2 Corporate Statement
OurCompany,whichwasincorporatedinJerseyin
2007, owns and operates through its subsidiaries
a ﬂeet of dry bulk vessels that transport along
worldwideshippingroutesdrybulkcargoessuchas
iron ore, coal, grain, steel products, alumina and
other commodities. The ﬂeet currently consists of
ﬁve vessels, comprising three Panamax vessels,
oneHandymaxandoneSupramax.Theﬂeethasan
aggregate carrying capacity of 303,141 dwt and
an average age of 16.2 years as at 31 December
2011.Inadditiontothecurrentoperatingﬂeet,the
Company, through its subsidiaries, also has two
new building Kamsarmax vessels on order for
deliveryinJanuaryandMarch2013.Thesevessels
will have an aggregate carrying capacity of
approximately 164,000 dwt and following their
delivery,theﬂeet’saggregatecarryingcapacitywill
increase to approximately 467,141 dwt and the
average age will decrease to 12.5 years.
The Company is committed to continue its long
standingrelationshipswithestablishedcustomers
and to ensure 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.
3 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 for 2011 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 34
Corporate Information 59
4
Contents 2011 HIGHLIGHTS
2011 Financial
• Revenue U.S.$33.2 million (2010: U.S.$57.5 million)
• EBITDA
1
U.S.$16.9 million (2010: U.S.$38.4 million)
• Operating Proﬁt U.S.$3.6 million before non-cash items (2010: U.S.$24.5 million)
• Net Loss U.S.$1.1 million excluding non-cash items (2010: U.S.$19.1 million Net Income)
• Gearing ratio
2
at 30.2% as of 31 December 2011 (26.5% as of 31 December 2010)
• Total cash U.S.$48.0 million (including restricted cash) as of 31 December 2011
(U.S.$60.0 million, including restricted cash, as of 31 December 2010)
• Reduction of Gross debt from U.S.$105.3 million on 31 December 2010 to U.S.$88.2 million
on 31 December 2011 resulting in a net debt position of U.S.$40.1 million from U.S.$45.3 million
2011 Operational
• Operation of a ﬂeet of 5.0 vessels on average compared to 5.6 vessels in 2010
• Net cash generated from operations U.S.$16.7 million (2010: U.S.$36.1 million)
• Time Charter Equivalent rate of U.S.$17,369 (2010: U.S.$26,089) outperforming the average 2011
Panamax and Supramax average TC earnings (U.S.$13,895 and U.S.$13,792 respectively
3
)
....................................................................................................................................................
1
EBITDA has been calculated as follows:
Operating proﬁt + Depreciation + Depreciation of dry-docking costs + Impairment charge - 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
Clarksons’ Research Services
5
Financial and Operational Highlights Hellenicnavigatedthroughachallengingdrybulkmarketenvironment
andglobalvolatilityduring2011.Byadaptingourcharteringstrategy
totheprevailingmarketconditions,maintainingapro-activeapproach
andpreservingourhigh-qualitycustomerrelations,ourﬂeetremained
employed during the year at rates above market levels.
Seaborne trade reached an all time high in 2011 and the demand for
dry bulk commodities remains strong, especially from emerging
markets. However the unprecedented dry bulk ﬂeet expansion has
resultedinthecurrenttradeimbalancethemarketisexperiencing.Our
management strategy together with our ﬂeet employment proﬁle
places the Company in the position to strengthen our revenue stream
by seeking out market opportunities in the short term.
In addition, we plan to continue with our ﬂeet renewal and expansion
program, acting prudently and aiming to build long term shareholder
value. Our expansion into the Kamsarmax sector with the two new
buildings that arrive in 2013 is an example of our focus on having a
diversiﬁed ﬂeet which oﬀers wider employment opportunities.
Our moderate leverage and healthy cash position coupled with the
long-standing relationships with our lenders can support our ﬂeet
growth plans. In order to optimize the use of cash when market
opportunities arise, but also to reinforce the Company’s liquidity, the
Directors of the Company have recommended that the dividend
payment for the year 2011 be suspended.
We are conﬁdent that with an experienced management team and an
eﬃciently run ﬂeet, Hellenic is well positioned to navigate through the
current depressed market and continue building long term value and
growth for our shareholders.
Graham Roberts
Chairman
8 March 2012
6
Chairman’s Statement Hellenic Carriers is pleased to report its ﬁnancial results for the year
ended 31 December 2011.
Despite strong demand for dry bulk commodities, the market was
subject to considerable pressure in 2011 impacted by heavy vessel
deliveries resulting in volatile freight rates.
The decrease in our Company’s revenues is mainly attributed to the
lower freight rates prevailing during the year. It is also a result of the
reduction in ﬂeet operating days aer the sale of the M/V Hellenic
Breeze in August 2010.
During the ﬁrst quarter of the year, our Company beneﬁted from the
continuation of charters agreed prior to the market downturn in Q4
2008atveryhighrates.Followingtheexpirationoftheseagreements,
the vessels were traded in the spot market avoiding long term
commitments at low rates. Our strategy moving forward is to secure
periodemploymentforthevesselswhenthefreightmarketimproves.
Our operating ﬂeet will expand in 2013 when the two new building
Kamsarmaxvesselspurchasedin2010willbedelivered.Bythattime,
we expect dry bulk fundamentals to improve, as the glut of new
tonnage that is currently being delivered will have subsided and will
allow the underlying supply/demand balance to tighten, thereby
helping the freight market.
However, in light of current market conditions, our company has
already taken steps to reinforce liquidity. An agreement with the
lenders has already been reached to have the debt repayment
obligations reduced over the next 2 years and the tenor of one of the
loanfacilitiesextendedfor3years.Allnecessarywaiversinrespectof
the ﬁnancial covenants until 2014 have also been obtained from
existing lenders. Furthermore, our Board of Directors recommended
that dividend payments for the year 2011 be suspended in order to
optimize the use of cash when market opportunities arise.
Looking ahead, we are optimistic about the longer term dry bulk
fundamentalsaseconomicgrowthinthedevelopingcountriesremains
robust.Thistrendisexpectedtocontinuetherebyincreasingtheneed
for transportation of iron ore, coal and grain. Equally important is the
urbanizationgrowthintheFarEast,whichison-goingandwillresultin
an increase in infrastructure projects and higher demand for energy
resources. Another factor which should be taken into account is that
approximately 17% or 100mdwt of the existing global dry-bulk ﬂeet
is over-aged and will eventually be scrapped, thereby alleviating the
oversupply within the next two years. We expect that during the same
period the pace of new building orders will remain at low levels due to
limited ﬁnancing resources.
Thecombinationoftheabovementionedfactors,sustainabledemand
from the emerging economies, increased scrapping and limited new
building activity, contribute to our positive long term outlook of the
dry bulk market.
Fotini Karamanli
Chief Executive Oﬃcer
8 March 2012
7
Chief Executive Oﬃcer’s Statement As of 31 December 2011, the Company owns and operates, through
its wholly owned subsidiaries, a ﬂeet of ﬁve dry-bulk carriers,
comprisingthreePanamaxvessels,oneHandymaxandoneSupramax
with a weighted average age of 16.2 years and a total carrying
capacityof303,141dwt.Thevessels’cargo-carryingcapacitiesrange
from44,809to73,981dwtdependingonthetypeofvessel.Thedry
bulkcarrierstransportmajorbulkcargoes(suchasgrain,coalandiron
ore) and minor bulk cargoes (such as bauxite, phosphate, steel
products and alumina) along worldwide shipping routes.
Fleet Developments:
During the year ended 31 December 2011, one vessel, the M/V
HellenicWindcompletedherspecialsurveywhichhasbeencapitalised.
Fleet details as at 31 December 2011:
8
Hellenic Carriers Fleet In June 2010, the Company, through two wholly owned subsidiaries
enteredintoshipbuildingcontractswithZhejiangOuhuaShipbuildingCo.
Ltd. for the construction of two Kamsarmax bulk carriers. The contract
price for each vessel is U.S.$34.0 million and the cost of additions to
eachvessel’sinitialspeciﬁcationamountstoU.S.$0.2million.Outofthis
amount40%ofthecontractpricewaspaidin2010andtheremaining
60% is payable upon delivery of the vessels in 2013. In March 2011,
therespectivesubsidiariessignedloanfacilityagreementswithamajor
European ﬁnancial institution securing ﬁnancing of up to 65% of each
vessel’s market value upon delivery or maximum U.S.$22.1 million per
vessel. Such amounts shall be drawn down upon delivery of each new
buildingvesselfromtheshipyard.TheCompanyhasnofurtherﬁnancial
commitments to the shipyard until delivery of the vessels in 2013.
FollowingthedeliveryofthetwoKamsarmaxvessels,theCompanywill
own and operate through its subsidiaries a diversiﬁed ﬂeet of seven
drybulkcarrierscomprisingtwoKamsarmaxes,threePanamaxes,one
Supramax and one Handymax with an aggregate carrying capacity of
about 467,141 dwt and a weighted average age of 12.5 years (as of
31 March 2013).
9 Fleet Deployment:
The dry bulk freight market deteriorated in 2011 with the BDI moving
between 1,043 points and 2,173 points, averaging at 1,549 points
compared to 2,758 points in 2010. This was mainly the result of a
14% increase in tonnage supply during 2011 followed by a 16% net
increasein2010.Althoughseabornetradedemandcontinuedtogrow
in 2011, supported mainly by the need for raw materials by the
developingcountries,itcouldnotfullyabsorbthemassiveinﬂowofnew
ships during the past two years. In this environment, during the ﬁrst
quarter of the year, Hellenic beneﬁted from the continuation of time
chartersagreedpriortothemarketdownturninQ42008atfavourable
ratescomparedtotheprevailingmarketratesduringtheyearinreview.
In particular, the M/V Hellenic Wind continued her employment under a
3-yeartimecharteragreementatgrossdailyrateofU.S.$54,000.This
chartercommencedinMay2008andwasterminatedinApril2011,one
month earlier than the contractually agreed redelivery date. However,
charterers Messrs Hanjin Shipping Co Ltd. compensated the Owners by
payingforthedamagesresultingfromtheearlyredeliveryofthevessel.
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. This charter was due to expire on 25 January 2011;
howeverthevesselwasredeliveredearlytoherOwnerson14January
2011. The charterers fulﬁlled all their ﬁnancial obligations towards
Owners (including payment of hire revenue and compensation for the
early redelivery) prior to their application for rehabilitation in Korea.
Duringtheﬁrstquarteroftheyear,theM/VHellenicSkywasearningagross
daily rate of U.S.$22,000 on the basis of a time charter agreement with
CargillInternationalS.A.foraperiodofminimumﬁvetoaboutsevenmonths.
The vessel was redelivered to her Owners on 9 March 2011. Following
redelivery from Cargill International S.A., the M/V Hellenic Sky was ﬁxed
underatimecharteragreementwithBungeS.A.foraperiodofsixtoeight
monthsatagrossdailyrateofU.S.$16,000.Thechartercommencedon9
March2011andthevesselwasredeliveredtoherOwnerson16October
2011. As from 16 October 2011, the Company, through its respective
shipowningsubsidiary,employedthevesselinthespotmarket.
DuringthesameperiodtheM/VHellenicSeawasemployedundertime
charterforninetoelevenmonthstoSetSeaS.p.A.atagrossdailyrate
of U.S.$23,300. This charter was terminated on 28 March 2011, a
month earlier than the agreed redelivery date. The charterers
compensated the Owners by paying the relevant amount of damages
for early redelivery.
Followingtheexpirationoftheaboveagreements,theCompanyopted
toemploysomeofthevesselsinthespotmarketfortheperformance
of single or consecutive laden legs or under short term time charter
agreements, avoiding long term commitments at depressed market
levels. In some cases repositioning of the vessels was conducted in
order to achieve more attractive time charter rates. Fleet days spent
for repositioning totalled to about 60 days.
FollowingherredeliveryfromHanjinShippingCoLtd.,theM/VHellenic
Wind traded under a short-term time charter agreement with
SangamonTransportationGroupatadailygrossrateofU.S.$24,500
fromarrivalinSouthAmericaplusU.S.$430,000ballastbonus.Upon
terminationofthisﬁxtureon1August2011,thevesselwasdelivered
to her next charterers Transgrain Shipping B.V. for the execution of
two laden legs at a gross daily rate of U.S.$11,750 for the ﬁrst 100
daysandU.S.$12,500thereaer.Shecompletedheremploymenton
18 November 2011 and proceeded for her scheduled special survey
and dry docking in China which she completed on 30th December
2011.Followingcompletionofthespecialsurveythevesselballasted
towards the US Gulf and was ﬁxed in February under a time charter
agreement for the period of about four to maximum six months at a
grossdailyrateofU.S.$10,000plusaballastbonusofU.S.$660,000.
Following redelivery from Korea Line Corp., the M/V Konstantinos D
wasﬁxedunderatimecharteragreementwithBungeS.A.foraperiod
of four to seven months at a gross daily rate of U.S.$9,250 for the
ﬁrst 40 days, increasing to U.S.$14,200 per day for the remaining
period. This charter commenced on 14 January 2011 and was
terminated on 29 July 2011 and averaged at a gross rate of
U.S.$13,189perday.Shewasdirectlydeliveredtohernextcharterers
WesternBulkPteLtd.fortheperformanceoftwo,optionalthree,laden
legs earning U.S.$14,250 per day gross for the ﬁrst two legs, and
10 U.S.$14,500fortheoptionalthirdleg.Uponterminationoftheabove
charteragreementon18November2011,thevesselwasﬁxedunder
a time charter agreement with Marimed Shipping Inc for a period of
about four to maximum six months at a gross daily rate of
U.S.$15,000. This charter came to an end on 3 March 2012 and the
vessel is since trading in the spot market thereaer.
During 2011, the M/V Hellenic Horizon was trading in the spot
market performing short voyages and time charter trips, mainly in
the Atlantic basin.
With respect to the trading activity of M/V Hellenic Sea, following her
redeliveryfromSetseaS.p.Athevesselwasemployedundershortterm
time charters and on 29 October 2011 was delivered to Swissmarine
Services S.A. to perform two optional three laden legs at a gross daily
rate of U.S.$15,000 from arrival of the vessel in Colombia plus
U.S.$500,000 ballast bonus. The option for the third leg was not
exercised, the charter was terminated on 6 January 2012 and the
vessel is trading in the spot market since.
The ﬂeet utilisation during the year remained at 98.3% taking into
account 23 idle days for the ﬂeet.
Taking into consideration the operating ﬂeet, the estimated time
charter coverage stands at 37.7% for the ﬁrst half of 2012 and at
18.7% until year end.
The Fleet Deployment of Hellenic is summarized below:
11 12
Board of Directors and Senior Management Team 13
Graham Roberts
(Age 61),
Chairman and Non-executive Director
Graham Roberts was appointed as our Chairman on Admission.
Between 2002 and 2006, Mr. Roberts was chief
executiveandmainboarddirectorofPDPortsPlc.
FromthatpositionhesuccessfullydirectedPD
Ports ﬂotation in 2004 on AIM and
subsequent sale to Babcock & Brown
InfrastructureLimitedin2005.Priorto
that, Mr. Roberts held chief executive
posts at London Luton Airport, MTL
(Merseyside Transport Limited) and
Servisair plc. Mr. Roberts was also a
senior executive at NFC plc (later
renamedExelplc)forover25years,
and was a member of its board from
1989 until he le the company in
1997. In total he has over 40 years
experienceinthetransportationsector.
Mr. Roberts is a non-executive director of
the Freight Transport Association Limited.
Fotini Karamanli
(Age 40),
Chief Executive Oﬃcer
Ms. Karamanli is Chief Executive Oﬃcer of the Company. She is
responsibleforstrategy,vesselacquisitions,charteringandﬁnancing.
Ms. Karamanli has more than 16 years shipping
experienceandhasbeenwithcompaniesassociated
with HCL since 1999. From 1998 to 1999, Ms.
Karamanli worked on the sale and purchase
deskofGalbraithsShipbrokersinLondonand
before that was a shipping lawyer with
Norton Rose in London and Greece.
Ms.Karamanliqualiﬁedasasolicitorofthe
HighCourtofEnglandandWalesin1997
andisamemberofthelegalcommitteeof
theAssociationofGreekShip-Owners.Ms.
Karamanli served as an independent non-
executive member of the board of directors
of Piraeus Bank S.A., a company listed on the
Athens Stock Exchange from 2006 until early
2012 and is currently 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.
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: Elpida Kyriakopoulou
(Age 39),
Chief Financial Oﬃcer
Ms.KyriakopoulouhasbeenactingasFinancial
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 57),
Non-executive Director
Ms. Stratos is a Senior Advisor to Morgan
Stanley's Investment Banking Division-Global
Transportationteam.From1987to2007,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
BankersTrustCompanyincluding,advisortotheShippingDepartment
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 39),
Non-executive Director
Mr.KapouniaridisisaSeniorDirectorandCo-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
hasapproximatelyﬁeenyearsofinvestmentbankingexperiencewith
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
Yiannis Karagiannis
(Age 47),
Commercial Manager
Mr. Karagiannis joined Hellenic Shipmanagement
in 2011 in the capacity of commercial manager
withresponsibilityforbusinessdevelopmentsand
overseeingtheCompany’scharteringandsaleand
purchase activities. He has more than 15 years of experience in the
chartering and commercial sector of the shipping industry, and was
previouslyemployedascharteringandcommercialmanagerofParalos
Maritime Corp. S.A. and prior to that as chartering manager of Lyras
Shipping Ltd.
Mr. Karagiannis is a graduate of the Merchant Marine Academy of
Hydra,andhas4yearsshipboardexperienceservinguptotherankof
Second Oﬃcer on board bulk carriers and tankers.
Helen Walsh
(Age 34),
Commercial/ Legal Department Oﬃcer
PriortojoiningHellenicShipmanagementCorp.in
January 2010, Ms. Walsh worked as a claims
handlerforashipadvisoryﬁrminPiraeus,andwas
appointed Registrar for the Barbados Maritime
Authority in Greece. Ms. Walsh holds a BSc (Hons) in Transport &
ShippingfromLondonGuildhallUniversityandaMasterofLaws(LLM)
inMaritime&CommercialLawfromtheUniversityofWales,Swansea.
Panagiotis Konstantopoulos
(Age 34),
Designated Person Ashore
Mr.KonstantopoulosjoinedHellenicShipmanagement
Corp. in 2011 in the capacity of the Designated
PersonAshore(DPA)andCompanySecurityOﬃcer
(CSO) and is responsible for the implementation,
monitoring and audit of the safety management procedures for the
ﬂeet, as well as the ISM (International Safety Management) and ISPS
(International Ship and Port Facility Security) certiﬁcation.
Mr. Konstantopoulos is a graduate of University of Piraeus on Maritime
Studies (BSc), obtained also a BSc from the Technological Educational
InstituteofAthens(TEI)inShipbuilding,andisqualiﬁedasaNavalArchitect.
Prior to joining Hellenic Shipmanagement Corp. he had sea service
experience as an Engineer and worked as marine consultant and
surveyor,conductingtrainingsessionsandfollowinguponvariousISM
projects for a Marine Consultancy Company in Piraeus.
Anastasia Delidimitriou
(Age 35),
Senior Accounting Oﬃcer
Before joining Hellenic Shipmanagement Corp. on
1 November 2007, Ms. Delidimitriou worked for
Mantinia Shipping Co. S.A. as an Accounting
Oﬃcer, since 2006. Ms. Delidimitriou started her
careerinshippingworkingasanaccountantatJohnGiavridisInc.She
holds a degree in Business Administration from the University of
Piraeus, Greece.
Dimitris Babousis
(Age 39),
Senior Accounting Oﬃcer
Before joining Hellenic Shipmanagement Corp. on
1 November 2007, Mr. Babousis worked for
MantiniaShippingCo.S.A.asaSeniorAccounting
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
ownedshipowningsubsidiaries,andoperator,throughitswhollyowned
manager,HellenicShipmanagementCorp.,ofaﬂeetofdrybulkvessels
that transport iron ore, coal, grain, steel products, alumina and other
drybulkcargoesworldwide.Theoperatingﬂeetattheendoftheperiod
underreviewincludedthreePanamaxvessels,oneSupramaxvesseland
one Handymax vessel. In addition to the operating ﬂeet, the Company,
throughitssubsidiaries,hasonorderforconstructiontwoKamsarmax
bulk carriers scheduled for delivery in January and March 2013.
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
The Company, through its wholly owned subsidiaries, operates a ﬂeet
of dry bulk carrier vessels throughout the world’s trade routes.
Shipping markets are by nature cyclical and prone to volatility and as
a consequence charter rates, vessel values and in turn operational
results are directly aﬀected by the prevailing changes in the ship
demand and supply balance.
Goingforward,weexpectdrybulkfundamentalstoimproveastheglut
ofnewtonnagethatiscurrentlybeingdeliveredwillhavesubsidedand
will allow the underlying supply/demand balance to tighten by 2013
which is when delivery of the Kamsarmax vessels is expected. In fact,
the ﬂeet as a whole will be in position to beneﬁt from improving dry
bulk fundamentals since none of the vessels is committed for the
longer term at current market rates. We expect a depressed freight
environment throughout 2012, which is why we remain cautious for
the short to medium term.
Looking ahead, we are optimistic about the long term dry bulk
fundamentals as economic growth in the developing countries remains
robust. This trend is expected to continue for the remainder of this
decade which will support dry bulk markets as the need for
transportationofironore,coalandgrainwillincrease.Equallyimportant,
istheurbanizationgrowthintheFarEastwhichison-goingandwillresult
in an increase in infrastructure projects and higher demand for energy
resources. Furthermore, we expect that the over-aged ships (20 years
plus)whichaccountforapproximately17%or100mdwtoftheexisting
ﬂeet will eventually be scrapped, thereby alleviating the oversupply
withinthenexttwoyears.Wealsoexpectthatduringthesameperiodthe
pace of new building orders will remain at low levels due to limited
ﬁnancing resources and unimpressive freight rates.
Thecombinationoftheabovementionedfactors,sustainabledemand
from the emerging economies increased scrapping and limited new
building activity, contribute to our positive long term outlook of the
dry bulk market.
2011 Operational & Financial Review
Going concern:
TheDirectorsbelieveitisappropriatetoadoptthegoingconcernbasis
inpreparingtheﬁnancialstatementssince,aerdueconsideration,the
DirectorsconsiderthattheCompanyanditssubsidiarieshaveadequate
resourcestocontinueinoperationalexistencefortheforeseeablefuture.
17
Directors’ Report for 2011 Full Year 2011 Results:
For the year ended 31 December 2011, Hellenic reported total
revenues of to U.S.$33.2 million compared to U.S.$57.5 million for
the same period of 2010. The decrease in revenues is mainly
attributedtothedepresseddrybulkfreightratesprevailingduringthe
year2011.Wenotethatforthetwelvemonthsof2011theBalticDry
Index (BDI) averaged at 1,549 points compared to 2,758 points
during the same period of 2010, a decrease of 43.8%. It is also a
resultofthereductioninﬂeetoperatingdaysforthetwelvemonthsof
2011 due to the sale of the M/V Hellenic Breeze in August 2010.
Operating loss amounted to U.S.$25.7 million for the year ended 31
December2011comparedtoanoperatingproﬁtofU.S.$32.9million
for the same period of 2010. The year ended 31 December 2011
operating loss ﬁgure included a non-cash impairment charge
recognised in 2011 of U.S.$29.3 million. The impairment charge
representsthediﬀerencebetweenthebookvalueofthreeﬂeetvessels
andtheircalculatedrecoverableamount.Theyearended31December
2010 ﬁgure included an U.S.$8.5 million gain resulting from the sale
of M/V Hellenic Breeze which is also a non-cash item.
Excluding the above mentioned non-cash items, Hellenic reported for
the year ended 31 December 2011 and 2010 an operating proﬁt of
U.S.$3.6 million and U.S.$24.5 million, respectively.
Theoperatingresultwasalsoaﬀectedbythedepreciationandamortization
charge of the year amounting to U.S.$13.8 million. The depreciation and
amortizationchargefor2010amountedtoU.S.$14.5million.
Net loss for the year ended 31 December 2011, excluding non-cash
items, amounted to U.S.$1.1 million compared to a net proﬁt of
U.S.$$19.1 million for the year ended 31 December 2010. Taking
intoconsiderationtheabovementionednon-cashitems,therecorded
net loss for 2011 amounted to U.S.$30.4 million and the net proﬁt
for 2010 was U.S.$27.5 million.
Netlossfortheyearended31December2011amountedtoU.S.$30.4
million representing a loss per share of U.S.$0.67 calculated on
45,616,851weightedaveragenumberofshares.Netproﬁtfortheyear
ended31December2010amountedtoU.S.$27.5millionrepresenting
a proﬁt per share of U.S.$0.60 calculated on 45,616,851 weighted
averagenumberofshares.Excludingnon-cashitems,netlossfortheyear
ended 31 December 2011 amounted to U.S.$1.1 million, or a loss of
U.S.$0.02perbasicanddilutedshare.Therespectivenetproﬁt,excluding
non-cash items, for the year ended 31 December 2010 amounted to
U.S.$19.1million,oraproﬁtofU.S.$0.42perbasicanddilutedshare.
During 2011 the Company, through its subsidiaries, operated 5.0
vessels which earned on average U.S.$17,369 per day compared to
5.6vesselsandaverageearningsofU.S.$26.089perdayin2010.We
note that Panamax and Supramax average Time Charter rates for the
year ended 31 December 2011 were reported at U.S.$13,895 and
U.S.$13,792, respectively compared to U.S.$24,955 and
U.S.$21,867 for the same period in 2010.
EarningsbeforeTax,Interest,DepreciationandAmortization(EBITDA)was
reportedatU.S.$16.9millionforthetwelvemonthsended31December
2011comparedtoU.S.$38.4millionforthesameperiodin2010.
Vessel operating expenses decreased by U.S.$0.1 million to a total of
U.S.$10.0 million, however daily operating expenses increased to
U.S.$5,456 from U.S.$4,934. This increase is partly attributed to
modiﬁcations performed on board the vessels in order to ensure
compliance with new regulations and is also a result of the increased
costs in terms of supplies purchased and maintenance expenses
incurred at expensive ports with respect to two of the vessels which
traded during 2011 in the Atlantic basin.
The Company’s general and administrative expenses for the twelve
months of 2011 were approximately U.S.$1.8 million in line with the
expenses charged in the same period in 2010.
Debtasof31December2011amountedtoU.S.$88.2millioncompared
to U.S.$105.3 million as of 31 December 2010. Repayment of long-
termdebtduringthetwelvemonthsof2011totaledtoU.S.$17.2million.
Inordertomaintainsuﬃcientliquiditytoovercomethedepressedfreight
market conditions Hellenic and its subsidiaries reached an agreement
withthelenderstolightenuptheirdebtrepaymentscheduleforthenext
two years. In December 2011, a supplemental agreement was signed
withoneofthelendersbasedonwhich principalinstalmentspayableto
theBankwerereducedby50%fortheyears2012and2013,increasing
theballoonfallingdueinMay2016,respectively.Anearningsrecapture
18 clause has been agreed based on which part of the excess earnings
generated by the vessels ﬁnanced under this loan facility agreement
during each year, commencing from ﬁnancial year 2012, will be paid to
thelendingbankatthebeginningofthenextﬁscalyear.
Asof31December2011,Hellenicanditssubsidiarieshaveobtained
the appropriate waivers from their lenders.
As of 31 December 2011 debt (debt, net of deferred ﬁnancing fees)
to total capitalisation (debt and stockholders’ equity) amounted to
48.7% compared to 45.6% in 2010. Net debt (debt less cash and
cash equivalents) to total capitalisation amounted to 30.2% on 31
December 2011 compared to 26.5% on 31 December 2010.
Total cash, including restricted cash amounted to U.S.$48.0 million
and U.S.$60.0 million as of 31 December 2011 and 31 December
2010, respectively.
Restrictedcashreportedat31December2011wasU.S.$4.0million.Out
ofthisamount,U.S.$0.6millionrepresentsfundsheldinaretentionaccount
fortherepaymentofthenextdebtinstalmentandinterestdueunderoneof
the existing loan agreements. The amount of U.S.$3.4 million is retained
against issuance of a Bank Guarantee of U.S.$3.1 million provided as
security to Setsea SpA, the former charterers of the vessel M/V Hellenic
Sea, pending the outcome of the arbitration proceedings already
commencedinLondonbetweenOwnersandCharterersontheoccasionof
thevessel’sgroundingintheAmazonRiverinJuly2010.Inputfromlegal
advisors is supportive to Owners’ position, therefore, as of date, the
Companyhasnotrecordedaprovisionintheinterimﬁnancialstatements.
19 Post balance sheet events
In February 2012, the Company and its subsidiaries agreed with one
lender to enter into an agreement for the restructuring of the
repaymentscheduleoftheloanfacilitybyextendingitstenor.Further
to this agreement the principal instalments payable to the Bank were
reduced by 48% for the period 2012-2013 and by 31% for the
period 2014-2015. The maturity of the loan is extended for three
years and the balloon payment is reduced. An earnings recapture
clause has been agreed based on which part of the excess earnings
generated by the vessels ﬁnanced under this loan facility agreement
during each year, commencing from ﬁnancial year 2012, will be paid
to the lending bank at the beginning of the next ﬁscal year.
Following the loan facility restructurings arranged with both lenders,
thescheduleddebtrepaymentsfallingduein2012havebeenreduced
to U.S.$6.3 million from U.S.$12.5 million. In addition, the main
ﬁnancial covenants have been waived until 1 January 2014.
Litigation
The Company is not engaged directly in any litigation of material
importance, nor, so far as the Directors are aware, is any litigation
pending or threatened, which would have a material adverse eﬀect on
the ﬁnancial position of the Company. Should the arbitration
proceedings with respect to M/V Hellenic Sea’s hull damage in July
2010 continue, the vessel owning company of M/V Hellenic Sea, will
be directly engaged in such proceedings but, on the basis of legal
advice received to date, a material adverse eﬀect on the ﬁnancial
position of the Company is not expected.
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.
20 Dividends
TheAGMheldinMay2011approvedaﬁnaldividendfor2010ofGBP
2,486,118 (5.45 pence per share), which was paid on 20 May 2011
to shareholders on record as of 26 April 2011.
Total dividends paid during the year 2010 amounted to GBP
2,107,498inaggregateandconsistedofa)ﬁnaldividendfortheyear
2009 of GBP 1,126,736 (2.47 pence per share) and b) interim
dividend for the year 2010 of GBP 980,762 (2.15 pence per share).
In order to reinforce the Company’s liquidity optimize the use of cash
when market opportunities arise, the Directors of the Company
recommendedthatdividendpaymentfortheyear2011besuspended.
Company’s Nominated Advisors
Panmure Gordon & Co has been acting as the Company’s Nominated
Advisor and broker since 14 June 2010.
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 2011 (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.  The Company is managed by the Board of Directors which has overall
responsibility for the corporate governance of the Company. The
directors are committed to ensuring that high standards of corporate
governance are maintained insofar as the Directors believe that such
standards are relevant and appropriate for the Company and
notwithstanding the fact that as an AIM listed company, which is
incorporatedinJersey,HellenicCarriershasnolegalobligationtocomply
with the “Combined Code” (i.e. the Code of Best Practice published by
theCommitteeontheFinancialAspectsofCorporateGovernance).
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
TheCompanyismanagedbytheBoardofDirectorsinaccordancewith
its Memorandum and Articles of Association. The Board of Directors
consists of ﬁve Directors, three of which are independent non-
executives.ExecutiveDirectorshaveresponsibilityfortheday-to-day
management and control of the Company, whereas non-executive
Directors are responsible for the overall promotion and safeguarding
of the Company’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
since14June2010.Furthermore,Boardmemberswillbeavailableto
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
controlsystemsandtheauditors’reportsrelatingtoouraccounts.The
AuditCommitteewillalsorecommendtheappointmentoftheexternal
auditors and will review the audit fees. The Combined Code
recommends that all members of the Audit Committee be Non-
executive Directors, independent in character and judgement and free
from any relationship or circumstances which may, could, or would be
likelyto,orwhichappeartoaﬀecttheirjudgment.TheBoardconsiders
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-executive Chairman. This Committee is responsible for
determining and agreeing with the Board the framework for the
remuneration of the Chief Executive Oﬃcer, all other executive
Directors, the Company Secretary and such other members of the
executive management as it is designated to consider. Furthermore,
the Committee is responsible for determining the total individual
remunerationpackagesofeachDirectorincluding,whereappropriate,
bonuses, incentive payments and share options. The Remuneration
CommitteealsoliaiseswiththeNominationCommitteetoensurethat
the remuneration of newly appointed executives is within the
Company’s overall policy.
23
Corporate Governance TheNominationCommitteeisheadedbyMr.Gr.RobertsandcomprisesofoneindependentNon-executiveDirector(DimosKapouniaridis),ourNon-
executiveChairman(GrahamRoberts)andourChiefExecutiveOﬃcer(FotiniKaramanli).ThisCommitteeisresponsibleforreviewingthestructure,
size and composition of the Board, preparing a description of the role and capabilities required for a particular appointment and identifying and
nominating candidates to ﬁll Board positions as and when they arise.
Below is a summary of our committees’ structure as at 31 December 2011:
Meetings
ThenumberoftheregularmeetingsbytheBoard,theAudit,RemunerationandNominationCommitteesandindividualattendancebymemberswithin
2011 is shown below:
Fotini Karamanli Graham Roberts
Chief Executive Oﬃcer Chairman
24 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;
•makejudgmentsandestimatesthatarereasonableandappropriate;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
8 March 2012.
Fotini Karamanli Graham Roberts
Chief Executive Oﬃcer Chairman
Statement of Directors’ Responsibilities   26
We have audited the ﬁnancial statements of Hellenic Carriers Limited
for the year ended 31 December 2011 which comprise the
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 as adopted by the European Union.
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 page 18, the directors are responsible for the preparation of the
ﬁnancial statements and for being satisﬁed that they give a true and
fair view. Our responsibility is to audit the ﬁnancial statements in
accordance with applicable law and International Standards on
Auditing.ThosestandardsrequireustocomplywithapplicableEthical
Standards for Auditors.
Scope of the audit of the ﬁnancial statements
An audit involves obtaining evidence about the amounts and
disclosures 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
assessmentof:whethertheaccountingpoliciesareappropriatetothe
company’s circumstances and 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.
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
Directors and Senior Management Team, Directors’ Report for 2011
and Corporate Governance 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:
• give a true and fair view of the state of the company’s aﬀairs as at
31 December 2011 and of its result for the year then ended;
• have been properly prepared in accordance with International
FinancialReportingStandardsasadoptedbytheEuropeanUnion;and
• have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Independent Auditor’s Report
to the Members of Hellenic Carriers Limited 27
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)Law1991requiresustoreporttoyouif,inouropinion:
•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
Date:
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. 28
For the year ended 31 December 2011
Consolidated Income Statement
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.
Revenue
Expenses and other income
Voyage expenses
Vessel operating expenses
Management fees - related party
Depreciation
Depreciation of dry-docking costs
Impairment loss
Gain on sale of vessel
General and administrative expenses
Other operating income
Operating (loss) / proﬁt
Finance expense
Finance income
Foreign currency gain / (loss), net
(Loss) / Proﬁt for the year
(Loss) / Earnings per share (U.S.$):
Basic and diluted (LPS) / EPS for the year
Weighted average number of shares
Notes
3
3
12
7
7
7
7
4
19
5
10
6
2011
U.S.$’000
33,186
(3,258)
(9,957)
(1,278)
(11,873)
(1,927)
(29,282)
-
(1,809)
534
(25,664)
(5,194)
480
11
(4,703)
(30,367)
(0.67)
45,616,851
2010
U.S.$’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
31 December 29
For the year ended 31 December 2011
Consolidated Statement of Comprehensive Income
(Loss) / Proﬁt for the year
Net gain / (loss) on cash ﬂow hedges
Total comprehensive (loss) / income for the year
Notes
14
2011
U.S.$’000
(30,367)
1,637
(28,730)
2010
U.S.$’000
27,536
(488)
27,048
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements. As at 31 December 2011
2011
U.S.$’000
105,014
27,842
714
6
133,576
2,237
945
239
-
2,964
420
3,974
44,064
54,843
188,419
46
54,355
10,826
(2,959)
30,578
92,846
79,150
1,265
80,415
2,593
9,002
1,694
1,790
79
15,158
95,573
188,419
30
Consolidated Statement of Financial Position
ASSETS
Non-current assets
Vessels, net
Vessels under construction
Deferred charges
Oﬃce furniture and equipment
Current assets
Inventories
Trade receivables, net
Claims receivable
Available for sale investments, net of impairment
Due from related parties
Prepaid expenses and other assets
Restricted cash
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Shareholders’ equity
Issued share capital
Share premium
Capital contributions
Other reserves
Retained earnings
Total equity
Non-current liabilities
Long-term debt
Other non-current ﬁnancial liabilities
Current liabilities
Trade payables
Current portion of long-term debt
Current portion of other non-current ﬁnancial liabilities
Accrued liabilities and other payables
Deferred revenue
Total Liabilities
TOTAL EQUITY AND LIABILITIES
Notes
7
8
13
2i
17
19
12
9
11
10
15
15
14
13
14
13
14
16
2010
U.S.$’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
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.
Fotini Karamanli
Chief Executive Oﬃcer
Elpida Kyriakopoulou
Chief Financial Oﬃcer
The ﬁnancial statements on pages 28 to 58 were approved by the Board of Directors on 8 March 2012 and were signed on its behalf by: 31
For the year ended 31 December 2011
Consolidated Statement of Changes in Equity
As at 1 January 2010
Proﬁt for the year
Other comprehensive income
Total comprehensive income
Dividends to equity
shareholders (note 18)
At 31 December 2010
Loss for the year
Other comprehensive income
Total comprehensive loss
Dividends to equity
shareholders (note 18)
At 31 December 2011
Issued
share capital
U.S.$'000
(Note 15)
46
-
-
-
-
46
-
-
-
-
46
Share
premium
U.S.$'000
(Note 15)
54,355
-
-
-
-
54,355
-
-
-
-
54,355
Capital
Contributions
U.S.$'000
10,826
-
-
-
-
10,826
-
-
-
-
10,826
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.
Other
reserves
U.S.$'000
(Note 14)
(4,108)
-
(488)
(488)
-
(4,596)
-
1,637
1,637
-
(2,959)
Retained
earnings
U.S.$'000
40,636
27,536
-
27,536
(3,209)
64,963
(30,367)
-
(30,367)
(4,018)
30,578
Total equity
U.S.$'000
101,755
27,536
(488)
27,048
(3,209)
125,594
(30,367)
1,637
(28,730)
(4,018)
92,846
Number of
shares
45,616,851
-
-
-
-
45,616,851
-
-
-
-
45,616,851
Par value
U.S.$
0.001
-
-
-
-
0.001
-
-
-
-
0.001 For the year ended 31 December 2011
32
Consolidated Statement of Cash Flows
Operating activities
(Loss) / Proﬁt for the year
Adjustments to reconcile (loss)/proﬁt to net cash ﬂows:
Depreciation
Depreciation of dry-docking costs
Impairment loss
Gain on sale of vessel
Finance expense
Finance income
Increase in inventories
Decrease / (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
Oﬃce furniture and equipment
Interest received
Net cash ﬂows used in investing activities
Financing activities
Repayment of long-term debt
Borrowing cost for vessels under construction
Restricted cash
Interest paid
Dividends paid to equity shareholders
Net cash ﬂows used in ﬁnancing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Notes
7
7
7
7
5
10
8
7
7
13
13
11
13
18
10
10
2011
U.S.$’000
(30,367)
11,873
1,927
29,282
-
5,194
(480)
17,429
(1,603)
3,054
(468)
203
(1,926)
16,689
(446)
(1,601)
-
(2)
517
(1,532)
(17,170)
(714)
(2,941)
(5,243)
(4,018)
(30,086)
(14,929)
58,993
44,064
2010
U.S.$’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
31 December
The accompanying notes 1 to 22 are an integral part of these consolidated ﬁnancial statements.  1. Formation, Basis of Presentation
and General Information
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
worldwidebasis.TheaddressoftheregisteredoﬃceoftheCompanyis
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 2011 include the ﬁnancial statements of HCL and the
ﬁnancial statements of its wholly owned subsidiaries listed below.
34
Notes to the Consolidated Financial Statements
TheannualconsolidatedﬁnancialstatementswereauthorisedforissueinaccordancewitharesolutionoftheBoardofDirectorson8March2012
and are expected to be approved by the Annual General Meeting of the shareholders. 2. Summary of signiﬁcant accounting policies
(a) Basis of Preparation:
The ﬁnancial statements of the Company and its subsidiaries have
beenpreparedonahistoricalcostbasis,exceptforderivativeﬁnancial
instrumentsthataremeasuredatfairvalue.Theconsolidatedﬁnancial
statements are presented in US dollars and all ﬁnancial values are
rounded to the nearest thousand ($000) except the per share
information.
(b) Statement of Compliance:
Theconsolidatedﬁnancialstatementsasat31December2011have
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
statementsoftheCompanyanditssubsidiariesaslistedinnote1.The
ﬁnancial statements of the subsidiaries are prepared for the same
reportingdateastheCompany,usingconsistentaccountingpolicies.All
materialinter-companybalancesandtransactionshavebeeneliminated
upon consolidation. Subsidiaries are consolidated from the date on
which control is transferred to the Group and cease to be consolidated
from the date on which control is transferred out of the Group.
(d) Signiﬁcant accounting judgements, estimates
and assumptions:
The preparation of consolidated ﬁnancial statements requires
management to make judgements, estimates and assumptions that
aﬀect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the reporting date.
However, uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying
amount of the asset or liability aﬀected in the future.
IntheprocessofapplyingtheCompany’sanditssubsidiariesaccounting
policies,managementhasnotmadeanyjudgementwithsigniﬁcanteﬀect
on the amounts recognised in the consolidated ﬁnancial statements,
exceptforjudgementsmadeinconnectiontoimpairmentassessment.
The key assumptions concerning the future and other key sources of
estimation uncertainty at the ﬁnancial position date, that have a
signiﬁcantriskofcausingasigniﬁcantadjustmenttothecarryingamount
of assets and liabilities within the next ﬁnancial year are the following:
Vessels: Management makes estimates in relation to useful lives of
vessels and their residual value considering industry practices.
(VesselshaveacarryingamountofU.S.$105,014andU.S.$146,491
as at 31 December 2011 and 2010, respectively).
The key estimates and assumptions relating to the carrying values and
impairmentofvesselsarediscussedinparagraphs(l)and(m),respectively.
Provisionsfordoubtfultradereceivables: Provisionfordoubtfultrade
receivables are recorded based on management’s expected future
collectability of the receivables. (Trade receivables, have a carrying
amount of U.S.$945 and U.S.$418 as at 31 December 2011 and
2010, 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.$239
and U.S.$3,772 as at 31 December 2011 and 2010, respectively).
(e) Revenues and Related Expenses:
The Company through its subsidiaries generates revenues from the
charterhiresand/orfreightsearnedbythevessels.Vesselsarechartered
usingeithertimecharters,whereacontractisenteredintofortheuseof
a vessel 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
calculatedonthebasisofthequantityofcargocarriedonboard.
Ifatimecharteragreementexistsandcollectionoftherelatedrevenue
isreasonablyassured,revenueisrecognisedonastraightlinebasisover
theperiodofthetimecharter.Suchrevenuesaretreatedinaccordance
with IAS 17 as lease income as explained in paragraph (t) below.
Associated voyage expenses, which primarily consist of charterers’
35 address commissions and brokers’ commissions, are recognised on a
pro-rata basis over the duration of the period of the time-charter.
If a voyage charter exists, the voyage is deemed to commence upon
the completion of discharge of the vessel's previous cargo and is
deemed to end upon the completion of discharge of the 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
arrangementsorbythevesselowningcompaniesundervoyagecharter
arrangements. The vessel owning companies defer bunker expenses
undervoyagecharteragreementsandchargethemtotheconsolidated
incomestatementovertherelatedvoyagecharterperiodtotheextent
revenue is recognised. Port and canal costs are accounted for on an
actualbasis.Operatingexpensesareaccountedforonanaccrualbasis.
Deferred revenue represents cash received prior to the ﬁnancial
positiondatewhichrelatestorevenueearnedaersuchdate.Whena
vesselistimechartered,thechartererasperindustrypracticepaysthe
revenuerelatedtothespeciﬁcagreementinadvance(usually15days
in advance). Therefore, as of ﬁnancial position date, the amount of
revenue relating to the next ﬁnancial year that was paid by the
charterer is presented in deferred revenue.
Deferred revenue also includes the value ascribed to time charter
agreementsassumeduponthepurchaseofavessel,ifany.Thisascribed
amount is amortised over the remaining term of the time charter and
theamortisedportionfortheperiodisincludedinrevenuefortheperiod.
(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 which utilise the U.S. dollar as the
functionalcurrency.Transactionsinvolvingothercurrenciesduringthe
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-end exchange rate. Gains or losses resulting from
foreign currency 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 certiﬁcates of deposit with an original
maturity of three months or less to be cash equivalents.
For the purpose of the consolidated statement of cash flows, cash
and cash equivalents consist of cash and short-term deposits as
defined above.
(h) Restricted Cash:
CertainoftheCompany’sanditssubsidiaries’loanagreementsrequire
themtodepositfundsintoaloanretentionaccountinthenameofthe
borrowerand/ortoestablishearningsrecaptureaccounts.Theamount
depositedinretentionaccountsisequivalenttothemonthlyportionof
the next capital and interest payment. The amounts deposited in
earnings recapture account represents part of the excess earnings
derivedfromtheoperationofthevessels.Restrictedcashalsoinclude
cash deposited to a bank as security for the provision of a bank
guarantee (note 11).
(i) Inventories:
Inventories consist of lubricants, victualling and bunkers, the latter for
vessels that are not trading under time charter agreements on cut-oﬀ
date. Inventories are stated at the lower of cost or net realisable value
and cost is determined by the ﬁrst-in ﬁrst-out method. Inventory of
bunkersincludedthereinamountedtoU.S.$1,822andU.S.$271at31
December 2011 and 2010, respectively.
(j) Trade Receivables, net:
Theamountshownastradereceivablesateachﬁnancialpositiondate
includes estimated recoveries from charterers for hire, freight and
demurragebillings,netofanallowanceforimpairment.Subsequentto
initial recognition trade receivables are recognised and carried at the
loweroftheiroriginalinvoicedvalueandrecoverableamount.Ateach
ﬁnancial position date, all potentially uncollectible accounts are
assessed individually for the purpose of determining the appropriate
36 allowanceforimpairment.Impaireddebtsarederecognizedwhenthey
are assessed as uncollectible. Allowance for doubtful receivables
amounted to U.S.$ nil at 31 December 2011 and 2010.
(k) Claims Receivable:
TheCompanyanditssubsidiariesrecogniseinsuranceclaimrecoveries
for damages to vessels in relation to insured risks. Insurance claim
recoveriesarerecordednetofanydeductibleamounts,atthetimethe
vessels suﬀer such damages. They include the recoveries from the
insurancecompaniesfortheclaims,providedtheamountsarevirtually
certaintobereceived.Claimsaresubmittedtotheinsurancecompany,
which may increase or decrease the claim amount. Such adjustments
are recorded in the year they become known. Insurance claims
receivable amounted to U.S.$239 and U.S.$3,772 at 31 December
2011 and 2010, respectively (note 17).
(l) Vessels, net:
The vessels are stated at cost, net of accumulated depreciation and
anyaccumulatedimpairmentloss.Vesselcostconsistsofthecontract
price for the vessel and any material direct costs incurred upon
acquisition of the vessel (initial repairs, improvements, delivery costs
and other expenditures) to prepare the vessel for its initial voyage.
Subsequentexpendituresformajorimprovementsarealsocapitalised
when it is probable that future economic beneﬁts associated with the
improvement will ﬂow to the entity and the cost of the improvement
can be measured reliably.
For vessels acquired in the second-hand market and where the
Company identiﬁes any intangible assets or liabilities associated with
the acquisition of a vessel, the Company allocates the purchase price
between the vessel and any identiﬁed intangible assets or liabilities
based on their relative fair values.
Fair value is determined by reference to market data. The Company
determines the fair value of any intangible asset or liability related to
time charters assumed, by reference to the market value of the time
chartersatthetimethevesselisacquired.Theamounttoberecorded
as an asset or liability at the date of vessel delivery is based on the
diﬀerencebetweenthecurrentfairmarketvalueofthecharterandthe
net present value of future contractual cash ﬂows. When the present
value of cash ﬂows of the time charter assumed is greater than the
currentfairmarketvalueofsuchcharter,thediﬀerenceisrecordedas
prepaid charter revenue (an asset). When the opposite situation
occurs,thediﬀerenceisrecordedasdeferredrevenue(aliability).Such
assets and liabilities, respectively, are amortised as a reduction of, or
an increase in, revenue over the period of the time charter assumed.
Thecostofeachvesselisdepreciatedbeginningwhenthevesselisready
foritsintendeduse,onastraight-linebasisoverthevessels'remaining
economic useful life, aer considering the estimated residual value.
Managementestimatestheusefullifeofthevesselsat25years,which
is consistent with industry practice. Acquired second-hand vessels are
depreciated from the date of their acquisition over their remaining
estimated useful life. The remaining useful lives of the vessels are
between5and13years.Avesselisderecognisedupondisposalorwhen
nofutureeconomicbeneﬁtsareexpectedfromitsuse.Anygainorloss
arising on derecognition of the vessel (calculated as the diﬀerence
betweenthenetdisposalproceedsandthecarryingamountofthevessel
including any unamortised portion of dry-docking) is included in the
consolidated income statement in the year the vessel is derecognised.
From time to time the vessels are required to be dry-docked for
inspectionandre-licensingatwhichtimemajorrepairsandmaintenance
thatcannotbeperformedwhilethevesselsareinoperationaregenerally
performed. The costs associated with dry-docking are capitalised and
added to the cost of vessel as occurred. They are amortised on a
straight-line basis over the year until the next scheduled dry-docking,
generally2.5years.Incaseswhere,thedry-dockingtakesplaceearlier
than 2.5 years since the previous one, the carrying amount of the
previous dry-docking is derecognised. In the event of a vessel sale, the
respective carrying 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
estimatesthecomponentofthecostthatcorrespondstotheeconomic
beneﬁttobederiveduntilthenextscheduleddry-dockingofthevessel
and this component is depreciated on a straight-line basis over the
remaining period until the next estimated dry-docking date.
37 (m) Impairment of Vessels:
The vessels are reviewed for impairment in accordance with IAS 36,
"Impairment of Assets." Under IAS 36, the Company and its
subsidiaries assess at each reporting date whether there is an
indication that a vessel may be impaired. If such an indication exists,
the Company and its subsidiaries make an estimate of the vessel’s
recoverableamount.Anyimpairmentlossofthevesselisassessedby
comparison between the carrying amount of the asset and its
recoverable amount. Recoverable amount is the higher of the vessel’s
fair value less costs to sell and 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
subsidiaries proceed to calculate the vessel’s value in use.
Thecalculationofvalueinuseismadeattheindividualvessellevelsince
separatelyidentiﬁablecashﬂowinformationisavailableforeachvessel.In
developing estimates of future cash ﬂows, the relevant vessel owning
companiesmakeassumptionsaboutfuturecharterrates,vesseloperating
expensesandtheestimatedremainingusefullivesofthevessels.
Theprojectednetoperatingcashﬂowsaredeterminedbyconsidering:
• for the period 2012 to 2013: time charter rates achievable for
vessels of similar type and age in the currently depressed freight
market; for the period 2014 onwards: the average rate for 1 year
timer charter period of the previous decade applying thereon a
revenue growth rate of 2.0%.
•thecashoutﬂowswhichcompriseofoperatingexpensesonwhichan
inﬂationrateof3.5%isappliedandfuturedry-dockingcostsforwhich
budgeted amounts are used.
• the estimated remaining useful lives of the vessels, in line with the
assumptions used for the depreciation calculation of the vessels.
The net operating cash ﬂows are discounted to their present value as
atthedateoftheﬁnancialstatementsusingtheweightedaveragecost
of capital as adjusted to reﬂect the risks speciﬁc to the 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.$29,282 and U.S.$ nil for the years ended 31 December
2011 and 2010, respectively (note 7).
(n) Vessels under construction:
Thevesselsunderconstructionarerecognisedatcostwhichcomprises
of the progress payments made to the shipyards and any costs
(interest, commitment fees, and on-site supervision costs incurred
during the construction periods) directly attributable to bringing the
vessel to the location and condition necessary for operation in the
intendedmanner.Vesselsunderconstructionremainatcostuntilthey
become operative upon delivery.
(o) Borrowing costs:
Borrowingcostsdirectlyattributabletotheacquisitionorconstruction
of an asset that necessarily takes a substantial period of time to get
ready for its intended use are capitalised as part of the cost of the
respectiveassets.Allotherborrowingcostsareexpensedintheperiod
they occur. Borrowing costs consist of interest and other costs
incurred in connection with the borrowing of funds.
(p) Long-Term Debt:
Long-term debt is initially recognised at the fair value of the
consideration received net of issue costs directly attributable to the
borrowing. Aer initial recognition, long-term debt is subsequently
measured at amortised cost using the eﬀective interest rate method.
Amortised cost is calculated by taking into account any issue costs
and any discount or premium on settlement.
A ﬁnancial liability is derecognised when the obligation under the
liability is discharged or cancelled or expired.
38 The Company and its subsidiaries capitalise borrowing costs that are
directlyattributabletoacquisitionorconstructionoftheasset.Please
refer to paragraph (o).
(q) Derivative Financial Instruments and Hedging:
The Company and its subsidiaries use derivative ﬁnancial instruments
suchasinterestrateswapstohedgerisksassociatedwithinterestrate
ﬂuctuations.Suchderivativeﬁnancialinstrumentsareinitiallyrecognised
at fair value on the date on which a derivative contract is entered into
andaresubsequentlyre-measuredatfairvalueusingbid-marketprices
on each reporting date. Derivatives are carried as assets when the fair
value is positive and as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives
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 fair
value of a recognised asset or liability or an unrecognised ﬁrm
commitment (except for foreign currency risk); or
• Cash ﬂow hedges when hedging exposure to variability in cash ﬂows
that is either attributable to a particular risk associated with 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
subsidiaries formally designate and document the hedge relationship
towhichtheywishtoapplyhedgeaccountingandtheriskmanagement
objective and strategy for undertaking the hedge. The documentation
includes identiﬁcation of the hedging instrument, the hedged item or
transaction,thenatureoftheriskbeinghedgedandhowtheentitywill
assess the hedging instrument’s eﬀectiveness in oﬀsetting the
exposure to changes in the hedged item’s fair value or cash ﬂows
attributable to hedged risk. Such hedges are expected to be highly
eﬀectiveinachievingoﬀsettingchangesinfairvalueorcashﬂowsand
areassessedonanongoingbasistodeterminethattheyactuallyhave
been highly eﬀective throughout the ﬁnancial reporting periods for
which they were designated.
Hedges which meet the strict criteria for hedge accounting are
accounted for as follows:
Cash Flow Hedges
The eﬀective portion of the gain or loss on the hedging instrument is
recogniseddirectlyinequity,whileanyineﬀectiveportionisrecognised
immediatelyintheconsolidatedincomestatement.Amountstakento
equityaretransferredtotheconsolidatedincomestatementwhenthe
hedged transaction aﬀects proﬁt or loss, such as when the hedged
ﬁnancial income or ﬁnancial expense is recognised or when a forecast
saleoccurs.Wherethehedgeditemisthecostofanon-ﬁnancialasset
ornon-ﬁnancialliability,theamountstakentoequityaretransferredto
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
theconsolidatedincomestatement.Ifthehedginginstrumentexpires
orissold,terminatedorexercisedwithoutreplacementorrollover,or
ifitsdesignationasahedgeisrevoked,amountspreviouslyrecognised
in equity remain in equity until the forecast transaction or ﬁrm
commitment occurs.
TheCompanyanditssubsidiariesuseinterestrateswapsashedgesof
theirexposuretohedgerisksassociatedwithinterestrateﬂuctuations
(note 14).
(r) Segment Reporting:
The Company and its subsidiaries report ﬁnancial information and
evaluatetheiroperationsbycharterrevenuesandnot,forexample,by
(i)thelengthofshipemploymentfortheircustomers,i.e.spotortime
charters; or (ii) type of vessel. 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, when the vessel owning
39 companiescharteravesseltoacharterer,thechartererisfreetotrade
the vessel worldwide and, as a result, the disclosure of geographic
information is impracticable.
(s) Finance Income:
Finance income is earned from the short-term deposits of the
Company and its subsidiaries and is recognised on the accrual basis.
(t) Leases:
Leases of vessels where the vessel owning companies do not transfer
substantially all the risks and beneﬁts of ownership of the vessel are
accounted for as operating leases. Lease income on operating leases
is recognised on a straight line basis over the lease term. Contingent
rentsarerecognisedasrevenueintheperiodinwhichtheyareearned.
(u) Share Capital:
Ordinary shares are classiﬁed as equity. Incremental costs directly
attributable to the issue of new shares are recognised in equity as a
deduction from the proceeds.
(v) Provisions and Contingencies:
ProvisionsarerecognisedwhentheCompanyanditssubsidiarieshave
a present legal or constructive obligation as a result of past events, it
is probable that 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
statements but are disclosed unless the possibility of an outﬂow of
resourcesembodyingeconomicbeneﬁtsisremote.Contingentassets
are not recognised in the ﬁnancial statements but are disclosed when
an inﬂow of economic beneﬁts is probable.
(w) Oﬀsetting of Financial Assets and Liabilities:
Financial assets and liabilities are oﬀset and the net amount is
presentedintheconsolidatedstatementofﬁnancialpositiononlywhen
theCompanyand/oritssubsidiarieshavealegallyenforceablerightto
set oﬀ the recognised amounts and intend either to settle such asset
andliabilityonanetbasisortorealisetheassetandsettletheliability
simultaneously.
(x) Derecognition of Financial Assets and Liabilities:
(i) Financial assets
Aﬁnancialasset(or,whereapplicableapartofaﬁnancialassetorpart
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 cash
ﬂowsfromtheasset,buthaveassumedanobligationtopaytheminfull
without material delay to a third party under a “pass-through”
arrangement; or
• the Company and/or its subsidiaries have transferred their rights to
receive cash ﬂows from the asset and either (a) have transferred
substantiallyalltherisksandrewardsoftheassets,or(b)haveneither
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
rightstoreceivecashﬂowsfromanassetandhaveneithertransferred
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.Continuinginvolvementthattakestheformofaguaranteeover
the transferred asset is measured at the lower of the original carrying
amount of the asset 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
ﬁnancialliabilityisreplacedbyanotherfromthesameonsubstantially
diﬀerent terms, or the terms of an existing liability are substantially
modiﬁed, such an exchange or modiﬁcation is treated as a
derecognition of the original liability and the recognition of a new
40 liability, and the diﬀerence in the respective carrying amounts is
recognised in the consolidated income statement.
(y) IFRS and IFRIC Interpretations that became eﬀective in the
year ended 31 December 2011:
The following Standards and Interpretations became eﬀective within
the year ended 31 December 2011. None of the Standards and
Interpretationshadanimpactintheconsolidatedﬁnancialstatements
of the Company and its subsidiaries.
• IFRIC 14, “Prepayments of a Minimum Funding Requirement”
(Amended). This amendment removes an unintended consequence
whenanentityissubjecttominimumfundingrequirementsandmakes
an early payment of contributions to cover such requirements. The
amendmentpermitsaprepaymentoffutureservicecostbytheentity
to be recognised as a pension asset.
•IFRIC19,“ExtinguishingFinancialLiabilitieswithEquityInstruments”.
Thisinterpretationclariﬁesthatequityinstrumentsissuedtoacreditor
to extinguish a ﬁnancial liability qualify as consideration paid. The
equityinstrumentsissuedaremeasuredattheirfairvalue.Incasethat
thiscannotbereliablymeasured,theinstrumentsaremeasuredatthe
fair value of the liability extinguished. Any gain or loss is recognised
immediately in proﬁt or loss.
•IAS24,“RelatedPartyTransactions”(Amended).TheIASBissuedan
amendment to IAS 24 that clariﬁes the deﬁnitions of a related party.
The new deﬁnitions emphasise a symmetrical view of related party
relationships and clariﬁes the circumstances in which persons and key
managementpersonnelaﬀectrelatedpartyrelationshipsofanentity.In
addition, the amendment introduces an exemption from the general
relatedpartydisclosurerequirementsfortransactionswithgovernment
and entities that are controlled, jointly controlled or signiﬁcantly
inﬂuenced by the same government as the reporting entity.
• IAS 32, “Financial Instruments”: Presentation (Amended). The IASB
issued an amendment that alters the deﬁnition of a ﬁnancial liability in
IAS32toenableentitiestoclassifyrightsissuesandcertainoptionsor
warrants as equity instruments. This amendment is applicable if the
rightsaregivenproratatoalloftheexistingownersofthesameclassof
an entity’s non-derivative equity instruments, to acquire a ﬁxed number
oftheentity’sownequityinstrumentsforaﬁxedamountinanycurrency.
• Improvements to IFRSs. In May 2010 the IASB issued its third
omnibus of amendments to its standards, primarily with a view to
removing inconsistencies and clarifying wording. The eﬀective dates
oftheimprovementswerevarious,theearliestbeingtheﬁnancialyear
beginning 1 July 2010. These amendments did not have an eﬀect on
the accounting policies, ﬁnancial position or performance of the
Company and its subsidiaries:
- IFRS 3 Business combinations
- IFRS 7 Financial instruments-Disclosure
- IAS 1 Presentation of Financial Statements
- IAS 27 Consolidated and Separate Financial Statements
- IAS 34 Interim Financial Statements
- IFRIC 13 Customer Loyalty Programmes
(z) IFRS and IFRIC Interpretations not yet eﬀective:
The Company and its subsidiaries have not applied the following IFRS
and IFRIC Interpretations that have been issued but are not yet
eﬀective and not early adopted:
• IAS 1, “Financial Statement Presentation” (Amended). Presentation
of Items of Other Comprehensive Income (“OCI”). This amendment is
eﬀective for annual periods beginning on or aer 1 July 2012. The
amendments to IAS 1 change the grouping of items presented in OCI.
Items that could be reclassiﬁed (or ‘recycled’) to proﬁt or loss at a
future point in time (for example, upon derecognition or settlement)
would be presented separately from items that will never be
reclassiﬁed. This amendment has not yet been endorsed by the EU.
The amendment aﬀects presentation only and has no impact on the
ﬁnancial position or performance Company and its subsidiaries.
• IAS 12, “Income Taxes” (Amended). Recovery of Underlying Assets.
Thisamendmentiseﬀectiveforannualperiodsbeginningonoraer1
January 2012. The amendment introduces the determination of
41 deferred tax on investment property measured at fair value. The
amendment introduces a rebuttable presumption that deferred tax on
investment property measured using the fair value model in IAS 40
should be determined on the basis that its carrying amount will be
recovered through sale. Furthermore, it introduces the requirement
that deferred tax on non-depreciable assets that are measured using
therevaluationmodelinIAS16alwaysbemeasuredonasalebasisof
the asset. 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.
•IAS19,“EmployeeBeneﬁts”(Amended).Thisamendmentiseﬀective
for annual periods beginning on or aer 1 January 2013. The IASB
has issued numerous amendments to IAS 19. These range from
fundamental changes such as removing the corridor mechanism and
theconceptofexpectedreturnsonplanassetstosimpleclariﬁcations
and re-wording. Early application is permitted. 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.
• IAS 27, “Separate Financial Statements” (Revised). This Standard is
eﬀectiveforannualperiodsbeginningonoraer1January2013.As
a consequence of the new IFRS 10 and IFRS 12, what remains of IAS
27islimitedtoaccountingforsubsidiaries,jointlycontrolledentities,
and associates in separate ﬁnancial statements. Earlier application is
permitted.ThisamendmenthasnotyetbeenendorsedbytheEU.The
Company and its subsidiaries do not present separate ﬁnancial
statements.
• IAS 28, “Investments in Associates and Joint Ventures” (as revised
in 2011). This Standard is eﬀective for annual periods beginning on
or aer 1 January 2013. As a consequence of the new IFRS 11 and
IFRS12, IAS28hasbeenrenamedIAS28InvestmentsinAssociates
andJointVentures,anddescribestheapplicationoftheequitymethod
to investments in joint ventures in addition to associates. This
amendment has not yet been endorsed by the EU. The Company and
itssubsidiariesdonotexpectthatthisamendmentwillhaveanimpact
on their ﬁnancial position or performance.
•IAS32,“FinancialInstruments:Presentation”(Amended).Oﬀsetting
Financial Assets and Financial Liabilities. This amendment is eﬀective
for annual periods beginning on or aer 1 January 2014. This
amendment clariﬁes the meaning of “currently has a legally
enforceable right to set-oﬀ”. This amendment also clariﬁes the
application of the IAS 32 oﬀsetting criteria to settlement systems
(suchascentralclearinghousesystems)whichapplygrosssettlement
mechanisms that are not simultaneous. The amendments to IAS 32
are to be retrospectively applied. Earlier application is permitted.
However,ifanentitychoosestoearlyadopt,itmustdisclosethatfact
and also make the disclosures required by the IFRS 7 Oﬀsetting
Financial Assets and Financial Liabilities amendments. This
amendment has not yet been endorsed by the EU. The amendment
aﬀectspresentationonlyandhasnoimpactontheﬁnancialpositionor
performance Company and its subsidiaries.
• IFRS 7, “Financial Instruments: Disclosures” (Amended). Enhanced
Derecognition Disclosure Requirements. This amendment is eﬀective for
annual periods beginning on or aer 1 July 2011. The amendment
requires additional disclosure about ﬁnancial assets that have been
transferred but not derecognised to enable the user of the ﬁnancial
statementstounderstandtherelationshipwiththoseassetsthathavenot
been derecognised and their associated liabilities. In addition, the
amendment requires disclosures about continuing involvement in
derecognisedassetstoenabletheusertoevaluatethenatureof,andrisks
associatedwith,theentity’scontinuinginvolvementinthosederecognised
assets.Theamendmentaﬀectspresentationonlyandhasnoimpactonthe
ﬁnancialpositionorperformanceCompanyanditssubsidiaries.
• IFRS 7, “Financial Instruments: Disclosures” (Amended). Oﬀsetting
Financial Assets and Financial Liabilities. This amendment is eﬀective
for annual periods beginning on or aer 1 January 2013. The
amendment introduces common disclosure requirements. These
disclosures would provide users with information that is useful in
evaluatingtheeﬀectorpotentialeﬀectofnettingarrangementsonan
entity’s ﬁnancial position. The amendments to IFRS 7 are to be
retrospectively applied. This amendment has not yet been endorsed
bytheEU.Theamendmentaﬀectspresentationonlyandhasnoimpact
ontheﬁnancialpositionorperformanceCompanyanditssubsidiaries.
42 •IFRS9,“FinancialInstruments-ClassiﬁcationandMeasurement”.The
new standard is eﬀective for annual periods beginning on or aer 1
January 2015. IFRS 9 as issued reﬂects the ﬁrst phase of the IASBs
work on the replacement of IAS 39 and applies to classiﬁcation and
measurementofﬁnancialassetsandﬁnancialliabilitiesasdeﬁnedinIAS
39. Phase 1 of IFRS 9 will have a signiﬁcant impact on (i) the
classiﬁcation and measurement of ﬁnancial assets and (ii) a change in
reportingforthoseentitiesthathavedesignatedﬁnancialliabilitiesusing
theFairValueOption.Insubsequentphases,theIASBwilladdresshedge
accounting and impairment of ﬁnancial assets. The completion of this
project is expected over the ﬁrst half of 2012. Early application is
permitted. This standard has not yet been endorsed by the EU. The
Companyanditssubsidiariesareinprogressofassessingtheimpactof
the amendment on their ﬁnancial position or performance.
• IFRS 10, “Consolidated Financial Statements”. The new standard is
eﬀectiveforannualperiodsbeginningonoraer1January2013.IFRS
10replacestheportionofIAS27ConsolidatedandSeparateFinancial
Statements that addresses the accounting for consolidated ﬁnancial
statements. It also includes the issues raised in SIC-12 Consolidation -
SpecialPurposeEntities.IFRS10establishesasinglecontrolmodelthat
applies to all entities including special purpose entities. The changes
introduced by IFRS 10 will require management to exercise signiﬁcant
judgment to determine which entities are controlled, and therefore, are
requiredtobeconsolidatedbyaparent,comparedwiththerequirements
thatwereinIAS27.ThisstandardhasnotyetbeenendorsedbytheEU.
The Company and its subsidiaries do not expect that this amendment
will have an impact on their ﬁnancial position or performance.
• IFRS 11, “Joint Arrangements”. The new standard is eﬀective for
annual periods beginning on or aer 1 January 2013. IFRS 11
replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-
controlled Entities - Non-monetary Contributions by Venturers. IFRS
11removestheoptiontoaccountforjointlycontrolledentities(JCEs)
using proportionate consolidation. Instead, JCEs that meet the
deﬁnition of a joint venture must be accounted for using the equity
method. This standard 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.
• IFRS 12, “Disclosures of Involvement with Other Entities”. The new
standardiseﬀectiveforannualperiodsbeginningonoraer1January
2013.IFRS12includesallofthedisclosuresthatwerepreviouslyinIAS
27 related to consolidated ﬁnancial statements, as well as all of the
disclosures that were previously included in IAS 31 and IAS 28. These
disclosures relate to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. A number of new
disclosures are also required. This standard has not yet been endorsed
bytheEU.TheCompanyanditssubsidiariesareinprogressofassessing
theimpactoftheamendmentontheirﬁnancialpositionorperformance.
•IFRS13,“FairValueMeasurement”.Thenewstandardiseﬀectivefor
annual periods beginning on or aer 1 January 2013. IFRS 13
establishes a single source of guidance under IFRS for all fair value
measurements.IFRS13doesnotchangewhenanentityisrequiredto
use fair value, but rather provides guidance on how to measure fair
value under IFRS when fair value is required or permitted. This
standard should be applied prospectively and early adoption is
permitted. This standard has not yet been endorsed by the EU. The
Company and its subsidiaries are in progress of assessing the impact
of the amendment on their ﬁnancial position or performance.
• IFRIC Interpretation 20, “Stripping Costs in the Production Phase of
a Surface Mine”. The interpretation is eﬀective for annual periods
beginningonoraer1January2013.Thisinterpretationonlyapplies
to stripping costs incurred in surface mining activity during the
production phase of the mine ('production stripping costs'). Costs
incurred in undertaking stripping activities are considered to create
two possible beneﬁts a) the production of inventory in the current
periodand/orb)improvedaccesstooretobeminedinafutureperiod
(striping activity asset). Where cost cannot be speciﬁcally allocated
between the inventory produced during the period and the stripping
activity asset, IFRIC 20 requires an entity to use an allocation basis
that is based on a relevant production measure. Early application is
permitted. IFRIC 20 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.
43 3. Voyage & Vessel Operating Expenses
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
4. General and Administrative Expenses
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
5. Finance Expense
Theamountsintheaccompanyingconsolidatedincomestatementare
analysed as follows:
6. Earnings / (Loss) per Share
Basic earnings per share ("EPS") or basic loss per share ("LPS") are
calculated by dividing proﬁt / (loss) for the year attributable to
shareholders of Hellenic Carriers Limited of U.S.$(30,367) and
U.S.$27,536 for the years ended 31 December 2011 and 2010,
respectively, by the weighted average number of shares outstanding
45,616,851 for the years ended 31 December 2011 and 2010.
Diluted (LPS)/ EPS reﬂects the potential dilution that could occur if
share options or other contracts to issue shares were exercised or
convertedintoshares.Sincenosuchoptionsorcontractsexistedasat
31 December 2011 and 2010, the numerators and denominators
used to calculate diluted (LPS)/ EPS are the same with those used to
calculate basic (LPS)/ EPS, as disclosed above.
44 7. Vessels, net
Vessels consisted of the following at 31 December:
The Company’s long-term loans are secured by a ﬁrst preferred
mortgage on the respective vessels, as well as general assignment of
the earnings, insurances and requisition compensation of the
respective vessel.
Depreciation charge for the year in the accompanying consolidated
incomestatementincludesU.S.$4depreciationonoﬃcefurnitureand
equipment for the year ended 31 December 2011 (31 December
2010: U.S.$3).
Disposal
InMay2010,NestosShippingCorp.,awhollyownedsubsidiaryofHCL
and owner of the 1993 built Panamax, vessel “Hellenic Breeze”,
entered into an agreement with an unaﬃliated third party for the sale
of the vessel. The sale was concluded at a gross consideration of
U.S.$23,460 in cash and the vessel was delivered to the new owners
on 12 August 2010. As of delivery date the vessel had a carrying
value of U.S.$14,641 inclusive of the unamortized balance of her
latestdry-docking.Thegainresultingfromthesaleofthevessel,aer
deducting the commission on the gross consideration and all other
expenses directly related to the sale was U.S.$8,451 and is included
in the consolidated statement of income for the year ended 31
December 2010.
Dry-docking costs
During ﬁscal year 2011, one vessel namely the M/V Hellenic Wind
performedherspecialsurvey.Thecapitalisedcostfortheabovesurvey
amounted to U.S.$1,601 and was included in the vessels cost as at
31 December 2011. The deferred dry-docking cost additions for the
year ended 31 December 2010, amounted to U.S.$2,217.
Impairment
Furthertothereceiptofvaluationsofthefairmarketvalueoftheﬂeet
asof31December2011,issuedbyindependentthirdpartyvaluators,
an indication of impairment was identiﬁed for three vessels and
vessels’ value in use was calculated at the individual vessel level,
through assessment of each vessel’s future cash ﬂows.
45 In developing estimates of future cash ﬂows, the Company and its
subsidiaries make assumptions about future charter rates using a) for
the period 2012 to 2013 time charter rates achievable for vessels of
similartypeandageinthecurrentlydepressedfreightmarketandb)for
theperiod2014onwards,theaverageratefor1yeartimecharterperiod
ofthepreviousdecadeapplyingthereonarevenuegrowthrateof2.0%.
Thecashoutﬂowscompriseofoperatingexpensesonwhichaninﬂation
rateof3.5%isappliedandfuturedry-dockingcostsforwhichbudgeted
amounts are used. The estimated remaining useful lives of the vessels
are in line with the assumptions used for the depreciation calculation of
thevessels.InordertodiscountthefuturecashﬂowstheCompanyuses
as discount rate the weighted average cost of capital. The impairment
exerciseishighlysensitivetopotentialvariancesinthetimecharterrates
andtheﬂeeteﬀectiveutilization.Consequently,asensitivityanalysiswas
performed by assigning possible alternative values to these two
signiﬁcantinputs.Asaresultofthedepresseddrybulkshippingmarket,
the impairment test and sensitivity analysis performed concluded to an
adjustment of the book values of three of the vessels to their value in
use, therefore an impairment loss of U.S.$29,282 was recognised by
theCompanyanditssubsidiariesfortheyearended31December2011
forthreevessels.Theimpairmentlossfor2010wasU.S.$nil.
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 vessels are scheduled for delivery in the ﬁrst quarter of 2013.
During 2010, an aggregate amount of U.S.$27,200 (or U.S.$13,600
foreachhull)waspaidtotheyardforthetwovesselsonorderfromcash
reserves.TheﬁrstinstalmentamountedtoU.S.$10,200pervesseland
was paid in July 2010 and the second instalment amounted to
U.S.$3,400 per vessel and was paid in October 2010. The remaining
cost will be paid upon delivery of each vessel though drawdown of the
loan facilities signed between the two vessel owning companies and a
European Banking Institution (note 13).
All material expenses incurred during the construction period are
capitalised.Theamountcapitalisedasof31December2011consisted
of: a) capitalised borrowing costs of U.S.$288 (2010: U.S.$ nil), b)
servicesprovidedinrelationtothesigningoftheshipbuildingcontracts
andtheplanapprovalprocessofU.S.$278(2010:U.S.$136),ofwhich
amount, the U.S.$230 (2010: U.S.$100) was charged by a related
party(note12),c)legalexpensesofU.S.$51(2010:U.S.$51)and,d)
Freight Demurrage Defence Insurance of U.S.$25 (2010: U.S.$9).
9. Prepaid Expenses and Other Assets
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
10. Cash and Cash Equivalents
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
Cashatbanksearnsinterestatﬂoatingratesbasedondailybankdeposit
rates.Short-termdepositsaremadeforvaryingperiodsofbetweenone
day and three months, depending on the immediate cash requirements
46 of the Company and its subsidiaries and earn interest at the respective
short-term deposit rates. Interest earned during the years ended 31
December2011and2010,amountedtoU.S.$480andU.S.$672and
is included in the accompanying consolidated income statement.
11. Restricted Cash
As of 31 December 2011 and 2010, restricted cash relating to the
ﬁnancingarrangementsoftheCompanyanditssubsidiariesamounted
to U.S.$574 and U.S.$1,033, respectively. The restricted cash as of
31 December 2011 and 2010 consists of amounts held in bank
accounts of the vessel owning companies that were retained for the
payment of future instalments. Restricted cash as of 31 December
2010 included also an amount of U.S.$459 pledged with the Bank
under the terms of the supplemental agreement of loan a (note 13).
In addition, an amount of U.S.$3,400 was deposited with a bank as
security for the issuance of a bank guarantee in the amount of
U.S.$3,100 (note 19). Such bank guarantee was provided to Setsea
SpA,theformercharterersofthevesselM/VHellenicSeaassecurity,
pending the outcome of the arbitration proceedings which have
commenced in London between Owners, Charterers and Sub-
charterersregardingthevessel’saccidentintheAmazonRiverinJuly
2010. Total restricted cash as at 31 December 2011 and 2010,
amounted to U.S.$3,974 and U.S.$1,033, respectively.
12. Related party transactions
Transactionswithrelatedpartiesconsistedofthefollowingfortheyear
ended 31 December:
Balances due from related parties as at 31 December comprise the
following:
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.$33.04 per vessel (U.S.$32.08 per month during ﬁscal year
2010). These transactions are eliminated in the consolidation.
Additionally, HSC has subcontracted to Mantinia Shipping Company
S.A.(“Mantinia”),arelatedparty,undercommoncontrol,thetechnical
management of the operating vessels. Out of the monthly fee of
U.S.$33.04 payable to HSC, the amount of U.S.$21.30 per vessel
(U.S.$20.68permonthduringﬁscalyear2010)ispayabletoMantinia
on a monthly basis for the services provided. For the year ended 31
December 2011 and 2010, sub-management fees charged by
Mantinia amounted to U.S.$1,278 and U.S.$1,394, respectively and
were included in Management fees – related party.
Furthermore Mantinia Shipping Company S.A. provided technical
supportandadvisoryservicestoHSCinrelationtoboththeplacingof
thenewbuildingorderswithZhejiangOuhuaShipbuildingCo.Ltd.and
theplanapprovalproceduresrequired.Thefeesfortheaboveservices
rendered were agreed to U.S.$230 and U.S.$100, for the year ended
31 December 2011 and 31 December 2010, respectively 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.
47 Directors’ remuneration for the year ended 31 December is analysed as follows:
The Director’s remuneration amounts are agreed in currencies other than the U.S. dollar (namely GBP and Euro), therefore, the variation between
the ﬁxed amounts of 2011 and 2010 reﬂect foreign exchange diﬀerences. No pension contributions were made during the years ended 31
December 2011 and 2010. 13. Long-Term Debt
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
Loan a: On 6 November 2007, two vessel-owning subsidiaries of HCL
enteredintoaloanfacilityagreementforU.S.$57,850.Theloanfacility
wasmadeavailableforthepurposesof(i)reﬁnancinginfulltheexisting
indebtness of M/V Hellenic Sky (ii) ﬁnancing part of the acquisition of
M/VHellenicHorizonand,(iii)providingcorporateliquidity.Anamount
of U.S.$6,200 was repaid immediately aer the Company’s Admission
on AIM. In June 2009, a supplemental agreement was signed, under
whichtherepaymentscheduleoftheloanfacilitywasamendedeﬀective
May 2009. The outstanding balance as of 31 December 2011, is
repayableinthirteenquarterlyinstalmentsofU.S.$1,450eachandone
quarterly instalment of U.S.$1,255. The ﬁrst instalment was due on 8
February 2012 and the ﬁnal instalment is due on 8 May 2015, along
with a balloon payment of U.S.$13,695.
Based on the terms of this supplemental agreement the borrowers
deposited, in 2010, in a restricted bank 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. 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.
49 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
indebtnessofM/VHellenicSeaandM/VHellenicBreeze,(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).TheamountofU.S.$110,000wasdrawnduring2008.
In December 2008, the Company 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 on the terms of this supplemental agreement the
borrowerspaidtothelenderinFebruary2011and2010,theamounts
of U.S.$2,890 and U.S.$2,450 calculated on the excess earnings of
the vessels ﬁnanced under loan b for the years 2010 and 2009
respectively.Inaddition,followingthesaleoftheM/VHellenicBreeze
inAugust2010,anamountofU.S.$21,000wasprepaidtothelender.
InDecember2011,asupplementalagreementwassigned,underwhich
the repayment schedule of the loan facility was amended eﬀective 7
February2012.Theoutstandingbalanceasof31December2011,is
payable in eight quarterly instalments of U.S.$835 each, followed by
tenquarterlyinstalmentsofU.S.$1,670each.Theﬁrstinstalmentwas
due and paid on 7 February 2012 and the ﬁnal instalment is due on 9
May 2016, along with a balloon payment of U.S.$31,390. In addition,
anearningsrecaptureclausewillapplyduringtherestructuringperiod.
Based on this clause, part of the excess earnings generated by the
vessels ﬁnanced under this loan facility agreement during each year,
commencing from the ﬁnancial year 2012, will be paid to the lending
bank at the beginning of the next ﬁscal year.
ThebankloansdenominatedinU.S.dollarsbearinterestatLIBORplus
a margin payable quarterly.
Loans a and b are secured by a ﬁrst preferred mortgage on the
respective vessel as well as general assignment of the earnings,
insurancesandrequisitioncompensationoftherespectivevessel.The
loan agreements contain covenants including restrictions as to
changes in management and ownership of the vessels, additional
indebtedness and mortgaging of vessels without the bank's prior
consent as well as minimum requirements regarding hull cover ratio
and security amount. The hull cover ratio requirement for loan a was
waivedbythelendersfortheperioduntil1January2013.Withregard
to loan b, the main ﬁnancial covenants as well as the hull cover ratio
were waived until 1 January 2014. The Company and its subsidiaries
are obliged under certain loan agreements to hold free cash liquidity
of U.S.$400 per vessel on a consolidated basis. As at 31 December
2011 and 2010, restricted cash relating to ﬁnancing arrangements
of the Company and its subsidiaries amounted to U.S.$574 and
U.S.$1,033 (note 11).
HCLhasissuedcorporateguaranteeinfavourofthebankofloana,as
a further security.
The weighted average interest rate for the year ended 31 December
2011 and 2010, was 5.25% and 4.84%, respectively. Total interest
paid was U.S.$5,243 and U.S.$5,951 for the years ended 31
December 2011 and 2010, respectively.
In March 2011, the two wholly owned subsidiaries of HCL which
entered into shipbuilding contracts for the construction of two
Kamsarmax vessels with scheduled delivery in the ﬁrst quarter of
2013, signed loan facility agreements with a European ﬁnancial
institution for the ﬁnancing of the vessels. The lender oﬀered a term-
loan facility of up to 65% of vessels’ market value upon delivery but
notmorethanU.S.$22,100pervesseltoﬁnance,upondelivery,each
vessel’sconstructioncost.Eachloanisrepayableintwelvesemi-annual
instalmentsofU.S.$600eachandaballoonpaymentofU.S.$14,900.
Theﬁrstinstalmentispayablesixmonthsaerdrawdownandtheﬁnal
instalment is due and payable on maturity of the loan, six years aer
drawdown. HCL has issued corporate guarantee as a further security.
Borrowing costs for the arrangement of the ﬁnancing as of 31
December 2011 amounted to U.S.$714 (2010: U.S.$ nil) and were
classiﬁed as non-current assets in the accompanying consolidated
statement of ﬁnancial position.
50 14. Other non-current ﬁnancial liabilities
Theamountsintheaccompanyingconsolidatedstatementofﬁnancial
position are analysed as follows:
At 31 December 2011, the Company had two interest rate swaps
designatedashedgesofexpectedfutureliborpaymentsinconnection
totheloansdescribedundernote13.Thecriticaltermsoftheinterest
rateswapshavebeennegotiatedupondesignationtomatchtheterms
oftherespectiveloans.Underbothcontracts,theCompanyexchanges
variable to ﬁxed interest rates at 3.99%. At 31 December 2011, the
notional amounts of the swaps were U.S.$29,650 and U.S.$33,300
representing87.7%and60.8%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 gain on cash ﬂow hedges amounting to
U.S.$1,637 has been credited to the consolidated statement of
comprehensive income for the year ended 31 December 2011. For
the year ended 31 December 2010, the Company recognised a net
unrealised loss of U.S.$488 which was charged to the consolidated
statement of comprehensive income.
The fair value of the derivative ﬁnancial instruments at 31 December
2011 and 2010, was a liability of U.S.$2,959 and U.S.$4,596
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:
The Company was incorporated under the laws of Jersey on 26
September2007,withanauthorisedsharecapitalofGBP10divided
into10,000ordinarysharesofGBP1.00each.Byaspecialresolution
dated 20 November 2007, the Company converted its authorised
share capital from pounds sterling to U.S. dollars at an exchange rate
ofGBP1=U.S.$2.070sothattheexistingsharecapitalwasconverted
toU.S.$20.7dividedinto10,000ordinarysharesofU.S.$2.070each.
Byaspecialresolutionalsodated20November2007,theauthorised
share capital of U.S.$20.7 was subdivided into 20,700,000 ordinary
shares of U.S.$0.001 each. By a special resolution also dated 20
November 2007, the Company increased 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 100,000,000
ordinary shares of U.S.$0.001 each.
On 30 November 2007, the Company was admitted to the AIM,
issuing 13,684,970 ordinary shares with par value U.S.$0.001 (in
addition to the 31,931,881 Ordinary Shares with par value of
U.S.$0.001 issued on 27 November 2007) at a premium of
U.S.$4.30 per ordinary share thereby increasing the share capital by
U.S.$0.046 million and increasing share premium by U.S.$58.9
million. Issuance costs directly attributable to the listing on AIM
amounted to U.S.$4.5 million.
51 The analysis of the share premium is as follows:
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
Claim receivables balance at 31 December is as follows:
Claims receivable at 31 December 2011 represented balance due
from insurers and other interests in favor of the owners of M/V
HellenicSeaasaresultofthehulldamagethatthevesselsustainedin
July2010duringherpassagethroughAmazonRiver.Theshipowning
company,throughitsinsurancepolicy,iscoveredforthecostofrepairs
and related expenses (excluding loss of hire) above the applicable
deductible (U.S.$125).
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.
TheAGMheldinMay2011approvedaﬁnaldividendfor2010ofGBP
2,486,118 (5.45 pence per share) or U.S.$4,018 which was paid on
20 May 2011 to shareholders on record as of 26 April 2011.
Total dividends paid during the year 2010 amounted to U.S.$3,209 in
aggregate and consisted of a) ﬁnal dividend for the year 2009 of GBP
1,126,736(2.47pencepershare)orU.S.$1,698andb)interimdividend
fortheyear2010ofGBP980,762(2.15pencepershare)orU.S.$1,511.
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
amountingtoU.S.$17,500.FollowingadisputebeforetheKoreanCourts
between Arkadia and Samsun on the damages claim the competent
courtsofSeoulruledinfavourofArkadiaon14December2009.
52 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 two non-interest cash payments of U.S.$593 and U.S.$534,
being 10% and 9% respectively of the recoverable claim as described
in sub-paragraph (i) above, were received on 30 December 2010 and
29December2011,respectivelyandwerecreditedtootheroperating
incomeintheaccompanyingconsolidatedincomestatementfortheyear
ended 31 December 2010 and 31 December 2011, respectively. The
outcomeoftheimplementationoftherehabilitationplanremainsdiﬃcult
toforecastand,therefore,futureinﬂowsareuncertain.Accordingly,the
Companyhasnotrecognisedfuturecashreceiptsunderthissettlement
and will make further assessments in 2012. In addition, in July 2010
Arkadia received 212,018 Samsun shares in respect of the remaining
portion (66%) of the claim stated under (ii) above. These shares have
beenclassiﬁedas“availableforsale”.Asthereisnotradingofthesenon
voting shares and as the outcome of the rehabilitation plan remains
diﬃcult to forecast, the Company has assigned U.S.$ nil value to them.
The Company will make further assessments in 2012.
Further to the hull damage of M/V Hellenic Sea during her passage
through the Amazon River in July 2010 (note 17), arbitration
proceedings have commenced in London in August 2011 by
appointmentofarbitrators,betweenPatmosShippingCo.Ltd.,thevessel
owningcompanyofM/VHellenicSea(“Owners”),thecharterersSetsea
S.p.A. (“Charterers”), and the sub-charterers of M/V Hellenic Sea. The
Owners have already provided to the Charterers a bank letter of
guarantee for U.S.$3,100 as security for Charterers’ alleged claim
againsttheOwnersofthevesselforallegedlossofproﬁtduringvessel’s
oﬀhire.Althoughaformal,ﬁnalclaimhasnotbeenserveduponOwners
and / or their legal representatives as of yet, Owners’ legal consultants
and appointed experts have advised the Owners that, on the basis of
available information and evidence to date, the prospects of success of
theCharterers’claimagainsttheOwnersareremote,hencenorespective
provisionwastakenbytheCompany.TheOwnersarealsomaintaininga
claimagainsttheCharterersforalltheirdamagescausedbytheincident
(includingthecostofsalvageandrepairswhichwerecoveredbyvessel’s
hull insurers and the oﬀ-hire cost), basis and prospects of which are
currentlybeingevaluatedbyexperts,henceagainnoprovisionforfuture
cashreceiptshasbeenmadebytheCompanyinthisrespect.
Operatingleasecommitments–vesselowningcompaniesaslessor:
Someofthevesselsowningcompanieshaveenteredintotimecharter
arrangements for their respective vessels. These arrangements have
remaining terms between 1 to 2 months as of 31 December 2011
and 1 to 4 months as of 31 December 2010.
Future minimum gross charter revenues receivable upon time charter
arrangements as at 31 December 2011 and 2010, 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.
Commitments for vessels under construction:
As of 31 December 2011, the two subsidiaries of HCL which are
engaged in the construction of two new building Kamsarmax vessels
(note 8) have scheduled commitments towards the shipbuilding yard in
theamountofU.S.$20,600foreachvessel.Suchpaymentsfalldueupon
delivery of the vessels in the ﬁrst quarter of 2013 and are expected to
becoveredbythedrawdownofthenewloanenteredsignedbetweenthe
twosubsidiariesofHCLandaEuropeanﬁnancialinstitution(note13).
53 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
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
outstandingshares,(''5PercentOverrideRule'').Managementbelieves
thattheCompanyanditssubsidiariescurrentlycomplywiththeabove
mentioned criteria; however, in the future, the Company and its
subsidiariesmaynotcontinuetosatisfycertaincriteriaintheU.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
The Company’s and its subsidiaries’ principal ﬁnancial liabilities, other
than derivatives, are bank loans. The main purpose of these ﬁnancial
liabilitiesistoﬁnancetheoperationsoftheCompanyanditssubsidiaries.
The Company and its subsidiaries have various other ﬁnancial
instruments such as cash and cash equivalents, restricted cash, trade
receivablesandtradepayables,whicharisedirectlyfromtheiroperations.
TheCompanyalsoentersintoderivativetransactions,primarilyinterest
rate swaps, the purpose of which is to manage the interest rate risk
arisingfromtheCompany’s anditssubsidiaries’sourcesofﬁnance.
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. The Company’s policy is to
manage its interest cost using a mix of ﬁxed and variable rate debts.
The Company’s policy to date has been to keep between 40% and
70% of its borrowings at ﬁxed rates of interest. To manage this, the
Companyentersintointerestrateswaps,inwhichtheCompanyagrees
toexchangevariabletoﬁxedinterestrate.Theseswapsaredesignated
to hedge underlying debt obligations. At 31 December 2011, 71.1%
of the Company’s and its subsidiaries’ long-term borrowings are at
ﬁxedrateofinterest(2010:67.5%).Duetotheprevailinguncertainty
with regard to the global macro-economics and its eﬀect on interest
54 rates, the Company will re-evaluate its policy upon termination of the
existing swap agreements.
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
coverpartoftheiroperatingandadministrativeforeseeableexpenses
payable in Euro. For the years ended 31 December 2011 and 2010,
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
December2011,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.
Thevesselowningcompanies intendtooperatewiththirdparties,with
whichtheyhaveeitherco-operatedinthepasttotheirfullsatisfaction,
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:
55 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 2011.
Fair value hierarchy
As at 31 December 2011, the Company and its subsidiaries held the
ﬁnancial instruments (note 14) 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:
Level1: quoted (unadjusted) prices in active markets for identical
assets or liabilities.
Level 2: other techniques for which all inputs which have a signiﬁcant
eﬀect on the recorded fair value are observable, either directly or
indirectly.
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
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 2011 and 2010, 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 2011 and 2010):
57 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.
TheCompanymanagesitscapitalstructureandmakesadjustmentsto
it, in light of changes in economic conditions. To maintain or adjust
the capital structure, the Company may adjust or suspend the
dividend payment to shareholders, return capital to shareholders, or
issue new shares.
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
In February 2012, the Company and its subsidiaries agreed with the
Lenders of loan a (note 13) to enter into an agreement for the
restructuring of the repayment schedule of the loan facility by
extendingitstenor. Furthertothisagreementtheoutstandingbalance
ofU.S.$33,800asof31December2011ispayableineightquarterly
instalments of U.S.$750 each, followed by eighteen quarterly
instalmentsofU.S.$1,000each.Theﬁrstinstalmentwasdueandpaid
on 8 February 2012 and the ﬁnal instalment is due on 8 May 2018,
along with a balloon payment of U.S.$9,800. An earnings recapture
clause has been agreed based on which part of the excess earnings
generated by the vessels ﬁnanced under this loan facility agreement
during each year, commencing from ﬁnancial year 2012, will be paid
to the lending bank at the beginning of the next ﬁscal year.
Furthermore, waivers were provided for the main ﬁnancial covenants
for the period 1 January 2012 until 1 January 2014 and in addition
thewaiverforthehullcoverratiowasextendeduntil1January2014.
58 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
28-30 The Parade,
St Helier,
Jersey, JE1 1EQ
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
1PosidonosAvenue&3Moraitini
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
59
Corporate Information www.hellenic-carriers.com