1 to 24 are an integral part of these consolidated financial statements.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

1. FORMATION, BASIS OF PRESENTATION AND GENERAL INFORMATION:

Goldenport Holdings Inc. ('Goldenport' or the 'Company') was incorporated under the laws of Marshall Islands, as a limited liability company, on 21 March 2005. On 5 April 2006 Goldenport Holdings Inc. was admitted in the Official List and started trading at the London Stock Exchange ("LSE").

The address of the registered office of the Company is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960. The address of the Head Office of the Company is Status Center, 41 Athinas Avenue, 166-71 Vouliagmeni, Greece.

Goldenport as at 31 December 2012 is the holding Company for eighteen intermediate holding companies, each in turn owning a vessel-owning company, as listed in the table below. Also, as at 31 December 2012 Goldenport is the holding Company of a fully owned subsidiary named Goldenport Marine Services, which provides the Company and its affiliates a wide range of shipping services, such as insurance consulting, legal, financial and accounting services, quality and safety, information technology (including software licences) and other administrative activities in exchange for a daily fixed fee, per vessel. Goldenport Marine Services has been registered in Greece under the provisions of Law 89/1967.

Goldenport and its subsidiaries will be hereinafter referred to as the 'Group'.

On 24 October 2011, the Group sold 20% of the voting shares in Tuzon Maritime Company, the vessel owning company of Paris JR. This 20% is accounted for as non-controlling interest as at 31 December 2012 and 2011.

The annual consolidated financial statements comprising the financial statements of the Company, its wholly owned subsidiaries, Tuzon Maritime Co, an 80% owned subsidiary (see (a) below) and the proportionally consolidated financial statements of the jointly controlled entity (see (b) below) were authorised for issue in accordance with a resolution of the Board of Directors on 14 March 2013. The shareholders of the Company have the right to amend the financial statements at the Annual General Meeting to be held on 6 June 2013.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

a) The subsidiaries of the Company are as at 31 December 2012:

The dormant companies that have been dissolved are no longer included in Note 1(a).

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

b) Proportionally consolidated the 50% Joint Venture (Note 9)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of preparation: The Group's financial statements have been prepared on a historical cost basis, except for derivative financial instruments that are measured at fair value. The consolidated financial statements are presented in US dollars and all financial values are presented and rounded to the nearest thousand ($000), except for the per share information.

(b) Statement of compliance: The consolidated financial statements as at 31 December 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

(c) Basis of Consolidation: The consolidated financial statements comprise the financial statements of the Company and its subsidiaries and the proportionally consolidated financial statements of the jointly controlled entity, listed in note 1. The financial statements of the subsidiaries are prepared for the same reporting date as the Company, using consistent accounting policies. All material inter-company balances and transactions have been eliminated upon consolidation. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(d) Accounting for joint ventures: A joint venture is an entity whose economic activities are jointly controlled by the Group and one or more other venturers in terms of a contractual arrangement. The Group's interest in jointly controlled entities is accounted for by the proportional consolidation method of accounting. Jointly controlled entities have the same reporting date as the Group and apply common accounting policies. The Group combines its share of the joint venturers' individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group's financial statements.

(e) Use of judgements, estimates and assumptions: The preparation of the Group's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future. The estimates and assumptions that have the most significant effect on the amounts recognised in the consolidated financial statements, are the following:

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Vessels: Management makes estimates in relation to useful lives of vessels considering industry practices. Estimated useful life of vessels is 25 years and estimated residual value is based on an amount per ton of U.S.$0.18 applied on vessels' Light Weight Tonnage. (Vessels have a carrying amount of U.S.$387,762 and U.S.$508,807 as at 31 December 2012 and 2011, respectively). Estimates and assumptions relating to the impairment of vessels are discussed in paragraph (n).

Provisions for doubtful trade receivables: Provisions for doubtful trade receivables are recorded based on management's expected future collectability of the receivables. (Receivables as included in the statement of financial position in trade receivables, have a carrying amount of U.S.$3,913 and U.S.$3,055 as at 31 December 2012 and 2011, respectively). Provisions for doubtful trade receivables as at 31 December 2012 amounted to U.S.$913 (U.S.$ nil as at 31 December 2011).

Insurance Claims: Amounts for insurance claims are provided when amounts are virtually certain to be received, based on the Company's judgement and estimates of independent adjusters as to the amount of the claims. (Insurance claims have a carrying amount of U.S.$445 and U.S.$571 as at 31 December 2012 and 2011, respectively). 

(f) Revenues and Related Expenses: The Group generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using either a) time charters, where a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate; or b) voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate per ton. If a charter agreement exists and collection of the related revenue (operating lease income) is reasonably assured, revenue is recognised as it is earned, evenly over the duration of the period of each voyage or time charter. A voyage is deemed to commence upon the completion of discharge of the vessel's previous cargo and is deemed to end upon the completion of discharge of the current cargo. Time-charter revenues arising from chartering the vessels is accounted for on a straight line basis over the term of the charter. Certain time-charter agreements specify scheduled rate increases/decreases over the charter term ("non-level charters"). As revenues from time chartering of vessels are accounted for on a straight line basis at the average charter hire rates over the charter periods of such charter agreements, as service is performed, an asset or liability is created.

Deferred revenue represents cash received prior to the reporting date which relates to revenue earned after such date. On time charters, the charterer as per industry practice pays the revenue related to the specific agreement in advance. Therefore, as at the reporting date the amount of revenue relating to the next financial year that was paid by the charterer is presented in deferred revenue.

Vessel voyage expenses primarily consisting of port, canal and bunker expenses that are unique to a particular charter are paid for by the charterer under time charter arrangements or by the Group under voyage charter arrangements. Furthermore, voyage expenses include commission on income including third party commissions, paid by the Group. The Group defers bunker expenses under voyage charter agreements and charges them to the statement of comprehensive income over the related voyage charter period to the extent revenue has been recognised. Port and canal costs are accounted for on an actual basis. Operating expenses are accounted on an accrual basis.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

(g) Foreign Currency Translation: The functional currency of the Group is the U.S. dollar which is also the presentation currency of the Group because the Group's vessels operate in international shipping markets, where the U.S. dollar is the currency used for transactions. Transactions involving other currencies during the year are converted into U.S. dollars using the exchange rates in effect at the time of the transactions. At the reporting dates, monetary assets and liabilities, which are denominated in currencies other than the U.S. dollar, are translated into the functional currency using the year end exchange rate. Gains or losses resulting from foreign currency transactions are included in foreign currency gain or loss in the consolidated statement of comprehensive income.

(h) Cash and Cash Equivalents: The Group considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

(i) Restricted Cash: Certain of the Group's loan agreements may require the Group to deposit funds into a loan retention account in the name of the borrower. The amount deposited is equivalent to the monthly portion of the next capital and interest payment. The amount is not freely available to the Group, and it is used for repaying interest and principal on the loan. Restricted cash amounts to U.S.$ 6,014 (Note 14) as at 31 December 2012 (U.S.$ 4,000 as at 31 December 2011) and concerns a) part of the amount drawn for the delivery instalment of M/V D Skalkeas, which remains restricted in use from the financing bank and b) cash restricted in use, subject to improvement of loan to value ratio by the bank.

(j) Inventories: Inventories consist of bunkers and are stated at the lower of cost or net realisable value. Cost is determined by the first-in first-out method. Any bunkers remaining on vessels which are laid up, are recognised as inventory. One vessel was laid up as at 31 December 2012.

(k) Trade Receivables: The amount shown as trade receivables at each reporting date includes estimated recoveries from charterers for hire, freight and demurrage billings, net of the allowance for doubtful trade receivables. Subsequent to initial recognition, trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. The carrying amount of receivables is reduced through an allowance account. Impaired debts are derecognized when they are assessed as uncollectible.

(l) Insurance Claims: The Group recognises insurance claim recoveries for insured losses incurred on damages to vessels. Insurance claim recoveries are recorded net of any deductible amounts, at the time the Group's vessels suffer insured damages. They include the recoveries from the insurance companies for the claims, provided the amounts are virtually certain to be received. Claims are submitted to the insurance company, which may increase or decrease the claim amount. Such adjustments are recorded in the year they become known and have not been material to the Group's financial position or results of operation in 2012 and 2011.

(m) Vessels: The vessels are stated at cost, net of accumulated depreciation and any accumulated impairment. Vessel cost consists of the contract price for the vessel and any material expenses incurred upon acquisition of the vessel (initial repairs, improvements, delivery expenses and other expenditures) to prepare the vessel for its initial voyage. Subsequent expenditures for major improvements are also capitalised when it is probable that future economic benefits associated with the improvement will flow to the entity and the cost of the improvement can be measured reliably.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

For vessels acquired in the second-hand market, and where the vessel is subject to an operating lease which is reflected in the acquisition cost of that vessel, the amount of the lease is determined in accordance with the lease policy of the Group (also see Note 2 (t)) and this component is amortized over the remaining term of the lease. The amortization is included in the income statement component of the consolidated statement of comprehensive income.

The cost of each of the Group's vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessels' remaining economic useful life, after considering the estimated residual value. Management estimates the useful life of new vessels at 25 years, which is consistent with industry practice. Acquired second-hand vessels are depreciated from the date of their acquisition over their remaining estimated useful life. The remaining useful life of the Group's vessels, other than those fully depreciated, is between 1 and 24 years. A vessel is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the vessel (calculated as the difference between the net disposal proceeds and the carrying amount of the vessel including any unamortised portion of dry-docking) is included in the statement of comprehensive income in the year the vessel is derecognised.

From time to time the Group's vessels are required to be dry-docked for inspection and re-licensing at which time major repairs and maintenance that cannot be performed while the vessels are in operation are generally performed. The Group capitalises the costs associated with dry-docking as they occur by adding them to the cost of the vessel and amortises these costs on a straight-line basis over 2.5 years, which is generally the period until the next scheduled dry-docking. In the cases where the dry-docking takes place earlier than 2.5 years since the previous one, the carrying amount of the previous dry-docking is derecognised. In the event of a vessel sale, the respective carrying value of dry-docking costs is derecognised together with the vessel's carrying amount at the time of sale.

At the date of acquisition of a second hand-vessel or upon completion of construction of a new built vessel, management estimates the component of the cost that corresponds to the economic benefit to be derived until the next scheduled dry-docking of the vessel under the ownership of the Group, and this component is depreciated on a straight-line basis over the remaining period to the estimated dry-docking date.

(n) Impairment of vessels: The Group's vessels are reviewed for impairment in accordance with IAS 36, "Impairment of Assets." Under IAS 36, the Group assesses at each reporting date whether there is an indication that a vessel may be impaired. If such an indication exists, the Group makes an estimate of the vessel's recoverable amount. Any impairment loss of the vessel is assessed by comparison of the carrying amount of the asset to its recoverable amount. Recoverable amount is the higher of the vessel's fair value as determined by independent marine appraisers less costs to sell and its value in use.

If the recoverable amount is less than the carrying amount of the vessel, the asset is considered impaired and an expense is recognised equal to the amount required to reduce the carrying amount of the vessel to its then recoverable amount.

The calculation of value in use is made at the individual vessel level since separately identifiable cash flow information is available for each vessel. In developing estimates of future cash flows, the Group makes assumptions about future charter rates, vessel operating expenses, and the estimated remaining useful lives of the vessels. (see also note 8)

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

The projected net operating cash flows are determined by considering:

i) the time charter equivalent revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days based on average historical 10 year rates for six months time charter for each type of our bulk carrier vessels and one year time charter for each type of our container vessels over the remaining estimated useful life of each vessel, considering the vessel's age and technical specifications.

ii) an average increase of 4% per annum on charter revenues,

iii) cash inflows are considered net of brokerage, and

iv) expected outflows for scheduled vessels' maintenance and vessel operating expenses are determined assuming an average annual inflation rate of 3%.

The net operating cash flows are discounted using the Weighted Average Cost of Capital of each vessel owning company to their present value as at the date of the financial statements. 

Historical average six-month and one-year time charter rates used in our impairment test exercise are in line with our overall chartering strategy, especially in periods/years of depressed charter rates. The historical averages reflect the full operating history of vessels of the same type and particulars with our operating fleet and they cover at least a full business cycle.

The average annual inflation rate applied for determining vessels' maintenance and operating costs approximates current projections for global inflation rate for the remaining useful life of our vessels.

Effective fleet utilization is assumed at 95%, after taking into consideration the periods each vessel is expected to undergo the scheduled maintenance (dry-docking and special surveys). These assumptions are in line with the Group's historical performance and the expectations for future fleet utilization under our current fleet deployment strategy.

The impairment test exercise is highly sensitive on variances in the time charter rates and fleet effective utilization. Consequently, a sensitivity analysis was performed by assigning possible alternative values to these two significant inputs.

During 2012, an impairment loss of U.S.$ 47,600 was recognised by the Group for the year ended 31 December 2012 (U.S.$ nil as at 31 December 2011) and is included in the consolidated statement of Comprehensive Income.

The recoverable amount of the vessels impaired was based on their fair value, as determined by independent marine appraiser less costs to sell with the exception of one vessel for which the recoverable amount was based on its value in use. The recoverable amount of this vessel was determined based on a value in use calculation using cash flow projections for the remaining life of the vessel. The discount rate (WACC) applied to the cash flow projections is 5.68%.

(o) Long-term debt: Long-term debt is initially recognised at the fair value of the consideration received net of issue costs directly attributable to the borrowing. After initial recognition, long-term debt is subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

(p) Borrowing costs: Borrowing costs on loans specifically used to finance the construction, or reconstruction of vessels are capitalised to the cost of that asset during the construction period.

(q) Derivative financial instruments and hedging: The Group uses derivative financial instruments such as interest rate swaps and foreign currency forwards to hedge its risks associated with interest rate and foreign exchange rates fluctuations respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The fair value of interest rate swap and foreign currency forward contracts is determined through valuation techniques.

None of the Group's derivatives have been designated as hedging instruments, therefore gains or losses arising from changes in the fair value of the derivatives are taken to the statement of comprehensive income.

(r) Segment Reporting: The Group reports financial information and evaluates its operations by charter revenues and not by other factors such as (i) the length of ship employment for its customers, i.e. spot or time charters; or (ii) type of vessel. Management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus, the Group has determined that it operates under one reportable segment. Furthermore, when the Group charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. Revenue from the Group's largest client amounted to U.S.$31,050 for the year ended 31 December 2012 (2011: U.S. $36,888).

(s) Finance income: Finance income is earned from the Group's short term deposits and the interest rate swaps and is recognised on an accrual basis.

(t) Leases: Leases of vessels where the Group does not transfer substantially all the risks and benefits of ownership of the vessel are accounted for as operating leases. Lease income on operating leases is recognized on a straight line basis over the lease term and classified under revenue (see also note 2(f)).

(u) Annual incentive plan: All share based compensation provided to Directors and Senior Management for their service is included in 'General and administrative expenses' of the Consolidated Statement of Comprehensive Income. The shares vest upon grant. The fair value of the employees' services received in exchange for the Company's restricted shares is accrued and recognized as an expense in the year of grant. Upon issuance of the relevant shares the total number of shares and their value is separately reflected in the Consolidated Statement of Changes in Equity.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

(v) Share-based payment transactions: Employees and Directors of the Group receive remuneration also in the form of share-based payment transactions, whereby employees and directors render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and the end of that period and is recognized in administrative expenses of the consolidated statement of comprehensive income.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(w) Share Capital: Ordinary shares are classified as equity. Incremental costs directly attributed to the issue of new shares are recognized in equity as deductions from proceeds.

(x) Treasury Stock: Own equity that is reacquired (treasury shares) is recognised at cost and deducted from equity. No gain or loss is recognised in the statement of comprehensive income on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued is recognised in share premium. Voting rights related to the treasury shares are nullified for the Group and no dividends are allocated to them respectively.

(y) Provisions: Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.

(z) Changes in accounting policies and disclosures

A) Changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Group as of 1 January 2012:

Ø IFRS 7 Financial Instruments: Disclosures (Amended) - Enhanced Derecognition Disclosure Requirements

Ø IAS 12 Income Taxes (Amended) -Recovery of Underlying Assets

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

When the adoption of the standard or interpretation is deemed to have an impact on the financial statements or performance of the Group, its impact is described below:

·; IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements (Amendment)

The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the financial statements to understand the relationship with their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with such involvement. Management has assessed that there is no impact on the Group's statement of financial position.

Ø IAS 12 Income Taxes (Amended) -Recovery of Underlying Assets

The amendment clarifies the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset. Management has assessed that there is no impact on the Group's statement of financial position.

B) Standards issued but not yet effective and not early adopted

·; IAS 1 Financial Statement Presentation (Amended) - Presentation of Items of Other Comprehensive Income

The amendment is effective for annual periods beginning on or after 1 July 2012. The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or 'recycled') to profit or loss at a future point in time (for example, net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) would be presented separately from items that will never be reclassified (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affects presentation only and has no impact on the Group's financial position or performance. Management has assessed that there is no impact on the Group's statement of comprehensive income.

·; IAS 19 Employee Benefits (Revised)

The amendment is effective for annual periods beginning on or after 1 January 2013. The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. Management has assessed that there is no impact on the Group's financial position.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

·; IAS 28 Investments in Associates and Joint Ventures (Revised)

The Standard is effective for annual periods beginning on or after 1 January 2013. As the Group applies IFRS as adopted by the EU, the effective date is 1 January 2014.As a consequence of the new IFRS 11 Joint arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. Management is in the process of assessing the impact from the adoption of the standard.

·; IAS 32 Financial Instruments: Presentation (Amended) - Offsetting Financial Assets and Financial Liabilities

The amendment is effective for annual periods beginning on or after 1 January 2014. These amendments clarify the meaning of "currently has a legally enforceable right to set-off". The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. Management has assessed that there is no impact on the Group's financial position.

·; IFRS 7 Financial Instruments: Disclosures (Amended) - Offsetting Financial Assets and Financial Liabilities

The amendment is effective for annual periods beginning on or after 1 January 2013. These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g. collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity's financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. Management has assessed that there is no impact on the Group's financial position.

·; IFRS 9 Financial Instruments: Classification and Measurement

The new standard is effective for annual periods beginning on or after 1 January 2015. IFRS 9, as issued, reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued. This standard has not yet been endorsed by the EU. Management is in the process of assessing the impact of the new standard on the financial position or performance of the Group.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

·; IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

The new standard is effective for annual periods beginning on or after 1 January 2013. As the Group applies IFRS as adopted by the EU, the effective date is 1 January 2014. IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation - Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Management has assessed that there is no impact on the Group's financial position.

·; IFRS 11 Joint Arrangements

The new standard is effective for annual periods beginning on or after 1 January 2013. As the Group applies IFRS as adopted by the EU, the effective date is 1 January 2014. IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. Management is in the process of assessing the impact of the new standard on the financial position or performance of the Group.

·; IFRS 12 Disclosures of Interests in Other Entities

The new standard is effective for annual periods beginning on or after 1 January 2013. As the Group applies IFRS as adopted by the EU, the effective date is 1 January 2014. IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. Management is in the process of assessing the impact of the new standard on the financial position or performance of the Group.

·; IFRS 13 Fair Value Measurement

The new standard is effective for annual periods beginning on or after 1 January 2013. IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. Management is in the process of assessing the impact of the new standard on the financial position or performance of the Group.

·; The IASB has issued the Annual Improvements to IFRSs - 2009 - 2011 Cycle, which contains amendments to its standards and the related Basis for Conclusions. The annual improvements project provides a mechanism for making necessary, but non-urgent, amendments to IFRS. The effective date for the amendments is for annual periods beginning on or after 1 January 2013. This project has not yet been endorsed by the EU. Management is in the process of assessing the impact of the project on the financial position or performance of the Group.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Ø IAS 1 Presentation of Financial Statements: This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative period is the previous period.

Ø IAS 16 Property, Plant and Equipment: This improvement clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory.

Ø IAS 32 Financial Instruments, Presentation: This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes.

Ø IAS 34 Interim Financial Reporting: The amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.

·; Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)

The guidance is effective for annual periods beginning on or after 1 January 2013. The IASB issued amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities. The amendments change the transition guidance to provide further relief from full retrospective application. The date of initial application' in IFRS 10 is defined as 'the beginning of the annual reporting period in which IFRS 10 is applied for the first time'. The assessment of whether control exists is made at 'the date of initial application' rather than at the beginning of the comparative period. If the control assessment is different between IFRS 10 and IAS 27/SIC-12, retrospective adjustments should be determined. However, if the control assessment is the same, no retrospective application is required. If more than one comparative period is presented, additional relief is given to require only one period to be restated. For the same reasons IASB has also amended IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities to provide transition relief. This guidance has not yet been endorsed by the EU. Management is in the process of assessing the impact of the guidance on the financial position or performance of the Group.

·; Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

The amendment is effective for annual periods beginning on or after 1 January 2014. The amendment applies to a particular class of business that qualify as investment entities. The IASB uses the term 'investment entity' to refer to an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. An investment entity must also evaluate the performance of its investments on a fair value basis. Such entities could include private equity organisations, venture capital organisations, pension funds, sovereign wealth funds and other investment funds. Under IFRS 10 Consolidated Financial Statements, reporting entities were required to consolidate all investees that they control (i.e. all subsidiaries). The Investment Entities amendment provides an exception to the consolidation requirements in IFRS 10 and requires investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendment also sets out disclosure requirements for investment entities. This project has not yet been endorsed by the EU.Management has assessed that there is no impact on the Group's financial position.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

3. VOYAGE AND VESSEL OPERATING EXPENSES:

The amounts in the accompanying consolidated statement of comprehensive income are analysed as follows:

Voyage expenses

Vessel operating expenses

4. GENERAL AND ADMINISTRATIVE EXPENSES:

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

5. FINANCE EXPENSE:

6. TREASURY STOCK - LIMITED SHARE BUY BACK PROGRAMME:

On 26 September 2011, the Group commenced a limited share buy-back programme, which was conducted in accordance with the resolution passed at the fifth Annual General Meeting on 11 May 2011, providing the Company a general authorisation to make purchases of up to 9,128,243 shares of U.S.$0.01 each, representing approximately 10% of the Company's issued share capital at the Annual General Meeting. During the period from 26 September 2011 to 31 December 2011, 427,887 shares of U.S.$0.01 par value each, were purchased under the buy-back share programme. The purchase cost amounted to U.S.$486 and is separately reflected in the accompanying Consolidated Statement of Changes in Equity. During 2012, there were no share purchases under the buy-back programme.

7. EARNINGS PER SHARE:

Basic and diluted earnings per share ("EPS") of U.S.$(0.71) (2011: U.S.$0.03) are calculated by dividing the (loss)/profit for the year attributable to Goldenport Holdings Inc. shareholders ((U.S.$ 65,339) and U.S.$2,339 for the years ended 31 December 2012 and 31 December 2011, respectively), by the weighted average number of shares outstanding (92,306,453 and 91,179,150 for the years ended 31 December 2012 and 31 December 2011, respectively). The weighted average number of shares outstanding reflects the weighted average number of shares existed on 31 December 2011 and the shares issued on 18 May 2012 relating to the share dividend programme (as approved by the AGM on 11 May 2012).

Diluted EPS reflects the potential dilution that could occur if share options or other contracts to issue shares were exercised or converted into shares.

GOLDENPORT HOLDINGS INC.

NOTES TO THE FINANCIAL STATEMENTS

8. VESSELS:

Vessels consisted of the following at 31 December: