Interim Results for Six Months Ended 30 June 2010

RNS Number : 8240R

Goldenport Holdings Inc

31 August 2010

 

Goldenport Holdings Inc.

 

Athens, 31 August 2010

 

Interim Results for the Six Months Ended 30 June 2010

 

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, announces today its Interim Results for the six months ended 30 June, 2010 reporting an interim dividend for 2010 of 1.8 pence per share.

 

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

 

§ Revenue of US$ 42,543 (2009: US$ 53,395)

§ EBITDA of US$ 20,640 (2009: US$ 27,670)

 

Underlying income (excluding non-recurring items)

§ Net Income of US$ 1,605 (2009: US$ 6,607)

§ Earnings per Share of US$ 0.02 calculated on 71,260,391 shares (2009: US$ 0.09 calculated on 70,141,640 shares)

 

As reported

§ Net loss of US$ 1,201 (2009: Net income of US$ 8,510)

§ Earnings per Share of US$ (0.02) calculated on 71,260,391 shares (2009: US$ 0.12 calculated on 70,141,640 shares)

 

§ Available cash at 30 June 2010 (pre-capital raising) of US$ 20,714 (31 December 2009: US$ 24,618)

§ Restricted cash to be used for the acquisition of vessels of US$ 10,100 after funding the acquisition of the vessel 'Grand Vision' (31 December 2009: US$ 15,100)

§ Available cash was increased by the gross proceeds of £ 23,490 (US$ 35,700) in July following the completion of the placing and open offer of 18,496,010 shares at 127 pence per share

§ Net debt to book capitalisation as of 30 June 2010, 41% (31 December 2009: 36%)

 

§ No impairment losses incurred in any vessel of the fleet

§ In full compliance with debt covenants

 

§ Interim dividend of 1.8 pence per share or £ 1,637 in total with scrip alternative (2009: 0.7 pence per share or £ 494 in total)

 

CEO Statement:

 

Captain Paris Dragnis, Founder and Chief Executive Officer of the Company commented:

 

"We are pleased to report healthy operational results for the first half of 2010 despite the continued market volatility during the period. Again, we continued with the consistent implementation of our strategy, which calls for prudent growth without sacrificing our balance sheet, while seeking stable cash flows with upside potential through the employment of our fleet under period time charters.

 

"We took advantage of prevailing market conditions and continued with our fleet renewal and expansion program. We sold at a profit a 1978-built, 962 TEU container vessel and replaced it with a larger and younger one 2,986 TEU built in 1991 and acquired a 1994 built 48,170 DWT handymax bulk carrier.

 

"We have secured strong forward period employment for the majority of our combined operational fleet of containers and dry bulk carriers with 96% of the fleet available days for 2010 and 66% for 2011 fixed under time charter employment, assuming earliest charter expiration. As a testimony of Goldenport's financial strength, confidence for the future and commitment to its shareholders, the Board declared an interim dividend of 1.8 pence per share (£ 1.6 million in total) in respect of the financial year ending 31 December 2010 compared to the 0.7 pence per share (£ 0.5 million in total) declared as 2009 interim dividend.

 

"As of today, our fleet consists of 25 vessels, of which 11 are containers and 14 are dry-bulk carriers. Out of the total, 7 vessels (1 container and 6 bulk-carriers) are new-building orders with expected deliveries between 2010 and 2011.

 

"During the fourth quarter of 2010 we expect to take delivery of three vessels, two of our 57,000 DWT COSCO new building Supramaxes and the 59,000 DWT SPP Supramax. These additions to our fleet will expand significantly the revenue and profit generation capacity of our Company. Two out of these three vessels are already chartered for three years from their dates of delivery. The first COSCO new-building is chartered with a floor rate and profit sharing allowing us to benefit from the potential upside of the dry-bulk market while protecting our downside, whereas the SPP new-building is chartered at a fixed rate which is higher than the current prevailing market freight rates.

 

"Our Company is in a strong financial condition given that as of 30 June 2010 our net debt was only US$ 167.4 million and our net debt to book capitalisation was 41%, a moderate figure for our industry. Our cash balance on 30 June 2010 was US$ 20.7 million and has been further increased by the receipt of the proceeds from the placing and open offer received on 21 July 2010. Moreover, the Company still has US$ 10.1 million for the acquisition of one vessel, held as restricted cash. 

 

"Our strong cash flow visibility based on the forward time charter coverage in both segments in which we operate, our new-building program which progresses on track and our healthy balance sheet enable us to be confident about the future growth prospects of our Company and put us in a strategic position to benefit from accretive fleet expansion opportunities as they occur."

 

Interim Dividend:

 

The Board of Directors of Goldenport believes it is prudent to maintain a conservative dividend payout ratio but at the same time it seeks to reward the shareholders who have been, and continue to be, supportive to the Company with a regular dividend. As a testimony of Goldenport's financial strength and commitment to its shareholders the Board declared an interim dividend of 1.8 pence per share in respect of the financial year ending 31 December 2010 (2009: 0.7 pence per share). In accordance with the Company's dividend policy the interim dividend represents one third of the expected total dividend for the year. The interim dividend for 2010 will be paid to the 90,969,908 shares following the successful capital raising. This cash dividend will be accompanied by a scrip dividend alternative, arrangements for which will be mailed to shareholders on or about 21 September 2010 with elections required to be made by 12 October 2010. The dividend will be payable on 2 November to the shareholders on the register as at close of business on 10 September 2010. The ex-dividend date is 8 September 2010.

 

Fleet Developments:

 

Profitable Vessel Disposal (amounts in US$ '000):

§ On 12 February 2010, the company agreed the sale of the 962 TEU, 1978-built vessel "MSC Mekong", to an unaffiliated third party. The sale was concluded at a gross consideration of US $1,989 in cash and the vessel was delivered to its new owners on 4 March 2010. The gain resulting from the sale of the vessel was US$868.

Amendment of New Building Contract at Jiangsu Yangzijiang Shipbuilding Co. Ltd

§ On 24 March 2010 an amendment to the initial shipbuilding contract was signed between the Group and Jiangsu Yangzijiang shipyard, providing the conversion of one of the two container vessels ordered on 7 August 2007 into one bulk carrier with carrying capacity of 93,000 DWT and estimated delivery date in May 2011.

 

Vessel Acquisitions (amounts in US$ '000):

 

§ On 6 May 2010, the Company took delivery of the M/V "Grand Vision", a container vessel of 2,986 TEU built in 1991, which was acquired for U.S.$ 6,750.

 

§ On 11 May 2010, the Company took delivery of the M/V "Arctic Trader" (renamed to "Golden Trader"), a bulk carrier of 48,170 DWT built in 1994, which was acquired for U.S.$ 17,250.

 

Expected Vessel Deliveries:

 

During the fourth quarter of 2010 the Company expects to take delivery of three Supramax vessels, two of which are being built in COSCO Zhousan Shipyard in China having carrying capacity of 57,000 DWT and one in SPP Shipyard in Korea having capacity of 59,000 DWT. Two out of these three vessels are chartered for three years from delivery.

 

As of today the fleet consists of 25 vessels of which 11 are container vessels (including one new-build vessel with delivery scheduled for 2011) and 14 dry bulk carriers (including six new-build vessels with deliveries scheduled for 2010 and 2011).

 

Compliance with Debt Covenants:

 

The Company is in full compliance with the covenants of the existing bank debt.

 

Impairment:

 

No impairment loss has been incurred in any vessels of the fleet. 

 

Operational Fleet Forward Coverage:

 

The percentage of available days of the fleet already fixed under contracts as of 30 August 2010, assuming the earliest charter expiration and excluding the new-build vessels not yet delivered, is as follows:

 

	2010(1) (2)	2011 (1) (2)	2012 (1)
Total Fleet	96% (94%)	66% (66%)	25% (25%)
Containers	99% (99%)	89% (89%)	45% (45%)
Bulk Carriers	92% (87%)	35% (35%)	1% (1%)

 

(1) Percentage of available days of the fleet fixed under contract as reported on 3 August 2010, being the date of the previous trading update, is given in brackets

(2) The percentages above include only the current operational fleet and exclude the seven new-build vessels for which we expect delivery in 2010 and 2011

 

2010 Financial Calendar:

 

Ex-dividend date:	8 September 2010
Record date:	10 September 2010
Calculation period for scrip dividend:	8-14 September 2010
Despatch Scrip Election Documentation:	21 September 2010
Last day of elections for the scrip dividend:	12 October 2010
Dividend payment:	2 November 2010

 

Conference Call and Webcast:

 

The Company's management will hold a conference call today Tuesday 31 August at 1:30 P.M. (BST), 3:30 P.M. (Athens), 8:30 A.M. (EDT), to discuss the results.

 

Conference Call details:

 

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

 

A telephonic replay of the conference call will be available until 7 September 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: +30 210 8910 500

John Dragnis, Commercial Director +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: [email protected]

[email protected]

 

Current Market Outlook:

 

Containers:

 

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 more than a year of negative sentiment, there are signs of strong recovery, with the medium to long term view more optimistic.

 

Market sentiment shifted significantly especially during the second quarter of 2010 with both charter rates and second hand prices performing strongly. On average charter rates during the first six months of the year gained 90% compared to the end of 2009. The recovery started as demand grew first for the larger sizes which in the second quarter outperformed general market conditions. Then stronger trade-flows increased demand for smaller asset classes.

 

Second-hand prices gained on average 33% compared to the start of the year with most vessel types following the general market, regardless the performance in the charter market. Buying interest remained strong during the period and the liquidity on second hand sales improved significantly.

 

As of late August 2010, the Howe Robinson Containers Index (HRCI) stands at 680 units or about 104% above its level on 30 December 2009. Vessel values continue to look firm compared to charter rates, suggesting an underlying expectation of continued and strong rates recovery.

 

The Company is expected to benefit in the short term from this improvement in the rates with chartering the vessel 'Grand Vision' which will open for re-chartering in November 2010. In the longer term the improvement in the market conditions will benefit both the existing fleet but also the prospective enlarged one.

 

Bulk-Carriers:

 

After four successive quarters of positive growth in 2009, the market in the first half of 2010 was volatile. Opening in January at 3,140 the BDI index slid to a quarterly low in mid February of 2,566 before recovering to a peak of 3,574 units in late March. Seasonal strength in April and May allowed a rebound with the index reaching the peak for 2010 of 4,209 units in late May. During June seasonal downturn led BDI to lower levels which recovered in the third quarter.

 

During the first half of 2010 there was a particularly unusual disconnection between the directions of travel in the Cape market on one hand and the Panamax and Sub-panamax sectors on the other. The Capesize market weakened because fleet expansion outpaced iron ore trades. Capesizes accounted nearly for half of all deliveries by DWT within the first half of the year. Also shipment volumes were constrained more by capacity restrains than underlying levels of demand. The revival in the market in April and May was more attributable to strong conditions in the grain trade affecting more the Panamax vessels and also seasonal increase in iron ore supply. In June the grain trade strength faded and Indian iron ore trades suffered a seasonal setback due to monsoon as well us increased pressure from the Capesize sector where supply of vessels outpaced demand. Hence the charter market ended in June lower and continued sliding in July.

 

Since then the market has shown signs of recovery with BDI at 28 August 2010 reaching 2,712 units compared to 2,406 units at the end of June (1,700 at the bottom on 15 July 2010). Goldenport continues to be well placed to maintain the visibility of its cash flows with 92% of the operational dry-bulk fleet available days for 2010 already fixed under period employment.

 

During the fourth quarter of 2010 the Company expects delivery of three Supramax bulk carriers. Two of those are already fixed for three years from delivery. The first vessel is chartered at floor rate plus 50/50 profit share which gives the Company upside potential if freight rates strengthen and the second vessel is chartered at a rate much higher than the current market rates.

 

Summary of Selected Financial and Operating Data:

 

	6 months ended
INCOME STATEMENT DATA (in US$ thousand except share data):	30 June 2010		30 June 2009
Revenue	42,543		53,395
EBITDA	20,640		27,670
Underlying income (excluding non-recurring items)(1)
EBIT	3,893		8,211
Net Income	1,605		6,607
Earnings per share (basic and diluted)	0.02		0.09
As reported:
EBIT	1,087		10,114
Net (Loss)/Income	(1,201)		8,510
Earnings per share (basic and diluted)	(0.02)		0.12
Weighted average number of shares	71,260,391		70,141,640
FLEET DATA:
Average number of vessels	16.8		20.0
Number of vessels at end of period	25		27
- Operating	18	(2)	17	(2)
- Non-operating	-		1
- New Buildings under construction	7		9
Vessels performed or completed dry-docking in the period	5		2
Ownership days	3,044		3,622	(3)
Available days	2,942		3,474	(3)
Operating days	2,755		3,314	(3)
Fleet utilisation	94%		95%
AVERAGE DAILY RESULTS (in US$):
Time Charter Equivalent (TCE) rate	13,668		14,372	(3)
Average daily vessel operating expenses	5,017	(3)	5,217	(3)
Average daily vessel operating expenses (excluding expenses while on dry-dockings not capitalised)	4,712	(4)	5,134	(4)
Average daily vessel operating expenses Full Year 2009			4,957	(3)

(1): To arrive to underlying income for 2010 the following non-recurring items are added back to the reported result: US$ 2,020 relating to the write-off of the unamortized element of the dry-docking of vessel 'Vasos', US$ 1,300 which represents the out-of-court settlement of a claim relating to a chartering dispute, US$ 354 of additional non-recurring expenses relating to the cancellation of the Qingshan contracts in late 2009. In addition to the added back items, the profit from the sale of the vessel 'MSC Mekong' amounting to US$ 868 is subtracted.

(2): Number of vessels in operation at the end of period in 2010 excludes the vessel 'MSC Mekong' and in 2009 excludes the vessels 'Athos', 'MSC Socotra', 'MSC Himalaya', 'MSC Emirates' that were sold and delivered to the new owners before 30 June.

(3): Ownership days, available days, operating days, TCE and average daily vessel operating expenses in 2010 and 2009 exclude all of the new-build vessels that will be delivered in a future date from the reporting date.

(4) During the first half of 2010 five vessels underwent scheduled dry-docking (2009, two vessels underwent dry-docking)

 

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$ 10,852 or 20.3% to US$ 42,543 for the six months ended 30 June 2010 (2009: US$ 53,395). The main reasons for this decrease were: (i) the vessels 'MSC Anafi' and 'Gitte' were laid up (not generating revenue) since the second half of 2009 and were reactivated in January 2010 and May 2010 respectively and (ii) the difference in available days between the two periods (2010: 2,942 days; 2009: 3,474 days), as a result of the disposal of vessels exceeding the deliveries or the acquisition of new operational vessels. The vessels 'MSC Emirates', 'MSC Himalaya', 'MSC Socotra', 'Howrah Bridge' 'Gianni D' were sold after June 2009, so they contributed for the majority of the first half of 2009 but did not contribute in 2010. In addition, the vessel 'MSC Mekong' was sold in February 2010 therefore only contributing to revenue for a limited period in 2010. The vessels 'Golden Trader' and 'Grand Vision' were acquired and delivered to the Company in May 2010 so their contribution in revenue for the six months period ending 30 June 2010 was limited. The vessels 'Marie-Paule' and 'MSC Fortunate that became operational in the first quarter of 2009, the vessel 'MSC Socotra (ex. Procyon)' that was acquired and became operational in the second quarter of 2009 and the vessel 'Alpine-Trader' that was delivered in the fourth quarter of 2009 were fully operational during the first six months of 2010.

 

Voyage expenses total: The voyage expenses decreased by US$ 1,110 or 32.2% to US$ 2,333 for the period ended 30 June 2010 (2009: US$ 3,443) mainly due to the decreased revenue figure to which commission rates applied.

 

Vessel operating expenses: Vessel operating expenses decreased by US$ 3,626 or 19.2% to US$ 15,272 for the six months ended 30 June 2010 (2009: US$ 18,898). This decrease is mainly 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 remaining, more efficient vessels. In addition the vessel 'Gitte' was idle until May, thus minimising its operating expenses.

 

On a per day basis operating expenses decreased by US$ 200 per day or 3.8% to US$ 5,017 per day (2009: US$ 5,217 per day) reflecting the change in the fleet profile after the sale of specific vessels. On a per day basis excluding items relating to dry-dockings that have not been capitalised, the average daily operating expenses decreased by US$ 422 per day or 8.2% to US$ 4,712 per day (2009: US$ 5,134 per day).

 

General and administrative expenses: Included in general and administrative expenses is US$ 1,300 of a non-recurring item, which represents the out-of-court settlement of a claim relating to a chartering dispute.

 

Depreciation: The vessels' depreciation charge increased by 5.7% to US$ 14,486 for the six months ended 30 June 2010 (2009: US$ 13,709) due to the incremental depreciation of the vessel 'Alpine-Trader' that was operational and the acquisition of the vessels 'Golden Trader' and 'Grand Vision' during the period compared to the disposed vessels that were fully depreciated.

 

Depreciation of dry-docking costs: Depreciation of dry-docking costs decreased by 2.9% to US$ 5,581 for the six months ended 30 June 2010 (2009: US$ 5,750), reflecting the disposal of a number of vessels which had undertaken dry-docking. Following their sale the amortisation of their dry-docking is accounted as part of the profit on disposal. Included in the depreciation of dry-docking costs is a cost of US$ 2,020 representing the write-off of the unamortized element of the dry-docking of vessel 'Vasos' which underwent special survey during the period to 30 June 2010.

 

Gain from vessel disposal and loss from cancellation of new building contracts: The Company realised profit of US$ 868 from the sale of the vessel 'MSC Mekong' during this six month period; in the same period last year the Company realised US$ 1,903 from the sale of one fully depreciated bulk carrier and three fully depreciated container vessels. During the six months to 30 June 2010 the Company incurred US$ 354 of additional non-recurring expenses relating to the cancellation of the Qingshan contracts in late 2009.

 

Financing costs: Interest expense increased by US$ 909 or 49.8% to US$ 2,734 for the six months ended 30 June 2010 (2009: US$ 1,825), reflecting the increased loan balance following the delivery of the vessel 'Alpine-Trader' and the acquisition of the vessels 'Golden Trader' and 'Grand Vision'.

 

Cash and cash equivalents: The Company as of 30 June 2010 had US$ 20,714 of cash and cash equivalents (31 December 2009: US$ 24,618). The Company is expected to utilise these together with the proceeds from the July 2010 capital-raising to strengthen the balance sheet and to selectively acquire additional vessels.

 

Restricted Cash: The Company as of 30 June 2010 had US$ 10,100 (31 December 2009 US$15,100) of restricted cash relating to the amount drawn on 16 December 2009 from a bank as part of a new loan facility for the future acquisition of vessels. US$ 5,000 was released during the period to refinance the acquisition of the vessel 'Grand Vision'.

 

APPENDIX 1:

 

Fleet Employment Profile:

	Operational fleet
	Vessel	Type	Capacity	Built	Rate (US$) per day	Earliest
						Expiration (1)
	Containers		TEU
1	MSC Fortunate (2)	Post Panamax	5,551	1996	28,500	Feb-13
2	MSC Socotra	Post Panamax	4,953	1995	12,350	Apr-13
3	Bosporus Bridge	Sub Panamax	3,720	1993	14,750	Feb-12
4	MSC Finland	Sub Panamax	3,032	1986	6,800	Apr-11
5	MSC Scotland (3)	Sub Panamax	3,007	1992	14,500	Mar-11
					6,800	Mar-12
6	Grand Vision	Sub Panamax	2,986	1991	6,500	Nov-10
7	MSC Anafi	Sub Panamax	2,420	1994	9,000	Jan-12
8	MSC Accra	Sub Panamax	1,889	1985	14,200	Jun-12
9	Gitte	Handy	976	1992	7,350	May-12
10	Brilliant	Handy	976	1992	6,000	Jun-12
	Dry Bulk		DWT
11	Vasos	Capesize	152,065	1990	23,950	Feb-11
12	Marie-Paule (4)	Supramax	53,800	2009	18,000	Jan-12
13	Alpine-Trader (4)	Supramax	53,800	2009	15,300	Oct-11
14	Alex D	Supramax	52,315	1989	14,200	Nov-10
15	Limnos	Supramax	52,266	1992	14,500	May-11
16	Lindos	Supramax	52,266	1990	11,000	Sep-10
17	Tilos	Supramax	52,266	1991	14,000	Nov-10
18	Golden-Trader	Handymax	48,170	1994	18,600	Nov-11
	Vessels under construction
	Vessel / Yard name	Type	Capacity	Scheduled Delivery
	Container		TEU
19	Jiangsu Yangzijiang	Sub Panamax	2,500	2011
	Vessel or Yard name	Type	Capacity	Scheduled Delivery	Rate (US$) per day
	Dry Bulk		DWT
20	Jiangsu Yangzijiang	Post Panamax	93,000	2011
21	SPP (5)	Supramax	59,000	2010	23,000
22	COSCO (5)	Supramax	57,000	2010	15,650+50% profit share at BSI(6) + 5%
23	COSCO	Supramax	57,000	2010	-
24	COSCO (5)	Supramax	57,000	2011	25,000
25	COSCO (5)	Supramax	57,000	2011	17,700+50% profit share at BSI(6) + 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 vessel will continue with the same charterer with the rates as stated in direct continuation
(4) Both vessels owned under a 50:50 joint venture with Glencore International AG
(5) The charter term is for three years from delivery
(6) 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, 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 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:

 

Financial Statements

 

GOLDENPORT HOLDINGS INC.

 

Interim Condensed Consolidated

Financial Statements

 

30 June 2010

 

 

 

 

 

 

 

 

 

 

INDEPENDENT REVIEW REPORT

 

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 2010, comprising of the interim consolidated statement of financial position as at 30 June 2010 and the related interim consolidated statements of comprehensive income, of changes in equity and of 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 International Financial Reporting Standards applicable to interim financial reporting as adopted by the European Union (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 Standard 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 inquires, 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.

 

 

 

Ernst & Young (HELLAS)

Certified Auditors - Accountants SA

30 August 2010

Athens

 

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2010

 

		Notes		6 months Ended 30 June 2010 U.S.$'000		6 months Ended 30 June 2009 U.S.$'000
				Unaudited		Unaudited
Revenue				42,543		53,395
Expenses:
Voyage expenses		3		(2,333)		(3,443)
Vessel operating expenses		3		(15,272)		(18,898)
Management fees - related party		15		(1,203)		(1,519)
Depreciation		7		(14,486)		(13,709)
Depreciation of dry-docking costs		7		(5,581)		(5,750)
General and administration expenses				(3,095)		(1,865)
Operating profit before disposal of vessels				573		8,211
Gain from disposal of vessels and loss from cancellation of new building contracts		7,8		514		1,903
Operating profit including disposal of vessels				1,087		10,114
Finance expense				(2,734)		(1,825)
Finance income				235		106
Foreign currency gain, net				211		115
(Loss)/ Profit for the period attributable to Goldenport Holdings Inc. shareholders				(1,201)		8,510
Total comprehensive income for the period attributable to Goldenport Holdings Inc. shareholders				(1,201)		8,510
Earnings per share (U.S.$):
- Basic EPS for the period		13		(0.02)		0.12
- Diluted EPS for the period		13		(0.02)		0.12
Weighted average number of shares		13		71,260,391		70,141,640

 

 

 

 

 

The accompanying notes 1-17 form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2010

 

		Notes		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
				Unaudited		Audited
ASSETS
Non-current assets
Vessels at cost, net		7		278,154		271,242
Advances for vessels under construction		8		129,773		97,010
Other non-current assets		10		5,042		6,549
				412,969		374,801
Current assets
Inventories				393		267
Trade receivables				5,068		1,382
Insurance claims		11		1,696		2,153
Due from related parties		15		2,200		2,079
Receivable from cancellation of new building contracts		8		-		9,360
Prepaid expenses and other assets				2,069		1,451
Restricted cash		6		10,100		15,100
Cash and cash equivalents		5		20,714		24,618
				42,240		56,410
TOTAL ASSETS				455,209		431,211
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Issued share capital		12		724		708
Share premium		12		111,332		108,865
Retained earnings				121,535		125,909
TOTAL EQUITY				233,591		235,482
Non-current liabilities
Long-term debt		14		169,706		140,690
Deferred revenue				1,736		3,041
Other non-current liabilities		10		796		663
				172,238		144,394
Current liabilities
Trade payables				8,206		10,476
Current portion of long-term debt		14		28,499		31,559
Accrued liabilities and other payables				8,060		4,885
Other current liabilities		10		504		414
Deferred revenue				4,111		4,001
				49,380		51,335
TOTAL LIABILITIES				221,618		195,729
TOTAL EQUITY AND LIABILITIES				455,209		431,211

The accompanying notes 1-17 form an integral part of the financial statements.

 

 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2010

 

 

		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
As of 31 December 2008		69,937,345		0.01		699		107,354		130,264		238,317
Profit for the period		-		-		-		-		8,510		8,510
AIP shares		175,014		0.01		0		238		-		238
Dividends to equity shareholders		479,294		0.01		5		766		(2,191)		(1,420)
As of 30 June 2009 (unaudited)		70,591,653		-		704		108,358		136,583		245,645
		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
As of 31 December 2009		70,820,611		0.01		708		108,865		125,909		235,482
Loss for the period		-		-		-		-		(1,201)		(1,201)
AIP shares		116,196		0.01		1		176		-		177
Dividends to equity shareholders		1,537,091		0.01		15		2,291		(3,173)		(867)
As of 30 June 2010 (unaudited)		72,473,898		-		724		111,332		121,535		233,591

 

 

 

The accompanying notes 1-17 form an integral part of the financial statements.

 

 

INTERIM CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2010

	Notes		6 months ended 30 June 2010 U.S.$'000		6 months ended 30 June 2009 U.S.$'000
			Unaudited		Unaudited
Operating activities
(Loss)/ Profit for the period			(1,201)		8,510
Adjustments for:
Depreciation	7		14,486		13,709
Depreciation of dry-docking costs	7		5,581		5,750
Gain from disposal of vessels	7		(868)		(1,903)
Finance expense			2,734		1,825
Finance income			(235)		(106)
AIP shares	15		9		(15)
Foreign currency gain			(211)		(115)
Operating profit before working capital changes			20,295		27,655
Inventories			(126)		(311)
Trade receivables, prepaid expenses & other assets			(2,797)		(3,710)
Insurance claims	11		457		(721)
Receivable from cancellation of new building contracts	8		9,360		-
Trade payables, accrued liabilities & other payables			(859)		(3,148)
Deferred revenue			(1,195)		(2,361)
Net cash flows from operating activities before movement in amounts due from related parties			25,135		17,404
Due from related parties	15		(121)		384
Net cash flows provided by operating activities			25,014		17,788
Investing activities
Acquisition/Improvements of vessels	7		(23,828)		(10,522)
Proceeds from disposal of vessels net of commissions	7		1,911		11,333
Advances for vessel under reconstruction			-		(5,385)
Advances for vessels under construction	8		(32,417)		(22,110)
Dry-docking costs			(2,255)		(283)
Interest received			235		122
Net cash flows used in investing activities			(56,354)		(26,845)
Financing activities
Proceeds from issue of long - term debt			45,481		26,850
Repayment of long-term debt			(19,694)		(30,370)
Restricted cash	6		5,000		-
Interest paid			(2,486)		(2,636)
Dividends paid	4		(867)		(1,420)
Net cash flows provided by/ (used in) financing activities			27,434		(7,576)
Net decrease in cash and cash equivalents			(3,906)		(16,633)
Exchange gains on cash and cash equivalents			2		89
Cash and cash equivalents at beginning of period			24,618		33,257
Cash and cash equivalents at end of period			20,714		16,713

The accompanying notes 1-17 form an integral part of the financial statements.

1. Formation and General Information

 

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

 

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

 

Goldenport as at 30 June 2010 is the holding Company for sixteen intermediate holding companies, each in turn owning a vessel-owning company, as listed in the table below. Goldenport is also the holding Company of seven more intermediate holding companies, owning Moonglade Maritime S.A., Valaam Incorporated, Cheyenne Maritime Company, Giga Shipping Ltd., Loden Maritime Co., Shila Maritime Corp. and Dionysos Ship. Carrier Co., which will be the vessel-owning companies of four new built bulk carriers ordered at Cosco Zhoushan Shipyard, one new built container vessel and one new built bulk carrier ordered at Jiangsu Yangzijiang Shipyard and one new built bulk carrier ordered at SPP Shipbuilding Co. shipyard upon delivery of the vessels. Also, as at 30 June 2010 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 (see note 15). Goldenport Marine Services has been registered in Greece under the provisions of Law 89/1967. As of 30 June 2010 Black Rose Shipping Ltd., the vessel-owning company of the disposed vessel "MSC Mekong" (see note 7), has become dormant.

 

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 and its wholly owned subsidiaries (see (a) below) and the proportionally consolidated financial statements of the joint venture (see (b) below) were authorised for issue in accordance with a resolution of the Board of Directors on 30 August 2010.

1. Formation and General Information

 

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
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	Container
Moyet Maritime Ltd.	Anemone Maritime S.A.	Liberia	Grand Vision	2010(1)	Container
Aleria Navigation Company	Melia Shipping Limited	Liberia	Golden Trader (ex.Arctic Trader)	2010(2)	Bulk Carrier
Abyss Maritime Ltd.	Moonglade Maritime S.A.	Liberia	ZS07036	2011(4)	Bulk Carrier
Seaward Shipping Co.	Valaam Incorporated	Liberia	ZS07037	2010(4)	Bulk Carrier
Jubilant Marine Company	Cheyenne Maritime Company	Marshall Islands	ZS07038	2011(4)	Bulk Carrier
Alacrity Maritime Inc.	Giga Shipping Ltd.	Marshall Islands	ZS07039	2010(4)	Bulk Carrier
Chanelle Shipping Company	Loden Maritime Co.	Marshall Islands	YZJ-815	2011(5)	Container
Clochard Maritime Limited	Shila Maritime Corp.	Marshall Islands	YZJ-917 (ex. YZJ-816)	2011(6)	Bulk Carrier
Lativa Marine Co.	Dionysos Ship. Carrier Co.	Liberia	S5087	2010(8)	Bulk Carrier

 

 

 

 

Intermediate holding company	Vessel - owning company	Country of Incorporation of vessel-owning company	Name of Vessel owned by Subsidiary
Daysailer Navigation Co.	Platax Shipholding Carrier S.A.	Liberia	Dormant Company(9)
Bacaro Services Corp.	Accalia Navigation Limited	Liberia	Dormant Company(10)
Oates Trading Corp.	Risa Maritime Co. Ltd.	Malta	Dormant Company
Nemesis Maritime Inc.	Samos Maritime Ltd.	Malta	Dormant Company
Meredith Trading Corporation	Guilford Marine S.A.	Panama	Dormant Company
Marta Trading Co.	Superb Maritime S.A.	Panama	Dormant Company
Royal Bay Marine Ltd	Opal Maritime Limited	Malta	Dormant Company
Daphne Marine Corp.	Dancing Waves Co. Ltd.	Malta	Dormant Company
Portia Navigation Co.	Borealis Shipping Co. Ltd.	Malta	Dormant Company
Audrey Marine Corp.	Wild Orchid Shipping Ltd.	Malta	Dormant Company
Sicuro Shipmanagement SA	Hampton Trading S.A.	Liberia	Dormant Company
Rawlins Trading Ltd	Fairland Trading S.A.	Panama	Dormant Company
Platinum Shipholding SA	Coral Sky Marine Ltd.	Malta	Dormant Company
Blaze Navigation Corp.	Nilwood Comp. Inc.	Panama	Dormant Company
Dumont International Inc.	Black Rose Shipping Ltd.	Malta	Dormant Company(3)
Dryades Maritime Limited	Ingle Trading Co.	Liberia	Dormant Company(7)
Leste Shipholding Inc.	Sundown International Inc.	Liberia	Dormant Company(7)
Goldenport Marine Services		Marshall Islands
(1)Vessel Grand Vision was delivered on 6 May 2010
(2)Vessel Golden Trader was delivered on 11 May 2010
(3) Black Rose Shipping Ltd. was the ship owning company of MV "MSC Mekong", which was disposed of on 4 March 2010 (note 7)
(4) New building bulk carriers (note 8a) with delivery dates between the fourth quarter of 2010 and the third quarter of 2011.
(5) New building container vessel (note 8a) with delivery date in second quarter 2011 (according to amended contract).
(6) New building bulk carrier (note 8a) with delivery date in second quarter 2011 (according to amended contract).
(7) Ship owning companies, which signed the contracts for the construction of two new building bulk carriers, initially arranged in August 2008 and cancelled on 8 January 2010.
(8) New building bulk carrier (note 8a) with delivery date in fourth quarter of 2010.
(9) 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 6 and 14).
(10) Accalia Navigation Limited will be the vessel owning company of a bulk carrier, which is planned to be acquired in the future (note 8).

 

1. Formation and General Information continued

 

b) Proportionally consolidated the 50% Joint Venture (see note 9)

 

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. Basis of presentation and summary of significant accounting policies

(a) Basis of preparation: The Group's interim condensed consolidated financial statements for the six months ended 30 June 2010 have been prepared using the same accounting policies and methods of computation used in the preparation of the Group's annual financial statements for the year ended 31 December 2009. 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 2010 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 2009.

 

(c) IFRS and IFRIC interpretations that became effective as of 1 January 2010

 

The accounting policies adopted are consistent with those of the financial year ended 31 December 2009 except as follows:

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2010:

 

Ø IFRIC 17 Distributions of Non-cash Assets to Owners

Ø IAS 39 Financial Instruments: Recognition and Measurement (Amended) - eligible hedged items 

Ø IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended)

Ø IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) 

Ø Improvements to IFRSs (May 2008) All amendments issued are effective as at 31 December 2009, apart from the following: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies when a subsidiary is classified as held for sale, all its assets and liabilities are classified as held for sale, even when the entity remains a non-controlling interest after the sale transaction. The amendment is applied prospectively.

Ø Improvements to IFRSs (April 2009)

 

There is no impact from the adoption of the above standards or interpretations on the financial statements or performance of the Group.

 

2. Basis of presentation and summary of significant accounting policies continued

 

Amendments resulting from improvements to IFRSs (April 2009) to the following standards which had or did not have an effect on the accounting policies, financial position or performance of the Group are as follows: 

 

Ø IFRS 2 Share-based Payment

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.

 

Ø IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

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.

 

Ø IFRS 8 Operating Segment Information

Clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. 

 

Ø IAS 1 Presentation of Financial Statements

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.

 

Ø IAS 7 Statement of Cash Flows

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.

 

Ø IAS 17 Leases

The amendment removes the specific guidance on classifying land as a lease so that only the general guidance remains.

 

Ø 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:

 

- Has primary responsibility for providing the goods or service

- Has inventory risk

- Has discretion in establishing prices

- Bears the credit risk

 

Ø IAS 36 Impairment of Assets

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.

 

Ø IAS 38 Intangible Assets

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.

 

2. Basis of presentation and summary of significant accounting policies continued

 

Ø IAS 39 Financial Instruments: Recognition and Measurement

The amendment clarifies that:

 

- 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.

- 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).

- 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).

 

Ø IFRIC 9 Reassessment of Embedded Derivatives

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.

 

Ø IFRIC 16 Hedges of a Net Investment in a Foreign Operation

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.

 

(d) IFRS and IFRIC interpretations not yet effective

 

In May 2010, except for the pronouncements that were disclosed in the audited financial statements as at 31 December 2009, the IASB issued its third 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 2010. Early application is permitted in all cases and this annual improvements project has not yet been endorsed by the EU.

 

Ø IFRS 1 First-time adoption,effective for annual periods beginning on or after 1 January 2011.

This improvement clarifies the treatment of accounting policy changes in the year of adoption after publishing an interim financial report in accordance with IAS 34 Interim Financial Reporting, allows first-time adopters to use an event-driven fair value as deemed cost and expands the scope of 'deemed cost' for property, plant and equipment or intangible assets to include items used subject to rate regulated activities.

 

Ø IFRS 3 Business Combinations, effective for annual periods beginning on or after 1 July 2010

This improvement clarifies that the amendments to IFRS 7 Financial Instruments: Disclosures, IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement, that eliminate the exemption for contingent consideration, do not apply to contingent consideration that arose from business combinations whose acquisition dates precede the application of IFRS 3 (as revised in 2008).

Moreover, this improvement limits the scope of the measurement choices (fair value or at the present ownership instruments' proportionate share of the acquiree's identifiable net assets) only to the components of non-controlling interest that are present ownership interests that entitle their holders to a proportionate share of the entity's net assets.

Finally, it requires an entity (in a business combination) to account for the replacement of the acquiree's share-based payment transactions (whether obliged or voluntarily), i.e., split between consideration and post combination expenses.

 

2. Basis of presentation and summary of significant accounting policies continued

 

 

Ø IFRS 7 Financial Instruments: Disclosures, effective for annual periods beginning on or after 1 January 2011

This improvement gives clarifications of disclosures required by IFRS 7 and emphasises the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments.

 

Ø IAS 1 Presentation of Financial Statements, effective for annual periods beginning on or after 1 January 2011

This amendment clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.

 

Ø IAS 27 Consolidated and Separate Financial Statements, effective for annual periods beginning on or after 1 July 2010

This improvement clarifies that the consequential amendments from IAS 27 made to IAS 21 The Effect of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures apply prospectively for annual periods beginning on or after 1 July 2009 or earlier when IAS 27 is applied earlier.

 

Ø IAS 34 Interim Financial Reporting, effective for annual periods beginning on or after 1 January 2011

This improvement provides guidance to illustrate how to apply disclosure principles in IAS 34 and add disclosure requirements.

 

Ø IFRIC 13 Customer Loyalty Programmes, effective for annual periods beginning on or after 1 January 2011

This improvement clarifies that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken into account.

 

None of the above standards or interpretations is expected to have a significant impact on the interim condensed financial statements or performance of the Group.

 

 

(e) Reclassifications: Certain prior period/year amounts have been reclassified for presentation purposes.

 

 

 

3. Voyage and vessel operating expenses

 

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

 

Voyage expenses		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Port charges		(85)		(288)
Bunkers (fuel costs), net		108		(280)
Commissions		(2,356)		(2,875)
Total voyage expenses:		(2,333)		(3,443)

 

Commissions include an amount of U.S.$791 (30 June 2009: U.S.$1,049) charged by a related party (see note 15).

Vessel Operating Expenses		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Crew expenses		(6,085)		(7,903)
Stores & Consumables		(562)		(551)
Spares		(1,199)		(1,213)
Repairs & Maintenance		(1,272)		(1,681)
Lubricants		(2,118)		(3,165)
Insurance		(2,093)		(2,521)
Taxes (other than income tax)		(341)		(337)
Other operating expenses		(1,602)		(1,527)
Total vessel operating expenses:		(15,272)		(18,898)

 

4. Dividends

 

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 proposed by the Board of Directors final dividend for 2009, was approved by the AGM held on 12 May 2010. The final dividend was 3 pence per share and included a share alternative resulting in a total dividend amount of US$ 3,173. On 14 May 2010 the cash payment was made for the shares that elected cash totalling GBP 571 or U.S.$867 and on 17 May 2010 1,537,091 shares were issued and admitted to the official list representing the share element.

 

5. Cash and cash equivalents

For the purpose of the interim condensed consolidated cash flow statement, cash and cash equivalents comprise the following:

 

		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Cash at bank		12,273		3,113
Time deposits		8,441		13,600
		20,714		16,713

 

 

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.$9,900 throughout the year.

 

6. Restricted cash

 

The restricted cash of U.S. $10,100 as at 30 June 2010 (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 future vessel acquisitions. The amount is held in the 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. As at 30 June 2010, an amount of U.S.$5,000 has been released by the bank and was used to refinance the acquisition of the container vessel 'Grand Vision' (note 7).

 

7. Vessels at cost, net

 

Vessels are analysed as follows:

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Cost
At beginning of period/year		338,576		260,110
Additions		23,828		10,665
Transfer from vessels under construction/ reconstruction		-		94,171
Initial expenses deduction		-		(84)
Disposals		(1,420)		(26,286)
At end of period/year		360,984		338,576
Depreciation
At beginning of period/year		(78,022)		(58,841)
Depreciation charge for the period/ year		(14,486)		(28,000)
Disposals		610		8,819
At end of period/year		(91,898)		(78,022)
Net carrying amount of vessels		269,086		260,554
Cost of dry-dockings
At beginning of period/year		39,706		42,981
Additions		4,194		4,702
Disposals		(1,015)		(7,977)
At end of period/year		42,885		39,706
Depreciation
At beginning of period/year		(29,018)		(22,663)
Depreciation charge for the period/year		(5,581)		(10,582)
Disposals		782		4,227
Accumulated depreciation		(33,817)		(29,018)
Net carrying amount of dry-docking costs		9,068		10,688
Total net carrying amount		278,154		271,242

 

 

As at 30 June 2010, the gross carrying amount of vessels, which have been fully depreciated to their residual value and are still in use after the sale of vessel 'MSC Mekong' is nil (U.S.$810 as at 31 December 2009).

 

All of the Group's operating vessels having a total net carrying value of U.S. $278,154 as at 30 June 2010 (U.S.$271,242 as at 31 December 2009), have been provided as collateral to secure the loans discussed in note 14.

 

7. Vessels at cost, net (continued)

 

Operational vessels acquisition

 

On 6 May 2010, the Company took delivery of the M/V Grand Vision, a container vessel of 2,986 TEU built in 1991, which was acquired for U.S.$6,750.

 

On 11 May 2010, the Company took delivery of the M/V Arctic Trader (renamed to Golden Trader), a bulk carrier of 48,170 DWT built in 1994, which was acquired for U.S.$17,250 (including U.S.$195 of unamortized dry-docking component).

 

 

Disposals

 

On 12 February 2010, the company agreed the sale of the 962 TEU, 1978-built vessel "MSC Mekong", to an unaffiliated third party. The sale was concluded at a gross consideration of US $1,989 in cash and the vessel was delivered to the new owners on 4 March 2010. As of delivery date, M/V MSC Mekong had a net carrying value of U.S.$1,043, 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 was U.S.$868 and is included in the interim consolidated income statement for the six months ended 30 June 2010.

 

Dry-docking costs

 

During 2010 five vessels of the Group commenced scheduled dry-dockings at a cost of U.S.$4,194 (U.S.$ 4,702 as at 31 December 2009 for dry docking of nine vessels). The total cost of U.S.$4,194 includes also the cost of the dry docking components of the new vessels.

 

 

8. Advances for vessels construction

 

The balances as at 30 June 2010 and 31 December 2009 are analysed as follows:

 

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
4 Bulk Carriers (Cosco Zhousan Shipyard, China)	(a)	75,835		53,540
1 Container (Jiangsu Yangzijiang Shipbuilding Co. Ltd, China)	(a)	19,356		19,231
1 Bulk Carrier (Jiangsu Yangzijiang Shipbuilding Co. Ltd, China)	(a)	19,476		19,300
1 Bulk Carrier (SPP Shipbuilding Co.)	(a)	15,106		4,939
		129,773		97,010
2 Bulk Carriers (Qingshan Shipyard, China)	(a)	-		28,156
Write off due to cancellation of new building contracts		-		(18,796)
Transfer to current assets		-		(9,360)
JV - 2 Bulk Carriers (Jiangsu Eastern Shipyard, China)		-		31,905
Transfer to cost of vessels		-		(31,905)
		129,773		97,010

 

 

8. Advances for vessels construction (continued)

 

a) New Buildings

 

4 Bulk Carriers (Cosco Zhousan Shipyard of China)

 

On 4 January 2010 the Group paid to the shipyard an amount of US$6,425 representing the third instalment for ZS07037. On 7 June 2010 the Group paid to the shipyard an amount of US$7,550 representing the fourth instalment for ZS07039. On 21 June 2010 the Group paid to the shipyard an amount of US$7,550 representing the fourth instalment for ZS07037. The last 20% will be paid upon delivery of the vessels.

 

1 Container - 1 Bulk Carrier

 

Amendment of new building contract at Jiangsu Yangzijiang Shipbuilding Co. Ltd

On 24 March 2010 an amendment to the initial shipbuilding contract was signed between the Group and Jiangsu Yangzijiang shipyard, providing the conversion of one of the two container vessels ordered on 7 August 2007 with hull number YZJ-816 into one bulk carrier (with hull number YZJ-917) with carrying capacity of 93,000 DWT and estimated delivery date in May 2011.

 

2 Bulk Carriers (Qingshan Shipyard of China)

 

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.

 

During 2010 the Group paid additional U.S.$354 for the cancellation of the Qingshan vessels.

 

1 Bulk Carrier (SPP Shipbuilding Co.)

 

On 21 January 2010 the Group paid to the shipyard an amount of US$4,763 representing the second instalment for the vessel. On 28 June 2010 the Group paid to the shipyard an amount of US$4,763 representing the third instalment for the vessel. The remaining payments will be made to the yard based on the construction process schedule. The bank that was financing the two Qingshan contracts that have been cancelled, agreed to transfer part of the loan commitment to the SPP contract for an amount of U.S.$21,700.

 

9. Joint Venture

 

The Group's 50% portion in the stand alone Financial Statements of Sentinel Holdings Inc., as at 30 June 2010 and for the period then ended, is as follows:

 

 

Consolidated Statement of Financial Position		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
ASSETS
Non-current assets
Vessels		30,783		31,429
		30,783		31,429
Current assets
Prepaid expenses and other assets		482		353
Cash and cash equivalents		836		2,426
		1,318		2,779
TOTAL ASSETS		32,101		34,208
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Retained earnings		1,948		984
TOTAL EQUITY		1,948		984
Non-current liabilities
Long-term debt		21,243		21,949
		21,243		21,949
Current liabilities
Current portion of long-term debt		1,412		1,412
Other liabilities		7,498		9,863
		8,910		11,275
TOTAL LIABILITIES		30,153		33,224
TOTAL EQUITY AND LIABILITIES		32,101		34,208

 

 

9. Joint Venture continued

 

Consolidated Statement of Comprehensive Income		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Revenue		2,955		960
Expenses
Voyage expenses		(141)		(45)
Vessel operating expenses		(833)		(386)
Management fees - related party		(128)		(31)
Depreciation		(597)		(236)
Depreciation of dry-docking costs		(50)		-
Operating profit		1,206		262
Finance expense		(248)		(125)
Foreign currency loss, net		6		-
Profit for the period attributable to Sentinel Holdings Inc. shareholders		964		137

 

 

10. Other non-current assets/ liabilities

 

The amounts of other non current assets in the accompanying statement of financial positions as at 30 June 2010 and 31 December 2009 are analysed as follows:

 

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Trade receivables		3,502		5,325
Non-level charters		1,540		1,224
		5,042		6,549

 

 

The amount of U.S.$3,502 (U.S.$5,325 as at 31 December 2009) relates to trade receivables from services rendered during 2009 and 2010, which under a separate agreement with the charterers will be settled until the end of 2011.

 

The amount of U.S.$1,540 (U.S.$1,224 as at 31 December 2009) relates to the asset created upon accounting for charter agreements with specified rate increases over the charter term.

 

 

10. Other non-current assets/ liabilities continued

 

The amounts of other non current liabilities in the accompanying statement of financial positions as at 30 June 2010 and 31 December 2009 are analysed as follows:

 

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Fair value of interest rate swaps- non current(1)		(796)		(663)
Fair value of interest rate swaps- current(1)		(358)		(414)
Fair value of foreign currency forward - current(2)		(146)		-
		(504)		(414)
(1): interest rate swap for the loan of vessel Bosporus Bridge and the loan of vessels MSC Socotra & MSC Finland.
(2): foreign currency forward contract

 

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 2010, the Group entered into foreign currency forward contract to purchase the amount of EUR3,000,000 at a EUR/USD exchange rate of 1.2740 with value date 15 March 2011. The Group did not designate this forward as hedging instrument, therefore gains or losses arising from changes in the fair value of the forward are taken to the statement of comprehensive income as finance expense. The fair value of the specific derivative financial instrument as at 30 June 2010 was a liability of U.S.$146, which is included in other 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 30 June 2010 and 31 December 2009 was a liability of U.S.$335 and U.S.$392 respectively which is included in other non-current and current liabilities in the accompanying consolidated statement of financial position and gains or losses arising from changes in the fair value of the interest rate swap are taken to the statement of comprehensive income as finance expense.

 

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 30 June 2010 and 31 December 2009 was a liability of U.S.$819 and U.S.$685 respectively, which is included in other non-current and current liabilities in the accompanying consolidated statement of financial position and gains or losses arising from changes in the fair value of the interest rate swap are taken to the statement of comprehensive income as finance expense. 

 

All financial instruments carried at fair value are categorised in three categories defined as follows:

Level 1 - Quoted market prices

Level 2 - Valuation techniques based on market observable inputs

Level 3 - Valuation techniques based on non- market observable inputs.

Both of the interest rate swaps of the Group were assessed as Level 2 and the foreign currency forward contract was assessed as Level 1.

 

11. Insurance claims

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Balance as at 1 January		2,153		2,012
Additions		90		2,072
Collections		(300)		(1,916)
Amounts written off		(247)		(15)
Balance as at end of period/ year		1,696		2,153

 

12. Share capital and Share premium

 

Share capital consists of the following:

 

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Authorised
Shares of $0.01 each		1,000		1,000
Issued and paid
Shares of $0.01 each		724		708
Total issued share capital		724		708

 

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 the participants selected the full shares award (FSA).

 

On 19 March 2010, 116,196 shares (175,014 shares were issued in 2009 for 2008 FSA) were issued to all the participants that selected the FSA. On the same date, an amount of U.S.$176 (U.S.$235 for 2008 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 2008		107,354
AIP shares issued in 2009		235
Scrip dividend shares		1,276
Balance 31 December 2009		108,865
AIP shares issued in 2010		176
Scrip dividend shares		2,291
Balance 30 June 2010		111,332

 

 

 

13. Earnings per share

Basic earnings per share ("EPS") of USD (0.02) (2009: 0.12) are calculated by dividing the (loss)/ profit for the period attributable to Goldenport Holdings Inc. shareholders (U.S.$(1,201) and U.S.$8,510 for the periods ended 30 June 2010 and 30 June 2009, respectively), by the weighted average number of shares outstanding (71,260,391 and 70,141,640 for the six month periods ended 30 June 2010 and 30 June 2009, respectively). 

The weighted average number of shares outstanding reflects the weighted average of the shares existed on 31 December 2009, the shares issued on 19 March 2010 relating to the Full Share Award under the provisions of AIP and the shares issued on 17 May 2010 relating to the scrip dividend program (as approved by the AGM on 12 May 2010).

 

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

 

Date		Number of shares as of year / period end
31 December 2009 (audited)		70,820,611
30 June 2010 (unaudited)		72,473,898
Weighted average number of shares during the six month period ended 30 June 2010 (unaudited)		71,260,391

 

 

14. Long-term debt

 

The amounts in the accompanying statement of financial positions are analysed as follows:

 

		30 June 2010		31 December 2009
		U.S.$'000		U.S.$'000
Bank Loan	Vessel(s)	Amount	Rate %	Amount	Rate %
a. Issued 26 June 2006, maturing 26 September 2011	MSC Scotland	5,500	3.04%	6,700	2.75%
b. Issued 19 July 2006, maturing 16 July 2011.	Vasos	7,850	1.31%	9,300	1.24%
c. Issued 16 December 2008, maturing 29 July 2013	MSC Fortunate	22,405	2.83%	24,325	2.78%
d. Issued 19 July 2007, maturing 19 July 2014	Anafi	11,950	2.80%	12,950	2.78%
e. Issued 17 August 2007, maturing 17 August 2012	MSC Accra	3,645	2.94%	4,455	2.77%
f. Issued 18 October 2007	Bosporus Bridge YZJ-815, YZJ-917	17,963	2.55%	18,630	2.53%
g. Issued 11 November 2007, maturing 11 November 2014	Gitte, Brillinat	13,000	2.87%	14,150	2.78%
h. Issued 16 January 2009, maturing 16 January 2019	Marie-Paule	11,068	2.05%	11,421	2.03%
i .Issued 26 October 2009, maturing 26 October 2019	Alpine Trader	11,647	2.29%	12,000	2.28%
j. Issued 18 August 2008, maturing 12 years after delivery	QS20060384	-	-	4,270	1.88%
k. Issued 18 August 2008, maturing 12 years after delivery	QS20060385	-	-	4,270	1.88%
l. Issued 6 March 2009, maturing 10 years after delivery	ZS07039	17,750	2.34%	10,200	1.98%
m. Issued 22 April 2009, maturing 10 years after delivery	ZS07037	17,750	2.15%	3,775	2.03%
n. Issued 16 December 2009, maturing 16 December 2014	MSC Finland,MSC Socotra, Tilos, Limnos, Grand Vision	34,750	3.54%	37,000	3.25%
o. Issued 10 May 2010, maturing 10 November 2017	Golden Trader, Lindos, Alex D	20,000	3.43%	-	-
p. Issued 10 May 2010, maturing 10 November 2017	S-5087	4,150	1.95%	-	-
Total		199,428		173,446
Less: initial financing costs		(1,223)		(1,197)
Less: current portion		(28,499)		(31,559)
Long-term portion		169,706		140,690

 

14. Long-term debt

 

Use of credit facilities:

·; Loan n: On 23 June 2010 the Group agreed with the financing bank to use an amount of U.S.$5,000 from the restricted amount of U.S.$15,100 to refinance the acquisition of the container vessel 'Grand Vision'.

·; Loan o: On 10 May 2010 and as part of the loan agreement, signed on 21 August 2009, between the Company and the bank, the Company proceeded with the drawdown of U.S.$20,000, to finance the acquisition cost of U.S.$17,250 of the bulk carrier 'Golden Trader' and the remaining amount to be maintained for working capital purposes.

Drawdown of loans:

 

·; Loan m: On 4 January 2010 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07037' and a bank, the vessel owning company proceeded with the drawdown of U.S.$6,425, representing the third instalment paid directly to the shipyard as per the contract. On 21 June 2010 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07037' and a bank, the vessel owning company proceeded with the drawdown of U.S.$7,550, representing the fourth instalment paid directly to the shipyard as per the contract.

·; Loan l: On 7 June 2010 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'ZS07039' and a bank, the vessel owning company proceeded with the drawdown of U.S.$7,550, representing the forth instalment paid directly to the shipyard as per the contract.

·; Loan p: On 28 June 2010 and as part of the loan agreement concluded between the vessel owning company of the new-built bulk carrier 'S-5087' and a bank, the vessel owning company proceeded with the drawdown of U.S.$4,150 representing the bank's portion of the third instalment, which was paid along with the Group's equity portion of U.S.$613, as per contract.

 

Repayment of loans due to cancellation:

 

·; On 8 January 2010 the Group proceeded with the full repayment of the outstanding amount of loans j and k amounted to U.S.$8,540 due to the cancellation of the two new-build bulk carrier contracts.

Loans (a-p) are denominated in U.S. dollars, and bear interest at LIBOR plus a margin. The applicable margin for the period was between 0.90% and 3.00%. The Company has entered into an interest rate swap agreement for loan (f) and loan (n), to exchange variable to fixed interest rate at 4.64% and 3.23%, respectively.

 

Total interest paid was U.S.$2,486 and U.S.$2,636 for the six month periods ended 30 June 2010 and 30 June 2009, respectively.

 

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 the Company.

 

15. Related party transactions and balances

 

Transactions with related parties consist of the following:

 

		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Voyage expenses - related Party
Goldenport Shipmanagement Ltd (Note 3)		791		1,049
Management fees - related party
Goldenport Shipmanagement Ltd		1,203		1,519
Total		1,994		2,568

 

 

Directors and management team remuneration amounts to U.S.$568 (30 June 2009: U.S.$556).

 

Balances due from related parties consist of the following:

 

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Audited
Due from related parties -Current
Goldenport Shipmanagement Ltd		2,200		2,079
Total		2,200		2,079

 

(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. In addition to the monthly fee GSL charges a commission equal to 2% of time and voyage revenues relating to charters it organises.

For the period ended 30 June 2010 commission charged by GSL amounted to U.S.$ 791 (30 June 2009: U.S.$1,049) and is included in "Voyage expenses". GSL has a branch office registered in Greece under the provisions of Law 89/1967.

 

The amounts receivable from GSL, shown in the table above, represent the vessel-operating companies' cash surplus handled by GSL.

 

 

 

15. Related party transactions and balances (continued)

 

(b) Annual Incentive Plan and other remuneration of Directors and Management team

 

On 1 March 2010, the Board of Directors approved the financial statements for the year ended 31 December 2009 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 would have to 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. By reference to the closing market value of the Company's shares on 12 March 2010, 116,196 shares were granted and then registered to the participants' names on 19 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.

 

The amounts included in "General and administration expenses" in the accompanying statement of comprehensive income, relating to the AIP and other remuneration of Directors and Management team are as follows:

 

		30 June 2010 U.S.$'000		30 June 2009 U.S.$'000
		Unaudited		Unaudited
Directors and management team remuneration		568		556
AIP bonus		9		-
		577		556

 

 

15. Related party transactions and balances (continued)

 

(c) 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 30 June 2010 as follows:

Name		Number of shares as at 31 Dec 2009		Shares issued under AIP 2009		Shares issued under scrip dividend 2009		Number of shares as at 30 June 2010		Percentage of shares as at 30 June 2010
Captain Paris Dragnis		42,540,879		47,076		1,262,339		43,850,294		60.50%
Chris Walton		2,180		-		64		2,244		0.003%
John Dragnis		489,201		14,711		14,515		518,427		0.72%
Christos Varsos		50,834		18,389		1,508		70,731		0.10%
Konstantinos Kabanaros		30,651		36,020		909		67,580		0.09%

 

 (d) Rental of office space: A monthly rental of EUR17,770 (U.S.$22) 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 period ended 30 June 2010 is $132 (U.S.$119 for the period ended 30 June 2009) and is included in "General and administration expenses" in the accompanying statement of comprehensive income.

 

The future minimum lease (rental) payments under the above agreement as at 30 June 2010 are as follows:

 

		30 June 2010 U.S.$'000
		Unaudited
Within one year		308
After one year but not more than five years		963
More than five years		313
		1,584

 

 

16. 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 interim 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. The total construction cost is estimated to be approximately U.S.$149,000, which is payable in five equal instalments (see note 8). Four of these instalments for vessels 'ZS07036' and 'ZS07038' and one for vessels 'ZS07037' and 'ZS07039' are committed and will be paid in accordance with the milestones, as described in the contract. Three of these instalments for vessels 'ZS07036' and 'ZS07038' and one for vessels 'ZS07037' and '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. On 19 December 2009, the Group requested from Jiangsu Yangzijiang shipyard the amendment of the existing shipbuilding contract signed on 7 August 2007 in principle providing for the conversion of the container vessel with hull number YZJ-816 into one bulk carrier with carrying capacity of 93,000 DWT (new hull number YZJ-917) and delivery date in May 2011. The total cost is estimated to be approximately U.S.$47,000 for each vessel, which is payable in 5 (five) and 4 (four) instalments for vessels YZJ-815 and YZJ-917 respectively (see note 8). Three of these instalments for vessel YZJ-815 and two instalments for vessel YZJ-917 are committed and will be paid in accordance with the milestones, as described in the contract. Two of these instalments for vessel YZJ-815 and one instalment for vessel YZJ-917 are secured through letter of guarantee from the financing bank.

 

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 8). Two of these payments are committed and will be paid in accordance with the milestones as described in the contract.

 

e. The Group has entered into time charter arrangements for all its vessels. These arrangements have remaining terms between 1-46 months as of 30 June 2010 (2-54 months as of 31 December 2009). Future minimum charters receivable (based on earliest delivery dates) upon time charter arrangements as at 30 June 2010, are as follows (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; in addition early delivery of the vessels by the charterers is not accounted for; with regard to the Cosco new buildings (see note 8) the calculation is based on the floor rate without taking into account any profit share scheme; for the vessels into Joint Venture (see note 8) 50% of revenue is included):

		30 June 2010 U.S.$'000		31 December 2009 U.S.$'000
		Unaudited		Unaudited
Within one year		79,087		64,318
1-5 years		136,022		151,923
> 5 years		-		-
		215,109		216,241

 

 

17. Events after the reporting date

 

Placing and Open offer: On 25 June 2010, the Board of Directors of the Company announced details of a Capital Raising to raise gross proceeds of approximately £23.5 million (approximately US$35 million) through the Placing and Open Offer of 18,496,010 New Shares at an Issue Price of 127 pence per New Share. The expected proceeds, net of expenses, are approximately £22.3 million (US$33.1 million). The Company invited the shareholders to an Extraordinary General Meeting (EGM), held on 19 July 2010, to approve the transaction.

The Open Offer closed for acceptance at 11.00 a.m. on 12 July 2010. The Company has received valid acceptances under the Open Offer in respect of 10,214,937 New Shares. In addition, 8,281,073 New Shares have been placed with existing shareholders and other investors pursuant to the Placing, resulting in the aggregate total of 18,496,010 New Shares to be issued under the Placing and Open Offer.

On 19 July 2010 the shareholders approved the Placing and Open Offer and on 21 July 2010 the company received GBP22.77 million representing the proceeds from the offering after deducting underwriters' commission.

The new number of shares following the offer is 90,969,908 and the new authorised share capital is U.S.$2,000 (2 million shares of U.S.$0.01 each).

Payment to Cosco Zhousan Shipyard: On 5 August 2010 the Group paid to the shipyard an amount of US$15,100 representing the second and third instalment for ZS07036. An amount of U.S.$11,325 was financed through a committed loan facility and the remaining U.S.$3,775 from cash reserves.

 

Loan repayments: On 14 July 2010, U.S.$1,450 was repaid in relation to loan (b), on 9 July 2010, U.S.$353 was repaid in relation to loan (i), on 16 July 2010, U.S.$353 was repaid in relation to loan (h), on 19 July 2010 U.S.$500 was repaid in relation to the outstanding balance of loan (d), on 19 July 2010 U.S.$334 was repaid in relation to the outstanding balance of loan (f), on 29 July 2010 U.S.$960 was repaid in relation to the outstanding balance of loan (c), 9 August 2010 U.S.$575 was repaid in relation to the outstanding balance of loan (g), on 10 August 2010 U.S.$650 was repaid in relation to the outstanding balance of loan (o) and on 17 August 2010 U.S.$405 was repaid in relation to the outstanding balance of loan (e).

Dividends: On 30 August 2010 the Board of Directors declared an interim dividend of 1.8 pence per share amounting to GBP 1,637. The dividend declared has a share alternative allowing the shareholders to select between cash and shares for the respective amount of 1.8 pence. The interim dividend is expected to be paid in October 2010. The respective interim dividend of 2009 amounted to GBP 494 (0.7 pence per share) or U.S.$ 802 and was paid in October 2009.