3
Corporate Statement
Our Company, which is incorporated in Jersey, owns and operates
throughitssubsidiariesaﬂeetofdrybulkvesselsthattransportironore,
coal,grain,steelproducts,aluminaandotherdrybulkcargoesworldwide.
The ﬂeet currently consists of ﬁve vessels, comprising three Panamax
vessels, one Handymax and one Supramax. The ﬂeet has an aggregate
carrying capacity of 303,141 dwt and an average age of 15.2 years as
at 31 December 2010. In addition, the Company placed, through two
newly formed subsidiaries, orders for two new building Kamsarmax
vesselswithdeliverydatesJanuaryandMarch2013.Thesevesselswill
haveanaggregatecarryingcapacityofapproximately164,000dwt.As
at 31 March 2013 the ﬂeet will have an aggregate carrying capacity of
approximately 467,141 dwt and an average age of 12.5 years.
The Company is committed to enhancing its long standing relationships
with its major customers and ensuring that the vessels are maintained
to the highest standards of safety and quality. The Company’s strategy
is to grow the ﬂeet in a manner that enhances shareholder value. 4
contents
Financial and Operational highlights 5
Chairman’s Statement 6
Chief Executive Oﬃcer’s statement 7
Hellenic Carriers Fleet 8
Board of Directors and senior management team 13
Directors’ Report 17
Corporate Governance 23
Statement of Directors’ Responsibilities
in respect of Financial Statements 25
Independent Auditor’s Report 26
Consolidated Income Statement 28
Consolidated Statement of Comprehensive Income 29
Consolidated Statement of Financial Position 30
Consolidated Statement of Changes in Equity 31
Consolidated Statement of Cash Flows 32
Notes to the Consolidated Financial Statements 35
Corporate Information 61 2010 FINANCIAL
• U.S.$57.5 million Revenue (2009: U.S.$58.0 million)
• U.S.$38.4 million EBITDA
1
(2009: U.S.$38.9 million)
• Book gain of U.S.$8.5 million and debt repayment of U.S.$21.0
million following the sale of M/V Hellenic Breeze
• U.S.$32.9 million Operating Proﬁt (2009: U.S.$23.9 million)
• U.S.$27.5 million Net Income (2009: U.S.$18.1 million)
• Earnings per share of U.S.$0.60 (2009: U.S.$0.40)
• Dividend payments: ﬁnal dividend 2.47 pence per share for 2009,
interim dividend for 2010 2.15 pence per share and ﬁnal dividend
for 2010 5.45 pence per share subject to AGM’s approval
• Gearing ratio
2
at 26.5% as of 31 December 2010 (39.4% as of
31 December 2009)
• Payment of ﬁrst two instalments in the amount of U.S.$27.2 million
for the construction of two new building Kamsarmax vessels
• Total unencumbered cash liquidity of U.S.$59.0 million as of 31
December 2010 (U.S.$71.2 million as of 31 December 2009)
2010 OPERATIONAL
• Operation of a ﬂeet of 5.6 vessels on average compared to 6.0
vessels in 2009
• Sale of the 1993 built Panamax M/V Hellenic Breeze at a gross
contract price of U.S.$23.5 million
• Signing of shipbuilding contracts with Zhejiang Ouhua Shipbuilding
Co Ltd for two Kamsarmax vessels to be delivered in Q1 2013 at
U.S.$34.2 million each
• Time Charter Equivalent rate of U.S.$26,089 (2009: U.S.$25,910)
outperforming the average 2010 Panamax and Supramax average
TC earnings (U.S.$25,041 and U.S.$22,456 respectively)
3
• DailyaverageoperatingexpensesofU.S.$4,934(2009:U.S.$4,799)
FINANCIAL AND OPERATIONAL HIGHLIGHTS
2010 HIGHLIGHTS
1
EBITDAhasbeencalculatedasfollows:Operatingproﬁt+Depreciation+Depreciation of dry-docking costs - Gain on sale of vessel - Other operating income
2
Gearing ratio is defined as Net Debt to total capitalization (debt, net of deferred ﬁnancing fees less cash and cash equivalents to net debt and stockholders’ equity)
3
AsreportedbyHoweRobinson:“Annualdry-bulkreview2010andoutlookfor2011” CHAIRMAN’S STATEMENT
I am pleased to report that Hellenic Carriers has delivered strong and
healthyresultsfor2010despitethechallengingmarketconditionsof
the dry bulk sector.
The volatility and uncertainty in the global ﬁnancial markets, and the
shipping market in particular, was a signiﬁcant factor during the
reporting period. Yet, as a result of implementing a prudent and
proactive business strategy, Hellenic has been able to strengthen the
Company’s trading performance and cash reserves by restructuring
existing time charter agreements and taking advantage of short term
opportunitiesthataroseduringtheyear.Despitethemarketdownturn
thatoccurredattheendof2008anditssequentialeﬀectsinto2009,
togetherwiththecontinuedvolatilitytheglobalmarketshavefacedin
2010, Hellenic is pleased to report that the Company has continued
with its dividend payments each year.
During2010theCompany’sﬂeetrenewalandexpansionprogramwas
initiated to improve long term growth and proﬁtability with the sale of
oneolderPanamaxvesselatfavourableterms,andtheplacingoforders
fortheconstructionoftwonewbuildingKamsarmaxvessels.Hellenic’s
operational ﬂeet now comprises of three Panamaxes, one Supramax
and one Handymax, a diversiﬁed ﬂeet which oﬀers wider employment
opportunities. The Company’s expansion in the Kamsarmax sector will
not only grow the ﬂeet with larger vessels and reduce the weighted
average age, but will also enhance our versatility as these vessel sizes
have shown high resilience, strong returns and employment ﬂexibility.
Looking forward, Hellenic Carriers is in a strong ﬁnancial condition to
take advantage of the opportunities in this testing market to further
grow the ﬂeet through selective acquisitions that will maximize the
long term value for our shareholders. With an eﬃciently run ﬂeet and
experienced management, Hellenic is well positioned to face the
market challenges of the coming year.
Graham Roberts
Chairman
9 March 2011
6 Hellenic Carriers is pleased to report very strong ﬁnancial and
operationalresultsfortheyearended31December2010despitethe
challenging conditions prevailing in the global economy and the
volatilityinthedrybulkshippingsector.Iamalsopleasedtoannounce
payment of a ﬁnal dividend for 2010 of GBP 5.45 pence per share or
total GBP 2,486,118 evidencing the Company’s consistency and
reliability throughout the shipping cycle.
During the year we continued to employ our vessels primarily under
medium to long term charters generating healthy cash ﬂows, to
strengthen our balance sheet and to reinforce our liquidity. This
strategy, which we have persistently followed during the last three
years, has allowed us not only to face challenging market conditions,
torewardourshareholdersthroughourdividendpayments,butalsoto
initiate our ﬂeet renewal and expansion programme.
Since early 2010 the market conditions placed a signiﬁcant premium
onsecondhandvessels,relativetothevalueofnewbuildings.Wetook
advantage of this opportunity by selling in May 2010 a 17-year old
Panamax dry bulk carrier at a price of U.S.$23.5 million out of which
U.S.$21.0 million was used towards debt repayment. We then placed
ordersfortheconstructionoftwoKamsarmaxnew-buildingvesselsat
U.S.$34.2 million each. Through the order of these vessels, which will
be delivered in the Q1 2013, we shall expand our presence in the
Panamax / Kamsarmax sector which has performed strongly and
shown resilience during times of depressed freight earnings.
Volatility has been present in the dry bulk market, however since Q4
2010thedownwardpressurehasbeenmoreintense,whilethepaceof
deliveries of new-buildings, which had been ordered during the boom
years,hasaccelerated.Sincethepaceofnewbuildingdeliveriesin2011
willnotsubside,webelievethefreightmarketwillbeaﬀectedandremain
cautiousfortheshorttomediumterm.However,wearepositiveforthe
long term, since demand from the developing economies is and will
remainstrongwhilstatthesametimethematureeconomiesareslowly
but steadily stepping out of recession and returning to growth.
We believe that although in the short term the current pressure in the
freightmarketwillaﬀectearningsandproﬁtability,inthelongertermit
will probably help the prospects of dry bulk shipping. We also believe
thatthispressuremaycreaterealopportunitiesontheacquisitionfront
ofmodern,primarilysecondhand,vessels.Asevidencedinourbalance
sheet, our Company is well positioned not only to face market
challengesforthecomingyearbutalsototakeadvantageofacquisition
opportunities maximizing long term value for our shareholders.
Fotini Karamanli
Chief Executive Oﬃcer
9 March 2011
7
CHIEF EXECUTIVE OFFICER’S STATEMENT HELLENIC CARRIERS FLEET
As of 31 December 2010, the Company owns and operates, through
its wholly owned subsidiaries, a ﬂeet of ﬁve vessels, comprising three
Panamax vessels, one Handymax and one Supramax with a weighted
average age of 15.2 years and a total carrying capacity of 303,141
dwt. The vessels’ cargo-carrying capacities range from 44,809 to
73,981 dwt depending on the type of vessel. The dry bulk carriers
transport major bulk cargoes (such as grain, coal and iron ore) and
minor bulk cargoes (such as bauxite, phosphate, steel products and
alumina) along worldwide shipping routes.
Fleet Developments:
InMay2010,NestosShippingCorp.,ownerofthe1993builtPanamax,
M/VHellenicBreeze,enteredintoanagreementwithanunaﬃliatedthird
party for the sale of the vessel at a contract price of U.S.$23.5 million.
The vessel was delivered to her new owners on 12 August 2010.
With this sale, the Company initiated its ﬂeet renewal program through
thedisposalofanoldervessel,whichhadbeenpurchasedatU.S.$21.0
million in 2006. The net book gain from the sale is U.S.$8.5 million.
In June 2010, two newly formed subsidiaries of Hellenic entered into
shipbuildingcontractswithZhejiangOuhuaShipbuildingCo.Ltd.,forthe
construction of two Kamsarmax vessels. Each of the vessels will cost
U.S.$34.2millionintotal(contractpriceofU.S.$34.0millioneachplus
U.S.$0.2 million in respect of additions to the initial speciﬁcation).
ThenewbuildingvesselsarescheduledfordeliveryinJanuaryandMarch
2013 respectively. An advance payment in the amount of U.S.$20.4
million representing 30% of the contract price for both vessels was
made in July 2010 and a second payment of U.S.$6.8 million
representing10%of thecontractpriceforbothvesselswaseﬀectedin
October2010.Theremaining60%ofthepriceispayableupondelivery
of the vessels.
InJuly2010,theM/VHellenicSeasustainedhulldamageaerrunning
agroundwhilstnavigatingthroughtheAmazonRiverinladencondition.
Aspecialistsalvageteamwasappointedtore-ﬂoatthevesselandassist
in the laden voyage towards the discharging port. Following
transshipment operations of part of the cargo, the vessel was
successfully re-ﬂoated on 14 August 2010 and proceeded to her
destination to discharge the remaining cargo on board. Temporary
repairs were carried out at the discharge port, following which the ship
sailed to a repair yard for permanent repairs. Such repairs were
concluded on 17 November 2010 together with the vessel’s special
survey. The vessel remained oﬀ-hire for an aggregate period of 136
days and was redelivered to her charterers on 5 December 2010 to
resume service under her time charter agreement. The shipowning
company, through its insurance policy, is covered for the cost of the
repairs,thecostofsalvageandrelatedexpenses(excludinglossofhire)
above the applicable deductible (U.S.$125,000).
During the year ended 31 December 2010, three of the vessels,
completedtheirspecialsurveysatatotalcostofU.S.$2.2millionwhich
has been capitalised. No further scheduled surveys are planned for
2011 in respect of the existing ﬂeet.
8 Fleet details as at 31 December 2010:
9
Following the delivery of the two Kamsarmax vessels, the Company will
ownandoperatethroughitssubsidiariesaﬂeetofsevendrybulkcarriers
comprisingtwoKamsarmaxes,threePanamaxes,oneSupramaxandone
Handymax with an aggregate carrying capacity of about 467,141 dwt
andaweightedaverageageof12.5years(asof31March2013). Fleet Deployment:
Duringtheyearended31December2010,twoofthevesselsintheﬂeet
continued operating under medium to longer term time charter
agreementsthathadcommencedinQ42007andQ22008atfavourable
ratescomparedtothemarketratesprevailingduringtheperiod.
InparticulartheM/VHellenicWindwasemployedundera3-yeartime
charter agreement with Hanjin Shipping Co. Ltd at gross daily rate of
U.S.$54,000. The charter commenced in May 2008 and its earliest
expiration date is 14 May 2011.
The M/V Konstantinos D was employed under a time charter
agreement with Korea Line Corp., at a gross daily hire rate of
U.S.$35,000. The charter was due to expire on 25 January 2011,
however the vessel was redelivered to her Owners on 14 January
2011.TheCharterershadfulﬁlledalltheirobligationstowardsOwners
(including payment of hire and compensation for the early redelivery)
prior to their application for rehabilitation in Korea.
Thereaer, the M/V Konstantinos D was ﬁxed under a time charter
agreement with Bunge S.A. for a period of four to seven months at a
gross daily rate of U.S.$9,250 for the ﬁrst 40 days, increasing to
U.S.$14,200perdayfortheremainingperiod.Theearliestexpiration
of this charter is 14 May 2011 and the latest is 14 August 2011.
The M/V Hellenic Breeze was employed under a restructured time
charter agreement at a daily gross rate of U.S.$24,000. This charter
wasterminatedatOwners’optionon25May2010duetothevessel’s
sale. Thereaer and until delivery to her new owners on 12 August
2010, the vessel was trading on a time charter trip at a gross daily
rate of U.S.$29,000.
Furthermore,duringtheyearended31December2010theCompany,
through its respective shipowning subsidiaries, extended one of its
existing time charter agreements at a favourable daily hire rate,
entered into a new time charter agreement for one vessel, and
selectively employed two of its vessels on the spot market.
In particular, the M/V Hellenic Sky was time chartered on 22 June
2009toCargillInternationalS.A.atagrossdailyrateofU.S.$18,000
foraperiodofminimumthirteentoaboutsixteenmonths,whichwould
haveexpiredinNovember2010.Thischarterwasextendedforaperiodof
minimumﬁvetoaboutsevenmonthsatthegrossdailyrateofU.S.$22,000
commencing on 20 October 2010. The vessel was redelivered to her
Owners on 9 March 2011 and is currently ﬁxed under a time charter
agreement with Bunge S.A. for a period of six to eight months at a gross
dailyrateofU.S.$16,000.Thechartercommencedon9March2011and
thevesselwasdeliveredtohernewcharterersintheFarEast.Theearliest
expirationdateis9September2011andthelatestis9November2011.
Duringtheﬁrstquarterof2010theM/VHellenicHorizonwastradingin
thespotmarket.InApril2010,thevesselwasﬁxedunderatimecharter
agreement with Itiro Corporation BVI for a period of minimum ﬁve to
maximumsevenmonthsatagrossdailyrateofU.S.$30,000.Thevessel
was redelivered to her owners on 19 October 2010 and thereaer was
trading spot. The M/V Hellenic Horizon is currently employed under a
timecharteragreementwithDampskibsselskabetNordenA/S,Denmark,
fortheperformanceof2to3ladenlegs(thirdlegatCharterers´option)
withanestimateddurationofabout60toabout90days(dependingon
theexecutionofthethirdleg)atagrossdailyrateofU.S.$15,500forthe
ﬁrsttwolegs,U.S.$16,000fortheoptionallegandU.S.$17,000forthe
period, if any, extending aer 100 days. According to the terms of the
charterthevessel’sredeliverytotheOwnersuponcompletionofthe2or
3 laden legs is limited to the Atlantic basin or the Mediterranean Sea,
areaswhichareconsideredmorefavourableforcharteringpurposes.
The Company obtains additional insurance for vessels that navigate
close to war / piracy zones.
The M/V Hellenic Sea completed her time charter to Swissmarine
CorporationLtdon20February2010,andthereaercarriedouttwo
shortchartersbeforecommencingheremploymenton29May2010
for a period of minimum 11 to about 13 months to Setsea S.p.A. at a
gross rate of U.S.$23,300 per day. During this charter the vessel
sustained hull damage in July 2010 and remained oﬀ-hire for an
aggregateperiodof136days.Thevesselresumedserviceunderthis
time charter agreement on 5 December 2010.
Taking into consideration the operating ﬂeet, the estimated time
charter coverage stands at 69.4% for the ﬁrst half of 2011 and at
38.3% until year end.
10 The Fleet Deployment of Hellenic is summarized below:
11  Our Board of Directors
The Board currently comprises two Executive Directors and three
Non-executive Directors. Details of the Directors, their roles and
their backgrounds are as follows:
Graham Roberts
(Age 60),
Chairman and Non-executive Director
Graham Roberts was appointed as our Chairman on Admission.
Between 2002 and 2006, Mr. Roberts was chief executive and main
board director of PD Ports Plc. From that position he successfully
directed PD Ports ﬂotation in 2004 on AIM and subsequent sale to
Babcock & Brown Infrastructure Limited in 2005. Prior to that, Mr.
Roberts held chief executive posts at London Luton Airport, MTL
(MerseysideTransportLimited)andServisairplc.Mr.Robertswasalso
a senior executive at NFC plc (later renamed Exel plc) for over 25
years, and was a member of its board from 1989 until he le the
company in 1997. In total he has over 39 years experience in the
transportation sector.
Mr. Roberts is a non-executive director of the Freight Transport
Association Limited.
Fotini Karamanli
(Age 39),
Chief Executive Oﬃcer
Ms. Karamanli is Chief Executive Oﬃcer of the Company. She is
responsibleforstrategy,vesselacquisitions,charteringandﬁnancing.
Ms. Karamanli has more than 15 years shipping experience and has
beenwithcompaniesassociatedwithHCLsince1999.From1998to
1999, Ms. Karamanli worked on the sale and purchase desk of
Galbraiths Shipbrokers in London and before that was a shipping
lawyer with Norton Rose in London and Greece.
Ms. Karamanli qualiﬁed as a solicitor of the High Court of England and
Wales in 1997 and is a member of the legal committee of the
Association of Greek Ship-Owners. Ms. Karamanli is an independent
non-executive member of the board of directors of Piraeus Bank S.A.,
a company listed on the Athens Stock Exchange and a member of the
board of directors of the Karamanlis Foundation.
Ms. Karamanli holds a law degree from the University of Athens and a
Master’s Degree (LLM) from the University of Cambridge.
13
BOARD OF DIRECTORS AND SENIOR MANAGEMENT TEAM Elpida Kyriakopoulou
(Age 38),
Chief Financial Oﬃcer
Ms. Kyriakopoulou has been acting as Financial Reporting Manager of
the Company since January 2008. In November 2009 Ms.
Kyriakopoulou was appointed Chief Financial Oﬃcer of the Company.
Prior to joining the Company Ms. Kyriakopoulou worked as Senior
Auditor and then as Manager at Ernst & Young Hellas, where she
signedsixyearsauditexperienceintheShippingSector.Fortheperiod
1997 to 2001 Ms. Kyriakopoulou worked as an accountant at
Goldenport Shipmanagement Ltd.
She holds a degree in Maritime Studies from the University of Piraeus,
GreeceandisamemberoftheGreekAssociationofCertiﬁedAccountants.
Charlotte Stratos
(Age 56),
Non-executive Director
Ms. Stratos is a Senior Advisor to Morgan Stanley's Investment
Banking Division-Global Transportation team. From 1987 to 2007,
Ms. Stratos served as managing director and head of Global Greek
Shipping for Calyon Corporate and Investment Bank of the Credit
Agricole Group. From 1976 to 1987, Ms. Stratos served in various
roles with Bankers Trust Company including, advisor to the Shipping
Department and vice president of Greek shipping ﬁnance.
In addition to serving as a Director for Hellenic Carriers Limited, Ms.
StratosalsocurrentlyservesasanindependentdirectorforCostamare
Inc. a containership company listed in the NY Stock Exchange and of
Gyroscopic Fund (a fund of hedge funds).
Dimos Kapouniaridis
(Age 38),
Non-executive Director
Mr. Kapouniaridis is a director and Co-Head of M&A in Eurobank EFG
Equities in Athens.
Mr. Kapouniaridis obtained a BA (major in Economics and minor in
Mathematics) from Hamilton College in Clinton, NY, in 1996. He has
over twelve years of investment banking experience with focus on
Mergers and Acquisitions in Greece and the USA. Prior to joining
Eurobank EFG Equities in 2002, he had worked for the industrial and
the M&A groups of Salomon Brothers and Salomon Smith Barney in
New York and Los Angeles as well as for the M&A group of Dresdner
Kleinwort Benson in New York.
14 Our Management Team
Helen Walsh
(Age 33),
Commercial/ Legal Department Oﬃcer
PriortojoiningHellenicShipmanagementCorp.inJanuary2010,Ms.
Walsh worked as a claims handler for a ship advisory ﬁrm in Piraeus,
and was appointed Registrar for the Barbados Maritime Authority in
Greece. Ms. Walsh holds a BSc (Hons) in Transport & Shipping and a
LLM in Maritime & Commercial Law.
Spyridoula Gavala
(Age 28),
Designated Person Ashore
Ms. Gavala operates as the DPA (Designated Person Ashore) of
Hellenic Shipmanagement Corp. and is responsible for the
implementation, monitoring and audit of the safety management
procedures for each vessel, as well as the ISM (International Safety
Management) certiﬁcation. Ms. Gavala is a graduate of the Merchant
Marine Academy in Greece and holds Captain’s Class C Certiﬁcate.
Before joining Hellenic Shipmanagement she worked for a tanker
managementcompanywheresheheldthepositionofthedeputyDPA
and Vetting Assistant.
Anastasia Delidimitriou
(Age 34),
Senior Accounting Oﬃcer
BeforejoiningHellenicShipmanagmentCorp.on1November2007,Ms.
Delidimitriou worked for Mantinia Shipping Co. S.A. as an Accounting
Oﬃcer, since 2006. Ms. Delidimitriou started her career in shipping
working as an accountant at John Giavridis Inc. She holds a degree in
Business Administration from the University of Piraeus, Greece.
Dimitris Babousis
(Age 38),
Senior Accounting Oﬃcer
BeforejoiningHellenicShipmanagementCorp.on1November2007,
Mr. Babousis worked for Mantinia Shipping Co. S.A. as a Senior
Accounting Oﬃcer, since 2004. Mr. Babousis started his career with
Universe Maritime in 1998 before joining chartered accountants
Moore Stephens in 2000.
15  Principal activity
The principal activity of Hellenic Carriers Limited (the “Company”)
during the period in review was that of an owner, through its wholly
owned ship owning subsidiaries, and operator, through its wholly
ownedmanager,HellenicShipmanagementCorp.,ofaﬂeetofdrybulk
vesselsthattransportironore,coal,grain,steelproducts,aluminaand
other dry bulk cargoes worldwide.
During the period in review, the Company, through its two newly
formed subsidiaries, placed orders for the construction of two
Kamsarmax vessels with delivery in January and March 2013. In
addition, one of its older vessels, a 1993 built Panamax vessel was
sold in August 2010. Following the sale of this vessel, the operating
ﬂeet at the end of the period under review included three Panamax
vessels, one Supramax vessel and one Handymax vessel.
TheCompany,whichwasincorporatedunderthelawsofJerseyon26
September 2007, has an authorised share capital of U.S.$100,000
consisting 100,000,000 ordinary shares of U.S.$0.001 each.
Immediately prior to Admission on AIM the Company issued
13,684,970ordinaryshareswithparvalueU.S.$0.001(inadditionto
the31,931,881ordinaryshareswithparvalueofU.S.$0.001issued
on 27 November 2007).
On30November2007,theCompanystartedtradingonAIMataprice
of GBP 2.12 per share. Through the IPO, a total amount of U.S.$58.9
million was raised with the intention to mainly fund ﬂeet expansion.
The address of the registered oﬃce of the Company is Walker House,
28-34 Hill Street, St. Helier, JE4 5TF, Jersey.
Outlook / Future prospects
TheCompany,throughitssubsidiaries,operatesaﬂeetofdrybulkcarrier
vessels throughout the world’s trade routes. Shipping markets are by
naturecyclicalandpronetovolatilityandasaconsequencecharterrates,
vessel values and in turn operational results are directly aﬀected by the
prevailingchangesintheshipdemandandsupplybalance.
Average earnings in 2010 for the dry bulk shipping markets were
marginally higher than the levels witnessed in 2009. This is despite a
considerable increase in the world ﬂeet as deliveries of new buildings
gathered pace during the year. Although well below the highs
witnessed in previous years, the fact that vessels’ earnings were
maintained last year despite the sizeable increase in the overall ﬂeet,
evidences that demand for dry bulk shipping continues to grow.
Going forward, despite continued presence of strong demand for dry
bulk cargoes, earnings will inevitably come under pressure as
deliveriesofnewbuildingvesselscontinueinto2011.Freightvolatility
will remain a feature of the market and in response Hellenic will
maintain its ﬂexible chartering strategy adapting to the prevailing
market conditions.
Weconsiderthatmarketconditionsin2011willprovideopportunities
to further grow our existing ﬂeet through prudent acquisitions of
second hand or new building tonnage which will add to the long term
value of the Company. Hellenic will continue to work closely with
existing Charterers and seek to create ties with new reliable
counterparties, whilst closely managing the company’s operational
costs, in order to achieve the continued proﬁtable employment of the
Company’s ﬂeet.
17
DIRECTORS’ REPORT FOR 2010 2010 Operational & Financial Review
Going concern:
TheDirectorsbelieveitisappropriatetoadoptthegoingconcernbasis
in preparing the ﬁnancial statements since, aer due consideration,
the Directors consider that the Company and its subsidiaries have
adequate resources to continue in operational existence for the
foreseeable future.
Full Year 2010 Results:
Hellenic is pleased to report healthy ﬁnancial and operational results
for the year ended 31 December 2010. Despite the continuous
volatility in the dry bulk sector during 2010, Hellenic managed to
maintain some of the long term charters agreed prior to the market
downturn in Q4 2008 and keep its charter rates above market levels
prevailingduring2010.Throughthesecharters,theCompanysecured
healthy cash ﬂows, which contributed towards the enhancement of its
balancesheetenablingthecompanytoremainresilientduringmarket
downturns and to expand.
In 2010 the Company, through its subsidiaries, owned and operated
a ﬂeet of 5.6 vessels earning on average U.S.$26,089 per day
compared to daily average earnings of U.S.$25,910 in 2009 for a
ﬂeet of 6.0 vessels.
HellenicreportedtotalrevenuesofU.S.$57.5millionin2010compared
toU.S.$58.0millionin2009,aslightdecreaseof0.9%.Fleetoperating
daysdecreasedto1,821from1,942in2009mainlyduetothesaleof
theM/VHellenicBreezeinAugust2010andthehulldamagesustained
on the M/V Hellenic Sea in July 2010, following which the vessel
remained oﬀ-hire for a period of about 4.5 months. Although these
events aﬀected the earnings generation capacity of the Company,
revenues reported for 2010 were similar to those achieved in 2009.
Excluding the period during which the M/V Hellenic Sea remained oﬀ-
hire, the ﬂeet utilization for 2010 was 98.7%. Taking into
considerationtheoﬀ-hireperiodoftheM/VHellenicSeafollowingthe
hull damage the ﬂeet utilization was 91.8%.
Voyage expenses in 2010 amounted to U.S.$5.8 million compared to
U.S.$4.7millionin2009,anincreaseofabout23.4%,whichismainlydue
tothefactthatonevessel,namelytheM/VHellenicHorizonwasemployed
undervoyagecharters foraperiodofabout4months,andthereforefuel
expensesandportcostsforthatperiodwereforOwners’account.
Earnings before Interest, Tax, Depreciation and Amortisation
(EBITDA)
(1)
for 2010 amounted to U.S.$38.4 million compared to
U.S.$38.9 million for 2009, a decrease of 1.3%.
A book gain in the amount of U.S.$8.5 million resulted from the sale
of the 1993 built Panamax M/V Hellenic Breeze. The sale was
concluded at a gross consideration of U.S.$23.5 million in cash and
the vessel was delivered to her new owners on 12 August 2010.
Net income for 2010 including the gain from the sale of M/V Hellenic
Breeze was reported at U.S.$27.5 million (U.S.$19.0 million net of
the gain from the sale) compared to U.S.$18.1 million for 2009, an
increase of 51.9%.
Basic and diluted earnings per share calculated on 45,616,851
weighted average number of shares were U.S.$0.60 for the full year
ended 31 December 2010 compared to earnings per share of
U.S.$0.40 for the full year of 2009.
Vesseloperatingexpensesfor2010decreasedbyU.S.$0.4millionto
a total of U.S.$10.1 million as a result of the sale of the M/V Hellenic
Breeze. On a per day basis operating expenses increased by 2.8%
from U.S.$4,799 in 2009 to U.S.$4,934 in 2010, an increase which
is in line with market conditions.
The Company’s general and administrative expenses in 2010
amounted to U.S.$1.8 million compared to U.S.$2.0 million in 2009,
a decrease of 10.0%.
ThevesselsdepreciationchargedecreasedbyapproximatelyU.S.$1.0
million due to the sale of the M/V Hellenic Breeze.
18 Following the sale of the M/V Hellenic Breeze, an amount of U.S.$21.0
million was prepaid to the respective lenders against the outstanding
loan balance. Debt balance as of 31 December 2010 was U.S.$105.3
millioncomparedtoU.S.$137.6millionon31December2009.Finance
expense decreased by U.S.$0.9 million to a total of U.S.$6.0 million.
FurthertothesigningoftheshipbuildingcontactswithZhejiangOuhua
Shipbuilding Co. Ltd. the yard received an aggregate amount of
U.S.$13.6 million as advance payment for the construction of each
Kamsarmax vessel. Total advance payments eﬀected in 2010 for the
two vessels on order amount to U.S.$27.2 million.
Cash and cash equivalents reported as of 31 December 2010
amounted to U.S.$59.0 million compared to U.S.$71.2 million as of
31 December 2009.
As of 31 December 2010 debt (debt, net of deferred ﬁnancing fees)
to total capitalisation (debt and stockholders’ equity) dropped to
45.6% from 57.5% in 2009, a decrease of 20.7%. Net debt (debt
less cash and cash equivalents) to total capitalisation dropped to
26.5% on 31 December 2010 from 39.4% on 31 December 2009,
a decrease of 32.7%.
Claim receivable on 31 December 2010 represents mainly the cost
of repairs and related expenses in connection with the hull damage of
theM/VHellenicSeainJuly2010.Theshipowningcompany,through
its insurance policy, is covered for the cost of repairs and related
expenses (excluding loss of hire) above the applicable deductible
(U.S.$125,000).
19 Litigation
The Company is not engaged in any litigation of material importance,
nor, so far as the Directors are aware, is any litigation pending or
threatened,whichwouldhaveamaterialadverseeﬀectontheﬁnancial
position of the Company.
Taxation
As from 1 January 2009, the exempt company regime in Jersey no
longerapplied,andtheCompanyisnowsubjecttoa0%taxinJersey.
Under the laws of the respective jurisdictions of the consolidated
companies,theCompany,anditssubsidiaries,currentlyarenotsubject
to tax on international shipping income.
Dividends
The Company’s Annual General Meeting took place on 12 May 2010
approvingaﬁnaldividendfor2009of2.47pencepershareortotalGBP
1,126,736.Thedividendwaspaidon21May2010toshareholderson
recordasof30April2010.
TheCompanypaidoutaninterimdividendfor2010of2.15penceper
share or total GBP 980,762. The interim dividend was paid on 15
October2010totheshareholdersonrecordasof17September2010.
The Board of Directors of the Company recommended a ﬁnal dividend for
2010 of GBP 5.45 pence per share or total GBP 2,486,118 subject to
shareholders’approvalattheAGMtobeheldinAthenson11May2011.
The ﬁnal dividend will be payable on 20 May 2011 to shareholders on
recordasof26April2011,withtheex-dividenddatebeing20April2011.
20 Directors
The Directors of the Company who served during the year were:
Graham Roberts (Chairman and Non-executive Director)
Fotini Karamanli (Chief Executive Oﬃcer)
Elpida Kyriakopoulou (Chief Financial Oﬃcer)
Charlotte Stratos (Non-executive Director)
Dimos Kapouniaridis (Non-executive Director)
The Directors’ interests in the share capital of the Company at 31
December 2010 (held directly or indirectly by the Director) were:
Fotini Karamanli is deemed to be interested in all the Ordinary Shares
held by: (a) Faith Holdings Inc., a company owned 100% by her and
(b) Bedat Holding Limited, a company owned 50% by her.
Auditors
Ernst&YoungLLPhasbeenappointedasauditoroftheCompanyand
has expressed willingness to continue in oﬃce.
Company’s Nominated Advisors
Panmure Gordon & Co has been acting as the Company’s Nominated
Advisor and broker since 14 June 2010 replacing Jeﬀeries
International who continue as the Company’s co-brokers.
21  The Company is managed by the Board of Directors which has overall
responsibilityforthecorporategovernanceoftheCompany.Directors
arecommittedtoensuringthathighstandardsofcorporategovernance
aremaintainedinsofarastheDirectorsbelievethatsuchstandardsare
relevantandappropriatefortheCompanyandnotwithstandingthefact
thatasanAIMlistedcompany,whichisincorporatedinJersey,Hellenic
Carriers has no legal obligation to comply with the “Combined Code”
(i.e. the Code of Best Practice published by the Committee on the
Financial Aspects of Corporate Governance).
The“CombinedCode”istheCombinedCodeonCorporateGovernance
published by the UK Financial Reporting Council. The Combined Code
appliesonlytocompanieswhichareadmittedtotheOﬃcialListandit
isthereforeuptotheDirectorsofanAIMlistedcompanytodecidethe
extent to which the AIM listed entity complies with the “Combined
Code". From Admission the Company broadly complies with the
principal requirements of the Combined Code.
The Quoted Companies Alliance (QCA) has also published corporate
governance guidelines for AIM listed companies. The QCA Guidelines
recommend that there be a formal schedule of matters speciﬁcally
reserved for the Board’s decision and that the Board be supplied with
information in a timely manner so as to enable it to discharge its
duties. The Company has adopted a schedule of matters reserved for
the Board in a form similar to that recommended by the QCA
Guidelines. The QCA Guidelines also recommend that the roles of
Chairman and chief executive should not be exercised by the same
individual and that a company has at least two independent non-
executive Directors (one of whom should be the chairman). The QCA
GuidelinesalsorecommendtheestablishmentofAudit,Remuneration
and Nomination Committees and that the Audit and Remuneration
Committees should comprise of at least two members, all of whom
should be independent non-executive Directors.
Board Eﬀectiveness
The Company is managed by the Board of Directors in accordance with
its Memorandum and Articles of Association. The Board of Directors
consistsofﬁveDirectors,threeofwhichareindependentnon-executives.
ExecutiveDirectorshaveresponsibilityfortheday-to-daymanagement
and control of the Company, whereas non-executive Directors are
responsiblefortheoverallpromotionandsafeguardingoftheCompany’s
interests. The Company’s Chairman, CEO and CFO along with the
Company’s broker and Nominated Advisor maintain a regular dialogue
with institutional shareholders. Panmure Gordon & Co has been acting
as the Company’s Nominated Advisor and broker since 14 June 2010
replacingJeﬀeriesInternationalwhocontinuestobetheCompany’sco-
brokers. Furthermore, Board members will be available to respond to
shareholders’ questions at the Annual General Meeting.
Committees
The Company has established an Audit Committee, a Remuneration
Committee and a Nomination Committee.
TheAuditCommitteeisheadedbyMs.Ch.Stratosanditsmembersare
our two independent Non-executive Directors and our Non-executive
Chairman. The Committee is responsible for the proper reporting and
monitoring of our ﬁnancial performance and the review of the internal
control systems and the auditors’ reports relating to our accounts. The
Audit Committee will also recommend the appointment of the external
auditorsandwillreviewtheauditfees. TheCombinedCoderecommends
that all members of the Audit Committee be Non-executive Directors,
independentincharacterandjudgementandfreefromanyrelationship
orcircumstanceswhichmay,could,orwouldbelikelyto,orwhichappear
to aﬀect their judgment. The Board considers that the Company
complies with the Combined Code in this respect.
TheRemunerationCommitteeisheadedbyMr.D.Kapouniaridisandits
members are our two independent Non-executive Directors and our
Non-executiveChairman.ThisCommitteeisresponsiblefordetermining
andagreeingwiththeBoardtheframeworkfortheremunerationofthe
Chief Executive Oﬃcer, all other executive Directors, the Company
Secretaryandsuchothermembersoftheexecutivemanagementasit
is designated to consider. Furthermore, the Committee is responsible
for determining the total individual remuneration packages of each
Directorincluding,whereappropriate,bonuses,incentivepaymentsand
share options. The Remuneration Committee also liaises with the
23
CORPORA TE GOVERNANCE Nomination Committee to ensure that the remuneration of newly
appointed executives is within the Company’s overall policy.
The Nomination Committee is headed by Mr. Gr. Roberts and
comprises of one independent Non-executive Director (Dimos
Kapouniaridis),ourNon-executiveChairman(GrahamRoberts)andour
Chief Executive Oﬃcer (Fotini Karamanli). This Committee is
responsible for reviewing the structure, size and composition of the
Board,preparingadescriptionoftheroleandcapabilitiesrequiredfor
a particular appointment and identifying and nominating candidates
to ﬁll Board positions as and when they arise.
Belowisasummaryofourcommittees’structureasat31December2010:
24
Meetings
The number of the regular meetings by the Board, the Audit,
Remuneration and Nomination Committees and individual attendance
by members within 2010 is shown below:
Fotini Karamanli
Chief Executive Oﬃcer
Graham Roberts
Chairman The Directors are responsible for preparing the consolidated ﬁnancial
statements of the Company and its subsidiaries in accordance with
applicable law and regulations.
Jersey Company law requires the Directors to prepare ﬁnancial
statements for each ﬁnancial period in accordance with generally
accepted accounting principles. The ﬁnancial statements are required
bylawtogiveatrueandfairviewofthestateofaﬀairsofthecompany
and of the proﬁt or loss of the company for that period. In preparing
these ﬁnancial statements, the Directors should:
•selectsuitableaccountingpoliciesandthenapplythemconsistently;
•makejudgmentsandestimatesthatarereasonableandprudent;and
• specify which generally accepted accounting principles have been
adopted in their preparation
The Directors are responsible for keeping accounting records which
aresuﬃcienttoshowandexplainthetransactionsoftheCompanyand
its subsidiaries and are such as to disclose with reasonable accuracy,
at any time, the ﬁnancial position of the Company and its subsidiaries
and enable them to ensure that the ﬁnancial statements prepared by
theCompanycomplywiththerequirementsoftheCompanies(Jersey)
Law 1991. They are also responsible for safeguarding the assets of
the Company and its subsidiaries and hence for taking reasonable
stepsforthepreventionanddetectionoffraudandotherirregularities.
TheDirectorsareresponsibleforthemaintenanceandintegrityofthe
corporateandﬁnancialinformationincludedontheCompany’swebsite.
Legislation in Jersey governing the preparation and dissemination of
ﬁnancial statements may diﬀer from legislation in other jurisdictions.
Approved by the Board of Directors and signed on its behalf on 9
March 2011.
25
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Fotini Karamanli
Chief Executive Oﬃcer
Graham Roberts
Chairman We have audited the ﬁnancial statements of Hellenic Carriers Limited
for the year ended 31 December 2010 which comprise Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated
Statement of Cash Flows and the related notes 1 to 22. The ﬁnancial
reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards.
This report is made solely to the company’s members, as a body, in
accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
company’smembersthosematterswearerequiredtostatetothemin
an auditor’s report and for no other purpose. To the fullest extent
permittedbylaw,wedonotacceptorassumeresponsibilitytoanyone
other than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors
and auditors
As explained more fully in the Directors’ Responsibilities Statement on
page25,thedirectorsareresponsibleforthepreparationoftheﬁnancial
statements and for being satisﬁed that they give a true and fair view.
Ourresponsibilityistoaudittheﬁnancialstatementsinaccordancewith
applicablelawandInternationalStandardsonAuditing. Thosestandards
requireustocomplywiththeInternationalFederationofAccountants’s
Handbook of the Code of Ethics for Professional Accountants.
Scopeoftheauditoftheﬁnancialstatements
Anauditinvolvesobtainingevidenceabouttheamountsanddisclosures
in the ﬁnancial statements suﬃcient to give reasonable assurance that
the ﬁnancial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the
accountingpoliciesareappropriatetothecompany’scircumstancesand
have been consistently applied and adequately disclosed; the
reasonableness of signiﬁcant accounting estimates made by the
directors; and the overall presentation of the ﬁnancial statements.
26
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF HELLENIC CARRIERS LIMITED In addition, we read all the ﬁnancial and non-ﬁnancial information in
the Financial and Operational Highlights, Chairman’s Statement, Chief
Executive Oﬃcer’s Statement, Hellenic Carriers Fleet, Board of
DirectorsandSeniorManagementTeam,Directors’Report,Corporate
Governance and Corporate Information to identify material
inconsistencies with the audited ﬁnancial statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on ﬁnancial statements
In our opinion the ﬁnancial statements:
•giveatrueandfairviewofthestateofthecompany’saﬀairsasat31
December 2010 and of its result for the year then ended;
•havebeenproperlypreparedinaccordancewithInternationalFinancial
Reporting Standards as adopted by the European Union; and
•havebeenpreparedinaccordancewiththerequirementsoftheCompanies
(Jersey) Law 1991.
Matters on which we are required to report
by exception
We have nothing to report in respect of the following matters where
the Companies (Jersey) Law 1991 requires us to report to you if, in
our opinion:
• properaccountingrecordshavenotbeenkept,orproperreturnsadequate
forouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or
•the financial statements are not in agreement with the accounting
records and returns; or
•wehavenotreceivedalltheinformationandexplanationswerequire
for our audit.
Geraint Davies
For and on behalf of Ernst & Young LLP
Jersey, Channel Islands
17 March 2011
Notes:
1.The maintenance and integrity of the Hellenic Carriers Limited web site is
theresponsibilityofthedirectors;theworkcarriedoutbytheauditorsdoes
not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the web site.
2.Legislation in Jersey governing the preparation and dissemination of
ﬁnancial statements may diﬀer from legislation in other jurisdictions.
27 28
Revenue
Expenses and other income
Voyage expenses
Vessel operating expenses
Management fees - related party
Depreciation
Depreciation of dry-docking costs
Gain on sale of vessel
General and administrative expenses
Allowance for doubtful debt
Other operating income
Operating proﬁt
Finance expense
Finance income
Foreign currency (loss)/ gain, net
Proﬁt for the year
Earnings per share (U.S.$):
Basic and diluted EPS for the year
Weighted average number of shares
Notes
3
3
12
7
7
7
4
2j
19
5
10
6
2010
U.S.$’000
57,531
(5,770)
(10,109)
(1,394)
(12,508)
(2,039)
8,451
(1,810)
-
593
32,945
(6,045)
672
(36)
(5,409)
27,536
0.60
45,616,851
2009
U.S.$’000
58,038
(4,741)
(10,511)
(1,433)
(13,473)
(1,566)
-
(1,978)
(446)
-
23,890
(6,888)
1,060
41
(5,787)
18,103
0.40
45,616,851
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2010
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements. 29
Proﬁt for the year
Net (loss)/ gain on cash ﬂow hedges
Total comprehensive income for the year
Notes
14
2010
U.S.$’000
27,536
(488)
27,048
2009
U.S.$’000
18,103
2,488
20,591
31 December
CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME
For the year ended 31 December 2010
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements. 30
ASSETS
Non-current assets
Vessels, net
Vessels under construction
Oﬃce furniture and equipment
Current assets
Inventories
Trade receivables
Claims receivable
Available for sale investments, net of impairment
Due from related parties
Prepaid expenses and other assets
Restricted cash
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to shareholders of
Hellenic Carriers Limited
Issued share capital
Share premium
Capital contributions
Other reserves
Retained earnings
Total equity
Non-current liabilities
Long-term debt
Other non-current ﬁnancial liabilities
Current liabilities
Trade payables
Current portion of long-term debt
Current portion of other non-current ﬁnancial liabilities
Accrued liabilities and other payables
Deferred revenue
Total Liabilities
TOTAL EQUITY AND LIABILITIES
Notes
7
8
17
19
12
9
11
10
15
15
14
13
14
13
14
16
2010
U.S.$’000
146,491
27,396
8
173,895
634
418
3,772
-
2,496
506
1,033
58,993
67,852
241,747
46
54,355
10,826
(4,596)
64,963
125,594
88,278
2,507
90,785
2,529
17,036
2,089
1,709
2,005
25,368
116,153
241,747
2009
U.S.$’000
173,459
-
11
173,470
449
236
1,148
-
2,493
401
260
71,180
76,167
249,637
46
54,355
10,826
(4,108)
40,636
101,755
125,796
1,801
127,597
1,775
11,827
2,307
1,928
2,448
20,285
147,882
249,637
CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION
As at 31 December 2010
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.
The ﬁnancial statements on pages 28 to 60 were approved by the Board of Directors on 9 March 2011 and were signed on its behalf by:
Fotini Karamanli
Chief Executive Oﬃcer
Elpida Kyriakopoulou
Chief Financial Oﬃcer 31
As at 1 January 2009
Proﬁt for the year
Other comprehensive income
Total comprehensive income
Dividends to equity
shareholders (note 18)
At 31 December 2009
Proﬁt for the year
Other comprehensive income
Total comprehensive income
Dividends to equity
shareholders (note 18)
At 31 December 2010
Issued
sharecapital
U.S.$'000
46
-
-
-
-
46
-
-
-
-
46
Share
premium
U.S.$'000
54,355
-
-
-
-
54,355
-
-
-
-
54,355
Capital
Contributions
U.S.$'000
10,826
-
-
-
-
10,826
-
-
-
-
10,826
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2010
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.
Other
reserves
U.S.$'000
(6,596)
-
2,488
2,488
-
(4,108)
-
(488)
(488)
-
(4,596)
Retained
earnings
U.S.$'000
23,986
18,103
-
18,103
(1,453)
40,636
27,536
-
27,536
(3,209)
64,963
Total equity
U.S.$'000
82,617
18,103
2,488
20,591
(1,453)
101,755
27,536
(488)
27,048
(3,209)
125,594
Number of
shares
45,616,851
-
-
-
-
45,616,851
-
-
-
-
45,616,851
Par value
U.S.$
0.001
-
-
-
-
0.001
-
-
-
-
0.001 32
Operating activities
Proﬁt for the year
Adjustments to reconcile proﬁt to net cash ﬂows:
Depreciation
Depreciation of dry-docking costs
Gain on sale of vessel
Allowance for doubtful debt
Finance expense
Finance income
(Increase) / decrease in inventories
Increase in trade receivables, claims receivable,
prepaid expenses and other assets
Increase in due from related parties
Increase in trade payables, accrued liabilities and other payables
Decrease in deferred revenue
Net cash ﬂows provided by operating activities
Investing activities
Advances for vessels under construction
Dry-docking costs
Proceeds from sale of vessels
Interest received
Net cash ﬂows used in investing activities
Financing activities
Repayment of long-term debt
Restricted cash
Interest paid
Dividends paid to equity shareholders
Net cash ﬂows used in ﬁnancing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Notes
7
7
7
2j
5
10
8
7
7
10
13
11
13
18
10
10
2010
U.S.$’000
27,536
12,508
2,039
(8,451)
-
6,045
(672)
39,005
(185)
(2,989)
(3)
692
(443)
36,077
(27,396)
(2,217)
23,092
750
(5,771)
(32,560)
(773)
(5,951)
(3,209)
(42,493)
(12,187)
71,180
58,993
2009
U.S.$’000
18,103
13,473
1,566
-
446
6,888
(1,060)
39,416
43
(1,446)
(278)
622
(982)
37,375
-
(3,431)
-
1,020
(2,411)
(9,800)
378
(6,891)
(1,453)
(17,766)
17,198
53,982
71,180
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2010
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.  34 Hellenic Carriers Limited (“HCL”, “Hellenic” or the “Company”) was
incorporatedunderthelawsofJerseyon26September2007.On30
November 2007, Hellenic Carriers Limited was admitted and started
tradingonAIMatapriceofGBP2.12pershare.Intotal,theCompany
received from its listing on AIM an amount of U.S.$58.9 million with
the intention to fund further ﬂeet expansion.
The principal business of the Company is the ownership and operation,
throughitssubsidiaries,ofaﬂeetofdrybulkcarriersprovidingmaritime
services in relation to the transportation of dry cargo products on a
worldwide basis. The address of the registered oﬃce of the Company
is Walker House, 28-34 Hill Street, St. Helier, JE4 5TF, Jersey.
The ﬂeet is managed by Hellenic Shipmanagement Corp. (“HSC”), a
wholly-ownedsubsidiaryincorporatedunderthelawsofMarshallIslands
on 17 September 2007 with a branch in Greece. The address of the
management company’s branch is 51 Akti Miaouli, Piraeus, Greece.
The annual consolidated financial statements for the year ended
31 December 2010 include the ﬁnancial statements of HCL and the
ﬁnancial statements of its wholly owned subsidiaries listed below.
35
Notes to the Consolidated Financial Statements
1. Formation, Basis of Presentation and General Information
The annual consolidated ﬁnancial statements were authorised for issue in accordance with a resolution of the Board of Directors on 9 March
2011 and is expected to be approved by the Annual General Meeting of the shareholders. 2.Summaryofsigniﬁcantaccountingpolicies
(a)BasisofPreparation:TheﬁnancialstatementsoftheCompanyand
its subsidiaries have been prepared on a historical cost basis,
exceptforderivativeﬁnancialinstrumentsthataremeasuredatfair
value. The consolidated ﬁnancial statements are presented in US
dollarsandallﬁnancialvaluesareroundedtothenearestthousand
($000) except the per share information.
(b) Statement of Compliance:Theconsolidatedﬁnancialstatements
as at 31 December 2010 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
(c) Basis of Consolidation: The consolidated ﬁnancial statements
comprise the ﬁnancial statements of the Company and its
subsidiaries. The ﬁnancial statements of the subsidiaries are
prepared for the same reporting date as the Company, using
consistentaccountingpolicies.Allmaterialinter-companybalances
and transactions have been eliminated upon consolidation.
Subsidiaries are consolidated from the date on which control is
transferredtotheGroupandceasetobeconsolidatedfromthedate
on which control is transferred out of the Group.
(d)UseofEstimates:Thepreparationofconsolidatedﬁnancialstatements
requiresmanagementtomakeestimatesandassumptionsthataﬀect
the reported amounts of revenues, expenses, assets and liabilities
anddisclosureofcontingentliabilitiesatthereportingdate.However,
uncertainty about these assumptions and estimates could result in
outcomesthatrequireamaterialadjustmenttothecarryingamount
of the asset or liability aﬀected in the future. The estimates and
assumptions that have the most signiﬁcant eﬀect on the amounts
recognisedintheconsolidatedﬁnancialstatements,arethefollowing:
Vessels: Managementmakesestimatesinrelationtousefullivesof
vessels considering industry practices. (Vessels have a carrying
amount of U.S.$146,491 and U.S.$173,459 as at 31 December
2010and2009,respectively).Estimatesandassumptionsrelating
to the impairment of vessels are discussed in paragraph (m) below.
Provisions for doubtful trade receivables: Provision for
doubtful trade receivables are recorded based on management’s
expectedfuturecollectabilityofthereceivables.Tradereceivables,
haveacarryingamountofU.S.$418andU.S.$236asat31December
2010 and 2009, respectively).
Insurance Claims: Amounts for insurance claims are provided
when amounts are virtually certain to be received, based on the
Company’s judgement and estimates of independent adjusters as
to the amount of the claims (Insurance claims have a carrying
amount of U.S.$3,772 and U.S.$1,148 as at 31 December 2010
and 2009, respectively).
(e) Revenues and Related Expenses: The Company through its
subsidiaries generates revenues from the charter hires and/or
freights earned by the vessels. Vessels are chartered using either
timecharters,whereacontractisenteredintofortheuseofavessel
for a speciﬁc period of time and a speciﬁed daily charter hire rate;
orvoyagecharters,whereacontractismadeinthespotmarketfor
the use of a vessel for a speciﬁc voyage against a speciﬁed freight
calculated on the basis of the quantity of cargo carried on board.
If a time charter agreement exists and collection of the related
revenueisreasonablyassured,revenueisrecognisedonastraight
line basis over the period of the time charter. Such revenues are
treated in accordancewith IAS 17 as lease incomeas explained in
paragraph (r) below. Associated voyage expenses, which primarily
consist of charterers’ address commissions and brokers’
commissions,arerecognisedonapro-ratabasisovertheduration
of the period of the time-charter.
Ifavoyagecharterexists,thevoyageisdeemedtocommenceupon
the completion of discharge of the vessel's previous cargo and is
deemed to end upon the completion of discharge of the cargo
carried under the speciﬁc voyage charter. Vessel voyage expenses
primarily consisting of port, canal and bunker expenses that are
unique to a particular charter are paid for by the charterer under
time charter arrangements or by the vessel owning companies
undervoyagecharterarrangements.Thevesselowningcompanies
defer bunker expenses under voyage charter agreements and
chargethemtotheconsolidatedincomestatementovertherelated
voyagecharterperiodtotheextentrevenueisrecognised.Portand
36 canal costs are accounted for on an actual basis. Operating
expenses are accounted for on an accrual basis.
Deferred revenue represents cash received prior to the ﬁnancial
positiondatewhichrelatestorevenueearnedaersuchdate.When
a vessel is time chartered, the charterer as per industry practice
pays the revenue related to the speciﬁc agreement in advance
(usually 15 days in advance). Therefore, as of ﬁnancial position
date,theamountofrevenuerelatingtothenextﬁnancialyearthat
was paid by the charterer is presented in deferred revenue.
Deferred revenue also includes the value ascribed to time charter
agreements assumed upon the purchase of a vessel, if any. This
ascribedamountisamortisedovertheremainingtermofthetime
charter and the amortised portion for the period is included in
revenue for the period.
(f) Foreign Currency Translation: The functional and presentation
currency of the Company and its subsidiaries is the U.S. dollar
because the vessels operate in international shipping markets
whichutilisetheU.S.dollarasthefunctionalcurrency.Transactions
involving other currencies during the year are converted into U.S.
dollars using the exchange rates in eﬀect at the time of the
transactions. At the ﬁnancial position dates, monetary assets and
liabilities, which are denominated in currencies other than the U.S.
dollar, are translated into the functional currency using the year-
endexchangerate.Gainsorlossesresultingfromforeigncurrency
transactions are included in foreign currency gain or loss in the
consolidated income statement.
(g) Cash and Cash Equivalents: The Company and its subsidiaries
consider highly liquid investments such as time deposits and
certiﬁcatesofdepositwithanoriginalmaturityofthreemonthsor
less to be cash equivalents.
(h) Restricted Cash: Certain of the Company’s and its subsidiaries’
loanagreementsrequirethemtodepositfundsintoaloanretention
account in the name of the borrower. The amount deposited is
equivalent to the monthly portion of the next capital and interest
payment. In addition, certain loan agreements require the
establishment of earnings recapture account for the deposit of
fundsduetothelenders,beingpartoftheexcessearningsderived
fromtheoperationofthevessels.Theamountisnotfreelyavailable
and it is used for repaying interest and principal on the loan.
(i) Inventories: Inventories consist of lubricants and victualling and
are stated at the lower of cost or net realisable value. Cost is
determined by the ﬁrst-in ﬁrst-out method. As at 31 December
2010, one vessel was operating under a voyage charter, thus
inventory of bunkers amounting to U.S.$271 was included in
inventories,whereason31December2009,allvesselswereunder
time-charter agreements, thus there was no inventory of bunkers.
(j)TradeReceivables:Theamountshownastradereceivablesateach
balance sheet date includes estimated recoveries from charterers
for hire, freight and demurrage billings, net of an allowance for
impairment.Subsequenttoinitialrecognitiontradereceivablesare
recognisedandcarriedattheloweroftheiroriginalinvoicedvalue
and recoverable amount. At each ﬁnancial position date, all
potentiallyuncollectibleaccountsareassessedindividuallyforthe
purposeofdeterminingtheappropriateallowanceforimpairment.
Impaired debts are derecognized when they are assessed as
uncollectible.AllowancefordoubtfulreceivablesamountedtoU.S.$
nil and U.S.$446 at 31 December 2010 and 2009, respectively.
(k) Insurance Claims: The Company and its subsidiaries recognise
insurance claim recoveries for damages to vessels in relation to
insured risks. Insurance claim recoveries are recorded net of any
deductible amounts, at the time the vessels suﬀer such damages.
They include the recoveries from the insurance companies for the
claims, provided the amounts are virtually certain to be received.
Claims are submitted to the insurance company, which may
increase or decrease the claim amount. Such adjustments are
recordedintheyeartheybecomeknown.Insuranceclaimsreceivable
amounted to U.S.$3,772 and U.S.$1,148 at 31 December 2010
and 2009, respectively (note 17).
(l)Vessels:Thevesselsarestatedatcost,netofaccumulateddepreciation
and any accumulated impairment loss. Vessel cost consists of the
contractpriceforthevesselandanymaterialdirectcostsincurred
37 upon acquisition of the vessel (initial repairs, improvements,
deliverycostsandotherexpenditures)topreparethevesselforits
initial voyage. Subsequent expenditures for major improvements
are also capitalised when it is probable that future economic
beneﬁtsassociatedwiththeimprovementwillﬂowtotheentityand
the cost of the improvement can be measured reliably.
For vessels acquired in the second-hand market and where the
Company identiﬁes any intangible assets or liabilities associated
with the acquisition of a vessel, the Company allocates the
purchase price between the vessel and any identiﬁed intangible
assets or liabilities based on their relative fair values.
Fairvalueisdeterminedbyreferencetomarketdata.TheCompany
determinesthefairvalueofanyintangibleassetorliabilityrelated
to time charters assumed, by reference to the market value of the
time charters at the time the vessel is acquired. The amount to be
recorded as an asset or liability at the date of vessel delivery is
based on the diﬀerence between the current fair market value of
the charter and the net present value of future contractual cash
ﬂows. When the present value of cash ﬂows of the time charter
assumed is greater than the current fair market value of such
charter, the diﬀerence is recorded as prepaid charter revenue (an
asset). When the opposite situation occurs, the diﬀerence is
recorded as deferred revenue (a liability). Such assets and
liabilities, respectively, are amortised as a reduction of, or an
increase in, revenue over the period of the time charter assumed.
Thecostofeachvesselisdepreciatedbeginningwhenthevesselis
readyforitsintendeduse,onastraight-linebasisoverthevessels'
remaining economic useful life, aer considering the estimated
residualvalue.Managementestimatestheusefullifeofthevessels
at 25 years, which is consistent with industry practice. Acquired
second-hand vessels are depreciated from the date of their
acquisitionovertheirremainingestimatedusefullife.Theremaining
useful lives of the vessels are between 6 and 14 years. A vessel is
derecognised upon disposal or when no future economic beneﬁts
areexpectedfromitsuse.Anygainorlossarisingonderecognition
ofthevessel(calculatedasthediﬀerencebetweenthenetdisposal
proceeds and the carrying amount of the vessel including any
unamortisedportionofdry-docking)isincludedintheconsolidated
income statement in the year the vessel is derecognised.
From time to time the vessels are required to be dry-docked for
inspection and re-licensing at which time major repairs and
maintenance that cannot be performed while the vessels are in
operation are generally performed. The costs associated with dry-
dockingarecapitalisedandaddedtothecostofvesselasoccurred.
They are amortised on a straight-line basis over the year until the
next scheduled dry-docking, generally 2.5 years. In cases where,
the dry-docking takes place earlier than 2.5 years since the
previous one, the carrying amount of the previous dry-docking is
derecognised.Intheeventofavesselsale,therespectivecarrying
values of dry-docking costs are derecognised together with the
vessel’s carrying amount at the time of sale.
At the date of acquisition of a second-hand vessel, management
estimates the component of the cost that corresponds to the
economicbeneﬁttobederiveduntilthenextscheduleddry-docking
of the vessel and this component is depreciated on a straight-line
basis over the remaining period until the next estimated dry-
docking date.
(m) Impairment of Vessels: Thevesselsarereviewedforimpairment
inaccordancewithIAS36,"ImpairmentofAssets."UnderIAS36,
the Company and its subsidiaries assess at each reporting date
whetherthereisanindicationthatavesselmaybeimpaired.Ifsuch
an indication exists, the Company and its subsidiaries make an
estimate of the vessel’s recoverable amount. Any impairment loss
of the vessel is assessed by comparison between the carrying
amount of the asset and its recoverable amount. Recoverable
amountisthehigherofthevessel’sfairvaluelesscoststoselland
its value in use.
If the recoverable amount is less than the carrying amount of the
vessel,theassetisconsideredimpairedandanexpenseisrecognised
equal to the amount required to reduce the carrying amount of the
vessel to its then recoverable amount. Fair value of vessels is
determined by independent marine appraisers. If the valuation from
the appraiser indicates possible impairment, the Company and its
subsidiariesproceedtocalculatethevessel’svalueinuse.
Thecalculationofvalueinuseismadeattheindividualvessellevel
since separately identiﬁable cash ﬂow information is available for
each vessel. In developing estimates of future cash ﬂows, the
38 relevantvesselowningcompaniesmakeassumptionsaboutfuture
charter rates, vessel operating expenses and the estimated
remaining useful lives of the vessels.
Theprojectednetoperatingcashﬂowsaredeterminedbyconsidering:
-thetimecharterratedeterminedbythecharterpartyagreements
currentlyeﬀectiveand/ortheaveragerateofthepreviousdecade
for1yeartimercharterperiodonwhicharevenuegrowthrateof
1.34% is applied for 2011 and 2.50% thereaer.
-thecashoutﬂowswhichcompriseofoperatingexpensesonwhich
aninﬂationrateof3%isappliedandfuturedry-dockingcostsfor
which budgeted amounts are used.
- theestimatedremainingusefullivesofthevessels,inlinewiththe
assumptions used for the depreciation calculation of the vessels.
Thenetoperatingcashﬂowsarediscountedtotheirpresentvalue
as at the date of the ﬁnancial statements using the weighted
averagecostofcapitalasadjustedtoreﬂecttherisksspeciﬁctothe
assets’ cash ﬂows. The discount rate calculation is based on the
speciﬁc circumstances of the Company and its subsidiaries and
derived from its weighted average cost of capital (WACC).
The impairment loss recognised by the Company and its
subsidiaries was U.S.$ nil and U.S.$ nil for the years ended
31 December 2010 and 2009 respectively (note 7).
(n) Long-Term Debt:Long-termdebtisinitiallyrecognisedatthefair
value of the consideration received net of issue costs directly
attributable to the borrowing. Aer initial recognition, long-term
debtissubsequentlymeasuredatamortisedcostusingtheeﬀective
interest rate method. Amortised cost is calculated by taking into
accountanyissuecostsandanydiscountorpremiumonsettlement.
A ﬁnancial liability is derecognised when the obligation under the
liability is discharged or cancelled or expired.
The Company and its subsidiaries capitalise borrowing costs that are
directly attributable to acquisition or construction of the asset.
(o) Derivative Financial Instruments and Hedging: The Company
and its subsidiaries use derivative ﬁnancial instruments such as
interest rate swaps to hedge risks associated with interest rate
ﬂuctuations. Such derivative ﬁnancial instruments are initially
recognised at fair value on the date on which a derivative contract
is entered into and are subsequently re-measured at fair value
using bid-market prices on each reporting date. Derivatives are
carried as assets when the fair value is positive and as liabilities
when the fair value is negative.
Anygainsorlossesarisingfromchangesinfairvalueonderivatives
during the year that do not qualify for hedge accounting are taken
directly to proﬁt or loss.
For the purpose of hedge accounting, hedges are classiﬁed as:
• Fair value hedges when hedging the exposure to changes in the
fairvalueofarecognisedassetorliabilityoranunrecognisedﬁrm
commitment (except for foreign currency risk); or
• Cash ﬂow hedges when hedging exposure to variability in cash
ﬂowsthatiseitherattributabletoaparticularriskassociatedwith
a recognised asset or liability or a highly probable forecast
transaction or the foreign currency risk in an unrecognised ﬁrm
commitment; or
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Company and its
subsidiariesformallydesignateanddocumentthehedgerelationship
to which they wish to apply hedge accounting and the risk
managementobjectiveandstrategyforundertakingthehedge.The
documentationincludesidentiﬁcationofthehedginginstrument,the
hedgeditemortransaction,thenatureoftheriskbeinghedgedand
how the entity will assess the hedging instrument’s eﬀectiveness in
oﬀsettingtheexposuretochangesinthehedgeditem’sfairvalueor
cashﬂowsattributabletohedgedrisk.Suchhedgesareexpectedto
be highly eﬀective in achieving oﬀsetting changes in fair value or
cash ﬂows and are assessed on an ongoing basis to determine that
they actually have been highly eﬀective throughout the ﬁnancial
reporting periods for which they were designated.
39 Hedges which meet the strict criteria for hedge accounting are
accounted for as follows:
Cash Flow Hedges
Theeﬀectiveportionofthegainorlossonthehedginginstrument
is recognised directly in equity, while any ineﬀective portion is
recognised immediately in the consolidated income statement.
Amounts taken to equity are transferred to the consolidated
income statement when the hedged transaction aﬀects proﬁt or
loss,suchaswhenthehedgedﬁnancialincomeorﬁnancialexpense
is recognised or when a forecast sale occurs. Where the hedged
item is the cost of a non-ﬁnancial asset or non-ﬁnancial liability,
the amounts taken to equity are transferred to the initial carrying
amount of the non-ﬁnancial asset or liability.
If the forecast transaction or ﬁrm commitment is no longer
expected to occur, amounts previously recognised in equity are
transferred to the consolidated income statement. If the hedging
instrument expires or is sold, terminated or exercised without
replacementorrollover,orifitsdesignationasahedgeisrevoked,
amounts previously recognised in equity remain in equity until the
forecast transaction or ﬁrm commitment occurs.
The Company and its subsidiaries use interest rate swaps as
hedges of their exposure to hedge risks associated with interest
rate ﬂuctuations (note 14).
(p) Segment Reporting: The Company and its subsidiaries report
ﬁnancialinformationandevaluatetheiroperationsbycharterrevenues
and not, for example, by (i) the length of ship employment for their
customers,i.e.spotortimecharters;or(ii)typeofvessel.Management
reviews operating results solely by revenue per day and operating
results of the ﬂeet and thus the Company and its subsidiaries have
determined that they operate under one reportable segment.
Furthermore,whenthevesselowningcompaniescharteravesseltoa
charterer,thechartererisfreetotradethevesselworldwideand,asa
result,thedisclosureofgeographicinformationisimpracticable.
(q) Finance Income: Finance income is earned from the short-term
deposits of the Company and its subsidiaries and is recognised on
the accrual basis.
(r) Leases: Leases of vessels where the vessel owning companies do
not transfer substantially all the risks and beneﬁts of ownership of
thevesselareaccountedforasoperatingleases.Leaseincomeon
operating leases is recognised on a straight line basis over the
lease term. Contingent rents are recognised as revenue in the
period in which they are earned.
(s)ShareCapital:Ordinarysharesareclassiﬁedasequity.Incremental
costsdirectlyattributabletotheissueofnewsharesarerecognised
in equity as a deduction from the proceeds.
(t) Provisions and Contingencies: Provisions are recognised when
the Company and its subsidiaries have a present legal or
constructiveobligationasaresultofpastevents,itisprobablethat
an outﬂow of resources embodying economic resources will be
required to settle the obligation and a reliable estimate of the
amount of the obligation can be made. Provisions are reviewed at
each ﬁnancial position date and adjusted to reﬂect the present
value of the expenditure expected to be required to settle the
obligation. Contingent liabilities are not recognised in the ﬁnancial
statementsbutaredisclosedunlessthepossibilityofanoutﬂowof
resources embodying economic beneﬁts is remote. Contingent
assets are not recognised in the ﬁnancial statements but are
disclosed when an inﬂow of economic beneﬁts is probable.
(u) Oﬀsetting of Financial Assets and Liabilities: Financial assets
and liabilities are oﬀset and the net amount is presented in the
consolidated statement of ﬁnancial position only when the
Company and/or its subsidiaries have a legally enforceable right
to set oﬀ the recognised amounts and intend either to settle such
asset and liability on a net basis or to realise the asset and settle
the liability simultaneously.
(v) Derecognition of Financial Assets and Liabilities:
(i) Financial assets
A ﬁnancial asset (or, where applicable a part of a ﬁnancial asset or
part of similar ﬁnancial assets) is derecognised where:
• the rights to receive cash ﬂows from the asset have expired;
• the Company and/or its subsidiaries retain the right to receive
40 cashﬂowsfromtheasset,buthaveassumedanobligationtopay
them in full without material delay to a third party under a
“pass-through” arrangement; or
•theCompanyand/oritssubsidiarieshavetransferredtheirrights
toreceivecashﬂowsfromtheassetandeither(a)havetransferred
substantially all the risks and rewards of the assets, or (b) have
neither transferred nor retained substantially all the risks and
rewards of the asset, but have transferred control of the asset.
Where the Company and/or its subsidiaries have transferred their
rights to receive cash ﬂows from an asset and have neither
transferred nor retained substantially all the risks and rewards of
the asset nor transferred control of the asset, the asset is
recognised to the extent of the Company and/or its subsidiaries
continuing involvement in the asset. Continuing involvement that
takes the form of a guarantee over the transferred asset is
measuredattheloweroftheoriginalcarryingamountoftheasset
and the maximum amount of consideration that the Company
and/or its subsidiaries could be required to repay.
(ii) Financial liabilities
A ﬁnancial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires. Where an existing
ﬁnancial liability is replaced by another from the same on
substantiallydiﬀerentterms,orthetermsofanexistingliabilityare
substantially modiﬁed, such an exchange or modiﬁcation is treated
as a derecognition of the original liability and the recognition of a
new liability, and the diﬀerence in the respective carrying amounts
is recognised in the consolidated income statement.
(w)Reclassiﬁcation:Wherenecessary,comparativeﬁgureshavebeen
adjustedtoconformtochangesinpresentationofthecurrentyear.
(x)IFRSandIFRICInterpretationsthatbecameeﬀectiveintheyear
ended 31 December 2010: The following Standards and
Interpretations became eﬀective within the year ended
31 December 2010. None of the Standards and Interpretations
had an impact in the consolidated ﬁnancial statements of the
Company and its subsidiaries.
- IFRIC 17, “Distributions of Non-cash Assets to Owners”. This
interpretationprovidesguidanceonhowtoaccountfornon-cash
distributions to owners. The interpretation clariﬁes when to
recognisealiability,howtomeasureitandtheassociatedassets
and when to derecognise the asset and liability.
- IAS 39, “Financial Instruments: Recognition and Measurement”
(Amended)–eligiblehedgeditems.Theamendmentclariﬁesthat
an entity is permitted to designate a portion of the fair value
changes or cash ﬂow variability of a ﬁnancial instrument as
hedged item. This also covers the designation of inﬂation as a
hedged risk or portion in particular situations.
-IFRS2,“GroupCash-settledShare-basedPaymentTransactions”
(Amended). This amendment clariﬁes the accounting for group
cash-settled share-based payment transactions and how such
transactions should be arranged in the individual ﬁnancial
statements of the subsidiary.
-IFRS3,“BusinessCombinations”(Revised)andIAS27,“Consolidated
andSeparateFinancialStatements”(Amended).TherevisedIFRS
3introducesanumberofchangesintheaccountingforbusiness
combinations which will impact the amount of goodwill
recognised, the reported results in the period that an acquisition
occurs, and future reported results. Such changes include the
expensing of acquisition-related costs and recognising
subsequent changes in fair value of contingent consideration in
the income statement (rather than by adjusting goodwill). The
amended IAS 27 requires that a change in ownership interest of
asubsidiaryisaccountedforasanequitytransaction.Therefore,
suchachangewillhavenoimpactongoodwill,norwillitgiveraise
to a gain or loss. Furthermore, the amended standard changes
theaccountingforlossesincurredbythesubsidiaryaswellasthe
loss of control of a subsidiary.
- 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,allitsassetsandliabilitiesareclassiﬁedasheldforsale,even
when the entity remains a non-controlling interest aer the sale
transaction. The amendment is applied prospectively.
41 -AmendmentsresultingfromimprovementstoIFRSs(April
2009)tothefollowingstandardswhichdidnothaveaneﬀecton
the accounting policies, ﬁnancial position or performance of the
Company and its subsidiaries:
• IFRS 2 Share-based Payment, eﬀective for annual periods
beginningonoraer1July2009. Thisamendmentclariﬁesthat
thecontributionofabusinessonformationofajointventureand
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.
•IFRS5Non-currentAssetsHeldforSaleandDiscontinued
Operations, eﬀective for annual periods beginning on or aer
1January2010.Thisamendmentclariﬁesthatthedisclosures
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.
•IFRS8OperatingSegmentInformation,eﬀectiveforannual
periodsbeginningonoraer1January2010.Thisamendment
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.
• IAS 1 Presentation of Financial Statements, eﬀective for
annual periods beginning on or aer 1 January 2010. The
termsofaliabilitythatcouldresult,atanytime,initssettlement
by the issuance of equity instruments at the option of the
counterparty do not aﬀect its classiﬁcation.
•IAS7StatementofCashFlows,eﬀectiveforannualperiods
beginningonoraer1January2010.Explicitlystatesthatonly
expenditurethatresultsinrecognisinganassetcanbeclassiﬁed
as a cash ﬂow from investing activities. This amendment will
impact the presentation in the statement of cash ﬂows of the
contingent consideration on the business combination
completed in 2009 upon cash settlement.
• IAS 17 Leases, eﬀective for annual periods beginning on or
aer 1 January 2010. The amendment removes the speciﬁc
guidance on classifying land as a lease so that only the general
guidance remains.
• IAS 18 Revenue, The Board has added guidance (which
accompanies the standard) to determine whether an entity is
actingasaprincipalorasanagent.Thefeaturestoconsiderare
whether the entity:
- Has primary responsibility for providing the goods or service
- Has inventory risk
- Has discretion in establishing prices
- Bears the credit risk
• IAS 36 Impairment of Assets, eﬀective for annual periods
beginningonoraer1January2010.Theamendmentclariﬁed
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.
•IAS38IntangibleAssets,eﬀectiveforannualperiodsbeginning
on or aer 1 July 2009. This amendment clariﬁes that if an
intangibleassetacquiredinbusinesscombinationisidentiﬁable
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. It also clariﬁes that
the valuation techniques presented for determining the fair
value of intangible assets acquired in a business combination
thatarenottradedinactivemarketsareonlyexamplesandare
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.
•IAS39FinancialInstruments:RecognitionandMeasurement,
eﬀective for annual periods beginning on or aer 1 January
2010. The amendment clariﬁes that:
-Aprepaymentoptionisconsideredcloselyrelatedtothehost
contract when the exercise price of a prepayment option
reimburses the up to the approximate present value of lost
interest for the remaining term of the host contract.
42 -Thescopeexemptionforcontractsbetweenanacquireranda
vendorinabusinesscombinationtobuyorsellanacquireeat
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 aer 1 January 2010).
- Gainsandlossesoncashﬂowhedgesofaforecasttransaction
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
allunexpiredcontractsforannualperiodsbeginningonoraer
1 January 2010).
• IFRIC 9 Reassessment of Embedded Derivatives, eﬀective
forannualperiodsbeginningonoraer1July2009.TheBoard
amended the scope paragraph of IFRIC 9 to clarify that it does
not apply to possible reassessment, at the date of acquisition,
toembeddedderivativesincontractsacquiredinacombination
between entities or business under common control or the
formationofajointventure.IfanentityappliesIFRS3(revised)
for an earlier period, the amendment shall also be applied for
that earlier period.
•IFRIC16HedgesofaNetInvestmentinaForeignOperation,
eﬀective for annual periods beginning on or aer 1 July 2009.
Theamendmentstatesthat,inahedgeofanetinvestmentina
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.
(y) IFRS and IFRIC Interpretations not yet eﬀective:TheCompany
and its subsidiaries have not applied the following IFRS and IFRIC
Interpretationsthathavebeenissuedbutarenotyeteﬀectiveand
not early adopted:
-IFRIC19,“ExtinguishingFinancialLiabilitieswithEquityInstruments”.
The interpretation is eﬀective for annual periods beginning on or
aer 1 July 2010. This interpretation addresses the accounting
treatment when there is a renegotiation between the entity and
the creditor regarding the terms of a ﬁnancial liability and the
creditoragreestoaccepttheentity’sequityinstrumentstosettle
theﬁnancialliabilityfullyorpartially.IFRIC19clariﬁessuchequity
instruments are “consideration paid” in accordance with
paragraph 41 of IAS 39. As a result, the ﬁnancial liability is
derecognised and the equity instruments issued are treated as
consideration paid to extinguish that ﬁnancial liability. The
Company and its subsidiaries do not expect that the amendment
will have an impact on their ﬁnancial position or performance.
- IFRIC 14, “Prepayments of a Minimum Funding Requirement”
(Amended). The amendment is eﬀective for annual periods
beginning on or aer 1 January 2011. The purpose of this
amendmentwastopermitentitiestorecogniseasanassetsome
voluntaryprepaymentsforminimumfundingcontributions.Earlier
application is permitted and must be applied retrospectively. No
fundeddeﬁnedbeneﬁtplansexist,thereforetheCompanyandits
subsidiaries do not expect that the amendment will have impact
on their ﬁnancial position or performance.
-IFRS9,“FinancialInstruments”–Phase1ﬁnancialassets,classiﬁcation
and measurement. The new standard is eﬀective for annual
periods beginning on or aer 1 January 2013. Phase 1 of this
new IFRS introduces new requirements for classifying and
measuring ﬁnancial assets. Early adoption is permitted. This
standardhasnotyetbeenendorsedbytheEU.TheCompanyand
its subsidiaries are in the process of assessing the impact of the
new standard on their ﬁnancial position and/or performance.
-IAS32,“ClassiﬁcationonRightsIssues”(Amended).Theamendment
is eﬀective for annual periods beginning on or aer 1 February
2010. This amendment relates to the rights issues oﬀered for a
ﬁxedamountofforeigncurrencywhichweretreatedasderivative
liabilities by the existing standard. The amendment states that if
certain criteria are met, these should be classiﬁed as equity
regardless of the currency in which the exercise price is
denominated.Theamendmentistobeappliedretrospectively.The
Company and its subsidiaries do not expect that this amendment
will have an impact on their ﬁnancial position or performance.
- IAS 24, “Related Party Disclosures” (Revised). The revision is
43 eﬀective for annual periods beginning on or aer 1 January
2011. This revision relates to the judgment which is required
soastoassesswhetheragovernmentandentitiesknowntothe
reporting entity to be under the control of that government are
considered a single customer. In assessing this, the reporting
entityshallconsidertheextentofeconomicintegrationbetween
those entities. Early application is permitted and adoption shall
beappliedretrospectively.TheCompanyanditssubsidiariesdo
not expect that this amendment will have an impact on their
ﬁnancial position or performance.
- In May 2010 the IASB issued its third omnibus of amendments
to its standards, primarily with a view to removing
inconsistenciesandclarifyingwording.Theeﬀectivedatesofthe
improvementsarevariousandtheearliestisfortheﬁnancialyear
beginning1July2010.Earlyapplicationispermittedinallcases.
• IFRS 3 Business Combinations, eﬀective for annual periods
beginning on or aer 1 July 2010. This improvement clariﬁes that
theamendmentstoIFRS7FinancialInstruments:Disclosures,IAS32
FinancialInstruments:PresentationandIAS39FinancialInstruments:
Recognition and Measurement, that eliminate the exemption for
contingent consideration, do not apply to contingent consideration
that arose from business combinations whose acquisition dates
precedetheapplicationofIFRS3(asrevisedin2008).Moreover,this
improvementlimitsthescopeofthemeasurementchoices(fairvalue
oratthepresentownershipinstruments’proportionateshareofthe
acquiree’s identiﬁable net assets) only to the components of non-
controlling interest that are present ownership interests that entitle
theirholderstoaproportionateshareoftheentity’snetassets.Finally,
it requires an entity (in a business combination) to account for the
replacement of the acquiree’s share-based payment transactions
(whetherobligedorvoluntarily),i.e.,splitbetweenconsiderationand
postcombinationexpenses.
•IFRS7FinancialInstruments:Disclosures,eﬀectiveforannual
periods beginning on or aer 1 January 2011. This improvement
givesclariﬁcationsofdisclosuresrequiredbyIFRS7andemphasises
theinteractionbetweenquantitativeandqualitativedisclosuresand
thenatureandextentofrisksassociatedwithﬁnancialinstruments.
•IAS1PresentationofFinancialStatements,eﬀectiveforannual
periods beginning on or aer 1 January 2011. This amendment
clariﬁesthatanentitywillpresentananalysisofothercomprehensive
income for each component of equity, either in the statement of
changesinequityorinthenotestotheﬁnancialstatements.
• IAS 27 Consolidated and Separate Financial Statements,
eﬀective for annual periods beginning on or aer 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
InterestsinJointVenturesapplyprospectivelyforannualperiods
beginning on or aer 1 July 2009 or earlier when IAS 27 is
applied earlier.
•IAS34InterimFinancialReporting,eﬀectiveforannualperiods
beginning on or aer 1 January 2011. This improvement
providesguidancetoillustratehowtoapplydisclosureprinciples
in IAS 34 and add disclosure requirements.
•IFRIC13CustomerLoyaltyProgrammes,eﬀectiveforannual
periodsbeginningonoraer1January2011.Thisimprovement
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.
- IFRS 7, “Financial Instruments: Disclosures as part of its
comprehensivereviewofoﬀbalancesheetactivities”(Amended).
The amendment is eﬀective for annual periods beginning on or
aer 1 July 2011. The purpose of this amendment is to allow
users of ﬁnancial statements to improve their understanding of
transfer transactions of ﬁnancial assets (e.g. securitisations),
includingunderstandingthepossibleeﬀectsofanyrisksthatmay
remain with the entity which transferred the assets. The
amendment also requires additional disclosures if a
disproportionateamountoftransfertransactionsareundertaken
around the end of a reporting period. The amendments broadly
aligntherelevantdisclosurerequirementsofIFRSsandUSGAAP.
44 This amendment has not yet been endorsed by the EU. The
Company and its subsidiaries do not expect that this
amendment will have an impact on their ﬁnancial position or
performance, however additional disclosures may be required.
-IAS12,“Deferredtax:RecoveryofUnderlyingAssets”(Amended).
Theamendmentiseﬀectiveforannualperiodsbeginningonoraer
1 January 2012. This amendment concerns the determination of
deferredtaxoninvestmentpropertymeasuredatfairvalueandalso
incorporates SIC-21 Income Taxes-Recovery of Revalued
Non-Depreciable Assets into IAS 12 for non-depreciable assets
measuredusingtherevaluationmodelinIAS16.
The aim of this amendment is to include a) a rebuttable
presumption that deferred tax on investment property measured
using the fair value model in IAS 40 should be determined on the
basisthatitscarryingamountwillberecoveredthroughsaleandb)
a requirement that deferred tax on non-depreciable assets,
measuredusingtherevaluationmodelinIAS16,shouldalwaysbe
measured on a sale basis. This amendment has not yet been
endorsed by the EU. The Company and its subsidiaries do not
expect that this amendment will have an impact on their ﬁnancial
position or performance.
3. Voyage & Vessel Operating Expenses
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
45 4. General and Administrative Expenses
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
5. Finance Expense
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
6. Earnings per Share
Basicearningspershare("EPS")arecalculatedbydividingtheproﬁtforthe
yearattributabletoshareholdersofHellenicCarriersLimited(U.S.$27,536
and U.S.$18,103 for the years ended 31 December 2010 and 2009,
respectively) by the weighted average number of shares outstanding
(45,616,851fortheyearsended31December2010and2009).
DilutedEPSreﬂectsthepotentialdilutionthatcouldoccurifshareoptions
orothercontractstoissueshareswereexercisedorconvertedintoshares.
Sincenosuchoptionsorcontractsexistedasat31December2010and
2009,thenumeratorsanddenominatorsusedtocalculatedilutedEPSare
thesamewiththoseusedtocalculatebasicEPS,asdisclosedabove.
7. Vessels
Vessels consisted of the following at 31 December:
46 TheCompany’slong-termloansaresecuredbyaﬁrstpreferredmortgage
ontherespectivevessels,aswellasgeneralassignmentoftheearnings,
insurancesandrequisitioncompensationoftherespectivevessel.
Depreciationchargefortheyearintheaccompanyingconsolidatedincome
statementincludesU.S.$3depreciationonoﬃcefurnitureandequipment
fortheyearended31December2010(31December2009:U.S.$4).
Disposal
In May 2010, Nestos Shipping Corp., a wholly owned subsidiary of HCL
andownerofthe1993builtPanamax,vessel“HellenicBreeze”,entered
intoanagreementwithanunaﬃliatedthirdpartyforthesaleofthevessel.
ThesalewasconcludedatagrossconsiderationofU.S.$23,460incash
andthevesselwasdeliveredtothenewownerson12August2010.As
ofdeliverydatethevesselhadacarryingvalueofU.S.$14,641inclusive
oftheunamortizedbalanceofherlatestdry-docking.Thegainresulting
fromthesaleofthevessel,aerdeductingthecommissiononthegross
consideration and all other expenses directly related to the sale was
U.S.$8,451andisincludedintheconsolidatedstatementofincomefor
theyearended31December2010.
Dry-docking costs
During ﬁscal year 2010, three vessels namely the M/V Hellenic Sea,
theM/VHellenicHorizonandtheM/VKonstantinosD.performedtheir
dry-docking surveys. The capitalised cost for the above mentioned
surveysamountedtoU.S.$2,217andwasincludedinthevesselscost
asat31December2010.Thedeferreddry-dockingcostadditionsfor
the year ended 31 December 2009 amounted to U.S.$3,431.
Impairment
Furthertothereceiptofvaluationsofthefairmarketvalueoftheﬂeet
asof31December2010issuedbyindependentthirdpartyvaluators,
anindicationofimpairmentwasidentiﬁedfortwovesselsandvessels’
value in use was calculated at the individual vessel level, through
assessment of each vessel’s future cash ﬂows.
Having performed the impairment test, the Company and its
subsidiaries recognised no impairment charge for the year ended
31 December 2010 (note 2m). The impairment exercise is highly
sensitiveonpotentialvariancesinthetimecharterratesandtheﬂeet
eﬀectiveutilization.Consequently,asensitivityanalysiswasperformed
byassigningpossiblealternativevaluestothesetwosigniﬁcantinputs,
which indicated that there is no impairment of individual long lived
assets. However, there can be no assurance as to how long charter
ratesandvesselvalueswillremainattheircurrentlevels.Charterrates
may remain at depressed levels for some time which could adversely
aﬀect our revenue and proﬁtability, and future assessments of vessel
impairment. Furthermore, no indicators were identiﬁed that indicated
that previously recognised impairment loss should be reversed.
8. Advances for vessels under construction
On28June2010,twowhollyownedsubsidiariesofHCL,namelySymi
Shipping Corp. and Ithaca Maritime Ltd. entered into shipbuilding
contractswithZhejiangOuhuaShipbuildingCo.Ltd.fortheconstruction
of two Kamsarmax bulk carrier vessels of 82,000 DWT each and for a
considerationofU.S.$34,200eachorU.S.$68,400inaggregate(note
1). The delivery of the ﬁrst vessel is scheduled for January 2013 and
the second one is expected to be delivered in March 2013.
During2010,anaggregateamountofU.S.$27,200(orU.S.$13,600
for each hull) was paid to the yard for the two vessels on order from
cash reserves. The ﬁrst instalment amounted to U.S.$10,200 per
vesselandwaspaidinJuly2010andthesecondinstalmentamounted
to U.S.$3,400 per vessel and was paid in October 2010. The
remaining cost will be paid upon delivery of each vessel.
All material expenses incurred during the construction period are
capitalised and, as at 31 December 2010, the capitalised cost was
U.S.$196 of which U.S.$100 have been charged by Mantinia for
services provided in relation to the plan approval and the signing of
the shipbuilding contracts (note 12).
47   9. Prepaid Expenses and Other Assets
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
10. Cash and Cash Equivalents
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
Cash at banks earns interest at ﬂoating rates based on daily bank
deposit rates. Short-term deposits are made for varying periods of
betweenonedayandthreemonths,dependingontheimmediatecash
requirementsoftheCompanyanditssubsidiariesandearninterestat
the respective short-term deposit rates.
Interest earned during the years ended 31 December 2010 and
2009, amounted to U.S.$672 and U.S.$1,060 and is included in the
accompanying consolidated income statement.
11. Restricted Cash
Therestrictedcashconcernstheamountsheldinbankaccountsofthe
vesselowningcompaniesthatwereretainedforthepaymentoffuture
instalments of the Company’s and its subsidiaries’ loans. In addition,
basedonthetermsofthesupplementalagreement,toloana(seenote
13)in2009,theborrowersdepositedin2010inarestrictedaccount
held with the lender, an amount of U.S.$459 calculated on the excess
earningsoftheborrowers.Restrictedcashat31December2010and
2009, amounted to U.S.$1,033 and U.S.$260, respectively.
12. Related party transactions
Transactionswithrelatedpartiesconsistedofthefollowingfortheyear
ended 31 December:
Balancesduefromrelatedpartiesasat31Decembercomprisethefollowing:
Thevessel-owningcompaniesoftheoperatingvesselsincludedinthe
consolidated ﬁnancial statements have entered into management
agreements with HSC to provide, in the normal course of business, a
widerangeofshippingmanagerialandadministrativeservices,suchas
commercialoperations,chartering,technicalsupportandmaintenance,
engagement and provision of crew, ﬁnancial and accounting services
and cash handling in exchange for a monthly management fee of
U.S.$32.08 per vessel (U.S.$29.83 for January and February 2009
and U.S.$31.08 for the period March to December 2009). These
transactions are eliminated in the consolidation.
50 Additionally, HSC has subcontracted to Mantinia Shipping Company
S.A.(“Mantinia”),arelatedparty,undercommoncontrol,thetechnical
managementoftheoperatingvesselsforamonthlyfeeofU.S.$20.68
per vessel (U.S.$ 19.17 for January and February 2009 and
U.S.$20.04 for the period March to December 2009). For the year
ended31December2010and2009,sub-managementfeescharged
by Mantinia amounted to U.S.$1,394 and U.S.$1,433, respectively
and were included in Management fees - related party.
Furthermore Mantinia Shipping Company S.A. provided technical
support and advisory services to HSC in relation to the placing of the
newbuildingorderswithZhejiangOuhuaShipbuildingCo.Ltd.Thefees
for the services rendered were agreed to U.S.$100 and have been
capitalised to vessels under construction cost (note 8).
The balance due from Hellenic Carriers Corporation S.A., a related
party under common control, was created upon the Group’s
restructuring during the Company’s preparation for admission to AIM
and is expected to be settled.
Directors’ remuneration for the year ended 31 December is analysed
as follows:
Mr.DimitrisSfakianakisresignedfromthepostofChiefFinancialOﬃcer
and stepped down as a Director of the Company on 31 October 2009.
The Director’s remuneration amounts are agreed in currencies other
than the U.S. dollar (namely GBP and Euro), therefore the variation
between the amounts of 2010 and 2009 reﬂect foreign exchange
diﬀerences. No pension contributions were made during the years
ended 31 December 2010 and 2009. 13. Long-Term Debt
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
The upcoming repayment terms of loans are as follows:
Loana:On6November2007,twovessel-owningsubsidiariesofHCL
entered into a loan facility agreement for U.S.$57,850. The loan
facilitywasmadeavailableforthepurposesof(i)reﬁnancinginfullthe
existing indebtness of M/V Hellenic Sky (ii) ﬁnancing part of the
acquisition of M/V Hellenic Horizon and, (iii) providing corporate
liquidity. An amount of U.S.$6,200 was repaid immediately aer the
Company’s Admission on AIM. In June 2009, a supplemental
agreement was signed, under which the repayment schedule of the
loan facility was amended eﬀective May 2009. The outstanding
balanceasof31December2010isrepayableinseventeenquarterly
instalments of U.S.$1,450 each and one quarterly instalment of
U.S.$1,255.
The ﬁrst instalment was due on 8 February 2011 and the ﬁnal
instalment is due on 8 May 2015, along with a balloon payment of
U.S.$15,495, being due on 8 May 2015.
Based on the terms of the supplemental agreement the borrowers
deposited, in 2010, in a restricted account held with the lender an
amount of U.S.$459 calculated on the excess earnings of the
borrowers for the year 2009. This amount together with the amount
of U.S.$1,341 calculated on the excess earnings of the borrowers for
the year 2010 was paid to the lender in March 2011 and the
aggregate amount of U.S.$1,800 was applied against the balloon
payment which was consequently amended to U.S.$13,695. As at
31 December 2010, the amount of U.S.$1,800 was included in the
current portion of the long-term debt in the accompanying
consolidated statement of ﬁnancial position.
52 Loan b: On 17 March 2008, the Company entered into a loan facility
agreement for up to U.S.$190,000. The loan facility was made
available for the purposes of (i) reﬁnancing in full the existing
indebtness of M/V Hellenic Sea and M/V Hellenic Breeze, (ii) ﬁnancing
part of the acquisition cost of M/V Konstantinos D., (iii) ﬁnancing part
of the acquisition cost of M/V Hellenic Wind, (iv) providing working
capital and (v) providing ﬁnancing for future dry-bulk vessel
acquisition(s). The amount of U.S.$110,000 was drawn during 2008.
The Company has agreed with the lender full cancellation of the
undrawn amount of U.S.$80,000. In March 2009, the Company
entered in a supplemental agreement under which the repayment
schedule of the loan facility was amended eﬀective May 2009. Based
onthetermsofthesupplementalagreementtheborrowerspaidtothe
lender in February 2010 an amount of U.S.$2,450 calculated on the
excessearningsofthevesselsﬁnancedunderloanbfortheyear2009.
In addition, following the sale of the vessel Hellenic Breeze in August
2010, an amount of U.S.$21,000 was prepaid to the lender and was
proportionally applied between the debt instalments and the balloon
payment. The outstanding balance as of 31 December 2010, is
repayableintwentytwoquarterlyinstalmentsofU.S.$1,670each.The
ﬁrst instalment was due on 7 February 2011 and the ﬁnal instalment
is due on 9 May 2016, along with an amended balloon payment of
U.S.$27,600, being due on 9 May 2016. Additionally, on 7 February
2011, the borrowers paid to the lender an amount of U.S.$2,890,
calculated on the excess earnings of the vessels ﬁnanced under loan
b for the year 2010 and this amount was applied against the balloon
payment which was consequently amended to U.S.$24,710. As at
31 December 2010 the amount of U.S.$2,890 was included in the
current portion of the long-term debt in the accompanying
consolidated statement of ﬁnancial position.
ThebankloansdenominatedinU.S.dollarsbearinterestatLIBORplus
a margin payable quarterly.
All loans are secured by a ﬁrst preferred mortgage on the respective
vessel as well as general assignment of the earnings, insurances and
requisition compensation of the respective vessel. 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
minimumrequirementsregardinghullcoverratioandsecurityamount.
The hull cover ratio requirement for loans a and b was waived by the
lenders until 1 January 2013 and 29 February 2012, respectively.
The restricted net assets of the vessel-owning subsidiary companies
at 31 December 2010 and 2009, consisted of restricted cash
U.S.$1,033 and U.S.$260, respectively. Furthermore, the Company
anditssubsidiariesareobligedundercertainloanagreementstohold
free cash liquidity of U.S.$400 per vessel on a consolidated basis.
HCLhasissuedacorporateguaranteeinfavourofthebank,inrespect
of loan a, as a further security for the aforementioned loan.
HCL signed an oﬀer letter with a ﬁnancial institution for the ﬁnancing
of the two Kamsarmax vessels currently on order. The lender oﬀered
aterm-loanfacilityofupto65%ofvessels’valueupondeliverybutnot
more than U.S.$22,100 per vessel to ﬁnance, upon delivery, each
vessel’s ﬁnal construction cost. The loan is repayable for each vessel
in twelve semi-annual instalments of U.S.$600 each and a balloon
payment of U.S.$14,900. The ﬁrst instalment is payable six months
aerdrawdownandtheﬁnalinstalmentisdueandpayableonmaturity
of the loan, six years aer drawdown.
The weighted average interest rate for the year ended 31 December
2010 and 2009, was 4.84% and 4.89%, respectively. Total interest
paidwasU.S.$5,951andU.S.$6,891fortheyearsended31December
2010 and 2009, respectively. 14. Other non-current ﬁnancial liabilities
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
On 31 December 2010, the Company had two interest rate swaps
designatedashedgesofexpectedfutureliborpaymentsinconnection
totheloansdescribedundernote13.Thecriticaltermsoftheinterest
rateswapshavebeennegotiatedupondesignationtomatchtheterms
oftherespectiveloans.Underbothcontracts,theCompanyexchanges
variable to ﬁxed interest rates at 3.99%. On 31 December 2010, the
notional amounts of the swaps were U.S.$33,650 and U.S.$37,700
representing81.3%and58.6%oftheoutstandingbalanceofloansa
and b respectively (see note 13).
The cash ﬂow hedges of the expected future libor payments were
assessed to be highly eﬀective throughout the ﬁnancial period,
therefore, a net unrealised loss on cash ﬂow hedges amounting to
U.S.$488 has been charged to the consolidated statement of
comprehensive income for the year ended 31 December 2010. For
the year ended 31 December 2009, the Company recognised a net
unrealisedgainofU.S.$2,488whichwascreditedtotheconsolidated
statement of comprehensive income.
The fair value of the derivative ﬁnancial instruments at 31 December
2010 and 2009, was a liability of U.S.$4,596 and U.S.$4,108
respectively and was included in other non-current ﬁnancial liabilities
and Current portion of other non-current ﬁnancial liabilities in the
accompanying consolidated statement of ﬁnancial position.
15. Share Capital and Share Premium
Share capital consisted of the following at 31 December:
TheCompanywasincorporatedunderthelawsofJerseyon26September
2007, with an authorised share capital of GBP 10 divided into 10,000
ordinary shares of GBP 1.00 each. By a special resolution dated 20
November2007,theCompanyconverteditsauthorisedsharecapitalfrom
poundssterlingtoU.S.dollarsatanexchangerateofGBP1=U.S.$2.070
sothattheexistingsharecapitalwasconvertedtoU.S.$20.7dividedinto
10,000ordinarysharesofU.S.$2.070each.Byaspecialresolutionalso
dated20November2007,theauthorisedsharecapitalofU.S.$20.7was
subdivided into 20,700,000 ordinary shares of U.S.$0.001 each. By a
specialresolutionalsodated20November2007,theCompanyincreased
its authorised share capital by the creation of an additional 79,300,000
ordinary shares in the share capital of the Company, following which, the
Company’s authorised share capital was U.S.$100 divided into
100,000,000ordinarysharesofU.S.$0.001each.
On30November2007,theCompanywasadmittedtotheAIM,issuing
13,684,970ordinaryshareswithparvalueU.S.$0.001(inadditionto
the 31,931,881 Ordinary Shares with par value of U.S.$0.001 issued
on27November2007)atapremiumofU.S.$4.30perordinaryshare
thereby increasing the share capital by U.S.$0.046 million and
increasingsharepremiumbyU.S.$58.9million.Issuancecostsdirectly
attributable to the listing on AIM amounted to U.S.$4.5 million.
The analysis of the share premium is as follows:
54 16. Accrued Liabilities and Other Payables
The amounts in the accompanying statement of ﬁnancial position at
31 December are analysed as follows:
17. Claims receivable
In July 2010, the M/V Hellenic Sea sustained hull damage aer
running aground in laden condition and a professional salvage team
was appointed to re-ﬂoat the vessel and assist in the laden voyage
towardsthedischargingport.Thevesselwassuccessfullyre-ﬂoatedon
14 August 2010, aer conducting partial transshipment operations
of the cargo to a lightering vessel at the vicinity of the incident. The
vesselsubsequentlyproceededtoherdestinationwheretheremaining
cargo was discharged and temporary repairs were carried out.
Permanent repairs were carried out in a dry-docking yard and were
concluded on 17 November 2010, together with the vessel’s special
survey. The vessel remained oﬀ-hire for an aggregate period of 136
days and was redelivered to her charterers on 5 December 2010, to
resume service under the time charter agreement. The shipowning
company,throughitsinsurancepolicy,iscoveredforthecostofrepairs
and related expenses (excluding loss of hire) above the applicable
deductible (U.S.$125). The claim submitted to the vessel’s insurers
amounts to U.S.$3,578 (net of the applicable deductible).
Claim receivables balance at 31 December is as follows:
18. Dividends Declared
Dividend rights: Under the Company’s Articles of Incorporation, 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 approve dividends, provided that the Directors
areabletosignastatementofsolvency.Thepaymentofﬁnaldividends
is subject to the approval of the Annual General Meeting of
Shareholders (“AGM”), while the payment of interim dividends is
subject to the approval of the Board of Directors.
Aninterimdividendfor2010ofGBP980,762(2.15pencepershare)
orU.S.$1,511wasapprovedbytheBoardofDirectorsoftheCompany
andwaspaidon15October2010totheshareholdersonrecordasof
17 September 2010.
TheAGMheldinMay2010approvedaﬁnaldividendfor2009ofGBP
1,126,736 (2.47 pence per share) or U.S.$1,698 which was paid on
21 May 2010 to shareholders on record as of 30 April 2010.
The dividend paid in 2009 for the year 2008 amounted to GBP
1,049,188 (2.30 pence per share) or U.S.$ 1,453.
19. Commitments and contingencies
Further to the repudiation of a two year time charter contract between
Arkadia Maritime Corp. (“Arkadia”), the vessel owning company of the
M/V Hellenic Horizon and Samsun Logix Corporation (“Samsun”) as
charterers in February 2009, Arkadia was registered as unsecured
creditor in the Rehabilitation proceedings that were commenced by
Samsun in Korea with respect to its claim for unpaid hire and damages
amounting to U.S.$17.5 million. Following a dispute before the Korean
CourtsbetweenArkadiaandSamsunonthedamagesclaimthecompetent
courtsofSeoulruledinfavourofArkadiaon14December2009.
GivenSamsun’srighttoappealagainsttheabovejudgementaswellas
the uncertainty of the outcome of the implementation of the
rehabilitation proceedings, the Company provided, on 31 December
2009,fortheoutstandinghirefromSamsunanddidnotrecogniseany
amount for damages that were being claimed.
55 On 19 January 2010, a settlement agreement was reached between
Arkadia and Samsun, whereby: a) Samsun acknowledged the total
amount of the claim and waived its rights to appeal against the above
mentioned decision of the Korean Court and b) Arkadia consented to
approve the Rehabilitation Plan, prepared by Samsun, at the meeting
of the Samsun creditors of 5 February 2010. According to the plan,
Arkadia may recover the acknowledged claim as follows: (i) 34% of
the claim in cash over 10 years (2010-2019) which will be non-
interest bearing and (ii) 66% in Samsun’s shares bearing no voting
rights, to be issued aer the court’s approval.
The ﬁrst non-interest cash payment of U.S.$593, being 10% of the
recoverableclaimasdescribedinsub-paragraph(i)abovewasreceivedon
30 December 2010 and was credited to other operating income in the
accompanying consolidated income statement for the year ended
31 December 2010. The outcome of the implementation of the
rehabilitationplanremainsdiﬃculttoforecastand,therefore,futureinﬂows
are uncertain. Accordingly, the Company has not recognised future cash
receiptsunderthissettlementandwellmakefurtherassessmentsin2011.
In addition, in July 2010 Arkadia received 212,018 Samsun shares in
respectoftheremainingportion(66%)oftheclaimstatedunder(ii)above.
These shares have been classiﬁed as “available for sale”. As there is no
tradingofthesenonvotingsharesandastheoutcomeoftherehabilitation
planremainsdiﬃculttoforecast,theCompanyhasassignedU.S.$nilvalue
tothem.TheCompanywillmakefurtherassessmentsin2011.
Operating lease commitments - vessel owning companies as lessor:
Someofthevesselsowningcompanieshaveenteredintotimecharter
arrangements for their respective vessels. These arrangements have
remaining terms between 1 to 4 months as of 31 December 2010
and 1 to 17 months as of 31 December 2009.
Future minimum gross charter revenues receivable upon time charter
arrangements as at 31 December 2010 and 2009, are as follows:
Itisnotedthatminimumgrosscharterrevenuesarecalculateduptothe
earliestcharterexpirationdatewhichrepresentstheﬁrstdateonwhich
the charterer may redeliver the vessel to the shipowning company.
Additionally,thevesseloﬀ-hiresanddry-dockingdaysthatcouldoccur
but are not currently known are not taken into consideration.
20. Income taxes
As from 1 January 2009, the exempt company regime in Jersey no
longerapplied,andtheCompanyisnowsubjecttoa0%taxinJersey.
Under the laws of the respective jurisdictions of the consolidated
companies, such companies are not subject to tax on international
shipping income; however, the consolidated companies are subject to
registration and tonnage taxes, which have been included in vessel
operatingexpensesintheaccompanyingconsolidatedincomestatement.
Pursuant to the United States Internal Revenue Code of 1986, as
amended (the ''Code''), U.S. source income derived by a foreign
corporation from the international operation of ships generally is
exemptfromU.S.taxifthecompanyoperatingtheshipsmeetsbothof
the following requirements, (a) the company is organised in a foreign
countrythatgrantsanequivalentexemptiontocorporationsorganised
in the United States and (b) either (i) more than 50% of the value of
the company's shares is owned, directly or indirectly, by individuals
who are ''residents'' of the company's country of organisation or of
another foreign country that grants an ''equivalent exemption'' to
corporationsorganisedintheUnitedStates(50%OwnershipTest)or
(ii) the company's shares are ''primarily and regularly traded on an
established securities market'' in its country of organisation, in
another country that grants an ''equivalent exemption'' to United
States corporations, or in the United States (Publicly-Traded Test).
Under the regulations, company's shares will be considered to be
''regularly traded'' on an established securities market if (i) one or
more classes of its shares representing more than 50% of its
outstandingshares,byvotingpowerandvalue,arelistedonthemarket
andtradedonthemarket,otherthaninminimalquantities,onatleast
60 days during the taxable year; and (ii) the aggregate number of
shares traded during the taxable year is at least 10% of the average
56 numberofsharesoutstandingduringthetaxableyear.Notwithstanding
theforegoing,theregulationsprovide,inpertinentpart,thateachclass
ofthecompany'sshareswillnotbeconsideredtobe''regularlytraded''
onanestablishedsecuritiesmarketforanytaxableyearinwhich50%
or more of the vote and value of the outstanding shares of such class
areowned,actuallyorconstructivelyunderspeciﬁedstockattribution
rules, on more than half the days during the taxable year by persons
whoeachown5%ormoreofthevalueofsuchclassofthecompany's
outstanding shares, (''5 Percent Override Rule'').
ManagementbelievesthattheCompanyanditssubsidiariescurrently
comply with the above mentioned criteria; however, in the future, the
Company and its subsidiaries may not continue to satisfy certain
criteria in the U.S. tax laws and as such, may become subject to the
U.S. federal income tax on U.S. source shipping income.
21. Financial Risk management objectives
and policies
TheCompany’sanditssubsidiaries’principalﬁnancialliabilities,other
than derivatives, are bank loans. The main purpose of these ﬁnancial
liabilities is to ﬁnance the operations of the Company and its
subsidiaries. The Company and its subsidiaries have various other
ﬁnancial instruments such as cash and cash equivalents, restricted
cash, trade receivables and trade payables, which arise directly from
theiroperations.TheCompanyalsoentersintoderivativetransactions,
primarily interest rate swaps, the purpose of which is to manage the
interest rate risk arising from the Company’s and its subsidiaries’
sources of ﬁnance.
The main risks arising from the Company’s and its subsidiaries’
ﬁnancial instruments are interest rate risk and credit risk.
Interest rate risk
TheCompany’sexposuretotheriskofchangesinmarketinterestrates
relatesprimarilytotheCompany’sanditssubsidiaries’long-termdebt
obligations at ﬂoating interest rates.
TheCompany’spolicyistomanageitsinterestcostusingamixofﬁxed
andvariableratedebts.TheCompany’spolicyistokeepbetween40%
and 70% of its borrowings at ﬁxed rates of interest. To manage this,
the Company enters into interest rate swaps, in which the Company
agrees to exchange variable to ﬁxed interest rate. These swaps are
designated to hedge underlying debt obligations. At 31 December
2010, aer taking into account the eﬀect of interest rate swaps,
67.5% of the Company’s and its subsidiaries’ long-term borrowings
are at ﬁxed rate of interest (2009: 60%).
The table below demonstrates the sensitivity of the proﬁt or loss
(throughtheimpactonﬂoatingrateborrowings)andofequity(through
the valuation of the interest rate swap), to a reasonably possible
change in interest rates (libor), with all other variables held constant:
Foreign currency risk
The majority of the Company’s and its subsidiaries’ transactions are
denominated in U.S. dollars. The Company has transactional currency
exposure in GBP currency. Such exposure arises from cash outﬂows
representing the payment of interim and annual dividends. The
Company mitigates its foreign exchange risk related to dividends by
converting the U.S. dollar amount in the respective amount of GBP at
thedateofdividendsdeclarationbytheBoardofDirectorsratherthan
the actual date of payment.
Furthermore, part of the operating expenses of the vessels and the
administrative costs are denominated in Euro currency. The vessel
owning companies and the management company mitigate their
exposuretoEurocurrencybyconvertingU.S.dollarsamountsintoEuro
within the year at rates that are deemed as reasonable, in order to
57 coverpartoftheiroperatingandadministrativeforeseeableexpenses
payable in Euro. For the years ended 31 December 2010 and 2009,
there is no signiﬁcant balance or transaction in foreign currency.
Credit risk
TheCompany’sanditssubsidiaries’maximumexposuretocreditriskin
the event the counterparties fail to perform their obligations as of 31
December2010,inrelationtoeachclassofrecognisedﬁnancialassets,
otherthanderivativesandinvestments,isthecarryingamountofthose
assets as indicated in the consolidated statement of ﬁnancial position.
Financial instruments, which potentially subject the Company and its
subsidiaries to signiﬁcant concentrations of credit risk, consist
principallyofcashandcashequivalentsandtradeaccountsreceivable.
TheCompanyanditssubsidiariesplacetheircashandcashequivalents,
consisting mostly of deposits, with reputable ﬁnancial institutions.
Credit risk with respect to trade accounts receivable is generally
monitored on an ongoing basis with the result that the exposure to
impairmentontradereceivablesisinsigniﬁcant.Moreover,thevessels
are normally chartered under time charter agreements where, as per
theindustrypractice,thechartererpaysforthetransportationservice
in advance, supporting the management of trade receivables.
TheCompanyanditssubsidiariesintendtooperatewiththirdparties,
with which they have either co-operated in the past to its full
satisfaction, or which have been introduced through established
independent third party broking channels.
Concentration of credit risk table
The following table provides information with respect to charterers
whoindividually,accountedformorethan10%oftheCompany’sand
its subsidiaries’ revenue for the year ended 31 December:
Fair Values
Derivatives and investments are recorded at fair value, while all other
ﬁnancial assets and ﬁnancial liabilities are recorded at amortised cost
which approximates fair value at 31 December 2010.
Fair value hierarchy
As at 31 December 2010, the Company and its subsidiaries held the
following ﬁnancial instruments measured at fair value:
The Company and its subsidiaries use the following hierarchy for
determining and disclosing the fair value of ﬁnancial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical
assets or liabilities.
Level2:othertechniquesforwhichallinputswhichhaveasigniﬁcanteﬀect
ontherecordedfairvalueareobservable,eitherdirectlyorindirectly.
Level3:techniqueswhichuseinputswhichhaveasigniﬁcanteﬀecton
the recorded fair value that are not based on observable market data.
Liquidity risk
The Company aims to mitigate liquidity risk by managing cash
generationbyoperations,applyingcashcollectiontargetsthroughout
itssubsidiaries.Thevesselsarenormallycharteredundertimecharter
agreementswhere,aspertheindustrypractice,thechartererpaysfor
the transportation service in advance, supporting the management of
58 cashgeneration.Investmentiscarefullycontrolled,withauthorisation
limitsoperatinguptoboardlevelandcashpaybackperiodsappliedas
part of the investment appraisal process.
In its funding strategy, the Company’s objective is to maintain a
balancebetweencontinuityoffundingandﬂexibilitythroughtheuseof
bank loans. The policy in new investments for second-hand vessels is
thatnotmorethan65%ofthevalueofeachinvestmentwillbefunded
through borrowings.
Excess cash used in managing liquidity is mainly invested in ﬁnancial
instruments exposed to insigniﬁcant risk of changes in market value,
being placed on interest-bearing deposit with maturities ﬁxed at no
more than 3 months.
The table below summarises the maturity proﬁle of the ﬁnancial
liabilities at 31 December 2010 and 2009, based on contractual
undiscounted payments (including interest to be paid, which is
calculated using the last applicable rate for each loan, as of
31 December 2010 and 2009):
59 Capital Management
The primary objective of the Company’s capital management is to
ensure that it maintains a strong ﬁnancial position and healthy capital
ratiosinordertosupportitsbusinessandmaximiseshareholdervalue.
TheCompanymanagesitscapitalstructureandmakesadjustmentstoit,
inlightofchangesineconomicconditions.Tomaintainoradjustthecapital
structure, the Company may adjust or suspend the dividend payment to
shareholders,returncapitaltoshareholders,orissuenewshares.
Inthiscontextandinordertomoreaccuratelyreﬂectthegearingratio
andmonitoringofcapitalmanagement,theCompanydeﬁnesleverage
as the ratio of the net debt (net of deferred ﬁnancing fees) to book
capitalization. Book capitalization is deﬁned as total equity plus net
debt. The Company’s policy is keeping gearing ratio below 80% on
average. Total equity includes issued share capital, share premium,
capital contributions, retained earnings and other reserves.
22. Events aer the ﬁnancial position date
The Board of Directors of the Company will propose to the Annual
GeneralMeetingforapproval,aﬁnaldividendfor2010of5.45pence
per share or total GBP 2,486,118. The dividend proposed by the
Board of Directors, is expected to be approved by the AGM to be held
inAthenson11May2011andwillbepayableon20May2011tothe
shareholdersonrecordasof26April2011.Theexdividenddatewill
be 20 April 2011.
60 Directors
Graham Roberts,
Non-Executive Chairman
Fotini Karamanli,
Chief Executive Oﬃcer
Elpida Kyriakopoulou,
Chief Financial Oﬃcer
Charlotte Stratos,
Non-Executive Director
Dimos Kapouniaridis,
Non-Executive Director
Secretary
TMF Channel Islands Limited
Walker House
28-34 Hill Street
St. Helier
Jersey JE4 5TF
Auditors
Ernst & Young LLP,
Liberation House,
Castle Street, St. Helier,
Jersey JE1 1EY
Bankers
National Bank of Greece S.A.
Piraeus Bank S.A.
EFG Eurobank S.A.
Solicitors
Norton Rose
1 Posidonos Avenue & 3 Moraitini
175 64 P. Faliro
Greece
Norton Rose LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Holman Fenwick Willan International
83 Akti Miaouli
185 38 Piraeus
Greece
Rea Mitropoulou
53-55 Akti Miaouli
185 36 Pireaus
Greece
Registrars
Capita Registrars (Jersey) Limited
PO Box 532
St. Helier
Jersey JE4 5UW
Registered Oﬃce
Walker House
PO Box 498
28-34 Hill Street
St. Helier
Jersey JE4 5TF
CORPORA TE INFORMA TION 62 63
www.hellenic-carriers.com