2 Mar 2010 07:00
Goldenport Holdings Inc.
Athens, 2 March 2010
Final Results for the Year Ended 31 December 2009
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 2009 reporting a final dividend for 2009 of 3 pence per share, which including the interim dividend results to a total dividend of 3.7 pence per share or a payout of c. 104% of earnings before exceptional items.
Financial Highlights (amounts in '000 except per share data)
§ Revenue of US$ 94,011, (2008: US$ 154,968)
§ EBITDA of US$ 46,481, (2008: US$ 88,710)
Excluding gain from vessels' disposals and the loss from cancellation of new building contracts
§ Net income of US$ 3,894 (2008: US$ 51,091)
§ Earnings per Share of US$ 0.06 calculated on 70,404,878 shares (2008: US$ 0.73 calculated on 69,924,071 shares)
As reported
§ Net loss of US$ 1,362 (2008 net income: US$ 87,581)
§ Earnings per Share of US$ (0.02) calculated on 70,404,878 shares (2008: US$ 1.25 calculated on 69,924,071 shares)
§ Gain from vessels' disposal of US$ 13,540 realised during 2009 (2008: US$ 36,490)
§ Loss on cancellation of new building contracts of U.S.$18,796
§ Available cash of US$ 24,618 (31 December 2008: US$ 33,257)
§ Additional cash of US$ 15,100 drawn from a bank facility in December 2009 for further bulk carrier fleet growth
§ US$ 20,000 of committed credit line for the acquisition of additional operating bulk carriers
§ Net debt to book capitalisation as of 31 December 2009, 36% (31 December 2008: 30.5%)
§ No impairment losses incurred in any vessel of the fleet
§ In compliance with debt covenants
§ During the year, waivers were granted by the financing bank in respect of a number of loans relating to the container fleet; these waivers were in respect of loan to value covenant and were granted with effect until 2011
§ Final dividend of 3.0 pence per share or £ 2,125 in total with scrip alternative
§ Total dividend for 2009 3.7 pence per share
§ Dividend payout ratio of c. 104% of earnings before exceptional items (excluding gain from vessels disposals and loss from cancellation of new building contracts)
§ The Board of Directors and Management team will elect for the scrip alternative for their entire holdings indicating their belief in the long term prospects of the business and the Company.
CEO Statement (amounts in US$'000)
Captain Paris Dragnis, Founder and Chief Executive Officer of the Company commented:
"Despite the highly volatile environment that has prevailed in the global financial and shipping markets since the last quarter of 2008, Goldenport continues to reward its shareholders with a regular dividend, a significant accomplishment in current market conditions. As a result of the proactive strategy we have implemented, Goldenport is currently in a strong position to weather the current storm and come out of this turmoil stronger and larger.
"Since the end of 2008, we swiftly adapted our strategy to the rapidly declining market conditions. Our objective was and remains to safeguard the shareholder value and at the same time to position our Company to take advantage of accretive fleet expansion opportunities that usually arise in periods of weak markets.
"In this context we took several proactive measures to optimize our fleet utilization and cash flow and to enhance our operational flexibility while we continued with our fleet renewal and expansion program.
"Regarding our fleet deployment, we enhanced the forward coverage of our container fleet beyond 2010 by shifting contracts fixed during 2008 on three older and fully depreciated vessels to younger vessels that were opening for re-chartering. This enabled us to maintain profitable employment for our younger tonnage and dispose the three older fully depreciated vessels for scrap during 2009 realizing book gains and enhancing our cash position.
"In December 2009 we also shifted the employment contract from the fully depreciated vessel 'MSC Mekong' to the 1994-built laid up vessel 'MSC Anafi' extending at the same time the duration of the contract from one to two years at higher rate compared to the currently prevailing market conditions. The 'MSC Mekong' was subsequently sold for demolition in February 2010, giving rise to a profit on disposal.
"For our bulk carrier fleet, we took advantage of the rebound in the dry-bulk rates to fix our bulk carrier vessels that opened for re-chartering at higher rates and to fix for two years our new build bulk carrier 'Alpine Trader', which was delivered to us in October 2009. We also utilised the strengthening in the bulk carrier market to profitably sell the bulk carrier vessel 'Gianni D'.
"In total, during 2009 we profitably sold four container vessels and two bulk carriers realising total net proceeds of US$ 34,757 which further strengthened our balance sheet.
"In addition, we optimized our capital expenditures and cash flow utilization by reaching an agreement with the Qingshan Shipyard of China to cancel the two new building contracts originally placed with the yard in 2008 for the construction of two Supramax bulk carriers with a capacity of 57,000 DWT each one. At the same time we acquired a contact for the construction of a 59,000 DWT new building Supramax vessel at SPP Shipyard of Korea with estimated delivery in the last quarter of 2010. Even after taking into account the cancellation costs, this reshuffling enabled us to generate savings on a project basis and optimize our debt exposure, further enhancing our asset base and financial strength.
"Since August 2009 we have arranged two different debt facilities by refinancing debt free vessels that we shall use in order to acquire further operating bulk carriers. The first facility relates to a committed credit line for a total amount of US$20,000 that can be used for the acquisition of bulk carriers. The second facility relates to a US$15,100 loan that was drawn on 16 December 2009 and remains restricted in use from the financing bank until the target vessel is identified.
"Our Company is in a strong financial condition given that as of 31 December 2009 our net debt was only US$ 132,531 and our net debt to book capitalisation was 36%, a moderate figure for our industry. Our cash balance on 31 December 2009 was US$24,618.
"Following the delivery of the two new building bulk carriers 'Marie-Paule' and 'Alpine Trader', the acquisition of the 1995-built container vessel 'MSC Socotra' and the sale of the vessels that took place during 2009, our fleet has a much younger age profile and significant increase in the capacity compared to the fleet as at IPO, which supports a long term quality earnings stream.
"As of today, our fleet consists of 23 vessels, of which 11 are containers and 12 are dry-bulk carriers. Out of the total, 7 vessels (2 container and 5 bulk-carriers) are new-building orders with expected deliveries between 2010 and 2011. For our combined operational fleet of containers and dry bulk carriers we have secured strong forward coverage with 79% of the fleet available days for 2010 and 59% for 2011 fixed under time charter employment, assuming earliest charter expiration and excluding the new building vessels (even if several are already chartered). This translates into strong and visible cash flows.
"In the current environment we have to remain particularly vigilant and alert. However, we also need to reward our shareholders who have been supportive throughout the years even while we were facing significant challenges. In this respect the Board has proposed a final dividend for the financial year 2009 of 3.0 pence per share, which is significantly higher compared to the prior guidance. Following this proposal the total dividend for 2009 will be 3.7 pence per share. This cash dividend will be accompanied by a scrip dividend alternative. This is a testimony of Goldenport's financial strength and commitment to its shareholders. Furthermore, the Management will elect for the scrip dividend alternative in respect of our entire holdings which is indicative of our belief in the long term prospects of the business and our Company.
"Our strong forward time charter coverage, our new-building program which progresses on track, our committed debt for fleet acquisitions, our strong balance sheet together with improved market prospects in both markets in which we operate, enable us to feel confident about the future growth prospects of our Company and puts us in a strategic position to take advantage of accretive fleet expansion opportunities as these may occur."
Final dividend
The Board of Directors of Goldenport believes it is prudent to maintain a conservative dividend payout ratio but understands that it also needs to reward the shareholders who have been supporting the Company during this year of market weakness, in which the Company operates. Therefore the Board proposed a final dividend of 3.0 pence per share in respect of the financial year ending 31 December 2009. Including the interim dividend of 0.7 pence per share already paid, the total dividend for 2009 will be 3.7 pence per share representing a dividend payout of c. 104% the earnings for the year before exceptional items (i.e. excluding gains from vessels disposals and the loss from the cancellation of new building contracts). This final dividend will be accompanied by a scrip dividend alternative, arrangements for which will be mailed to shareholders on or about 29 March 2010 with elections required to be made by 21 April 2010. The Board of Directors and the Management team undertake to elect for the scrip dividend alternative in respect of their entire holdings. Assuming that the dividend proposal will be approved on the AGM that will be held on 12 May 2010, the dividend will be payable on 14 May 2010 to the shareholders on the register as at close of business on 12 March 2010. The ex-dividend date is 10 March 2010.
Fleet Developments:
Vessel Deliveries:
§ On 11 February 2009 the Company took delivery of the 53,800 DWT new bulk carrier 'Marie-Paule' which commenced its agreed three-year time charter;
§ On 23 February 2009 the Company delivered the vessel 'MSC Fortunate' (previous name 'Fortune') to the charterer to commence a four-year time charter;
§ On 12 October 2009 the Company took delivery of the 53,800 DWT new build bulk carrier 'Alpine Trader' which upon delivery commenced its agreed two-year time charter.
Optimization of new building program (amounts in US$ '000):
§ During 2009 the Company arranged for discounts to contract prices with two of the shipyards where orders have been placed totalling US$6,650;
§ The Company agreed with the shipyard where the two container vessels are ordered to reschedule the milestone payments from 2010 to the first quarter of 2011;
§ The Company agreed with the shipyard where two of the Supramax bulk carriers are being built to reschedule equity payments of US$ 7,550 from the first quarter of 2010 to the last quarter of 2010;
§ In October 2009 the Company agreed with Qingshan Shipyard of China to cancel the two new-build bulk carrier contracts initially arranged in August 2008.The cancelled contracts were for the construction of two new-build Supramax bulk carriers in China with carrying capacity of 57,000 DWT each and were initially contracted for at a total consideration of US$ 91,660, with estimated delivery in December 2010.
As part of this agreement, in January 2010 the Company received back from the Shipyard US$ 9,360 representing a portion of its initial deposit and subsequently the refund and performance guarantees have been cancelled. The Company used these proceeds to repay in full the US$ 8,540 of the project specific loan.
The cancellations of the two Qingshan vessels and the acquisition of the SPP vessel enable the Company to optimize its capital expenditure and debt exposure taking advantage of the prevailing market environment. Following both transactions, the Company's debt commitments in 2010 will be reduced by an estimated US$ 42,100. Furthermore, on a ship-by-ship project basis, the replacement of one Qingshan contract with the single Supramax contract provides to the Company cash savings of US$ 4,700.
Vessel Acquisition (amounts in US$ '000):
§ On 4 March 2009, the Company acquired the vessel 'NYK Procyon', a 1995-built container vessel with carrying capacity of 4,953 TEU, for a total consideration of US$ 10,500. The vessel was renamed to 'MSC Socotra' and entered a four-year time charter in April.
§ On 20 November 2009, the Company acquired a contract for the construction of a new build geared Supramax bulk carrier with 59,000 DWT capacity for US$31,800. The vessel will be constructed in SPP Shipbuilding Co. Ltd in Korea and is expected to be delivered in the last quarter of 2010. The bank that was financing the cancelled Qingshan contracts agreed to transfer the loan commitment to the SPP contract for an amount up to US$21,700.
Profitable Vessel disposals (amounts in US$ '000):
2009
§ On 6 February 2009, the Company agreed the sale of the 67,515 DWT, 1977-built vessel 'Athos', to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,895 in cash and the vessel was delivered to the new owners on 12 February 2009. The gain resulting from the sale of the vessel was US$357 after accounting for commissions and other expenses.
§ On 22 May 2009, the Company agreed the sale of the 2,258 TEU, 1980-built vessel 'MSC Socotra', to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,513 in cash and the vessel was delivered to the new owners on 4 June 2009. The gain resulting from the sale of the vessel was US$252 after accounting for commissions and other expenses.
§ On 22 May 2009, the Company agreed the sale of the 2,108 TEU, 1978-built vessel 'MSC Himalaya', to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,093 in cash and the vessel was delivered to the new owners on 9 June 2009. The gain resulting from the sale of the vessel was US$825 after accounting for commissions and other expenses.
§ On 3 June 2009, the Company agreed the sale of the 934 TEU, 1979-built vessel 'MSC Emirates', to an unaffiliated third party. The sale was concluded at a gross consideration of US $1,276 in cash and the vessel was delivered to the new owners on 16 June 2009. The gain resulting from the sale of the vessel was US$422 after accounting for commissions and other expenses.
§ On 29 May 2009, the Company agreed the sale of the 69,100 DWT, 1998-built vessel 'Gianni D', to an unaffiliated third party. The sale was concluded at a gross consideration of US $20,000 in cash and the vessel was delivered to the new owners on 27 July 2009. The gain resulting from the sale of the vessel was US$11,244 after accounting for commissions and other expenses.
§ On 26 October 2009, the company agreed the sale of the 2,257 TEU, 1985-built vessel 'Howrah Bridge', to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,814 in cash and the vessel was delivered to the new owners on 6 November 2009. The gain resulting from the sale of the vessel was US$440 after accounting for commissions and other expenses.
2010
§ On 12 February 2010, the Company agreed the sale of the 962 TEU, 1978-built vessel 'MSC Mekong', to an unaffiliated third party for demolition. The sale was concluded at a gross consideration of US$1,989 in cash. The Company is expected to have a gain of 870 which will be included in the 2010 financial statements.
The fleet as of today consists of 23 vessels, of which 11 are containers and 12 are dry-bulk carriers. Out of the total, 7 vessels (2 container and 5 bulk-carriers) are new-building orders with expected deliveries between 2010 and 2011.
Operational Fleet Forward Coverage
The percentage of available days of the fleet already fixed under contracts as of 1 March 2010 assuming the earliest charter expiration is as follows:
|
| 2010(1) (2) | 2011 (1) (2) | 2012 (1) |
| Total Fleet | 79% (78%) | 59% (59%) | 26% (26%) |
| Containers | 89% (89%) | 88% (88%) | 45% (45%) |
| Bulk Carriers | 64% (60%) | 18% (18%) | 1% (1%) |
(1) Percentage of available days of the fleet fixed under contract as reported on 2 February 2010, being the date of the last trading update, is given in brackets
(2) The percentages above include the current operational fleet and exclude the seven new-build vessels for which we expect delivery in 2010 and 2011.
Debt Refinancing (amounts in US$ '000)
§ On 21 August 2009, the Company arranged a new loan facility of US$ 20,000 for the acquisition of bulk carriers. Two of the existing debt free bulk carriers will be used as collateral for the new loan.
§ On 16 December 2009, the Company drew-down a new loan facility of US$25,100. US$10,000 will be used for working capital purposes and the remaining US$15,100 will be used to finance the acquisition of bulk carriers. As at 31 December 2009 the US$15,100 were in a restricted account until the asset is identified. Two of the existing debt free bulk carriers were used as collateral for the new loan.
Compliance with Debt Covenants
§ The Company is in compliance with the covenants of the existing bank debt.
§ For a number of our containers vessels we obtained from the financing bank a waiver until 2011 of the security requirement under which the charter-free market value of the mortgaged vessels should be at least 120% or 125% of the outstanding balance of each loan.
Impairment
§ No impairment loss has incurred in any vessels of the fleet.
2010 Financial Calendar
| Ex-dividend date: | 10 March 2010 |
| Record date: | 12 March 2010 |
| Calculation period for scrip dividend: | 10-16 March 2010 |
| Despatch Annual Report and Scrip Election Documentation: | 29 March 2010 |
| Last day of elections for the scrip dividend: | 21 April 2010 |
| Annual General Meeting | 12 May 2010 |
| Dividend payment: | 14 May 2010 |
Conference Call and Webcast
The company's management will hold a conference call today Tuesday 2 March 2010 at 3:30 pm (London), 5:30 pm (Athens), 10:30 am. (New York), 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 Tuesday 9 March 2010 by dialling 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:
Christos Varsos, Chief Financial Officer: Today +30 694 429 4839
Thereafter +30 210 8910 500
John Dragnis, Commercial Director Today +30 694 668 8180
Thereafter +30 210 8910 500
Investor Relations Co-ordinators:
Capital Link:
Annie Evangeli - London +44 203 206 1320
Nicolas Bornozis - New York +1 212 661 7566
E-mail: goldenport@capitallink.com
info@goldenport.biz
Market Outlook:
Containers:
At the beginning of 2009 400 vessels of 1.1 million TEU capacity were laid up. Throughout the year this figure increased to 1.6 million TEU, and at the same time, charter rates dropped to the lowest levels ever recorded. As a consequence, the majority of the liner companies reported record losses and second hand values declined significantly.
The whole industry was facing its biggest challenge to date and in order to survive implemented a number of measures including:
§ cost reduction initiatives;
§ rescheduling and consolidating of services;
§ applying slow steaming tactics;
§ increasing freight rates, where possible;
§ maximizing utilization;
§ forming of alliances between liner companies and pools between independent owners;
§ cancelling of new building orders or deferring delivery of new vessels where possible; and
§ scrapping of older vessels (more than 370,000 TEU capacity, representing approximately 2.7% of the world fleet was sent for demolition during 2009).
In addition, a number of the major liner companies also looked to recapitalise their balance sheets, either through the Capital Markets or through governmental support.
Notwithstanding the challenging trading conditions, except for a few reported corporate failures (mainly local operators and a few small KG companies in Germany), all key participants in this industry have managed to survive.
The market's outlook depends on the supply/demand balance. During 2009, for the first time ever, negative growth in real demand for containership capacity was experienced with global container movements falling by about 8%. Adjusting for ton/miles and average cargo weights, the cumulative estimated surplus at the beginning of 2010 was about 3 million TEU (approximately 20% of the world capacity). However, after almost 18 months of negative sentiment, there are some signs of recovery, with the medium to long term view currently more optimistic.
As a general rule the demand growth for containerized cargo is about three times greater than the world's GDP growth. Based on the latest estimations for 2010, this would suggest that container demand should be expected to increase by around 9% during the year.
On the supply side, there are also some indications that the supply/demand balance may return earlier than predicted. However, this remains dependent on a number of factors, including: the actual number of vessels being delivered needs to remain substantially below what is scheduled; the liner companies need to continue to decrease fleet productivity (slow streaming); and an equivalent, if not higher number of containerships is sent for demolition during 2010, as were during 2009.
Despite improving market conditions, it is likely that 2010 will remain a year of recovery and caution for both the liner companies and independent owners. It will take some time before charter rates return to historic 'average' levels and much more time for liner companies to return to profitability.
During 2009 the Company despite the negative market environment described managed to maintain high utilisation of the container fleet at profitable rates, by shifting contracts fixed during 2008 on three older and fully depreciated vessels to younger vessels that were opening for re-chartering in 2009 and subsequently scrapping the older vessels.
In late 2009 the Company shifted another contract from the fully depreciated vessel 'MSC Mekong' to the 1994-built laid up vessel 'MSC Anafi' at the same time as extending of the contract for one further year. All these allowed the Company to have strong forward coverage with 89% of the available days in 2010 and 88% of the available days in 2011 to be already committed under contracts at much higher rates compared to the prevailing charter market. With the exception of the vessel 'Gitte' which is currently laid up no other container vessel opens for re-chartering during 2010. From the remaining eight operating vessels, one will open for re-chartering in 2011, five in 2012 and two in 2013.
Bulk-Carriers:
The dry bulk market actually outperformed expectations and predictions during 2009. The collapse of the world financial system in the last quarter of 2008 which resulted in a decline in demand for bulk carriers, coupled with the significant new-building order-book did not leave much space for market optimism. However, in real terms as from early February 2009, trade volumes have shown signs of recovery which has boosted both the spot and period dry bulk markets. The dry bulk market found its new equilibrium in this changing environment which started being established during last summer around 2,500 to 3,000 units of Baltic Dry Index ('BDI'). Whilst not reaching the highs experienced during 2007 and 2008, all types of vessels, irrespective of age are currently operating at EBITDA accretive levels.
As with containers the balance between supply and demand is critical. Despite the negative global GDP negative growth, demand for dry bulk cargoes during 2009 actually remained almost at the same level as for 2008, due primarily to demand from China and India. Chinese iron ore imports increased by 41% which went some way towards compensating for reductions experienced in other countries, principally in Europe and USA. On the supply side, after allowing for the cargo capacity being sent for demolition, the dry bulk fleet grew by only 7% as compared to expectations of double digit growth.
For 2010 the demand for dry cargo transportation is expected to grow by approximately 8% boosted by the steel industry where the world steel consumption is expected to grow by over 10%. However, at the same time lack of new investments in port infrastructure may increase port congestion thereby decreasing productivity of the world fleet. Vessels scheduled for delivery during 2010 does still remain high, however it will be important to see what the actual deliveries will be as well as the number of vessels to be scrapped when considering the net growth of the world fleet and overall supply.
Charter rate volatility was certainly a key feature during 2009 and this is expected to continue into 2010. Rates will continue to be difficult to predict however even if average freight rates for 2010 are found to be slightly lower than for 2009 this should not cause undue concern.
Goldenport continues to be well placed to maintain the visibility of its cash flows with 64% of the dry-bulk fleet available days for 2010 already fixed under period employment. This figure excludes the three new building Supramaxes which are expected to be delivered within 2010, although all are already chartered.
Summary of Selected Financial and Operating Data
|
|
| Year ended |
| |||
| Income Statement Data (in US$ thousand): |
| 31 December 2009 | 31 December 2008 |
| ||
| Revenue |
| 94,011 | 154,968 |
| ||
| EBITDA |
| 46,481 | 88,710 |
| ||
|
|
|
|
|
| ||
| Excluding gain from vessels disposals & loss from cancellation of new building contracts: |
| |||||
| EBIT |
| 7,899 | 56,314 |
| ||
| Net Income |
| 3,894 | 51,091 |
| ||
| Weighted average number of shares |
| 70,404,878 | 69,924,071 |
| ||
| Basic EPS |
| 0.06 | 0.73 |
| ||
|
|
|
|
|
| ||
| As reported: Including gain from vessels disposals & loss from cancellation of new building contracts: |
| |||||
| EBIT |
| 2,643 | 92,804 |
| ||
| Net (Loss)/Income |
| (1,362) | 87,581 |
| ||
| Weighted average number of shares |
| 70,404,878 | 69,924,071 |
| ||
| Basic EPS |
| (0.02) | 1.25 |
| ||
|
|
|
|
|
| ||
| Gain from vessels' disposals |
| 13,540 | 36,490 |
| ||
| Cancellation of new building contacts |
| (18,796) | - |
| ||
|
|
|
|
|
| ||
| FLEET DATA: |
|
|
|
| ||
| Average number of vessels |
| 19 | 22 |
| ||
| Number of vessels at end of period |
| 24 | 30 |
| ||
| -Operating |
| 15 | 19 |
| ||
| -Laid-up | (5) | 2 | - |
| ||
| -Under reconstruction |
| - | 1 |
| ||
| -New Buildings under construction |
| 7 | 10 |
| ||
| Number of vessels in operation at end of period |
| 15 | 19 |
| ||
| Ownership days | (2) | 6,803 | 8,110 | (1) | ||
| Available days | (2) | 6,503 | 7,514 | (1) | ||
| Operating days | (2) | 5,982 | 7,328 | (1) | ||
| Fleet utilisation | (6) | 92.0% | 97.5% |
| ||
|
|
|
|
|
| ||
| AVERAGE DAILY RESULTS (in US$) |
|
|
|
| ||
| Time Charter Equivalent (TCE) rate |
| 13,424 | 19,028 |
| ||
| Average daily vessel operating expenses | (2) | 5,082 | 5,786 | (1) | ||
| Average daily vessel operating expenses excluding items arising in dry-dockings and one-off insurance premiums | (2)(4) | 4,957 | 5,084 | (1)(3) | ||
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|
|
| ||
| (1): Ownership days and average daily vessel operating expenses exclude the vessel Fortune and the new building orders not delivered that will be delivered in a future date, but include the vessels sold in 2008 up to their respective sale dates | ||||||
| (2): Ownership days and average daily vessel operating expenses exclude the new building orders not delivered, but include the vessels Marie-Paule and Alpine Trader from their respective delivery dates and also include the vessels sold in 2009 up to their respective sale dates | ||||||
| (3): For 2008 items relating to dry-dockings aggregating a total amount of US$3,793 and the additional insurance premiums totalling US$1,896 are excluded from the total operating expenses in order to arrive to the calculation above | ||||||
| (4): For 2009 items relating to dry-dockings aggregating a total amount of US$772 (2008 US$3,793) and the additional insurance premiums totaling US$76 (2008 US$1,896) are excluded from the total operating expenses in order to arrive to the calculation above | ||||||
| (5): From late January 2010 only one vessel remains laid-up. | ||||||
| (6): Fleet utilization includes the two laid-up vessels as of 31 December 2009. | ||||||
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| ||||||
See Appendices, for Notes on the Summary of Selected Financial and Operating Data, for detailed Fleet Employment profile, for Notes on the Summary of Selected Financial and Operating Data, for forward looking statements and for full set of financial statements.
Financial review (amounts in US$ '000, except the per day OPEX data)
Time and Voyage Charter Revenues: Revenues decreased by US$ 60,957 or 39.3% to US$ 94,011 for 2009 (2008: US$ 154,968). The main reasons for this decrease were: (i) a decline in freight rates during 2009, in both sectors in which we operate, compared with record high rates in the same period of 2008 especially in the bulk carriers segment and (ii) the difference in operating days between the two periods (2009: 5,982 days; 2008: 7,328 days). The difference between the operating days is attributable to three main reasons: a) the disposal of vessels in 2008 b) the disposal of vessels during 2009 exceeded the deliveries of operational vessels and c) laying-up two container vessels in the second half of 2009.
The vessels 'Samos' 'Ios', 'Achim', 'Glory D' and 'Tuas Express' were sold during 2008 so did not contribute at all in the revenue of 2009.
The vessels 'Athos', 'MSC Emirates', the old 'MSC Socotra', 'MSC Himalaya', 'Gianni D' and 'Howrah Bridge' were sold in different times throughout 2009 so they did not contribute in full in 2009 revenue. The vessels 'MSC Anafi' and 'Gitte' were laid-up most of the second half of 2009 so they did not contribute to the revenue (although they minimised expenses as well).
The vessels 'Marie-Paule' and 'MSC Fortunate became operational in the first quarter of 2009 and the vessel 'MSC Socotra (ex. Procyon)' was acquired and became operational in the second quarter of 2009. The vessel 'Alpine Trader' was delivered from the shipyard and became operational in October 2009.
Voyage expenses total: The voyage expenses decreased by US$ 5,288 or 44.1% to US$ 6,707 for 2009 (2008: US$ 11,995) mainly due to the decreased revenue figure to which commission rates applied.
Vessel operating expenses: Vessel operating expenses decreased by US$ 12,351 or 26.3% to US$ 34,570 for the 2009 (2008: US$ 46,921). The decrease in absolute numbers is attributable to the decrease of the fleet in terms of numbers of vessels, but also to the change of mix as the vessels sold were older compared to the existing vessels.
On a per day basis operating expenses decreased by US$ 704 per day or 12.2% to US$ 5,082 per day (2008: US$ 5,786 per day) reflecting the change in mix after the sale of specific vessels and the reduction in the prices of lubricants and insurance cost due to the change of the insured values.
Depreciation: The vessels' depreciation charge increased by 20.8% to US$ 28,000 for 2009 (2008: US$ 23,183) due to the incremental depreciation of the vessels 'MSC Fortunate', 'Marie-Paule', 'MSC Socotra (ex. Procyon)' and 'Alpine Trader' that became operational during the period compared to the disposed vessels that most of them were fully depreciated.
Depreciation of dry-docking costs: Depreciation of dry-docking costs increased by 14.9% to US$ 10,582 for 2009 (2008: 9,213) mainly due to: (i) dry-docking of 11 vessels in 2008 the expense of which affected in full the period in 2009; and (ii) dry-docking of five vessels that took place within the 2009.
Gain from vessel disposals: The Company realised profit of US$ 13,540 from the sale of one fully depreciated bulk carrier, one other bulk carrier and four fully depreciated container vessels; during 2008 the Company realised US$ 36,490 from the sale of two fully depreciated bulk carrier vessels and three fully depreciated container vessels.
Loss from cancellation of new building contracts: During 2009 the Company agreed with Qingshan Shipyard of China to cancel the two new-build bulk carrier contracts initially contracted in 2008 subject to receiving back the amount of U.S.$9,360 (U.S.$4,680 per vessel) out of total U.S.$27,360 of the original instalment paid in August 2008. The amount of U.S.$9,360 represents the portion of loan facility drawn of U.S.$8,540 along with the equity amount of U.S.$820 paid up to the cancellation date. Loss from the cancellation is equal to the total amount capitalised as of 31 December 2009 consisting of a) net initial deposit to shipyard of U.S.$18,000 not refunded to the Company, b) borrowing costs of U.S.$669, c) FDD insurance of U.S.$71, d) plan approval fee of U.S.$56.
Financing costs: Interest expense decreased by US$ 2,135 or 32.4% to US$ 4,448 for 2009 (2008: US$ 6,583), reflecting the significant drop of the interest rates. Interest income decreased by US$ 814 to US$ 508 due to lower cash balance available during the period and time deposits fixed at lower rates.
Cash and cash equivalents: The Company as of 31 December 2009 had US$ 24,618 of cash and cash equivalents (2008: US$ 33,257). The Company is expected to utilise these to strengthen the balance sheet, to cover remaining equity instalments for the new building program and to acquire vessels selectively if and when the right opportunities arise.
Restricted Cash: The Company as of 31 December 2009 had US$15,100 of restricted cash concerning the amount drawn on 16 December 2009 from a bank as part of a new loan facility for the future acquisition of a bulk carrier built after 1995.
APPENDIX 1:
Fleet Employment Profile
|
| Operational fleet |
|
|
|
|
| |
|
| Vessel | Type | Capacity | Rate (US$) per day | Earliest |
| |
|
|
|
|
|
| Expiration (1) |
| |
|
| Containers |
| TEU |
|
|
| |
|
|
|
|
|
|
|
| |
| 1 | MSC Fortunate (2) | Post Panamax | 5,551 | 28,500 | Feb-13 |
| |
| 2 | MSC Socotra (ex. Procyon) | Post Panamax | 4,953 | 12,350 | Apr-13 |
| |
| 3 | Bosporus Bridge | Sub Panamax | 3,720 | 14,750 | Feb-12 |
| |
| 4 | MSC Finland (3) | Sub Panamax | 3,032 | 16,500 | Apr-10 |
| |
|
|
|
|
| 6,800 | Apr-11 |
| |
| 5 | MSC Scotland (3) | Sub Panamax | 3,007 | 14,500 | Mar-11 |
| |
|
|
|
|
| 6,800 | Mar-12 |
| |
| 6 | MSC Anafi | Sub Panamax | 2,420 | 9,000 | Jan-12 |
| |
| 7 | MSC Accra | Sub Panamax | 1,889 | 14,200 | Jun-12 |
| |
| 8 | Gitte | Handy | 976 | Note 4 |
| ||
| 9 | Brilliant | Handy | 976 | 6,000 | Jun-12 |
| |
|
|
|
|
|
|
|
| |
|
| Dry Bulk |
| DWT |
|
|
| |
|
|
|
|
|
|
|
| |
| 10 | Vasos | Capesize | 152,065 | 23,950 | Feb-11 |
| |
| 11 | Marie-Paule (6) | Supramax | 53,800 | 18,000 | Jan-12 |
| |
| 12 | Alpine-Trader (6) | Supramax | 53,800 | 15,300 | Oct-11 |
| |
| 13 | Alex D | Supramax | 52,315 | 14,000 | Mar-10 |
| |
| 14 | Limnos | Supramax | 52,266 | 17,250 | May-10 |
| |
| 15 | Lindos | Supramax | 52,266 | 17,500 | Jul-10 |
| |
| 16 | Tilos | Supramax | 52,266 | 20,500 | Aug-10 |
| |
|
|
|
|
|
|
|
| |
|
| Vessels under construction |
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
| Vessel / Yard name | Type | Capacity | Scheduled Delivery |
|
| |
|
|
|
|
|
|
|
| |
|
| Containers |
| TEU |
|
|
| |
|
|
|
|
|
|
|
| |
| 17 | Jiangsu Yangzijiang | Sub Panamax | 2,500 | 2011 |
|
| |
| 18 | Jiangsu Yangzijiang | Sub Panamax | 2,500 | 2011 |
|
| |
|
|
|
|
|
|
|
| |
|
| Vessel or Yard name | Type | Capacity | Scheduled Delivery | Rate (US$) per day | ||
|
|
|
|
|
|
|
| |
|
| Dry Bulk |
| DWT |
|
|
| |
|
|
|
|
|
|
|
| |
| 19 | SPP (7) | Supramax | 59,000 | 2010 |
| ||
| 20 | COSCO (7) | Supramax | 57,000 | 2010 | 17,650+50% profit share at BSI(8) + 5% | ||
| 21 | COSCO | Supramax | 57,000 | 2010 | - | ||
| 22 | COSCO (7) | Supramax | 57,000 | 2011 | 25,000 | ||
| 23 | COSCO (7) | Supramax | 57,000 | 2011 | 17,700+50% profit share at BSI(8) + 5% over 18,200 | ||
|
|
|
|
|
|
|
| |
| (1) Represents earliest day on which the charterer may redeliver the vessel | |||||||
| (2) The rate stated is the average rate per day over the duration of the time charter | |||||||
| (3) The vessels will continue with the same charterer with the rates as stated in direct continuation | |||||||
| (4) The vessel is currently laid-up thus minimising the operating expenses | |||||||
| (5) The vessel 'MSC Mekong' was sold for demolition within February 2010 | |||||||
| (6) Both vessels owned under a 50:50 joint venture with Glencore International AG | |||||||
| (7) The charter rate is expected to be announced in the next trading update | |||||||
| (8) BSI: Baltic Supramax Index | |||||||
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 other than scheduled repairs or repairs under guarantee, vessel upgrades or special surveys, 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 (both net of any restricted cash) over the carrying amount of vessels and vessels under construction.
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 2009
The interim condensed 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.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Goldenport Holdings Inc.
We have audited the accompanying financial statements of Goldenport Holdings Inc. and its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 31 December 2009 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 Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors' Responsibility
Our responsibility is to express an opinion on these 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 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 financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the 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 financial statements in order to design audit procedures that are appropriate for 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 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 give a true and fair view of the financial position of the Group as of 31 December 2009, and of 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.
1 March 2010.
GOLDENPORT HOLDINGS INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2009
|
|
Notes |
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
|
|
| Revenue |
|
| 94,011 |
| 154,968 |
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
| Voyage expenses | 3 |
| (4,897) |
| (8,896) |
| Voyage expenses - related party | 3,20 |
| (1,810) |
| (3,099) |
| Vessel operating expenses | 3 |
| (34,570) |
| (46,921) |
| Management fees - related party | 20 |
| (2,679) |
| (3,515) |
| Depreciation | 7 |
| (28,000) |
| (23,183) |
| Depreciation of dry-docking costs | 7 |
| (10,582) |
| (9,213) |
| General and administrative expenses | 4 |
| (3,574) |
| (3,827) |
| Operating profit before disposal of vessels and cancellation of new building contracts |
|
| 7,899 |
| 56,314 |
|
|
|
|
|
|
|
| Gain from vessels disposal | 7 |
| 13,540 |
| 36,490 |
| Cancellation of new building contracts | 9 |
| (18,796) |
| - |
|
|
|
|
|
|
|
| Operating profit |
|
| 2,643 |
| 92,804 |
|
|
|
|
|
|
|
| Finance expense | 5 |
| (4,448) |
| (6,583) |
| Finance income |
|
| 508 |
| 1,322 |
| Foreign currency (loss)/gain, net |
|
| (65) |
| 38 |
|
|
|
|
|
|
|
| (Loss)/Profit for the year attributable to Goldenport Holdings Inc. shareholders |
|
| (1,362) |
| 87,581 |
| Total comprehensive income for the year attributable to Goldenport Holdings Inc. shareholders |
|
| (1,362) |
| 87,581 |
|
|
|
|
|
|
|
| Earnings per share (U.S.$): |
|
|
|
|
|
|
|
|
|
|
|
|
| - Basic EPS for the year | 6 |
| (0.02) |
| 1.25 |
| - Diluted EPS for the year | 6 |
| (0.02) |
| 1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares for basic EPS |
|
| 70,404,878 |
| 69,924,071 |
|
|
|
|
|
|
|
| Weighted average number of shares adjusted for the effect of dilution |
|
| 70,410,356 |
| 69,926,085 |
The accompanying notes 1 to 23 are an integral part of these consolidated financial statements.
GOLDENPORT HOLDINGS INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
|
|
Notes |
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
| Vessels | 7 |
| 271,242 |
| 221,587 |
| Vessel under reconstruction | 8 |
| - |
| 57,215 |
| Advances for vessels under construction | 9 |
| 97,010 |
| 101,510 |
| Other non-current assets | 10 |
| 6,549 |
| - |
|
|
|
| 374,801 |
| 380,312 |
| Current assets |
|
|
|
|
|
| Inventories |
|
| 267 |
| 266 |
| Trade receivables |
|
| 1,382 |
| 1,098 |
| Insurance claims | 11 |
| 2,153 |
| 2,012 |
| Due from related parties | 20 |
| 2,079 |
| 3,342 |
| Receivable from cancellation of new building contracts | 9,23 |
| 9,360 |
| - |
| Prepaid expenses and other assets |
|
| 1,451 |
| 1,054 |
| Restricted cash | 13 |
| 15,100 |
| - |
| Cash and cash equivalents | 12 |
| 24,618 |
| 33,257 |
|
|
|
| 56,410 |
| 41,029 |
| TOTAL ASSETS |
|
| 431,211 |
| 421,341 |
|
|
|
|
|
|
|
| EQUITY AND LIABILITIES |
|
|
|
|
|
| Equity attributable to shareholders of Goldenport Holdings Inc. |
|
|
|
|
|
| Issued share capital | 14 |
| 708 |
| 699 |
| Share premium | 14 |
| 108,865 |
| 107,354 |
| Retained earnings |
|
| 125,909 |
| 130,264 |
| Total equity |
|
| 235,482 |
| 238,317 |
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
| Long-term debt | 15 |
| 140,690 |
| 116,858 |
| Deferred revenue | 16 |
| 3,041 |
| 5,649 |
| Other non-current liabilities | 10 |
| 663 |
| 801 |
|
|
|
| 144,394 |
| 123,308 |
| Current liabilities |
|
|
|
|
|
| Trade payables |
|
| 10,476 |
| 12,993 |
| Current portion of long-term debt | 15 |
| 31,559 |
| 32,564 |
| Accrued liabilities and other payables | 17 |
| 4,885 |
| 8,990 |
| Other current liabilities | 10 |
| 414 |
| 257 |
| Deferred revenue current portion | 16 |
| 4,001 |
| 4,912 |
|
|
|
| 51,335 |
| 59,716 |
| Total Liabilities |
|
| 195,729 |
| 183,024 |
| TOTAL EQUITY AND LIABILITIES |
|
| 431,211 |
| 421,341 |
The accompanying notes 1 to 23 are an integral part of these consolidated financial statements.
GOLDENPORT HOLDINGS INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2009
|
|
|
Number of shares |
|
Par value U.S.$ |
| Issued share capital U.S.$'000 |
|
Share premium U.S.$'000 |
|
Retained earnings U.S.$'000 |
|
Total equity U.S.$'000 |
| At 1 January 2008 |
| 69,885,106 |
| 0.01 |
| 699 |
| 106,991 |
| 73,757 |
| 181,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit and total income for the year |
| - |
| - |
| - |
| - |
| 87,581 |
| 87,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share based payments- AIP (Annual Incentive Plan) shares |
| 52,239 |
| 0.01 |
| 0 |
| 363 |
| - |
| 363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends declared, approved and paid to equity shareholders |
| - |
| - |
| - |
| - |
| (31,074) |
| (31,074) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2008 |
| 69,937,345 |
| 0.01 |
| 699 |
| 107,354 |
| 130,264 |
| 238,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the year |
| - |
| - |
| - |
| - |
| (1,362) |
| (1,362) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share based payments- AIP (Annual Incentive Plan) shares |
| 175,014 |
| 0.01 |
| 2 |
| 235 |
| - |
| 237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends declared, approved and paid to equity shareholders |
| 708,252 |
| 0.01 |
| 7 |
| 1,276 |
| (2,993) |
| (1,710) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2009 |
| 70,820,611 |
| 0.01 |
| 708 |
| 108,865 |
| 125,909 |
| 235,482 |
The accompanying notes 1 to 23 are an integral part of these consolidated financial statements.
GOLDENPORT HOLDINGS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2009
|
| Notes |
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) / Profit for the year |
|
| (1,362) |
| 87,581 |
| Adjustments to reconcile (loss) / profit for the year to net cash inflow from operating activities: |
|
|
|
|
|
| Depreciation | 7 |
| 28,000 |
| 23,183 |
| Depreciation of dry-docking costs | 7 |
| 10,582 |
| 9,213 |
| Gain from vessel disposal | 7 |
| (13,540) |
| (36,490) |
| Loss from cancellation of new building contracts | 9 |
| 18,796 |
|
|
| Finance expense | 5 |
| 4,448 |
| 6,583 |
| Finance income |
|
| (508) |
| (1,322) |
| Annual Incentive Plan Shares | 20 |
| 168 |
| 252 |
| Foreign currency gain, net |
|
| 65 |
| (38) |
|
|
|
| 46,649 |
| 88,962 |
| Increase in inventories |
|
| (1) |
| (112) |
| (Increase) in trade receivables, prepaid expenses and other assets |
|
| (7,254) |
| (256) |
| (Increase)/Decrease in insurance claims | 11 |
| (141) |
| 1,256 |
| (Decrease) in trade payables, accrued liabilities and other payables |
|
| (7,124) |
| 2,342 |
| (Decrease) in deferred revenue |
|
| (3,519) |
| (3,248) |
| Net cash flows from operating activities before movement in amounts due from related parties |
|
| 28,610 |
| 88,944 |
| Due from related parties | 20 |
| 1,263 |
| (53) |
| Net cash flows from operating activities |
|
| 29,873 |
| 88,891 |
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
| Acquisition/improvement of vessels | 7 |
| (10,665) |
| (12) |
| Proceeds from disposal of vessels, net of commission | 7 |
| 35,515 |
| 47,158 |
| Payments for other costs relating to disposals of vessels | 7 |
| (758) |
| (410) |
| Proceeds relating to initial expenses | 7 |
| 84 |
| 248 |
| Dry-docking costs | 7,17 |
| (5,455) |
| (17,715) |
| Advances for vessel under reconstruction | 8 |
| (4,031) |
| (17,537) |
| Advances for vessel under construction | 9 |
| (54,569) |
| (38,249) |
| Interest received |
|
| 151 |
| 1,362 |
| Net cash flows used in investing activities |
|
| (39,728) |
| (25,155) |
|
|
|
|
|
|
|
| Financing activities |
|
|
|
|
|
| Proceeds from issue of long-term debt |
|
| 108,290 |
| 32,519 |
| Repayment of long-term debt |
|
| (85,510) |
| (44,729) |
| Restricted cash | 13 |
| (15,100) |
| - |
| Interest paid |
|
| (4,896) |
| (7,195) |
| Dividends paid | 18 |
| (1,710) |
| (31,074) |
| Net cash flows provided by/ (used in) financing activities |
|
| 1,074 |
| (50,479) |
| Net (decrease)/ increase in cash and cash equivalents |
|
| (8,781) |
| 13,257 |
| Net foreign exchange difference |
|
| 142 |
| 53 |
| Cash and cash equivalents at 1 January | 12 |
| 33,257 |
| 19,947 |
| Cash and cash equivalents at 31 December | 12 |
| 24,618 |
| 33,257 |
The accompanying notes 1 to 23 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") at a price of GBP 2.35 per share. On 11 April 2006 the over allotment option was exercised at a price of GBP 2.35 per share. In total, the Company received from its listing in the LSE an amount of GBP 66 million (equivalent to U.S.$. 115.5 million) which was used to partially repay debt and to fund further fleet expansion.
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 2009 is the holding Company for fifteen intermediate holding companies, each in turn owning a vessel-owning company, as listed in the table below. Goldenport is also the holding Company of nine more intermediate holding companies, owning Moonglade Maritime S.A., Valaam Incorporated, Cheyenne Maritime Company, Giga Shipping Ltd., Loden Maritime Co., Shila Maritime Corp., Ingle Trading Co., Sundown International Inc. and Dionysos Ship. Carrier Co., which will be the vessel-owning companies of four new built bulk carriers ordered at Cosco Zhoushan Shipyard, two new built container vessels ordered at Jiangsu Yangzijiang Shipyard, two new built bulk carriers ordered at Qingshan Shipyard of China and one new built bulk carrier ordered at SPP Shipbuilding Co. shipyard upon delivery of the vessels. Following the cancellation of the two new built bulk carriers (note 9) Ingle Trading Co. and Sundown International Inc. will become dormant. Also, as at 31 December 2009 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. In addition to the fully owned management Company, there is Goldenport Ship Management, a related party (Note 20a) that provides to the Group technical, operational and commercial management. As at 31 December 2009 Borealis Shipping Co. Ltd., Wild Orchid Shipping Ltd., Hampton Trading S.A., Fairland Trading S.A., Coral Sky Marine Ltd. and Nilwood Comp. Inc. the vessel-owning companies of the disposed vessels , "MSC Himalaya", "MSC Emirates", "MSC Socotra", "Athos", "Gianni D", and "Howrah Bridge" (note 7), have become dormant.
Goldenport and its subsidiaries will be hereinafter referred to as the 'Group'.
The annual consolidated financial statements comprising the financial statements of the Company and its wholly owned subsidiaries (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 1 March 2010. The shareholders of the Company have the right to amend the financial statements at the Annual General Meeting to be held on 12 May 2010.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
a) The wholly owned subsidiaries of the Company are:
| Intermediate holding company | Vessel - owning company | Country of Incorporation of vessel-owning company | Name of Vessel owned by Subsidiary | Year of acquisition of vessel | Type of Vessel |
| Aloe Navigation Inc. | Karana Ocean Shipping Co. Ltd. | Malta | Alex D | 1999 | Bulk Carrier |
| Dumont International Inc. | Black Rose Shipping Ltd. | Malta | MSC Mekong | 2001 | Container |
| Carrier Maritime Co. | Black Diamond Shipping Ltd. | Malta | Lindos | 2003 | Bulk Carrier |
| Medina Trading Co. | Carina Maritime Co. Ltd. | Malta | Tilos | 2004 | Bulk Carrier |
| Savannah Marine Inc. | Serena Navigation Ltd. | Malta | Limnos | 2004 | Bulk Carrier |
| Sirene Maritime Co. | Alvey Marine Inc. | Liberia | MSC Scotland | 2006 | Container |
| Kariba Shipping SA | Kosmo Services Inc. | Marshall Islands | MSC Fortunate (ex. Fortune) | 2006 | Container |
| Muriel Maritime Co. | Ipanema Navigation Corp. | Marshall Islands | Vasos | 2006 | Bulk Carrier |
| Baydream Shipping Inc. | Hinter Marine S.A. | Marshall Islands | MSC Finland | 2007 | Container |
| Knight Maritime S.A. | Mona Marine S.A. | Liberia | MSC Anafi | 2007 | Container |
| Foyer Marine Inc. | Ginger Marine Company | Marshall Islands | MSC Accra | 2007 | Container |
| Genuine Marine Corp. | Breaport Maritime S.A | Panama | Bosporus Bridge | 2007 | Container |
| Jaxon Navigation Ltd. | Hampson Shipping Ltd. | Liberia | Gitte | 2007 | Container |
| Tuscan Navigation Corp. | Longfield Navigation S.A. | Liberia | Brilliant (ex. Tiger Star) | 2007 | Container |
| Oceanrace Maritime Limited | Seasight Marine Company | Marshall Islands | MSC Socotra (ex. Procyon) | 2009(11) | Container |
| Abyss Maritime Ltd. | Moonglade Maritime S.A. | Liberia | ZS07036 | 2011(7) | Bulk Carrier |
| Seaward Shipping Co. | Valaam Incorporated | Liberia | ZS07037 | 2010(7) | Bulk Carrier |
| Jubilant Marine Company | Cheyenne Maritime Company | Marshall Islands | ZS07038 | 2011(7) | Bulk Carrier |
| Alacrity Maritime Inc. | Giga Shipping Ltd. | Marshall Islands | ZS07039 | 2010(7) | Bulk Carrier |
| Chanelle Shipping Company | Loden Maritime Co. | Marshall Islands | YZJ-815 | 2011(8) | Container |
| Clochard Maritime Limited | Shila Maritime Corp. | Marshall Islands | YZJ-816 | 2011(9) | Container |
| Dryades Maritime Limited | Ingle Trading Co. | Liberia | QS20060384 | 2010(10) | Bulk Carrier |
| Leste Shipholding Inc. | Sundown International Inc. | Liberia | QS20060385 | 2010(10) | Bulk Carrier |
| Lativa Marine Co. | Dionysos Ship. Carrier Co. | Liberia | S5087 | 2010(12) | Bulk Carrier |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
| Intermediate holding company | Vessel - owning company | Country of Incorporation of vessel-owning company | Name of Vessel owned by Subsidiary | Year of acquisition of vessel | Type of Vessel |
| Daysailer Navigation Co. | Platax Shipholding Carrier S.A. | Liberia | Dormant Company(13) |
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| Oates Trading Corp. | Risa Maritime Co. Ltd. | Malta | Dormant Company |
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| Nemesis Maritime Inc. | Samos Maritime Ltd. | Malta | Dormant Company |
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| Meredith Trading Corporation | Guilford Marine S.A. | Panama | Dormant Company |
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| Marta Trading Co. | Superb Maritime S.A. | Panama | Dormant Company |
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| Royal Bay Marine Ltd | Opal Maritime Limited | Malta | Dormant Company |
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| Daphne Marine Corp. | Dancing Waves Co. Ltd. | Malta | Dormant Company |
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| Portia Navigation Co. | Borealis Shipping Co. Ltd. | Malta | Dormant Company(2) |
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| Audrey Marine Corp. | Wild Orchid Shipping Ltd. | Malta | Dormant Company(4) |
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| Sicuro Shipmanagement SA | Hampton Trading S.A. | Liberia | Dormant Company(3) |
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| Rawlins Trading Ltd | Fairland Trading S.A. | Panama | Dormant Company(1) |
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| Platinum Shipholding SA | Coral Sky Marine Ltd. | Malta | Dormant Company(5) |
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| Blaze Navigation Corp. | Nilwood Comp. Inc. | Panama | Dormant Company(6) |
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| Goldenport Marine Services |
| Marshall Islands |
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| (1) Fairland Trading S.A. was the ship owning company of MV "Athos", which was disposed of on 12 February 2009 (note 7) | |||||
| (2) Borealis Shipping Co. Ltd. Was the ship owning company of MV "MSC Himalaya", which was disposed of on 9 June 2009 (note 7) | |||||
| (3) Hampton Trading S.A. was the ship owning company of MV "MSC Socotra", which was disposed of on 4 June 2009 (note 7) | |||||
| (4) Wild Orchid Shipping Ltd. Was the ship owning company of MV "MSC Emirates.", which was disposed of on 16 June 2009 (note 7) | |||||
| (5) Coral Sky Marine Ltd. Was the ship owning company of MV "Gianni D", which was disposed of on 27 July 2009 (note 7) | |||||
| (6) Nilwood Comp. Inc. was the ship owning company of MV "Howrah Bridge", which was disposed of on 6 November 2009 (note 7) | |||||
| (7) New building bulk carriers (note 9a) with delivery dates between the fourth quarter of 2010 and the third quarter of 2011. | |||||
| (8) New building container vessel (note 9a) with delivery date in second quarter 2011 (according to amended contract). | |||||
| (9) New building container vessel (note 9a) with delivery date in third quarter 2011 (according to amended contract). | |||||
| (10) Contracts for the construction of two new building bulk carriers, initially arranged in August 2008, were cancelled on 8 January 2010. | |||||
| (11) Vessel MSC Socotra was delivered on 4 March 2009 | |||||
| (12) New building bulk carrier (note 9a) with delivery date in fourth quarter of 2010. | |||||
| (13) Platax Shipholding Carrier S.A. will be the vessel owning company of a bulk carrier, which is planned to be acquired in the future (note 13 and 15). | |||||
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
b) Proportionally consolidated the 50% Joint Venture ( note 9b)
| Intermediate holding company | Vessel-owning company | Country of Incorporation of vessel-owning company | Name of Vessel owned by Subsidiary | Year of acquisition of vessel | Type of Vessel |
| Sentinel Holdings Inc. | Citrus Shipping Corp. | Marshall Islands | Marie-Paule (ex.JES041) | 2009 | Bulk Carrier |
| Sentinel Holdings Inc. | Barcita Shipping S.A. | Marshall Islands | Alpine Trader (ex.JES042) | 2009 | Bulk Carrier |
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 2009 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 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 ventures 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 ventures' 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
Vessels: Management makes estimates in relation to useful lives of vessels considering industry practices. (Vessels have a carrying amount of U.S.$271,242 and U.S.$ 221,587 as at 31 December 2009 and 2008, respectively). Estimates and assumptions relating to the impairment of vessels are discussed in paragraph (n).
Provisions for doubtful trade receivables: Provision 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 and non current assets, have a carrying amount of U.S.$6,707 and U.S.$1,098 as at 31 December 2009 and 2008, respectively).
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.$2,153 and U.S.$ 2,012 as at 31 December 2009 and 2008, 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 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 (non-level charters) agreements specify scheduled rate increases/decreases over the charter term. As revenues from time chartering of vessels are accounted for on a straight line basis at the average revenue 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
(g) Foreign Currency Translation: The functional currency of the Company and of the subsidiaries 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. As at 31 December 2009, no loan agreements required deposit of funds into a retention account. Restricted cash amounts to U.S.$15,100 and relates to part of the new loan drawn from a bank on 16 December 2009, which will be utilised to support further bulk carrier fleet expansion (note 13).
(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 undergoing scheduled dry-docking as at 31 December 2009, are also recognised as inventory unless the vessel is to continue under the same time charter. Any bunkers remaining on vessels which are laid up, are also recognised as inventory. Inventories amount to U.S.$267 as at 31 December 2009 (U.S.$266 as at 31 December 2008) and relate to bunkers of vessels 'MSC Anafi' and 'Gitte', which were laid up within 2009.
(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 accounts. 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 2009 and 2008.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(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.
For vessels acquired in the second-hand market and where the Company identifies any intangible assets or liabilities associated with the acquisition of a vessel, the Company allocates the purchase price between the vessel and any identified tangible and intangible assets or liabilities based on their relative fair values. Fair value is determined by reference to market data. The Company determines the fair value of any intangible asset or liability related to time charters assumed, by reference to the market value of the time charters at the time the vessel is acquired. The amount recorded as an asset or liability at the date of vessel delivery is the lowest of: a) the difference between the market value of the vessel on a charter free basis and the vessel's acquisition cost and b) the present value of the difference between the future cash flows of the assumed charter and the future cash flows at the current market rate. If an intangible asset is identified it is recorded as prepaid charter revenue. If an intangible liability is identified it is recorded as deferred revenue. Such assets and liabilities, respectively, are amortized as a reduction of, or an increase in, revenue over the period of the time charter assumed.
The Company records any identified assets or liabilities associated with the acquisition of a vessel at fair value, determined by reference to market data. The Company values any asset or liability arising from the market value of assumed time charters as a condition of the original purchase of a vessel at the date when such vessel is initially deployed on its charter. The value of the asset or liability is based on the difference between the current fair value of a charter with similar characteristics as the time charter assumed and the net present value of contractual cash flows of the time charter assumed, to the extent the vessel capitalized cost does not exceed its fair value without a time charter contract. When the present value of contractual cash flows of the time charter assumed is greater than its current fair value, the difference is recorded as imputed prepaid revenue. When the opposite situation occurs, the difference is recorded as imputed deferred revenue. Such assets and liabilities are amortized as a reduction of, or an increase in, revenue, respectively, during the period of the time charter assumed.
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 (excluding new building vessels not yet delivered). 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.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
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.
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 6-months time charter for each type of our bulk carrier vessels and 1-year time charter for each type of our container vessels over the remaining estimated useful life of each vessel,
ii) an average increase of 4% per annum on charter revenues,
iii) cash inflows were considered net of brokerage, and
iv) expected outflows for scheduled vessels' maintenance and vessel operating expenses were 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.
GOLDENPORT HOLDINGS INC.
NOTES TO 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.
No impairment loss was identified or recorded for the years ended 31 December 2009 and 2008 and the Group has not identified any other facts or circumstances that would require the write down of vessel values under the current market conditions.
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, which indicated that there is no impairment of individual long lived assets.
However, there can be no assurance as to how long charter rates and vessel values will remain at their currently low levels or whether they will improve to any significant degree. Charter rates may remain at depressed levels for some time which could adversely affect our revenue and profitability, and future assessments of vessel impairment.
(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.
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.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(q) Derivative financial instruments and hedging. The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations. 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 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. $39,922 (2008: U.S. $34,188).
(s) Finance income: Finance income is earned from the Group's short term deposits and is recognised on the 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.
(u) Share 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 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.
(v) 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.
(w) 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.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(x) IFRS and IFRIC Interpretations that became effective in the year ended 31 December 2009: The following Standards and Interpretations became effective within the year ended 31 December 2009. None of the Standards and Interpretations had an impact in the consolidated financial statements, which did not have any effect on the financial position of the Group but did give rise to additional disclosures.
·; IFRIC 13 Customer Loyalty Programmes effective 1 July 2008
·; IFRIC 15 Agreements for the Construction of Real Estate effective 1 January 2009
·; IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective 1 October 2008
·; IFRIC 9 Remeasurement of Embedded Derivatives (Amended) and IAS 39 Financial Instruments: Recognition and Measurement (Amended) effective for periods ending on or after 30 June 2009
·; IFRS 1 First-time Adoption of International Financial Reporting Standards (Amended) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective 1 January 2009
·; IFRS 2 Share-based Payment: Vesting Conditions and Cancellations (Amended) effective 1 January 2009
·; IFRS 8 Operating Segments effective 1 January 2009
·; IFRS 7 Financial Instruments: Disclosures (Amended) effective 1 January 2009
·; IAS 1 Presentation of Financial Statements (Revised) effective 1 January 2009
·; IAS 32 Financial Instruments: Presentation (Amended) and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation (Amended) effective 1 January 2009
·; IAS 23 Borrowing Costs (Revised) effective 1 January 2009
·; Improvements to IFRSs (May 2008)
·; IFRIC 18 Transfers of Assets from Customers effective 1 July 2009
When the adoption of the standard or interpretation is deemed to have an impact on the financial statements and performance of the Group, the impact is described below.
·; IFRS 2 Share-based Payments (Amended)
The amendment clarifies two issues. The definition of 'vesting condition', introduces the term 'non-vesting condition' for conditions other than service conditions and performance conditions. It also clarifies that the same accounting treatment applies to awards that are effectively cancelled by either the entity or the counterparty. This amendment did not have any impact on the financial statements.
·; IFRS 7 Financial Instruments: Disclosures (Amended)
The amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by the source of inputs, using a three-level hierarchy, by class, for all financial instruments recognized at fair value. In addition, a reconciliation between the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers between the levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value and liquidity risk disclosures are not impacted by the amendments as all financial instruments are level 1.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IAS 1 Presentation of Financial Statements (Revised)
The revised standard requires that the statement of changes in equity includes only transactions with shareholders; introduces a new statement of comprehensive income that combines all items of income and expense recognised in profit or loss together with "other comprehensive income" (either in one single statement or in two linked statements); and requires the inclusion of a third column on the statement of financial position to present the effect of restatements of financial statements or retrospective application of a new accounting policy as at the beginning of the earliest comparative period. The Group made the necessary changes to the presentation of its financial statements in 2009 and has elected to present a single statement for the statement of comprehensive income.
In May 2008 the IASB issued its first omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The effective dates of the improvements are various and the earliest is for the financial year beginning 1 January 2009.
·; IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
The amendment clarifies that all of a subsidiary's assets and liabilities are classified as held for sale, under IFRS 5, even when the entity will retain a non-controlling interest in the subsidiary after the sale.
·; IFRS 7 Financial Instruments: Disclosures
This amendment removes the reference to 'total interest income' as a component of finance costs.
·; IAS 1 Presentation of Financial Statements
This amendment clarifies that assets and liabilities classified as held for trading in accordance with IAS 39 Financial Instruments: Recognition and Measurement are not automatically classified as current in the statement of financial position.
·; IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
This amendment clarifies that only implementation guidance that is an integral part of an IFRS is mandatory when selecting accounting policies.
·; IAS 10 Events after the Reporting Period
This amendment clarifies that dividends declared after the end of the reporting period are not obligations.
·; IAS 16 Property, Plant and Equipment
This amendment clarifies that items of property, plant & equipment held for rental that are routinely sold in the ordinary course of business after rental, are transferred to inventory when rental ceases and they are held for sale. Proceeds on sale are subsequently shown as revenue. IAS 7 Statement of cash flows is also revised, to require cash payments to manufacture or acquire such items to be classified as cash flows from operating activities. The cash receipts from rents and subsequent sales of such assets are also shown as cash flows from operating activities.
·; IAS 18 Revenue
This amendment replaces the term 'direct costs' with 'transaction costs' as defined in IAS 39.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IAS 19 Employee Benefits
This amendment revises the definitions of 'past service costs', 'return on plan assets' and 'short-term' and 'other long term' employee benefits to focus on the point in time at which the liability is due to be settled.
·; IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
Loans granted with no or low interest rates are not exempt from the requirement to impute interest. Interest is to be imputed on loans granted with below-market interest rates, thereby being consistent with IAS 39. The difference between the amount received and the discounted amount is accounted for as a government grant. To be applied prospectively - to government loans received on or after 1 January 2009.
·; IAS 23 Borrowing Costs
The amendment revises the definition of borrowing costs to consolidate the types of items that are considered components of 'borrowing costs' into one - the interest expense calculated using the effective interest rate method as described in IAS 39.
·; IAS 27 Consolidated and Separate Financial Statements
When a parent entity accounts for a subsidiary at fair value in accordance with IAS 39 in its separate financial statements, this treatment continues when the subsidiary is subsequently classified as held for sale.
·; IAS 28 Investment in Associates
This interpretation clarifies that (i) if an associate is accounted for at fair value in accordance with IAS 39 only the requirement of IAS 28 to disclose the nature and extent of any significant restrictions on the ability of the associate to transfer funds to the entity in the form of cash or repayment of loans applies and (ii) an investment in an associate is a single asset for the purpose of conducting the impairment test - including any reversal of impairment. Therefore, any impairment is not separately allocated to the goodwill included in the investment balance and any impairment is reversed if the recoverable amount of the associate increases.
·; IAS 29 Financial Reporting in Hyperinflationary Economies
This amendment revises the reference to the exception to measure assets and liabilities at historical cost, such that it notes property, plant and equipment as being an example, rather than implying that it is a definitive list.
·; IAS 31 Interest in Joint ventures
This amendment clarifies that if a joint venture is accounted for at fair value, in accordance with IAS 39 only the requirements of IAS 31 to disclose the commitments of the venturer and the joint venture, as well as summary financial information about the assets, liabilities, income and expenses will apply.
·; IAS 34 Interim Financial Reporting
This amendment clarifies that earnings per share is disclosed in interim financial reportsif an entity is within the scope of IAS 33.
·; IAS 36 Impairment of assets
This amendment clarifies that when discounted cash flows are used to estimate 'fair value less costs to sell', the same disclosure is required as when discounted cash flows are used to estimate 'value in use'.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IAS 38 Intangible Assets
- Expenditure on advertising and promotional activities is recognised as an expense when the entity either has the right to access the goods or has received the services.
- Deletes references to there being rarely, if ever, persuasive evidence to support an amortisation method for finite life intangible assets that results in a lower amount of accumulated amortisation than under the straight-line method, thereby effectively allowing the use of the unit of production method.
- A prepayment may only be recognised in the event that payment has been made in advance to obtaining right of access to goods or receipt of services.
·; IAS 39 Financial instruments recognition and measurement
- Clarifies that changes in circumstances relating to derivatives - specifically derivatives designated or de-designated as hedging instruments after initial recognition - are not reclassifications. Thus, a derivative may be either removed from, or included in, the 'fair value through profit or loss' classification after initial recognition. Similarly, when financial assets are reclassified as a result of an insurance company changing its accounting policy in accordance with paragraph 45 of IFRS 4 Insurance Contracts, this is a change in circumstance, not a reclassification.
- Requires use of the revised effective interest rate (rather than the original effective interest rate) when remeasuring a debt instrument on the cessation of fair value hedge accounting.
·; IAS 40 Investment property
- Revises the scope (and the scope of IAS 16) such that property that is being constructed or developed for future use as an investment property is classified as investment property. If an entity is unable to determine the fair value of an investment property under construction, but expects to be able to determine its fair value on completion, the investment under construction will be measured at cost until such time as fair value can be determined or construction is complete. Clarifies that the carrying amount of investment property held under lease is the valuation obtained increased by any recognised liability.
·; IAS 41 Agriculture
- Replaces the term 'point-of-sale costs' with 'costs to sell'.
- Removes the reference to the use of a pre-tax discount rate to determine fair value, thereby allowing use of either a pre-tax or post-tax discount rate depending on the valuation methodology used.
Removes the prohibition to take into account cash flows resulting from any additional transformations when estimating fair value. Rather, cash flows that are expected to be generated in the 'most relevant market' are taken into account.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(i) IFRS and IFRIC Interpretations not yet effective: The Group has not early adopted the following IFRS and IFRIC Interpretations that have been issued but are not yet effective:
·; IFRIC 17 Distributions of Non-cash Assets to Owners
This interpretation is effective for annual periods beginning on or after 1 July 2009 with early application permitted. The interpretation provides guidance on how to account for non-cash distributions to owners. The interpretation clarifies when to recognize a liability, how to measure it and the associated assets, and when to derecognize the asset and liability. The Group does not expect IFRIC 17 to have an impact on the financial statements as the Group has not made any non-cash distributions to shareholders in the past.
·; IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
The interpretation is effective for annual periods beginning on or after 1 July 2010. This interpretation addresses the accounting treatment when there is a renegotiation between the entity and the creditor regarding the terms of a financial liability and the creditor agrees to accept the entity's equity instruments to settle the financial liability fully or partially. IFRIC 19 clarifies such equity instruments are "consideration paid" in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognised and the equity instruments issued are treated as consideration paid to extinguish that financial liability. This interpretation has not yet been endorsed by the EU. The Group does not expect that the amendment will have impact on the financial position or performance of the Group.
·; IFRIC 14 Prepayments of a Minimum Funding Requirement (Amended)
The amendment is effective for annual periods beginning on or after 1 January 2011. The purpose of this amendment was to permit entities to recognise as an asset some voluntary prepayments for minimum funding contributions. This Earlier application permitted and must be applied retrospectively. This amendment has not yet been endorsed by the EU. The Group does not expect that the amendment will have impact on the financial position or performance of the Group.
·; IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)
The revision and amendment is effective for annual periods beginning on or after 1 July 2009. The revised IFRS 3 introduces a number of changes in the accounting for business combinations which will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. Such changes include the expensing of acquisition-related costs and recognising subsequent changes in fair value of contingent consideration in the profit or loss (rather than by adjusting goodwill). The amended IAS 27 requires that a change in ownership interest of a subsidiary is accounted for as an equity transaction. Therefore such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3 (Revised) and IAS 27 (Amendment) must be applied prospectively and will affect future acquisitions and transactions with minority interests.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IAS 39 Financial Instruments: Recognition and Measurement (Amended) - eligible hedged items
The amendment is effective for annual periods beginning on or after 1 July 2009.The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The Group does not expect that the amendment will have any impact on the financial position or performance of the Group, as the Group has not entered into any such hedges.
·; IFRS 9 Financial Instruments - Phase 1 financial assets, classification and measurement
The new standard is effective for annual periods beginning on or after 1 January 2013. Phase 1 of this new IFRS introduces new requirements for classifying and measuring financial assets. Early adoption is permitted. This standard has not yet been endorsed by the EU. The Group is in the process of assessing the impact of the new standard on the financial position or performance of the Group.
·; IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended)
The amendment is effective for annual periods beginning on or after 1 January 2010. This amendment clarifies the accounting for group cash-settled share-based payment transactions and how such transactions should be arranged in the individual financial statements of the subsidiary. This interpretation has not yet been endorsed by the EU. The Group does not expect that this amendment will have an impact on the financial position or performance of the Group.
·; IAS 32 Classification on Rights Issues (Amended)
The amendment is effective for annual periods beginning on or after 1 February 2010. This amendment relates to the rights issues offered for a fixed amount of foreign currency which were treated as derivative liabilities by the existing standard. The amendment states that if certain criteria are met, these should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment is to be applied retrospectively. The Group does not expect that this amendment will have an impact on the financial position or performance of the Group.
·; IAS 24 Related Party Disclosures (Revised)
The revision is effective for annual periods beginning on or after 1 January 2011.This revision relates to the judgment which is required so as to assess whether a government and entities known to the reporting entity to be under the control of that government are considered a single customer. In assessing this, the reporting entity shall consider the extent of economic integration between those entities. Early application is permitted and adoption shall be applied retrospectively. This interpretation has not yet been endorsed by the EU. The Group does not expect that this amendment will have an impact on the financial position or performance of the Group.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IFRS 1 Additional Exemptions for First-time Adopters (Amended)
The amendment is effective for annual periods beginning on or after 1 January 2010. This interpretation has not yet been endorsed by the EU. The Group does not expect that this amendment will have an impact on the financial position or performance of the Group.
·; IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for first time adopters" (Amended).
The amendment is effective for annual periods beginning on or after 1 January 2010. This interpretation has not yet been endorsed by the EU. The Group does not expect that this amendment will have an impact on the financial position or performance of the Group.
In April 2009 the IASB issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The effective dates of the improvements are various and the earliest is for the financial year beginning 1 July 2009. This annual improvements project has not yet been endorsed by the EU.
·; IFRS 2 Share-based Payment,effective for annual periods beginning on or after 1 July 2009.
Clarifies that the contribution of a business on formation of a joint venture and combinations under common control are not within the scope of IFRS 2 even though they are out of scope of IFRS 3 (revised). If an entity applies IFRS 3 (revised) for an earlier period, the amendment shall also be applied for that earlier period.
·; IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, effective for annual periods beginning on or after 1 January 2010.
Clarifies that the disclosures required in respect of non-current assets and disposal groups classified as held for sale or discontinued operations are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required for such non-current assets or discontinued operations.
·; IFRS 8 Operating Segment Information, effective for annual periods beginning on or after 1 January 2010.
Clarifies that segment assets and liabilities need only to be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker.
·; IAS 1 Presentation of Financial Statements, effective for annual periods beginning on or after 1 January 2010.
The terms of a liability that could result, at any time, in its settlement by the issuance of equity instruments at the option of the counterparty do not affect its classification.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IAS 7 Statement of Cash Flows,effective for annual periods beginning on or after 1 January 2010.
Explicitly states that only expenditure that results in recognising an asset can be classified as a cash flow from investing activities. This amendment will impact the presentation in the statement of cash flows of the contingent consideration on the business combination completed in 2009 upon cash settlement.
·; IAS 17 Leases, effective for annual periods beginning on or after 1 January 2009.
The amendment removes the specific guidance on classifying land as a lease so that only the general guidance remains.
·; IAS 18 Revenue, The Board has added guidance (which accompanies the standard) to determine whether an entity is acting as a principal or as an agent. The features to consider are whether the entity:
Ø Has primary responsibility for providing the goods or service
Ø Has inventory risk
Ø Has discretion in establishing prices
Ø Bears the credit risk
·; IAS 36 Impairment of Assets,effective for annual periods beginning on or after 1 January 2010. The amendment clarified that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes.
·; IAS 38 Intangible Assets,effective for annual periods beginning on or after 1 July 2009. Clarifies that if an intangible asset acquired in business combination is identifiable only with another intangible asset, the acquirer may recognise the group of intangible assets as a single asset provided the individual assets have similar useful lives. Also, clarifies that the valuation techniques presented for determining the fair value of intangible assets acquired in a business combination that are not traded in active markets are only examples and are not restrictive on the methods that can be used. If an entity applies IFRS 3 (revised) for an earlier period, the amendment shall also be applied for that earlier period.
·; IAS 39 Financial Instruments: Recognition and Measurement, effective for annual periods beginning on or after 1 January 2010. The amendment clarifies that:
o A prepayment option is considered closely related to the host contract when the exercise price of a prepayment option reimburses the lender up to the approximate present value of lost interest for the remaining term of the host contract.
o The scope exemption for contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date, applies only to binding forward contracts, and not derivative contracts where further actions by either party are still to be taken (Applicable to all unexpired contracts for annual periods beginning on or after 1 January 2010)
o Gains and losses on cash flow hedges of a forecast transaction that subsequently results in the recognition of a financial instrument or on cash flow hedges of recognised financial instruments should be reclassified in the period that the hedged forecast cash flows affect profit or loss (Applicable to all unexpired contracts for annual periods beginning on or after 1 January 2010)
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; IFRIC 9 Reassessment of Embedded Derivatives, effective for annual periods beginning on or after 1 July 2009. The Board amended the scope paragraph of IFRIC 9 to clarify that it does not apply to possible reassessment, at the date of acquisition, to embedded derivatives in contracts acquired in a combination between entities or business under common control or the formation of a joint venture. If an entity applies IFRS 3 (revised) for an earlier period, the amendment shall also be applied for that earlier period.
·; IFRIC 16 Hedges of a Net Investment in a Foreign Operation, effective for annual periods beginning on or after 1 July 2009. The amendment states that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may be held by any entity or entities within the group, including the foreign operation itself, as long as the designation, documentation and effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied.
3. VOYAGE AND VESSEL OPERATING EXPENSES
The amounts in the accompanying consolidated statement of comprehensive income are analysed as follows:
Voyage expenses
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Port charges | (552) |
| (822) |
| Bunkers (fuel costs) | (881) |
| (1,481) |
| Third party commissions | (3,464) |
| (6,593) |
|
| (4,897) |
| (8,896) |
| Voyage expenses - related party |
|
|
|
| Commissions | (1,810) |
| (3,099) |
Vessel operating expenses
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Crew expenses | (14,057) |
| (17,625) |
| Store & Consumables | (1,102) |
| (2,153) |
| Spares | (3,355) |
| (5,441) |
| Repairs & maintenance | (3,033) |
| (5,152) |
| Lubricants | (5,448) |
| (5,111) |
| Insurance | (4,554) |
| (7,297) |
| Taxes (other than income tax) | (575) |
| (502) |
| Other | (2,446) |
| (3,640) |
|
| (34,570) |
| (46,921) |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
4. GENERAL AND ADMINISTRATIVE EXPENSES
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Directors and Management team Remuneration and Annual Incentive Plan (note 20(c)) |
(1,343) |
|
(1,515) |
| Payroll cost (Goldenport Marine Services) | (946) |
| (889) |
| Rents | (237) |
| (263) |
| Audit fees | (316) |
| (362) |
| Legal fees | (100) |
| (47) |
| Other | (632) |
| (751) |
|
| (3,574) |
| (3,827) |
The Executive Directors' and Management team's Annual Incentive Plan ("AIP") consists of a non cash bonus, which will be settled in the form of shares under the terms of AIP (note 20(c)).
5. FINANCE EXPENSE
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
Interest expense |
(4,048) |
|
(5,677) |
| Loss on fair value of derivatives | (400) |
| (906) |
|
| (4,448) |
| (6,583) |
6. EARNINGS PER SHARE
Basic earnings per share ("EPS") are calculated by dividing the (loss)/profit for the year attributable to Goldenport Holdings Inc. shareholders (U.S.$1,362 loss and U.S.$87,581 profit for the years ended 31 December 2009 and 2008, respectively) by the weighted average number of shares outstanding (70,404,878 for the year ended 31 December 2009 and 69,924,071 for the year ended 31 December 2008).
Diluted EPS reflects the potential dilution that could occur if share options or other contracts to issue shares were exercised or converted into shares. Accordingly, in respect of the restricted stock granted to the Company's directors under the Annual Incentive Plan (note 20 (c)), diluted EPS for the years ended 31 December 2009 and 2008 includes such shares granted but not issued. Diluted EPS was calculated based on the weighted average number of shares that would derive if these shares were issued on the grant date. Such number is calculated by dividing the fair value of the directors' services exchanged for Company's shares with the average market value of the Company's stock during the respective year.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
7. VESSELS
Vessels consisted of the following at 31 December:
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Cost of vessels |
|
|
|
| At 1 January | 260,110 |
| 272,518 |
| Additions | 10,665 |
| 12 |
| Transfer from vessels under construction / reconstruction |
94,171 |
|
- |
| Initial expenses deduction | (84) |
| (248) |
| Disposals | (26,286) |
| (12,172) |
| At 31 December | 338,576 |
| 260,110 |
| Depreciation |
|
|
|
| At 1 January | (58,841) |
| (40,900) |
| Depreciation charge for the year | (28,000) |
| (23,183) |
| Disposals | 8,819 |
| 5,242 |
| Accumulated depreciation | (78,022) |
| (58,841) |
|
|
|
|
|
| Net carrying amount of vessels' cost | 260,554 |
| 201,269 |
|
|
|
|
|
|
|
|
|
|
| Cost of dry-dockings |
|
|
|
| At 1 January | 42,981 |
| 28,270 |
| Additions | 4,702 |
| 19,783 |
| Disposals | (7,977) |
| (5,072) |
| At 31 December | 39,706 |
| 42,981 |
| Depreciation |
|
|
|
| At 1 January | (22,663) |
| (15,194) |
| Depreciation charge for the year | (10,582) |
| (9,213) |
| Disposals | 4,227 |
| 1,744 |
| Accumulated depreciation | (29,018) |
| (22,663) |
|
|
|
|
|
| Net carrying amount of dry-docking costs | 10,688 |
| 20,318 |
|
|
|
|
|
| Total, net carrying amount at 31 December | 271,242 |
| 221,587 |
The gross carrying amount of vessels, which have been fully depreciated to their residual value and were still in use as at 31 December 2009, was U.S.$810 (2008: U.S.$7,277).
All of the Company's operating vessels having a total carrying value of U.S. $271,242 as at 31 December 2009 (U.S.$221,587 as at 31 December 2008), have been provided as collateral to secure the loans discussed in note 15.
As at 31 December 2009, two vessels with carrying amount of U.S. $40,270 were idle (note 23).
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Operational vessel acquisition
On 4 March 2009, the Company took delivery of the M/V Procyon (renamed to MSC Socotra), a container vessel of 4,953 TEU built in 1995 for U.S.$10,500 (including U.S.$86 of unamortized dry-docking component).
Delivery of new build bulk carriers
On 11 February 2009 the Company took delivery of the 53,800 DWT new build bulk carrier 'Marie-Paule'. The Group's 50% portion of the total construction cost of vessel amounted to U.S.$16,461 (the remaining 50% was paid by its joint venture partners). Upon delivery the vessel commenced its agreed three-year time charter.
On 12 October 2009 the Company took delivery of the 53,800 DWT new build bulk carrier 'Alpine Trader'. The Group's 50% portion of the total construction cost of vessel amounted to U.S.$15,444 (the remaining 50% was paid by its joint venture partners). Upon delivery the vessel commenced its agreed two-year time charter.
Delivery of vessel under reconstruction
On 23 February 2009 the Company took delivery of the 68,537 DWT and 5,551 TEU container 'MSC Fortunate' which was reconstructed in Cosco Zhousan shipyard of China. The total reconstruction cost amounted to U.S.$62,266 (note 8).
Disposals
On 6 February 2009, the company agreed the sale of the 67,515 DWT, 1977-built vessel "Athos", to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,895 in cash and the vessel was delivered to the new owners on 12 February 2009. As of delivery date, M/V "Athos" had a net carrying value of U.S.$3,351, which was equal to her scrap value along with the unamortized balance of the latest dry-docking. A commission of 4% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$357 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
On 22 May 2009, the company agreed the sale of the 2,258 TEU, 1980-built vessel "MSC Socotra", to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,513 in cash and the vessel was delivered to the new owners on 4 June 2009. As of delivery date, M/V MSC Socotra had a net carrying value of U.S.$3,129, which was equal to her scrap value along with the unamortized balance of the latest dry-docking. A commission of 3% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$252 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
On 22 May 2009, the company agreed the sale of the 2,108 TEU, 1978-built vessel "MSC Himalaya", to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,093 in cash and the vessel was delivered to the new owners on 9 June 2009. As of delivery date, MSC Himalaya had a net carrying value of U.S.$2,134, which was equal to her scrap value along with the unamortized balance of the latest dry-docking. A commission of 3% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$825 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
On 29 May 2009, the company agreed the sale of the 69,100 DWT, 1998-built vessel "Gianni D", to an unaffiliated third party. The sale was concluded at a gross consideration of US $20,000 in cash and the vessel was delivered to the new owners on 27 July 2009. As of delivery date, M/V "Gianni D" had a net carrying value of U.S.$8,554, which was equal to her net book value along with the unamortized balance of the latest dry-docking. A commission of 1% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$11,244 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
On 3 June 2009, the company agreed the sale of the 934 TEU, 1979-built vessel "MSC Emirates", to an unaffiliated third party. The sale was concluded at a gross consideration of US $1,276 in cash and the vessel was delivered to the new owners on 16 June 2009. As of delivery date, MSC Emirates had a net carrying value of U.S.$816, which was equal to her scrap value. A commission of 3% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$422 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
On 26 October 2009, the company agreed the sale of the 2,257 TEU, 1985-built vessel "Howrah Bridge", to an unaffiliated third party. The sale was concluded at a gross consideration of US $3,814 in cash and the vessel was delivered to the new owners on 6 November 2009. As of delivery date, Howrah Bridge had a net carrying value of U.S.$3,233, which was equal to her net book value along with the unamortized balance of the latest dry-docking. A commission of 3% on the gross consideration was paid for this disposal. The gain resulting from the sale of the vessel (after accounting for other expenses) was U.S.$440 and is included in the consolidated statement of comprehensive income for the year ended 31 December 2009.
Dry-docking costs
During 2009 five vessels of the Group commenced and completed scheduled dry-dockings at a cost of U.S.$4,702 (2008: U.S.$ 19,783 for dry docking of eight vessels). The total cost of U.S.$4,702 includes also the cost of the dry docking components of the new vessels.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
8. VESSEL UNDER RECONSTRUCTION
The balances as at 31 December were as follows:
|
| 2009 U.S. $'000 |
| 2008 U.S. $'000 |
|
|
|
|
|
| Purchase Price | 13,000 |
| 13,000 |
| Capital expenditure for reconstruction | 46,975 |
| 41,944 |
| Capitalised interest and other borrowing costs | 2,291 |
| 2,271 |
| Total cost and expenditure for vessel under reconstruction | 62,266 |
| 57,215 |
| Transfer to cost of vessels (note 7) | (62,266) |
| - |
|
| - |
| 57,215 |
On 16 June 2006, the Group acquired the M/V Fortune, a container vessel of 5,551 TEU and 68,537 DWT, built in 1996, for U.S.$13,000. The vessel was damaged in a fire on 21 March 2006. During the year the Group paid instalments to the yard as follows: a) on 8 January 2009 the amount of U.S.$1,000, b) on 30 January 2009 the amount of U.S.$ 250, c) on 23 April 2009 the amount of U.S.$1,250 and d) on 17 September 2009 the amount of U.S.$1,000. The remaining U.S.$1,000 of the total reconstruction was paid in January 2010 (note 23). The vessel concluded its reconstruction process and became operational on 23 February 2009, under the name 'MSC Fortunate'.
9. Advances for vesselS UNDER construction
The balances as at 31 December were as follows:
|
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
|
| 4 Bulk Carriers (Cosco Zhousan Shipyard, China) | (a) | 53,540 |
| 30,922 |
| 2 Containers (Jiangsu Yangzijiang Shipbuilding Co. Ltd, China) | (a) | 38,531 |
| 19,276 |
| 1 Bulk Carrier (SPP Shipbuilding Co.) | (a) | 4,939 |
| - |
|
|
| 97,010 |
| 50,198 |
| 2 Bulk Carriers (Qingshan Shipyard, China) | (a) | 28,156 |
| 27,630 |
| Write off due to cancellation of new building contracts | (a) | (18,796) |
| - |
| Transfer to current assets (note 23) | (a) | (9,360) |
| - |
| JV - 2 Bulk Carriers (Jiangsu Eastern Shipyard, China) | (b) | 31,905 |
| 23,682 |
| Transfer to cost of vessels (note 7) |
| (31,905) |
| - |
|
|
| 97,010 |
| 101,510 |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
a) New Buildings
4 Bulk Carriers (Cosco Zhousan Shipyard)
On 27 November 2007, the Group paid to the shipyard an aggregate amount of U.S.$30,200 representing the 20% deposit in respect of the four contracts for the vessels to be delivered in 2010 (ZS07037 and ZS07039) and 2011 (ZS07036 and ZS07038). During 2009 the Group paid to the shipyard an aggregate amount of U.S.$15,100 representing the 20% deposit in respect of the second installment for ZS07037 and ZS07039. On 21 July 2009 the ship owning companies of vessels ZS07037 and ZS07039 and Cosco Zhousan Shipyard agreed an aggregate discount of US$2,250 for both vessels (US$1,125 each). On 17 December 2009 the Group paid to the shipyard an amount of US$6,425 representing the third instalment for ZS07039. Payments will be made to the yard based on the construction progress schedule in tranches of 20% of the total value. The last 20% will be paid upon delivery of the vessels.
The Group capitalises all the material expenses incurred during the construction period. Amount capitalised as of 31 December 2009 consists of: a) borrowing costs of U.S.$957 (U.S.$440 in 2008), b) extra items for vessels ZS07037 and ZS07039 of U.S.$271, c) broker's commission of U.S.$113 (U.S.$76 in 2008), d) plan approval fee of U.S.$56 (paid in full in 2008, e) Freight Demurrage Defence insurance ('FDD') of U.S.$172 (U.S.$96 as of 2008), f) site supervision fees of U.S.$174 and g) legal fees of U.S.$72 (U.S.$53 as of 2008).
2 Containers (Jiangsu Yangzijiang Shipbuilding Co. Ltd)
On 7 August 2007, the Group separately agreed the specification terms with Jiangsu Yangzijiang Shipbuilding Co. Ltd and Anhui Technology Imp. & Exp. Co. Ltd for the construction of two new-build geared container vessels of 2,500 TEU nominal capacity each (the "YZJ Contracts"), the first of which was to be delivered in October 2010 and the second in March 2011. The total combined cost payable by the Group for these two vessels is estimated to be approximately U.S. $94,000, which is payable in five equal instalments. On 25 June 2009, the Group signed an amendment to the initial contracts providing for new delivery dates in June 2011 and in August 2011 for vessels YZJ-815 and YZJ-816, respectively.
On 31 October 2007, the Group paid U.S.$18,730, representing the 20% deposit for the two vessels, as per contract. On 14 August 2009 the Group paid to the shipyard an amount of US$9,433 representing the 20% deposit in respect of second instalment for YZJ-815. A portion amounted to U.S.$4,400 was financed through a new loan facility (note 15). On 18 December 2009 the Group paid to the shipyard an amount of US$9,541 representing the 20% deposit in respect of second instalment for YZJ-816. A portion amounted to U.S.$4,400 was financed through a new loan facility (note 15). Payments will be made to the yard based on the construction progress schedule in tranches of 20% of the total value. The last 20% will be paid upon delivery of the vessels.
The Group capitalises all the material expenses incurred during the construction period. Amount capitalised as of 31 December 2009 consists of: a) borrowing costs of U.S.$440 (U.S.$228 in 2008), b) broker's commission of U.S.$200 paid in full in 2008, c) plan approval fee of U.S.$56 paid in full in 2008, d) FDD insurance of U.S.$55 (nil in 2008), and e) legal fees of U.S.$76 (U.S.$62 in 2008).
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
2 Bulk Carriers (Qingshan Shipyard of China)
On 27 June 2008 the Group entered into contracts for the construction of two additional bulk carrier vessels of 57,000 DWT each, with Qingshan Shipyard of China (member of Changjiang National Shipping Group), for a total consideration of U.S.$ 91,660, with estimated delivery in December 2010.
The initial deposit of U.S.$ 27,360 was paid during 2008 with U.S.$ 18,820 from cash reserves and U.S.$ 8,540 through the drawdown of a new loan facility (note 15).
On 16 October 2009 the Group agreed with Qingshan Shipyard of China to cancel the two new-build bulk carrier contracts subject to receiving back the amount of U.S.$9,360 (U.S.$4,680 per vessel) out of total U.S.$27,360 of the original instalment paid in August 2008 (note 23). The amount of U.S.$9,360 represents the portion of loan facility drawn of U.S.$8,540 along with the equity amount of U.S.$820 paid up to the cancellation date. Loss from the cancellation is equal to the total amount capitalised as of 31 December 2009 consisting of i) deposits to shipyards of U.S.$18,000 (initial deposit of U.S. $27,360, net of U.S.$ 9,360 refunded by the shipyard (note 23)), ii) borrowing costs of U.S.$669, iii) FDD insurance of U.S.$71, iv) plan approval fee of U.S.$56 .
1 Bulk Carrier (SPP Shipbuilding Co.)
On 20 November 2009, the Group entered into agreement with an unaffiliated third party to acquire a contract for a new building geared Supramax bulk carrier vessel. The vessel which is being built at SPP Shipbuilding Co. Ltd. of Korea will have a carrying capacity of 59,000 DWT and is expected to be delivered in the last quarter of 2010. The aggregate cost for the contract is U.S.$31,800 and the Company has the option to elect for additional items of equipment with a total value of U.S.$2,000 to be added until the delivery date.
The initial deposit of U.S.$4,763 is funded by cash reserves. The remaining payments will be made to the yard based on the construction process schedule and will be financed by cash reserves and the drawdown of a loan facility. The bank that was financing the two Qingshan contracts that have been cancelled, agreed to transfer the loan commitment to the SPP contract for an amount of U.S.$21,700.
b) New Buildings-Joint Venture
On 15 January 2009 the Group paid U.S.$2,700, representing the 50% portion of the delivery instalment for vessel 'Marie Paule', payable to the shipyard as per the contract. Vessel became operational on 11 February 2009.
On 15 January 2009 the Group paid U.S.$3,200, representing the 50% portion of the fourth instalment for vessel 'Alpine Trader', payable to the shipyard as per the contract. On 8 October 2009 the Group paid U.S.$1,500, representing the 50% portion of the delivery instalment for vessel 'Alpine Trader', payable to the shipyard as per the addendum made to the initial contract. Vessel became operational on 12 October 2009.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
The Group's 50% portion in the stand alone financial statements of Sentinel Holdings Inc., as at 31 December and for the year then ended were as follows:
|
Consolidated Statement of Financial Position | 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Vessels | 31,429 |
| - |
| Advances for vessel construction | - |
| 23,682 |
| Other assets | 353 |
| 87 |
| Cash and cash equivalents | 2,426 |
| - |
| TOTAL ASSETS | 34,208 |
| 23,769 |
|
|
|
|
|
| EQUITY AND LIABILITIES |
|
|
|
| Equity attributable to shareholders of Sentinel Holdings Inc. |
|
|
|
| Retained earnings | 984 |
| - |
| Total equity | 984 |
| - |
|
|
|
|
|
| Non Current Liabilities |
|
|
|
| Long term debt | 21,949 |
| 14,340 |
|
|
|
|
|
| Current Liabilities |
|
|
|
| Current portion of long term debt | 1,412 |
| 553 |
| Liabilities | 9,863 |
| 8,876 |
|
| 11,275 |
| 9,429 |
| Total Liabilities | 33,224 |
| 23,769 |
| TOTAL EQUITY AND LIABILITIES | 34,208 |
| 23,769 |
| Consolidated Statement of Comprehensive Income | 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Revenue | 3,389 |
| - |
|
|
|
|
|
| Expenses |
|
|
|
| Voyage expenses | (170) |
| - |
| Vessel operating expenses | (1,043) |
| - |
| Management fees - related party | (141) |
| - |
| Depreciation | (670) |
| - |
| Depreciation of dry-docking costs | (58) |
| - |
| Operating profit | 1,307 |
| - |
|
|
|
|
|
| Finance expense | (318) |
| - |
| Foreign currency loss, net | (5) |
| - |
| Profit for the year attributable to Sentinel Holdings Inc. shareholders | 984 |
| - |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
10. OTHER NON-CURRENT ASSETS - LIABILITIES
The amounts in the accompanying statement of financial position are analysed as follows:
ASSETS
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Trade receivables | 5,325 |
| - |
| Non-level charters | 1,224 |
| - |
|
| 6,549 |
| - |
The amount of U.S.$5,325 relates to trade receivables from services rendered during 2009, which under a separate agreement with the charterers will be settled after January 2011.
The amount of U.S.$1,224 relates to the asset created upon accounting for charter agreements with specified rate increases over the charter term.
LIABILITIES
The amounts in the accompanying statement of financial position are analysed as follows:
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Fair value of derivative instrument non current(1) | (663) |
| (801) |
|
Fair value of derivative instrument current (1) | (414) |
| (257) |
|
|
|
|
|
|
| |||
| (1): interest rate swap for the loan of vessel Bosporus Bridge and the loan of vessels MSC Socotra & MSC Finland. | |||
Variability can appear in floating rate assets, floating rate liabilities or from certain types of forecasted transactions, and can arise from changes in interest rates or currency exchange rates.
During 2007, the Group entered into an interest rate swap for the loan of vessel Bosporus Bridge. The initial notional amount of this contract amounted to U.S.$12,166 amortising in accordance with the loan repayment schedule. Under the swap agreement, the Group exchanged variable to fixed interest rate at 4.64%. The fair value of the specific derivative financial instrument as at 31 December 2009 and 2008 was a liability of U.S.$685 and U.S.$1,058 respectively, which is included in other non-current and current liabilities in the accompanying consolidated statement of financial position.
During 2009, the Group entered into an interest rate swap for the loan of vessels MSC Finland and MSC Socotra (ex Procyon). The initial notional amount of this contract amounted to U.S.$11,900 amortising in accordance with the loan repayment schedule. Under the swap agreement, the Group exchanged variable to fixed interest rate at 3.23%. The fair value of the specific derivative financial instrument as at 31 December 2009, was a liability of U.S.$392 which is included in other non-current and current liabilities in the accompanying consolidated statement of financial position.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
As the Group did not designate the swap agreements as accounting hedge, net losses resulting from this derivative instruments, which approximated U.S.$19 and U.S.$864 for the years ended 31 December 2009 and 2008, were recorded in finance expense or finance income in the consolidated statement of comprehensive income.
11. INSURANCE CLAIMS
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Balance as of 1 January | 2,012 |
| 3,268 |
| Additions | 2,072 |
| 1,594 |
| Collections | (1,916) |
| (2,731) |
| Amounts written off | (15) |
| (119) |
| Balance as of 31 December | 2,153 |
| 2,012 |
12. CASH AND CASH EQUIVALENTS
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Cash at bank | 3,493 |
| 1,751 |
| Short term deposits at banks | 21,125 |
| 31,506 |
|
| 24,618 |
| 33,257 |
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.
The Group's loan agreements contain minimum liquidity clauses requiring available cash balances of U.S.$8,600 throughout the year.
13. RESTRICTED CASH
The restricted cash of U.S. $15,100 as at 31 December 2009 concerns part of the amount drawn on 16 December 2009 under a new loan facility for the future acquisition of a bulk carrier built after 1995. Amount is held in bank account of Platax Shipholding Carrier S.A. ('Platax') a Liberian company wholly owned by Daysailer Navigation Co. whose sole shareholder is Goldenport. Platax will be the ship owning company of the new vessel upon acquisition.
14. SHARE CAPITAL AND SHARE PREMIUM
Share capital consisted of the following at 31 December:
|
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Authorised |
|
|
|
|
| Shares of $0.01 each |
| 1,000 |
| 1,000 |
| Issued and paid |
|
|
|
|
| Shares of $0.01 each |
| 708 |
| 699 |
| Total issued and paid share capital |
| 708 |
| 699 |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Annual Incentive Plan (AIP):
The Remuneration Committee on its meeting on 10 December 2009 proposed and the Board of Directors approved the base award for each participant under the terms of the AIP. All four participants selected the full shares award (FSA).
On 23 March 2009, 175,014 shares (52,239 shares were issued in 2008 for 2007 FSA) were issued to the participants that selected the FSA for the performance of the year 2008. On the same date an amount of U.S.$237 (U.S.$363 for 2007 FSA), representing the fair value of the award as of the grant date, was transferred from Current Liabilities into the Share Premium.
The analysis of the share premium is as follows:
|
|
| U.S. $'000 |
| Balance 31 December 2007 |
| 106,991 |
| AIP shares issued in 2008 |
| 363 |
| Balance 31 December 2008 |
| 107,354 |
| AIP shares issued in 2009 |
| 235 |
| Scrip dividend shares |
| 1,276 |
| Balance 31 December 2009 |
| 108,865 |
15. LONG-TERM DEBT
Debt refinancing:
On 4 March 2009 the Group refinanced the outstanding debt of the vessel 'MSC Finland' amounting U.S.$6,800 and proceeded with the drawdown of additional U.S.$6,400 to cover the acquisition cost of the vessel 'MSC Socotra'. Both vessels have been provided as collateral to the new loan amounting U.S.$13,200 in total. On 16 December 2009 the outstanding balance of this loan, amounted to U.S.$11,900, was refinanced through the new loan facility mentioned below.
New Loan Facility:
On 16 December 2009 the Group arranged a new loan facility with a bank for a total amount of U.S.$37,000, which was fully drawn. Out of the total amount, U.S.$15,100 will be used to finance up to 80% of the acquisition cost of a dry bulk carrier, built after 1995, U.S.$11,900 will be used to refinance the existing credit facility of vessels MSC Finland and MSC Socotra and the remaining U.S.$10,000 will be used for working capital purposes. Two existing vessels, Tilos and Limnos that became debt free were used as collateral for the new facility. The amount of U.S.$15,100 is restricted in use from the respective bank and will be released upon acquisition of a dry bulk carrier.
Drawdown of loans:
·; On 15 January 2009 and as part of the loan agreement concluded between the vessel owning company of the JV new-build bulk carrier 'Marie-Paule' and a bank (note 9b) the vessel owning company proceeded with the drawdown of U.S.$6,300, representing the delivery instalment of U.S.$5,400 paid directly to the shipyard as per the contract and U.S.$900 for working capital purposes.
·; On 15 January 2009 and as part of the loan agreement concluded between the vessel owning company of the JV new-build bulk carrier 'Alpine Trader' and a bank (note 9b) the vessel owning company proceeded with the drawdown of U.S.$6,400, representing the fourth instalment paid directly to the shipyard as per the contract.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
·; On 6 March 2009 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07039' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$3,775, representing the bank's portion of the steel cutting instalment, which was paid along with the Group's equity portion of U.S.$3,775, as per contract.
·; On 22 April 2009 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07037' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$3,775, representing the bank's portion of the steel cutting instalment, which was paid along with the Group's equity portion of U.S.$3,775, as per contract.
·; On 14 August 2009 and as part of the loan agreement concluded between the vessel owning company of the new-built container vessel 'YZJ-815' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$4,400, representing the bank's portion of the second instalment, which was paid along with the Group's equity portion of U.S.$5,033, as per contract.
·; On 6 October 2009 and as part of the loan agreement concluded between the vessel owning company of the JV new-build bulk carrier 'Alpine Trader' and a bank (note 9b) the vessel owning company proceeded with the drawdown of U.S.$6,400, representing the delivery instalment of U.S.$3,000 paid directly to the shipyard as per the contract and U.S.$3,400 for working capital purposes.
·; On 17 December 2009 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07039' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$6,425, representing the third instalment, which was paid along directly to the shipyard as per contract.
·; On 18 December 2009 and as part of the loan agreement concluded between the vessel owning company of the new-built container vessel 'YZJ-816' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$4,400, representing the bank's portion of the second instalment, which was paid along with the Group's equity portion of U.S.$5,141, as per contract.
Prepayment of loans:
·; On 30 January 2009 a prepayment of U.S.$1,300 was applied towards the outstanding amount of loan c reducing the amortisation on a prorata basis.
·; On 17 February 2009 a prepayment of U.S.$3,739 was applied towards the outstanding balance of loan f reducing the amortisation on a prorata basis.
·; On 10 June 2009 a prepayment of U.S.$2,566 was applied towards the outstanding amount of loan c.
·; On 10 June 2009 a prepayment of U.S.$3,000 was applied towards the outstanding amount of loan f reducing the amortisation on a prorata basis.
·; On 12 November 2009 a prepayment of U.S.$3,650 was applied towards the outstanding amount of loan f reducing the amortisation on a prorata basis.
Credit facility:
On 21 August 2009 the Company agreed with a bank a credit facility for a total amount of U.S.$ 20,000 to be used for the acquisition of a bulk carrier. The vessels 'Lindos' and 'Alex D' were provided as collateral. The credit facility is available for draw-down until 30 June 2010. As at 31 December 2009 no amounts were drawn under this facility.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
The amounts in the accompanying statement of financial position are analysed as follows:
|
|
| 2009 | 2008 | |||||
|
|
| U.S.$'000 | U.S.$'000 | |||||
| Bank Loan | Vessel(s) | Amount | Rate % | Amount | Rate % | |||
| a. Issued 13 February 2003, maturing 30 May 2009 |
Lindos (1) | - | - | 1,750 | 3.40% | |||
| b. Issued 31 March 2004, maturing 30 September 2010 |
Tilos, Limnos (2) | - | - | 4,600 | 5.05% | |||
| c. Issued 17 May 2005, maturing 17 August 2009 | MSC Mekong, Alex D (1) | - | - | 5,526 | 3.45% | |||
| d. Issued 26 June 2006, maturing 26 September 2011 |
MSC Scotland | 6,700 | 2.75% | 9,500 | 2.77% | |||
| e. Issued 19 July 2006, maturing 16 July 2011. | Vasos | 9,300 | 1.24% | 12,200 | 3.99% | |||
| f. Issued 16 December 2008, maturing 29 July 2013 | MSC Fortunate | 24,325 | 2.78% | 38,100 | 1.77% | |||
| g. Issued 14 March 2007, maturing 14 March 2012. | MSC Finland, MSC Socotra (ex. NYK Procyon) (3) | - | - | 6,800 | 5.89% | |||
| h. Issued 19 July 2007, maturing 19 July 2014 | Anafi | 12,950 | 2.78% | 15,125 | 5.30% | |||
| i. Issued 17 August 2007, maturing 17 August 2012 |
MSC Accra,
| 4,455 | 2.77% | 6,075 | 3.30% | |||
| j. Issued 18 October 2007 | Bosporus Bridge YZJ-815, YZJ-816 | 18,630 | 2.53% | 11,165 | 5.60% | |||
| k. Issued 11 November 2007, maturing 11 November 2014 | Gitte, Brillinat | 14,150 | 2.78% | 16,450 | 3.24% | |||
| l. Issued 16 January 2009, maturing 16 January 2019 | Marie-Paule | 11,421 | 2.03% | 8,800 | 3.01% |
| ||
| m .Issued 26 October 2009, maturing 26 October 2019 | Alpine Trader | 12,000 | 2.28% | 5,600 | 3.01% | |||
| n. Issued 18 August 2008, maturing 12 years after delivery | QS20060384 | 4,270 | 1.88% | 4,270 | 4.23% | |||
| o. Issued 18 August 2008, maturing 12 years after delivery | QS20060385 | 4,270 | 1.88% | 4,270 | 4.23% | |||
| p. Issued 6 March 2009, maturing 10 years after delivery | ZS07039 | 10,200 | 1.98% | - | - | |||
| q. Issued 22 April 2009, maturing 10 years after delivery | ZS07037 | 3,775 | 2.03% | - | - | |||
| r. Issued 16 December 2009, maturing 16 December 2014 | MSC Finland, MSC Socotra(ex. NYK Procyon), Tilos, Limnos (2) (3) | 37,000 | 3.25% | - | - | |||
| Total |
| 173,446 |
| 150,231 |
| |||
| Less: initial financing costs |
| (1,197) |
| (809) |
| |||
| Less: current portion |
| (31,559) |
| (32,564) |
| |||
| Long-term portion |
| 140,690 |
| 116,858 |
| |||
|
(1): Following the full repayment of the respective loans, vessels 'Lindos' and 'Alex D' were provided as collateral for the credit line of U.S.$20,000 | ||||||||
| (2): Following the full repayment of the respective loans, vessels 'Tilos' and 'Limnos were provided as collateral for the new loan facility of U.S.$37,000 | ||||||||
| (3): Following the refinancing of loan g vessels 'MSC Finland', 'MSC Socotra' were provided as collateral for the new loan facility of U.S.$37,000 | ||||||||
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
The upcoming repayment terms of loans with balances outstanding at 31 December 2009 are:
Loan d: This loan is repayable in six quarterly instalment of U.S.$600 each, the first one being due on 26 March 2010 and the final one being due on 26 June 2011, plus a balloon payment of U.S.$3,100, being due on 26 September 2011.
Loan e: This loan is repayable in four semi-annual instalments of U.S.$1,450 each, the first one being due on 16 January 2010 and the final one being due on 16 July 2011, along with a balloon payment of U.S.$3,500.
Loan f: This loan is repayable in fifteen quarterly instalments of U.S.$960 each, the first one being due on 29 January 2010 and the last one being due on 29 July 2013 along with a balloon payment of U.S.$9,925.
Loan g&r: This loan is repayable as follows: i) the amount of U.S.$25,100 (equal to the amount of U.S.$15,100 drawn for the acquisition of a bulk carrier along with the amount of U.S.$10,000 drawn for working capital purposes) is repayable in twenty quarterly instalments of U.S.$950 each, the first one being due on 16 March 2010 and the final one on 16 December 2014 along with a balloon payment of U.S.$6,100 and ii) the amount of U.S.$11,900 used to refinance the existing loan facility of vessels MSC Finland and MSC Socotra is repayable in six quarterly instalments of U.S.$650 the first one being due on 16 March 2010 and the final one on 16 June 2011 and fourteen quarterly instalment of U.S.$350 each the first one being due on 16 September 2011 and the last one on 16 December 2014 along with a balloon payment of U.S.$3,100.
Loan h: This loan is repayable in nineteen quarterly instalments of U.S.$500 each, the first one being due on 19 January 2010 and the final one on 19 July 2014 along with a balloon payment of U.S.$3,450.
Loan i: This loan is repayable in eleven quarterly instalments of U.S.$405 each, the first one being due on 16 February 2010 and the final one on 17 August 2012.
Loan j: The portion of the loan relating to the vessel 'Bosporus Bridge' of U.S.$9,830 is repayable in twenty quarterly instalments of U.S.$333.75 each, the first one being due on 18 January 2010 and the final one on 18 October 2014 along with a balloon payment of U.S.$3,155. The portion of the loan relating to the two new building vessels YZJ-815 and YZJ-816 of U.S.$8,800 will be repayable in ten years after the delivery of the vessels in 2011 and the final draw-down of the respective loan.
Loan k: This loan is repayable in twenty quarterly instalments of U.S.$575 each, the first one being due on 11 February 2010 and the final one on 11 November 2014 along with a balloon payment of U.S.$2,650.
Loan l: This loan is repayable in thirty seven quarterly instalments of U.S.$176.5 each, the first one being due on 16 January 2010 and the final one on 16 January 2019 along with a balloon payment of U.S.$4,890.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Loan m: This loan is repayable in forty quarterly instalments of U.S.$176.5 each, the first one being due on 16 January 2010 and the final one on 26 October 2020 along with a balloon payment of U.S.$4,940.
Loan n&o: These loans were fully repaid in January 2010 through the proceeds from the cancellation of the Qingshan new built bulk carriers and subsequently all the refund and performance guarantees were cancelled (note 23).
All loans discussed above are denominated in U.S. dollars, and bear interest at LIBOR plus a margin. In addition, the Company has entered into an interest rate swap agreement for loan (j) and loan (r), to exchange variable to fixed interest rate at 4.64% and 3.23% ,respectively.
The remaining loans have margins between 0.90% and 3.00% above LIBOR.
Total interest paid was U.S.$4,896 and U.S.$7,195 for the year ended 31 December 2009 and 31 December 2008, respectively.
The loans are secured with first priority mortgages over the borrowers vessels. The loan agreements contain covenants including restrictions as to changes in management and ownership of the vessels, additional indebtedness and mortgaging of vessels without the bank's prior consent as well as minimum requirements regarding hull cover ratio and corporate guarantees of Goldenport Holdings. The hull cover ration requirement for loans d, f, h, i &,k was waived by the lender until 28 February 2011.
A number of the Group's loan agreements contain minimum liquidity clauses for a total amount of $8,600 (U.S. $7,500 as at December 2008).
16. DEFERRED REVENUE
Deferred revenue as of 31 December 2009 includes an amount of U.S.$5,649 (U.S.$8,257 as of 31 December 2008), which represents the unamortized difference between the market value of the vessel charter free and the amount actually paid to acquire MV Bosporus Bridge in the secondhand market in 2007. This amount will be recognized to income for the remaining of the charter period. The amount of U.S.$2,608 was recognized to income in the current year (U.S.$2,628 in 2008). The remaining balance in deferred revenue represents cash received from charterers prior to 31 December 2009, which relates to revenue earned after that date.
17. ACCRUED LIABILITIES AND OTHER PAYABLES
The amounts in the accompanying statement of financial position at 31 December are analysed as follows:
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Interest | 532 |
| 702 |
| Insurance supplementary calls | 299 |
| 1,823 |
| Wages | 135 |
| 619 |
| Annual incentive plan | 168 |
| 252 |
| Audit fees | - |
| 146 |
| Dry-docking costs | 115 |
| 868 |
| Other accrued expenses | 1,382 |
| 1,900 |
| Other payables | 2,254 |
| 2,680 |
|
| 4,885 |
| 8,990 |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
18. DIVIDENDS DECLARED
The Board of Directors of the Company will propose to the Annual General Meeting for approval, a final dividend for 2009 of 3 pence per share or total GBP 2,125 (2 pence per share or GBP 1,399 for 2008). The dividend that will be proposed which, is expected to be approved by the AGM to be held in Athens on 12 May 2010 has a share alternative allowing the shareholders to select between cash and shares for the respective amount of 3 pence.
Dividend rights: Under the Company's by-laws, each ordinary share is entitled to dividends if and when dividends are declared by the Board of Directors. There are no restrictions on the Company's ability to transfer funds in and out of Marshall Islands. The payment of final dividends is subject to the approval of the Annual General Meeting ("AGM") of Shareholders. The final dividend proposed by the Board of Directors for 2008, was approved by the AGM held on 7 May 2009. The final dividend was 2 pence per share and included a share alternative resulting in a total dividend amount of GBP1,399 or U.S.$2,191. On 15 May 2009 the cash payment was made for the shares that elected cash totalling GBP 907 or U.S.$1,420 and on 20 May 2009 479,294 shares with reference price of 102.7 pence were issued and admitted to the official list representing the share element of the dividend. On 26 August 2009 the Board of Directors approved an interim dividend of 0.7 pence per share amounting in total to GBP 494 or U.S.$802. On 29 October 2009 the cash payment was made for the shares that elected cash totalling GBP 186 and on 3 November 2009 228,958 shares with reference price of 134.7 pence were issued and admitted to the official list representing the share element of the dividend. The payment of dividends was U.S.$31,074 in 2008 (29.73 cents per share or 15 pence per share as final dividend for 2007 and 14.73 cents per share or 8.0 pence per share as interim dividend for 2008).
19. COMMITMENTS AND CONTINGENCIES
a. Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance providers and from other claims with suppliers relating to the operations of the Group's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the consolidated financial statements.
b. Goldenport Holdings Inc. entered into agreement with Cosco (Zhousan) Shipyard Co. for the construction of four new build bulk carriers of 57,000 DWT each. The total construction cost is estimated to be approximately U.S.$149,000, which is payable in five equal instalments ( note 9a). Four of these payments for vessels ZS07036 and ZS07038, three for vessel ZS07037 and two for vessel ZS07039 are committed and will be paid in accordance with the milestones, as described in the contract (note 23). Three of these payments for vessels ZS07036 and ZS07038, two for vessel ZS07037 and one for vessel ZS07039 are secured through letter of guarantee from the financing bank.
c. On 7 August 2007, the Company entered into agreement with Jiangsu Yangzijiang Shipbuilding Co. Ltd and Anhui Technology Imp. & Exp. Co. for the construction of two new build geared container vessels of 2,500 TEU nominal capacity each. The total combined cost is estimated to be approximately U.S.$94,000, which is payable in five equal instalments ( note 9a). Three payments are committed and will be paid in accordance with the milestones, as described in the contract. One of these payments is secured through a letter of guarantee from the financing bank.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
d. On 16 December 2009, the Company entered into agreement with SPP Shipbuilding Co. Ltd in Korea for the construction of one new build bulk carrier vessel of 59,000 DWT capacity for a total construction cost of U.S.$31,800. The total construction cost is payable in five instalments (note 9a). Four of these payments are committed and will be paid in accordance with the milestones as described in the contract.
e. As at 31 December 2009, the Group had entered into time charter arrangements for all but one of its operating vessels. These arrangements have remaining terms between 2 and 54 months.
f. Future minimum charters receivable from time charter arrangements as at 31 December 2009, are as follows
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
|
|
|
|
|
| Within one year | 64,318 |
| 87,797 |
| 1-5 years | 151,923 |
| 199,941 |
| > 5 years | - |
| 3,775 |
|
| 216,241 |
| 291,513 |
It is noted that the vessel off-hires and dry-docking days that could occur but are not currently known are not taken into consideration. The Company assumes delivery at the earliest date allowed by the contract of the vessels by the charterers; future default of the charterers where no indication has been given is not taken into account. With regard to the Cosco new buildings ( note 9a) the calculation is based on the floor rate without taking into account any profit share scheme and for the vessels into Joint Venture ("JV") (note 9b) 50% of revenue is included.
20. RELATED PARTY TRANSACTIONS
Transactions with related parties consisted of the following for the years ended 31 December:
(a) Goldenport Shipmanagement Ltd. ("GSL"): All vessel operating companies included in the consolidated financial statements have a management agreement with GSL, a Liberian corporation directly controlled by Captain Paris Dragnis, to provide, in the normal course of business, a wide range of shipping managerial and administrative services, such as commercial operations, chartering, technical support and maintenance, engagement and provision of crew for a monthly management fee of U.S.$12.5 per vessel (U.S.$13.75 for the first half of 2008 and U.S.$12.5 from 1 July 2008 to year end). In addition to the monthly fee GSL charges a commission equal to 2% of time and voyage revenues relating to charters it organises.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Voyage expenses - related party |
|
|
|
| Commissions | 1,810 |
| 3,099 |
| Management fees - related party |
|
|
|
| Goldenport Shipmanagement Ltd | 2,679 |
| 3,515 |
|
| 4,489 |
| 6,614 |
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Due from related parties |
|
|
|
| Goldenport Shipmanagement Ltd | 2,079 |
| 3,342 |
| Total | 2,079 |
| 3,342 |
The amounts receivable from GSL, shown in the table above, represent the vessel operating companies' cash surplus handled by GSL.
(b) Sentinel Holdings Inc. appointed Goldenport Shipmanagement Ltd. as a consultant for the new-buildings project at Jiangsu Eastern Shipyard of China (note 9). As part of the supervision agreement between the two companies, GSL undertakes the plan approval, the attendance and supervision of the construction and trials of vessels 'Marie-Paule' and 'Alpine Trader', in exchange for a supervision fee for the first twelve months from steel cutting (unless delivery is earlier). For the year ended 31 December 2009 such fee charged by GSL amounted to U.S.$909 (as of 2008:U.S.$622) half of which is included in 'vessels under construction' of the accompanying consolidated statement of financial position.
(c) Annual Incentive Plan and other remuneration of Directors and Management team
The Remuneration Committee believes that a significant proportion of total remuneration should be performance-related. In addition, performance-related rewards should be deliverable largely in shares to more closely align the interests of shareholders and all Executive Directors and Management. In order to achieve this, the Board decided to terminate the 2006 Annual Cash Bonus arrangements and to replace them with a new plan called the Annual Incentive Plan ('AIP'), which will be administrated by the Remuneration Committee.
It was decided that under the terms of the AIP the eligible employees (i.e Executive Directors and Management) can elect to have their annual cash bonus delivered in the form of restricted shares in the Company. The performance criteria remained same as for the Annual Cash Bonus. Again, it is intended that the maximum limit for each participant will be 40% of annual base salary. The Remuneration Committee may select in future years, to adjust the maximum but it will not in any event exceed 75% of annual base salary. The Board (after a proposal by the Remuneration Committee) reserves the right to award shares in other circumstances which could include, without being limited to, subsequent offers of shares (primary or secondary). In each year the Remuneration Committee will propose to the Board the percentage of base salary applicable to each participant for the purposes of the AIP ("Base Award").
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Under the AIP, a participant may apply his Base Award in one of three ways:
·; Full Cash Award ('FCA'): If the participant selects the FCA, then the AIP will pay cash but only at 90% of the Base Award.
·; Full Shares Award ('FSA'): If the participant selects the FSA, then under the AIP 110% of Base Award will be given in the form of shares.
·; Half Cash-Half Shares Award ('HCHS'): If the participant selects the HCHS, then on 50% of Base Award the 90% rule will apply and will be paid cash and on the other 50% the 110% rule will apply and will be paid in shares.
The Remuneration Committee at its meeting on 10 December 2009 proposed to the Board of Directors under the terms of AIP the base award for each participant. The Board of Directors on 10 December 2009 approved the Remuneration Committee proposal, subject to finalisation of the financial statements for 2009, and announced the base award to each participant. All four participants voluntarily selected the full shares award.
As per the terms of AIP the FCA is 90% of the base award, whereas FSA is 110% of the base award. The FSA amounts to U.S.$168 (2008: U.S.$252), which is included in General and administrative expenses in the accompanying consolidated statements of comprehensive income.
On 1 March 2010, the Board of Directors approved the financial statements and authorised the issuance of the shares relating to the full share award under the provisions of the AIP. Under these provisions the AIP shares will be calculated by reference to the closing market value of the Company's shares on the date of announcement of full year results for 2009. The AIP shares will be allotted and then registered in the participants name after the record date (12 March 2010).
The participant shall have the right to receive dividends for 2010 and the right to vote in respect of AIP shares but during a restricted period of one calendar year from registration the participant is not allowed to sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any of the AIP shares.
There are no other choices for the participants. The amounts included in the financial statements under AIP and other remuneration of Directors and Management team as of 31 December are as follows:
|
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Directors and management team remuneration |
| 1,175 |
| 1,263 |
| Share bonus - AIP |
| 168 |
| 252 |
|
|
| 1,343 |
| 1,515 |
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(d) The Interests of the Directors, the Senior Management and their respective immediate families in the share capital of the Company (all of which are beneficial unless otherwise stated), were as at 31 December 2009 as follows:
|
Name | Number of shares as at 31 Dec 2008 | Shares issued under AIP 2008 | Share Dividend 2008 | Share Dividend 2009 | Number of shares as at 31 Dec 2009 | Percentage of shares as at 31 Dec 2009 |
|
|
|
|
|
|
|
|
| Captain Paris Dragnis (1) | 41,830,444 | 81,998 | 408,508 | 219,929 | 42,540,879 | 60.068 % |
| Chris Walton(2) | 2,128 | - | 41 | 11 | 2,180 | 0.003 % |
| John Dragnis(3) | 456,549 | 25,624 | 4,500 | 2,528 | 489,201 | 0.691% |
| Christos Varsos(4) | 13,412 | 36,899 | 261 | 262 | 50,834 | 0.072 % |
| Konstantinos Kabanaros(5) | - | 30,493 | - | 158 | 30,651 | 0.043 % |
(1)Captain Paris Dragnis is the Chief Executive Officer of the Company
(2)Chris Walton is the non-executive Chairman of the Board of Directors
(3)John Dragnis is the Commercial Director of the Company
(4) Christos Varsos is the Chief Financial Officer of the Company
(5) Konstantinos Kabanaros is the Chief Accounting Officer of the Company
(e) Rental of office space: A monthly rental of EUR17.8 was agreed to be charged by the owner of the building (a related party under common control) to Goldenport Marine Services for the rental of the head offices. Total rent expense for the year ended 31 December 2009 amounted to U.S.$237 (U.S.$263 in 2008) and is included in General and administration expenses in the accompanying financial statements.
The future minimum lease (rental) payments under the above agreement as at 31 December are as follows:
|
| 2009 U.S.$'000 |
| 2008 U.S.$'000 |
| Within one year | 306 |
| 297 |
| After one year but not more than five years | 1,058 |
| 1,177 |
| More than five years | 333 |
| 544 |
|
| 1,697 |
| 2,018 |
21. INCOME TAXES
Under the laws of the Republic of Marshall Islands and the respective jurisdictions of the Consolidated Companies the Group is not subject to tax on international shipping income. However, the Consolidated Companies are subject to registration and tonnage taxes, which have been included in vessel operating expenses in the accompanying consolidated statement of income.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Pursuant to the United States Internal Revenue Code of 1986, as amended (the ''Code''), U.S. source income derived by a foreign corporation from the international operation of ships generally is exempt from U.S. tax if the company operating the ships meets both of the following requirements, (a) the company is organised in a foreign country that grants an equivalent exception to corporations organised in the United States and (b) either (i) more than 50% of the value of the company 's shares is owned, directly or indirectly, by individuals who are ''residents'' of the company's country of organization or of another foreign country that grants an ''equivalent exemption'' to corporations organised in the United States (50% Ownership Test) or (ii) the company's shares are ''primarily and regularly traded on an established securities market'' in its country of organization, in another country that grants an ''equivalent exemption'' to United States corporations, or in the United States (Publicly-Traded Test). Under the regulations, company's shares will be considered to be ''regularly traded'' on an established securities market if (i) one or more classes of the its shares representing more than 50% of its outstanding shares, by voting power and value, is listed on the market and is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year; and (ii) the aggregate number of shares traded during the taxable year is at least 10% of the average number of shares outstanding during the taxable year. Notwithstanding the foregoing, the regulations provide, in pertinent part, that each class of the company's shares will not be considered to be ''regularly traded'' on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of the company's outstanding shares, (''5 Percent Override Rule''). In the event the 5 Percent Override Rule is triggered, the regulations provide that the 5 Percent Override Rule will nevertheless not apply if the Company can establish that among the closely-held group of 5% Stockholders, there are sufficient 5% Stockholders that are considered to be "qualified stockholders" for purposes of Section 883 to preclude non-qualified 5% Stockholders in the closely-held group from owning 50% or more of each class of the Company's stock for more than half the number of days during the taxable year.
Treasury regulations under the Code were promulgated in final form in August 2003. These regulations apply to taxable years beginning after September 24, 2004. As a result, such regulations are effective for calendar year taxpayers, like the Company, beginning with the calendar year 2005. All the Company's ship-operating subsidiaries currently satisfy the 50% Ownership Test. In addition, the management of the Company believes that by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like the Company, the 50% Ownership Test can also be satisfied based on the trading volume and the widely-held ownership of the Company's shares. Regarding the 2007, 2008 and 2009 tax years, the Company believes that it satisfies the Publicly-Traded Test and all of its United States source shipping income will be exempt from U.S. federal income tax.
22. FINANCIAL INSTRUMENTS
Risk management objectives and policies
The Group's principal financial instruments are bank loans. The main purpose of these financial instruments is to finance the Group's operations and further fleet expansion. The Group has various other financial instruments such as cash and cash equivalents, trade receivables and trade payables, which arise directly from its operations.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
From time to time, the Group also uses derivative financial instruments, principally interest rate swaps.
The main risks arising from the Group's financial instruments are interest rate risk and credit risk. The majority of the Group's transactions are denominated in U.S. dollars therefore its exposure to foreign currency risk is minimal.
Cash flow interest rate risk
Cash flow interest rate risk arises primarily from the possibility that changes in interest rates will affect the future cash outflows from the Group's long-term debt. The sensitivity analysis presented in the table below demonstrates the sensitivity to a reasonably possible change in interest rates (libor), with all other variables held constant, on the Group's profit for the year (fluctuations in interest rates do not impact the Groups equity). The sensitivity analysis has been prepared using the following assumptions:
·; A rise or fall in interest rates will impact interest expense on floating rate borrowings.
·; Although the fair value of the derivatives, and therefore the statement of comprehensive income will be impacted by movements in interest rates, the fair value impact of the derivatives have been excluded from the sensitivity analysis as not significant.
·; One interest rate swap entered into in 2007 and one in 2009 economically hedge the respective loans and the interest payments/receipt almost fully offset, therefore these two loans have not been included in the sensitivity analysis.
|
|
Increase/Decrease (%) | U.S.$'000 Effect on profit |
| 2009 | +0.5% | -654 |
| -0.5% | +654 | |
| 2008 | +0.5% | -575 |
| -0.5% | +575 |
Credit risk
The Group's maximum exposure to credit risk in the event the counterparties fail to perform their obligations as of 31 December 2009 in relation to each class of recognised financial assets, other than derivatives, is the carrying amount of those assets as indicated in the statement of financial position.
Concentration of Credit Risk
Financial instruments, which potentially subject the Group to significant concentrations of credit risk, consist principally of cash and cash equivalents, and trade accounts receivables. The Group places its cash and cash equivalents, consisting mostly of deposits, with financial institutions. The Group performs annual evaluations of the relative credit standing of those financial institutions. Credit risk with respect to trade accounts receivable is generally managed by the chartering of vessels to major trading houses (including commodities traders), established container-line operators, major producers and government-owned entities rather than to more speculative or undercapitalised entities. The vessels are normally chartered under time-charter agreements where as per the industry practice the charterer pays for the transportation service in advance, supporting the management of trade receivables.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Fair Values
Derivatives are recorded at fair value while all other financial assets and financial liabilities are recorded at amortised cost which approximates fair value.
Foreign currency risk
The majority of the Group's transactions are denominated in U.S. dollars therefore its exposure to foreign currency risk from operations is minimal.
Liquidity risk
The Group aims to mitigate liquidity risk by managing cash generation by its operations, applying cash collection targets throughout the Group. The vessels are normally chartered under time-charter agreements where as per the industry practice the charterer pays for the transportation service in advance, supporting the management of cash generation. Investment is carefully controlled, with authorisation limits operating up to Group's board level and cash payback periods applied as part of the investment appraisal process. In this way the Group aims to maintain a good credit rating to facilitate fund raising.
In its funding strategy, the Group objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans. The Group's policy in new investments for second-hand vessels is that not more than 70% of the value of each investment will be funded through borrowings, whereas for the new buildings the respective limit is 80%. In all the acquisitions within 2009 the bank financing was in line with the Group's policy.
The Group normally meets its working capital needs through cash flows from operating activities and available credit lines. Management prepares cash flow projections in order to forecast its short term working capital position.
Excess cash used in managing liquidity is only invested in financial instruments exposed to insignificant risk of changes in market value, being placed on interest-bearing deposit with maturities fixed at no more than 3 months. Short term flexibility is achieved if required by credit line facilities. As of December 31 2009 the Company has drawn U.S.$10,000 for working capital purposes (note 15).
The table below summarises the maturity profile of the Group's financial liabilities at 31 December 2009 and 2008, based on contractual undiscounted payments (including interest to be paid, which is calculated using the last applicable rate for each loan, as of 31 December 2009 and 2008):
| 31 December 2009 |
months |
| 3- 12 months |
| 1- 2 years |
| 2- 5 years |
| >5 years |
| Total | |||||
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 | ||||||
| Interest bearing loans | 16,371 |
| 20,338 |
| 37,991 |
| 86,887 |
| 27,834 |
| 189,421 | |||||
| Trade payables | 10,476 |
| - |
| - |
| - |
| - |
| 10,476 | |||||
| Other payables | 2,254 |
| - |
| - |
| - |
| - |
| 2,254 | |||||
| Derivative instrument liability | 111 |
| 303 |
| 334 |
| 329 |
| - |
| 1,077 | |||||
|
| 29,212 |
| 20,641 |
| 38,325 |
| 87,216 |
| 27,834 |
| 203,228 |
| ||||
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
| 31 December 2008 |
months |
| 3- 12 months |
| 1- 2 years |
| 2- 5 years |
| >5 years |
| Total | |||||||||||
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 |
| U.S.$000 | ||||||||||||
| Interest bearing loans | 9,020 |
| 24,633 |
| 28,379 |
| 86,837 |
| 20,540 |
| 169,409 | |||||||||||
| Trade payables | 12,993 |
| - |
| - |
| - |
| - |
| 12,993 | |||||||||||
| Other payables | 2,680 |
| - |
| - |
| - |
| - |
| 2,680 | |||||||||||
| Derivative instrument liability | 70 |
| 189 |
| 224 |
| 577 |
| - |
| 1,060 | |||||||||||
|
| 24,763 |
| 24,822 |
| 28,603 |
| 87,414 |
| 20,540 |
| 186,142 | |||||||||||
Capital Management
The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group's policy is to keep the gearing ratio below 75% on average (also Group's funding policy in Liquidity Risk section). Excess capital represented by a low gearing ratio, is used to fund further expansion plans. The Group includes within net debt, interest bearing loans, less cash and cash equivalents. Capital includes issued share capital, share premium and retained earnings.
|
| 2009 |
| 2008 |
|
| U.S.$000 |
| U.S.$000 |
| Interest bearing loans | 173,446 |
| 150,231 |
| Less: cash and short term deposits(including restricted cash) | (39,718) |
| (33,257) |
| Net debt | 133,728 |
| 116,974 |
|
|
|
|
|
| Issued share capital | 708 |
| 699 |
| Share premium | 108,865 |
| 107,354 |
| Retained earnings | 125,909 |
| 130,264 |
| Total capital | 235,482 |
| 238,317 |
|
|
|
|
|
| Capital & Net debt | 369,210 |
| 355,291 |
| Gearing ratio | 36% |
| 33% |
23. EVENTS AFTER THE REPORTING DATE
Waiver of increase in management fee: On 5 January 2010 Goldenport Shipmanagement agreed with the Group to waive the right to a 5% increase in the management fee. Therefore, the management fee for 2010 will be remain at U.S.$12.50, as discussed in note 20.
Drawdown of loan: On 4 January 2010 and as part of the loan agreement concluded between the vessel owning company of the new building bulk carrier 'ZS07037' and a bank (note 9a) the vessel owning company proceeded with the drawdown of U.S.$6,425, representing the keel laying instalment to the yard.
GOLDENPORT HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
Loan repayments: On 8 January 2010 the Group paid U.S.$176.5 in relation to the outstanding balance of loan (m), on 19 January 2010 the Group paid U.S.$176.5 in relation to the outstanding balance of loan (l) on 14 January 2010 the Group paid U.S.$1,450 in relation to the outstanding balance of loan (e), on 19 January 2010 U.S.$334 in relation to loan (j), on 19 January 2010 U.S.$500 in relation to loan (h), on 9 February 2010 U.S.$575 in relation to loan (k), on 17 February 2010 U.S.$405 in relation to loan (i) and on 29 January 2010 U.S.$960 in relation to loan (f).
Refund of deposit from Qingshan Shipyard: On 8 January 2010 the Company received U.S.$9,360 from the Qingshan Shipyard representing the refund of the initial deposit following the cancellation agreement. U.S.$8,540 were used to repay in full the existing loan facility.
Payment of last instalment for vessel reconstruction: On 13 January 2010 the Company paid the final instalment for the reconstruction of the vessel 'MSC Fortunate' to the yard amounting to U.S.$1,000.
Payment to SPP Shipbuilding Co: On 21 January the Company paid an amount of U.S.$4,763 from cash reserves representing the steel cutting instalment as per the new building contract.
Idle Vessels: On 30 January 2010 vessel MSC Anafi which was idle as at 31 December 2009 became operational.
Disposal of vessel: On 12 February 2010 the company agreed the sale of the 962 TEU, 1978-built container 'MSC Mekong' to an unaffiliated third party. The sale was concluded at gross consideration of U.S. $1,989 in cash. A commission of 3% on the gross consideration is payable for this disposal. The gain resulting from the sale of the vessel is estimated to be U.S $870.
Dividends: On 1 March 2010 the Board of Directors of the Company decided to propose to the Annual General Meeting for approval, a final dividend for 2009 of 3 pence per share or total GBP 2,125 (2 pence per share or GBP 1,399 for 2008). The dividend proposed which, is expected to be approved by the AGM to be held in Athens on 12 May 2010 has a share alternative allowing the shareholders to select between cash and shares for the respective amount of 3 pence.