GPRT.L Regulatory News (GPRT)

Goldenport Holdings Inc.

Athens, 29 August 2014

Interim Results for the Half Year and the Three Months Ended 30 June 2014

Goldenport Holdings Inc. ("Goldenport" or "the Company"), (LSE: GPRT) the international shipping company that owns and operates a fleet of dry bulk and container vessels, announces today its Interim Results for the six months ended 30 June, 2014.

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

Three Months Ended 30 June 2014

§ Revenue of US$ 12,274, -18.0% decrease (2013: US$ 14,966)

§ EBITDA of US$ 3,137, -8.9% decrease (2013: US$ 3,443)

§ Net Income of US$ 454 (2013: Net Loss of US$ 5,888)

§ Earnings per Share of US$ 0.05 (2013: Loss per share US$ 0.63)

Six months ended 30 June 2014

§ Revenue of US$ 24,694, -17.1% decrease (2013: US$ 29,792)

§ EBITDA of US$ 7,566, -13.1% decrease (2013: US$ 8,703)

§ Net Loss of US$ 1,391 (2013: Net Loss of US$ 8,310)

§ Loss per Share of US$ 0.15 (2013: Loss per share US$ 0.89)

§ Total cash at 30 June 2014 of US$ 21,656 (31 December 2013: US$ 16,859)

§ Net debt to book capitalisation as of 30 June 2014, 45% (31 December 2013: 47%)

CEO Statement:

Trading during the second quarter of 2014 was softer than in the first quarter due to continued subdued demand in the Far East and a weak South American grain season. Supramax rates were once again more resilient than Capesize and Panamax rates, reflecting their versatility and reduced earnings volatility, while containership rates remained broadly stable at levels close to all time lows.

For the three months ended 30 June 2014, the Company reported an 18.0% decline in revenues, which was less than the corresponding decrease in the average number of vessels from 18 to 14, reflecting the shift in the fleet mix. Our fleet was fully employed during the quarter with the utilisation rate reaching 99%. The time charter equivalent rate for the fleet was stable, while average daily operating expenses dropped by 11% due to the retirement of older, less efficient tonnage. This resulted in a widening of the EBITDA margin by 2.6 percentage points to 25.6%. The Company reported a net profit of US$ 454 or US$ 0.05 per share, including a gain of US$3,077 from the sale of MSC Socotra.

In anticipation of a recovery, we have continued to employ our fleet on a short term basis under 3-6 month time charter agreements. In the past few weeks we have experienced an improvement in dry bulk rates which bodes well for the remainder of the year. This is supported by the Supramax FFA for the remainder of 2014, which is currently trading at US$ 12,600 per day compared to the BSI average TC rate YTD of US$ 9,717 per day. We continue to expect that for 2014 as a whole we will employ our vessels on better terms than 2013 when the BSI average TC rate was US$ 10,328.

We believe that the outlook for the dry bulk sector for the remainder of the year is positive, due to the record US harvests of wheat, grain and soybeans as well as the delayed South American shipments which are expected to begin shipping in September, increased coal imports to India and China, as well as an increase in long-haul Brazilian iron ore imports to China. The outlook for the containership sector is also positive but less clear due to a lack of obvious catalysts. In light of the positive outlook for the dry bulk sector and continued uncertainty in the containership sector, our strategy will continue to be to further increase our exposure to small and medium sized dry bulk carriers and reduce our exposure to older containerships, while maintaining a competitive operating cost base.

Our proposed equity placing was postponed on 13 June 2014 in anticipation of improved shipping and equity market conditions. There is a possibility that the transaction can be completed by year-end. As such, the agreements to acquire option interests in respect of five Green Dolphin Handysize newbuildings from a related party have been extended until year-end. Their exercise is subject to renewed shareholder approval.

Fleet Developments:

Disposals:

On 28 March 2014, the Company agreed the disposal of vessel m/v MSC Socotra to an unaffiliated third party. The sale was concluded at a net cash consideration of US$ 11,150 and the vessel was delivered to the new owners on 30 April 2014. As of delivery date, m/v MSC Socotra had a net carrying value of US$ 8,073. The gain resulting from the sale of the vessel was US$ 3,077 and is included in the consolidated statement of comprehensive income.

Today the fleet consists of 14 vessels, of which 7 are container vessels and 7 dry bulk carriers. The Company also has a 50% share in 2 additional dry bulk carriers that are accounted for under the equity method.

Operational Fleet Forward Coverage:

The percentage of available days of the fleet already fixed under contracts as of 28 August 2014, assuming the earliest charter expiration, is as follows:

(1) Percentage of available days of the fleet fixed under contract as reported on 6 May 2014, being the date of the previous trading update, is given in brackets

Conference Call and Webcast:

The Company's management will hold a conference call today Friday 29 August at 1:00 P.M. (BST), 3:00 P.M. (Athens), 08:00 A.M. (EDT), to discuss the results.

Conference Call details: 

Time: 13:00 London Time/ 08:00 am NY Time/ 15:00 Athens Time

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: + 44 (0) 800 368 1063 (from UK), + 1 866 288 9315 (from US) or + 44 (0) 20 7075 3205 (all other callers). Please quote "Goldenport Holdings" to the operator.

REPLAY

If you are unable to participate, a recording of the conference will be available one hour after the conclusion of the conference call until the end of business day of 5th September 2014.

To access the recording, please dial the following numbers:

For further information, please contact:

Q2 2014 Review and Current Market Outlook:

Dry Bulk Carriers:

Supply:

During the second quarter of 2014, deliveries reached approximately 11.1 million DWT (146 vessels) while demolition levels were approximately 4.2 million DWT (77 vessels). As a result there was a net increase in the fleet of approximately 7 million DWT in terms of capacity and approximately 70 units in terms of number of vessels.

New orders showed a noticeable decrease from Q1 and reached around 120 units of 10.5 million DWT compared to 306 units of 27.5 million DWT. The current orderbook stands at about 2,110 units representing about 21% of the world fleet in terms of number of vessels and about 24% in terms of carrying capacity.

During the first half of the year there have been 180 orders placed in the wider Handymax sector and the current orderbook of 805 units represents about 26% of the operating Handymax fleet.

Demand:

Chinese iron ore imports continue to increase and reached about 460 million tonnes by the end of the second quarter. This 20% rise compared to the first half of last year has been mainly driven by the price of the commodity falling below the $100/tonne mark in May 2014 which fostered the expansion in production in Australia and the displacement of lower quality Chinese iron ore.

Dry bulk freight rates were lower in the second quarter, but since the end of the quarter and especially during the month of August we have experienced a recovery in rates. The average TC rates in Q1 and Q2 2014, current and FFAs for Q4 2014, as of Tuesday 26 August are as follows:

Containerships:

Supply:

In the second quarter, the world containership fleet remained largely unchanged in terms of number of vessels at approximately 5,000 units. In terms of capacity, however, there was a 2.3% increase and it reached about 17.6 million TEU. This is the result of larger vessels being introduced into the market and utilised by the liner companies, and smaller vessels reaching the end of their economic life being scrapped.

During the second quarter of 2014, about 30 new building contracts were signed, equivalent to about 185,000 TEU. This is a sharp decrease from the first quarter and it is mainly attributed to the increase in the price for newbuildings.

The current orderbook stands at about 455 vessels of about 3.5 million TEU and this represents approximately 20% of the world fleet in terms of capacity. The vast majority of the investment in the container segment is focused in the asset class of over 8,000 TEU, which represents about 82% of the current orderbook.

Demand:

From a chartering point of view, there has not been any significant movement in the freight market. The cascading effect continued and the West Africa trade (one of the core trades for 2,500 TEU geared vessels) saw the introduction of gearless tonnage. This change is, however, thought to be short lived due to port infrastructure limitations.

New building ''eco'' vessels are being delivered and command a premium from current market levels due to the bunker savings they provide. However, older vessels continue to offer more attractive overall economics.

A gradual recovery is expected in the container freight market, provided that the restrained ordering and increased demolition will remain throughout 2014.

Summary of Selected Financial and Operating Data:

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

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

Financial review for the 3 months ended 30 June 2014:

Time and Voyage Charter Revenues: Revenues decreased by US$ 2,692 or 18.0% to US$ 12,274 (2013: US$14,966). This decrease is mainly attributable to the decreased average number of vessels.

Voyage expenses total: Voyage expenses decreased by US$ 120 or 8.4% to US$ 1,544 (2013: US$ 1,424) mainly due to the decreased brokerage commissions relating to decreased revenue.

Vessel operating expenses: Vessel operating expenses decreased by US$ 2,542 or 30.5% to US$ 5,783 (2013: US$ 8,325) as a result of the decreased average number of vessels as well as tight cost control.

Depreciation: The vessels' depreciation charge decreased by 15.8% to US$ 4,256 (2013: US$ 5,053) mainly as a result of the decreased average number of vessels.

Depreciation of dry-docking costs: Depreciation of dry-docking costs decreased by 28.2% to US$ 572 (2013: US$ 372), reflecting the decreased dry-docking activity.

Financing costs: Interest expense decreased by US$ 217 or 14.4% to US$ 1,286 (2013: US$ 1,503), reflecting the decreased aggregate loan balance following the contracted debt repayments.

Financial review for the 6 months ended 30 June 2014:

Time and Voyage Charter Revenues: Revenues decreased by US$ 5,098 or 17.1% to US$ 24,694 (2013: US$29,792). This decrease is mainly attributable to the decreased average number of vessels.

Voyage expenses total: Voyage expenses decreased by US$ 162 or 6.5% to US$ 2,321 (2013: US$ 2,483) mainly due to the decreased brokerage commissions relating to decreased revenue.

Vessel operating expenses: Vessel operating expenses decreased by US$ 3,812 or 24.9% to US$ 11,495 (2013: US$ 15,307) as a result of the decreased average number of vessels as well as tight cost control.

Depreciation: The vessels' depreciation charge decreased by 16.8% to US$ 8,559 (2013: US$ 10,285) mainly as a result of the decreased average number of vessels.

Depreciation of dry-docking costs: Depreciation of dry-docking costs decreased by 22.5% to US$ 166 (2013: US$ 738), reflecting the decreased dry-docking activity. For the 6-month period ended 30 June 2014, 2 of our vessels completed scheduled dry-dockings (3 for the period ended 30 June 2013).

Financing costs: Interest expense decreased by US$ 243 or 8.5% to US$ 2,601 (2013: US$ 2,844), reflecting the decreased aggregate loan balance following the contracted debt repayments.

Cash and cash equivalents: The Company as of 30 June 2014 had US$ 19,980 of cash and cash equivalents (31 December 2013: US$ 14,217).

Restricted Cash: The restricted cash of U.S. $1,676 as at 30 June 2014 (U.S. 2,642 as at 31 December 2013) relates to cash restricted in use by the financing banks subject to the rectification and/or fulfilment of certain financial covenant ratios and/or other terms. An amount of U.S.$ 176 was released subsequent to the period end and applied towards the outstanding balance as well as settlement of interest accrued as at the date of the release. The remaining amount of U.S.$1,500 will be released and applied towards the outstanding debt of the respective financing bank.

APPENDIX 1:

Notes on Summary of Selected Financial and Operating Data:

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

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

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

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

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

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

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

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

APPENDIX 2:

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 3:

Fleet Employment Profile:

APPENDIX 4:

Goldenport Holdings Inc.

Unaudited Interim Condensed Consolidated Financial Statements

30 June 2014

Report on review of interim condensed consolidated

financial statements to the shareholders of Goldenport Holdings Inc.

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Goldenport Holdings Inc. and its subsidiaries ("the Group") as at 30 June 2014, comprising of the interim consolidated statement of financial position as at 30 June 2014 and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standards on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

28 August 2014

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

Athens

* Certain amounts shown here do not correspond to the interim condensed consolidated financial statements as at 30 June 2013 and reflect adjustments made as detailed in Notes 4 and 6.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

* Certain amounts shown here do not correspond to the consolidated financial statements as at 31 December 2013 and reflect adjustments made as detailed in Note 6.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

* Certain amounts shown here do not correspond to the SOCIE as at 30 June 2013 and reflect adjustments made as detailed in Note 4.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2014

1. FORMATION, BASIS OF PRESENTATION AND GENERAL INFORMATION:

Goldenport Holdings Inc. ('Goldenport' or the 'Company') was incorporated under the laws of the 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 its shares started trading on the London Stock Exchange ("LSE").

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

Goldenport as at 30 June 2014 is the majority holding Company for fourteen intermediate holding companies, each in turn owning a vessel-owning company, and the 50% owner of another intermediate holding company, owning two vessel owning companies and has been treated as joint venture as presented in table b) below and Note 6. Also, as at 30 June 2014 Goldenport is the holding Company of a fully owned subsidiary named Goldenport Marine Services, which provides the Company and its affiliates with 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.

On 24 October 2011, the Group sold 20% of the voting shares in Tuzon Maritime Company, the vessel owning company of Paris JR. This 20% is accounted for as non-controlling interest as at 30 June 2014 and 31 December 2013.

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

The interim condensed consolidated financial statements comprising the financial statements of the Company, its wholly owned subsidiaries and Tuzon Maritime Co, the 80% owned subsidiary (see (a) below) were authorised for issue in accordance with a resolution of the Board of Directors on 28 August 2014. 

a) The subsidiaries of the Company are as at 30 June 2014:

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

b) Joint Venture (Note 6)

Under IFRS 11, Joint Arrangements, effective January 1, 2014, it is required that the interest of the Company in a joint venture is accounted for using the equity method according to IAS 28 (Revised). The transition was applied retrospectively as required by IFRS 11 and previous years and periods have been restated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of preparation: The Group's interim condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared using the same accounting policies (refer also to section 2(e) below) and methods of computation used in the preparation of the Group's annual financial statements for the year ended 31 December 2013. The interim consolidated financial statements are presented in US dollars and all financial values are rounded to the nearest thousand ($000), except the per share information.

(b) Statement of compliance: The interim condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared in accordance with International Financial Reporting Standards applicable to interim financial reporting as adopted by the European Union (IAS 34). The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2013.

(c) 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:

Depreciation: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated residual value. Each vessel's residual value is equal to the product of its lightweight tonnage and estimated scrap rate, which until 31 December 2012, was estimated to be U.S.$180 per lightweight ton. In order to align the scrap rate estimates with the current historical average scrap rate, effective from 1 January 2013, the Company adjusted the estimated scrap rates used to calculate the vessels' residual value from U.S.$180 to U.S.$250 per lightweight ton and the impact is included in both periods ended 30 June 2014 and 2013.

Provisions for doubtful trade receivables: Provisions for doubtful trade receivables are recorded based on management's expected future collectability of the receivables. (Receivables as included in the statement of financial position in trade receivables, have a carrying amount of U.S. $2,468 and U.S. $2,102 as at 30 June 2014 and 31 December 2013, respectively). Provision for doubtful accounts as at 30 June 2014 amounted to U.S. $nil (U.S. $301 as at 31 December 2013).

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

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

The calculation of value in use is made at the individual vessel level since separately identifiable cash flow information is available for each vessel. In developing estimates of future cash flows, the Group makes assumptions about future charter rates, vessel operating expenses, and the estimated remaining useful lives of the vessels (see also note 5).

The projected net operating cash flows are determined by considering:

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

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

iii) cash inflows are considered net of brokerage, and

iv) expected outflows for scheduled vessels' maintenance and vessel operating expenses 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. 

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

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

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

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

No impairment loss was identified by the Group for the period ended 30 June 2014 and 2013.

(e) Changes in accounting policies and disclosures:

A. The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Group as of 1 January 2014:

· New consolidation standards (IFRS 10, 11, 12 and Revised IAS 28) and Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)

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

· Amendment to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities

· Amendment to IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets

· Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting

· IFRIC Interpretation 21: Levies

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

The Group has applied, for the first time, IFRS 11 Joint Arrangements that requires restatement of previous financial statements. As required by IAS 34, the nature and the effect of these changes are disclosed below. Several other new standards and amendments apply for the first time in 2014. However, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group.

The nature and the impact of each new standard or amendment are described below:

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

As a consequence of the new IFRS 11 Joint arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. Management has assessed the impact from the adoption of the standard and is disclosed in Note 6.

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

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

· IFRIC Interpretation 21: Levies

The Interpretations Committee was asked to consider how an entity should account for liabilities to pay levies imposed by governments, other than income taxes, in its financial statements. This Interpretation is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. Management has assessed that there is no impact on the Group's financial position.

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

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation - Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. The application of this new standard had no impact on the Company's financial position or performance since the new definition of control did not change the status of the subsidiaries.

· IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for joint arrangements that are joint ventures using proportionate consolidation. Instead, joint arrangements that meet the definition of a joint venture must be accounted for using the equity method. Management has assessed the impact from the adoption of the standard and this is disclosed in Note 6.

· IFRS 12 Disclosures of Interests in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The application of this new standard had no impact on the Company's financial position or performance. None of these disclosure requirements are applicable for interim condensed consolidated financial statements, unless significant events and transactions in the interim period require that they are provided. Accordingly, the Group has not made such disclosures.

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

The IASB issued amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities. The amendments change the transition guidance to provide further relief from full retrospective application. The date of initial application' in IFRS 10 is defined as 'the beginning of the annual reporting period in which IFRS 10 is applied for the first time'. The assessment of whether control exists is made at 'the date of initial application' rather than at the beginning of the comparative period. If the control assessment is different between IFRS 10 and IAS 27/SIC-12, retrospective adjustments should be determined. However, if the control assessment is the same, no retrospective application is required. If more than one comparative period is presented, additional relief is given to require only one period to be restated. For the same reasons IASB has also amended IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities to provide transition relief. Management has assessed the impact from the adoption of the amendments and is disclosed in Note 6.

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

The amendment applies to a particular class of business that qualify as investment entities. The IASB uses the term 'investment entity' to refer to an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. An investment entity must also evaluate the performance of its investments on a fair value basis. Such entities could include private equity organisations, venture capital organisations, pension funds, sovereign wealth funds and other investment funds. Under IFRS 10 Consolidated Financial Statements, reporting entities were required to consolidate all investees that they control (i.e. all subsidiaries). The Investment Entities amendment provides an exception to the consolidation requirements in IFRS 10 and requires investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendment also sets out disclosure requirements for investment entities. Management has assessed that there is no impact on the Group's financial position since none of the entities in the Group qualifies to be an investment entity under IFRS 10.

· IAS 36 Impairment of Assets (Amended) - Recoverable Amount Disclosures for Non-Financial Assets

These amendments remove the unintended consequences of IFRS 13 on the disclosures required under IAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or CGUs for which impairment loss has been recognised or reversed during the period. Management has assessed that there is no impact on the Group's financial position or performance.

· IAS 39 Financial Instruments (Amended): Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting

Under the amendment there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The IASB made a narrow-scope amendment to IAS 39 to permit the continuation of hedge accounting in certain circumstances in which the counterparty to a hedging instrument changes in order to achieve clearing for that instrument. Management has assessed that there is no impact on the Group's financial position or performance.

B. Standards issued but not yet effective and not early adopted (in addition to those already disclosed in the Group's annual financial statements as at 31 December 2013)

· IAS 16 Property, Plant & Equipment and IAS 38 Intangible assets (Amendment): Clarification of Acceptable Methods of Depreciation and Amortization

The amendment is effective for annual periods beginning on or after 1 January 2016. The amendment provides additional guidance on how the depreciation or amortization of property, plant and equipment and intangible assets should be calculated. This amendment clarifies the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendment has not yet been endorsed by the EU. Management is in the process of assessing the impact from the adoption of the standard.

· IFRS 14 Regulatory Deferral Accounts

The standard is effective for annual periods beginning on or after 1 January 2016. The IASB has a project to consider the broad issues of rate regulation and plans to publish a Discussion Paper on this subject in 2014. Pending the outcome of this comprehensive Rate-regulated Activities project, the IASB decided to develop IFRS 14 as an interim measure. IFRS 14 permits first-time adopters to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. An entity that already presents IFRS financial statements is not eligible to apply the standard. This standard has not yet been endorsed by the EU. Management has assessed that the new standard will not have an impact on the Group's financial position.

· IFRS 11 Joint arrangements (Amendment): Accounting for Acquisitions of Interests in Joint Operations

The amendment is effective for annual periods beginning on or after 1 January 2016. IFRS 11 addresses the accounting for interests in joint ventures and joint operations. The amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business in accordance with IFRS and specifies the appropriate accounting treatment for such acquisitions. The amendment has not yet been endorsed by the EU. Management is in the process of assessing the impact from the adoption of the standard.

· IFRS 15 Revenue from Contracts with Customers

The standard is effective for annual periods beginning on or after 1 January 2017. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard's requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity's ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates. The standard has not been yet endorsed by the EU. Management is in the process of assessing the impact from the adoption of the standard.

3. VOYAGE AND VESSEL OPERATING EXPENSES:

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

Voyage expenses

Vessel operating expenses