Quarterly Report • Aug 27, 2014
Quarterly Report
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Second quarter 2014 August 27th, 2014
*EBITDA is equal to operating profit plus depreciations (including impairment related to vessels) and amortisation.
Golden Ocean Group Limited (the "Company" or "Golden Ocean") reports profit of \$1.0 million and earnings per share at par for the second quarter of 2014. This compares with profit and earnings per share of \$10.1 million and \$0.02 respectively for the first quarter of 2014. Total operating revenues for the second quarter were \$72.8 million; total operating expenses were \$64.3 million and other gains/losses net were positive with \$2.5 million. Net financial items were negative with \$10.0 million.
The profit for the period of \$1.0 million is a decrease of \$9.1 million compared to last quarter. Net operating income is down by \$7.4 million while net financial items are down by \$1.7 million. When excluding one-off items the earnings on the fleet is down by \$5.5 million. This is mainly related to lower earnings in the spot market during the second quarter of 2014, compared to the earnings in the first quarter. A few vessels finished profitable charters during the quarter but at the same time the recently purchased second hand vessels contributed positively to the quarter. The net financial cost is higher compared to last quarter due to the interest allocated to the convertible bond for a full quarter as well as negative mark-to-market development on the Company's interest rate swaps.
Changes in one-off items relative to last quarter are negative with approximate \$1.8 million. These one-offs includes revaluation of refundable installments on newbuildings (+\$10.5 million), negative mark-to-market on FFAs (-\$8.5 million) and compensation for default of a charter contract (+\$5.3 million).
The table below shows the split for some key numbers between the long term and the short term portfolio for the second quarter of 2014. Administrative expenses are not allocated. The long term portfolio is defined as owned vessels, long term time charter in contracts and bareboat vessels and relates to the vessels that the Company gives information on in quarterly releases and on the web page. The short term portfolio consists of the vessels, cargoes and derivatives that are entered into with a short duration.
| (in millions of \$) | Long term portfolio | Short term portfolio | Total |
|---|---|---|---|
| Total operating revenue | 53.1 | 19.7 | 72.8 |
| Total operating expenses (ex admin) | -42.6 | -18.9 | -61.5 |
| Total other gain/losses net | 4.8 | -2.3 | 2.5 |
| Operating profit (ex admin) | 15.3 | -1.5 | 13.8 |
| Admin expenses | -2.8 | ||
| Operating profit | 11.0 |
Cash and cash equivalents decreased by \$122.1 million during the quarter. The Company generated cash from operating activities of \$5.0 million during the quarter. Restricted cash decreased with \$9.3 million. The Company purchased four vessels with a total cost of \$128 million in the quarter and settled the payment of
the 50% shares of Golden Magnum Inc. The Company paid \$6.6 million in the quarter for dry-dock expenses related to four vessels. The Company received \$56.2 million from Jinhaiwan. Financing activities were negative with \$46.5 million in the quarter. Repayment of debt, interest and financing charges amounted to \$29.9 million, including \$20.2 million related to the Jinhaiwan refunds, and dividends declared for first quarter of 2014 results were paid with a total of \$11.2 million.
In February 2014 the Company purchased three 2012 Korean built 81,500 dwt Kamsarmax bulk carriers. The sister vessels were bought in an en-block transaction and were delivered to the Company through April and May 2014.
In April 2014 the Company entered into an agreement to buy one ice class Panamax vessel built at Pipavav Defence & Offshore Engineering Company ("Pipavav"). The vessel is named Golden Ruby and is acquired from a third party. The Company took delivery of the vessel in May 2014.
Two vessels have been docked during second quarter. Golden Strength has been through 5 year drydocking while Channel Navigator has had an intermediate dry-dock with steel renewals. So far this year 5 vessels have been docked and in total 8 of the Company's vessels will be docked during 2014.
The Company has decided not to declare the optional years on Golden Kiji and will redeliver the vessel to owners during September 2014.
In the second quarter of 2014 the Company received refund of \$5.3 million in relation to a default of a charter contract for Golden Feng.
As per today Golden Ocean's total newbuilding program consists of eight Supramax vessels, two vessels from Japan Marine United Corporation ("JMU") and six vessels from Chengxi. The remaining capital expenditure for vessels under construction is \$184.7 million as of end Q2-2014. None of the newbuildings are yet financed and the Company will work on financing prior delivery of the vessels. Based on the strong interest seen from banks the Board is confident that attractive financing for these vessels can be achieved.
As earlier reported the Company has had arbitration processes ongoing in relation to nine construction contracts cancelled at Zhoushan Jinhaiwan Shipyard Co. Ltd. Last quarter the Company obtained final awards on three of these contracts and in May the Company received \$56.2 million as refund for two contracts, covering installments of \$45.8 million and interest of \$10.4 million. End July the Company received additional \$47.4 million, covering installments of \$38.65 million and \$8.7 million in interest for the third contract. In total this exceeded the recorded values of the same contracts with \$6.9 million. The Company has paid down debt with in total \$31.9 million in relation to these contracts.
For the remaining six contracts the Company has received preliminary awards concluding that the Company was entitled to cancel the contracts and therefore also entitled to refunds. On two out of these contracts the Company was not awarded interest, on the basis of assumed facts, but installments only. Both parties are pursuing appeals in the High Court in London against these awards. In addition, the yard has applied to the High Court in London for leave to appeal against the awards made in respect of the four other contracts, and the Company expects the High Court to decide on whether the yard is to be allowed to pursue such appeals within the next three to four months.
The Company's claim towards the yard is secured by refund guarantees from two of the top four Chinese banks. The Company has in aggregate paid \$90.8 million on the last six vessels and has drawn \$11.3 million under the related loan facilities. Aggregate interest exceeds the recorded values by \$3.6 million, when not taking into account the interest on the two contracts where the Company is currently pursuing an appeal in the High Court.
On August, 2014 the Board has declared a dividend of \$0.025 per share. The record date for the dividend has been set to September 10, 2014, ex dividend date will be September 8, 2014 and the dividend will be paid on or about September 25, 2014.
The Company has during the second quarter sold 55,000 shares in Korea Line Corporation at 25,094 krw/share with total proceeds of USD 1.4 million, which also has been booked as a profit in the income statement. The Company's remaining holding of KLC shares is then 115,042.
After the issuance of the Convertible Bond in January 2014 the Company had a very high degree of fixed interest rate on the loan portfolio .The Company decided to reduce this ratio by terminating \$200 million of interest rate swaps with approximate 1, 5-2 years remaining duration. The Company still has a high degree of its debt secured by fixed interest rate swaps.
The Company has due to limited liquidity and relative high cost decided to seek delisting Golden Ocean from the secondary listing on SGX. The Company's presence in Asia on the shipping side is increasing and not affected by this delisting.
As of June 30, 2014 the total number of shares outstanding in Golden Ocean was 447,314,296 of \$0.10 par value each. Additionally the Company had stock options for 4.86 million shares outstanding under various share incentive programs for management and the Directors, of which 1.48 million are vested and exercisable.
The second quarter took the dry bulk industry by surprise. It did not live up to expectations forecasted by most analysts following the sector. Capesize vessels earned on average \$11,900 per day compared to \$16,300 per day the previous quarter. This is still almost twice as much as the same quarter in 2013. The Panamax segment was even a bigger disappointment and earned on average \$6,300 per day which was even lower than the same quarter previous year.
Chinese steel production has grown by approximately six percent in the first half of 2014 from the previous six month period, which was in line or even above the consensus forecast. Analysts have also been right in their fleet growth assumptions, so the relatively disappointing fleet utilization has to be explained by other reasons.
Continued weak Chinese coal and bauxite import has meant a plentiful supply of Panamaxes to put pressure on Capesize through ratios in the coal trade. Coal demand from China has been considerably lower than anticipated due to more available hydro power and increased use of natural gas. Chinese imports and production of thermal coal each declined by one percent in the first half of 2014 compared to the first half of 2013. In addition, the ban on exports put in place by the Indonesian Government for nickel ore and bauxite, and a relatively moderate South American grain season did not support the smaller segments which again have a negative impact on Capesizes. China has been drawing down on bauxite and nickel ore inventories for the last six months and unless the ban is lifted sourcing has to take place from longer distances.
Iron ore, which is the main demand driver for the Capesize segment, has lived up to its expectations. China alone imported 457 million mt in the first half of the year, representing an increase of 19 percent year on year. The three major suppliers in Australia (Rio Tinto, BHP and FMG) have pushed forward their expansion plans and are expected to add another 130 million mt of extra commodity this year. Brazil is also adding capacity and if the country is going to reach its target of 350 million mt for 2014 a ramp up has to take place in the second half of 2014. This should support the freight market given the longer sailing distances to Far East. Prices of international ore have been under pressure and should support imports versus domestic Chinese production going forward.
Approximately 11 million dwt of new dry bulk capacity was delivered during the second quarter of 2014, compared to 16 million dwt the previous quarter. Scrapping has been fairly stable and four million dwt was removed from the tonnage list last quarter. As a consequence of a softer freight market, ordering of new vessels came down compared to the previous quarter. Available data is showing that orders for 14 million dwt of new capacity were signed during the second quarter of 2014, half of what was reported during the first quarter of 2014. The present order book represents approximately 19 percent of the existing fleet.
After several quarters of steady rise in asset values, prices corrected down. The Capsizes however were holding better up than the smaller segments and according to sale and purchase brokers modern vessels (maximum 5 years old) were priced three percent lower by the end of June compared to end of March 2014, while Panamaxes and Supramaxes lost between 5 and 10 percent compared to end of March 2014, depending on age and country where built. The positive development in newbuilding prices seems to have had a halt in the quarter and a minor negative correction has been observed.
As communicated last quarter the Company currently has a strategy of trading it's vessels in the spot market in order to position the fleet for an increase in long term rates. The market has been weaker than the Company's expectations in the second quarter and so far into third quarter and the earnings have suffered under such market conditions. However the expectations are still that the market will improve towards the end of the year and the Company will therefore continue to trade the vessels spot. Looking further ahead the Company expects to take down the spot exposure gradually if the market recovers during the last part of 2014 and into 2015.
Based on the increased spot activity on the Company's owned fleet and the limited volatility in the market there is a reduction in activity on the short term trading. The Company expects this to be a smaller part of the total activity for the near future compared to earlier quarters.
The Company's strategy of keeping the fleet spot is possible due to the strong cash position and the low cash break even on the vessels. At the time of writing, following the latest refund from Jinhaiwan in July, the Company holds cash and cash equivalents of approximate \$160 million. The average debt to vessel gearing when excluding the convertible bond is 48%. The average cash break even as of now, including G&A, for the sailing fleet is \$15,600 / day for Capesize vessels and \$11,500 per day for the combined fleet of ice class Panamaxes and Kamsarmax vessels. Adding on a few profitable charter contracts still running long term, the cash break even for the total fleet is reduced by 1,400 \$/day. Thus the downside risk to the Company is limited at the current levels, while the upside potential is significant. For each \$1,000 the market increases for the whole year of 2015, the Company expects to generate an additional income in the region of \$8-10 million.
So far in the third quarter the earnings on the fleet is lower than in the second quarter, when the fleet benefited from the higher earnings coming from the first quarter. The uptick seen lately will impact positively towards the end of the quarter; however the Board of Directors expects a small net loss for the third quarter of 2014. Fluctuations in market rates will affect the derivatives valuations and thus the final result for the quarter. Future earnings will continue to correlate with the spot market and the result for 2014 is therefore dependent on the market development going into the fourth quarter.
The arbitration processes against Jinhaiwan has progressed to a new level the last three months. The Company has received almost half the outstanding amount, related to the three contracts where final award was obtained prior to our last report. For the six remaining contracts preliminary awards have been published on all contracts and the awards are either appealed or applied for appeal. Depending on the outcome of the appeal processes, it may take until the start of 2015 before all the receivables are received. The Board of Directors still expect that the Company will recover installments and interest in all cases.
The Board of Directors feels that the Company has a strong balance sheet with an equity ratio of 47% and cash of around \$160 million. This combined with a young fleet with an average age of 5 years place the Company in a strong position to benefit from an expected recovery in the dry bulk market. Further growth and consolidation opportunities are currently being evaluated.
This press release contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Golden Ocean's management's examination of historical operating trends. Although Golden Ocean believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Golden Ocean cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results to differ materially from those discussed in this press release include the strength of world economies and currencies, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in the Company's operating expenses including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company.
August 27th, 2014
The Board of Directors Golden Ocean Group Limited Hamilton, Bermuda
Questions should be directed to: Herman Billung: CEO Golden Ocean Management AS +47 22 01 73 41
Birgitte Ringstad Vartdal: CFO Golden Ocean Management AS +47 22 01 73 53
Consolidated Comprehensive Income Statement June 30, 2014
Consolidated Balance Sheet as at June 30, 2014
Consolidated Cash Flow Statement for June 30, 2014
Consolidated Statement of Changes in Equity for June 30, 2014
Notes to Consolidated financial information
Golden Ocean Group Limited (GOGL) is a leading international dry bulk shipping company based in Bermuda, mainly operating in the Capesize and Panamax market segments. The Golden Ocean Group fleet is managed by the fully owned subsidiary Golden Ocean Management (Bermuda) Ltd, who in turn has subcontracted services to Golden Ocean Management AS, based in Oslo, Norway, and Golden Ocean management Asia Pte Ltd, based in Singapore Golden Ocean Group Ltd. is dual listed on Oslo Stock Exchange and Singapore Exchange with ticker GOGL.
(in thousands of \$, except per share data which are in \$)
| 2014 | 2013 | 2014 | 2013 | ||
|---|---|---|---|---|---|
| Notes | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | |
| Unaudited | Unaudited Unaudited | Unaudited | |||
| Operating revenue | |||||
| Revenue | 67 190 | 74 458 | 140 995 | 128 632 | |
| Other operating income | 3 | 5 610 | 30 249 | 6 000 | 30 508 |
| Total operating revenue | 72 800 | 104 707 | 146 995 | 159 139 | |
| Operating expenses | |||||
| Voyage expenses and commission | 21 842 | 21 758 | 44 101 | 34 576 | |
| Vessel operating expenses | 14 308 | 10 734 | 26 345 | 21 870 | |
| Charter hire expenses | 13 206 | 17 755 | 30 941 | 26 354 | |
| Administrative expenses | 2 788 | 3 561 | 5 571 | 6 617 | |
| Depreciation and amortisation | 7,8 | 12 186 | 9 643 | 22 518 | 18 819 |
| Impairment of vessels and vessels under construction Total operating expenses |
64 329- | - 63 452 | 129 477- | 108 236 | |
| Other gain/(losses) net | |||||
| Other gains/(losses) net | 4 | 2 523 | (1 442) | 11 883 | 368 |
| Total other gains/(losses) net | 2 523 | (1 442) | 11 883 | 368 | |
| Operating profit/(loss) | 10 994 | 39 813 | 29 401 | 51 271 | |
| Interest income | 412 | 231 | 595 | 516 | |
| Interest expense | 5 | (8 283) | (4 691) | (15 408) | (9 354) |
| Other financial items | 6 | (2 097) | 8 141 | (3 414) | 7 828 |
| Total net financial items | (9 968) | 3 681 | (18 228) | (1 010) | |
| Profit/(loss) before income tax | 1 026 | 43 494 | 11 173 | 50 261 | |
| Income tax | - | - | - | - | |
| Profit/(loss) for the period | 1 026 | 43 494 | 11 173 | 50 261 | |
| Profit/(loss) attributable to: | |||||
| Owners of the parent | 1 307 | 43 663 | 11 569 | 50 482 | |
| Non-controlling interests | (281) | (169) | (396) | (221) | |
| Profit/(loss) for the period | 1 026 | 43 494 | 11 173 | 50 261 | |
| Basic earnings/(loss) per share | \$0.0 | \$0.10 | \$0.025 | \$0.11 | |
| Diluted earnings/(loss) per share | \$0.0 | \$0.10 | \$0.025 | \$0.11 | |
| Other comprehensive income: | |||||
| Items that may be subsequently reclassified to profit or | |||||
| loss | |||||
| Changes in fair value of available-for-sale financial assets | (842) | 1 191 | (1 438) | 1 191 | |
| Total comprehensive income/(loss) for the period | 184 | 44 685 | 9 735 | 51 452 | |
| Comprehensive income/(loss) attributable to: | |||||
| Owners of the parent | 465 | 44 854 | 10 131 | 51 673 | |
| Non-controlling interests | (281) | (169) | (396) | (221) | |
| Total comprehensive income/(loss) for the period | 184 | 44 685 | 9 735 | 51 452 |
See accompanying notes that are an integral part of these financial statements
| 2014 | 2013 | ||
|---|---|---|---|
| (in thousands of \$) | Notes | Jun 30 | Dec 31 |
| ASSETS | Unaudited | ||
| Non current assets | |||
| Vessels and equipment, net | 7 | 833 370 | 667 788 |
| Vessels held under finance leases, net | 8 | 126 145 | 130 795 |
| Vessels under construction | 9 | 26 694 | 16 144 |
| Other long term receivables | 11 | 8 883 | 8 588 |
| Investment in associated companies / JV | 12 | 9 937 - |
17 419 - |
| Total non-current assets | 1 005 029 | 840 734 | |
| Current assets | |||
| Inventories | 11 331 | 10 775 | |
| Trade and other receivables | 11 | 25 931 | 25 495 |
| Derivative financial assets | 13 | 3 411 | 2 735 |
| Refundable installments for cancelled newbuildings | 2 | 149 477 | 192 976 |
| Available-for-sale financial assets | 14 | 15 478 | 16 916 |
| Cash and cash equivalents incl. restricted cash | 10 | 133 335 | 98 841- |
| Total current assets | 338 964 | 347 737 | |
| Total assets | 1 343 993 | 1 188 471 |
| Share capital | 44 731 | 44 726 | |
|---|---|---|---|
| Additional paid in capital | 99 187 | 99 156 | |
| Other reserves | 50 227 | 23 551 | |
| Retained earnings | 442 757 | 457 823 | |
| Owners Equity | 636 903 | 625 256 | |
| Non-controlling interests | 212 | 1 108 | |
| Total Equity | 637 115 | 626 364 | |
| Non-Current Liabilities | |||
| Long term debt | 15 | 492 094 | 319 605 |
| Obligations under finance leases | 16 | 107 174 | 110 416 |
| Other long term liabilities | 1 753 - |
1 903 - |
|
| Total non-current liabilities | 601 021 | 431 924 | |
| Current Liabilities | |||
| Long-term debt - current portion | 15 | 66 144 | 84 414 |
| Obligations under finance leases – current portion | 16 | 7 195 | 7 370 |
| Amount due to related parties | 534 | 1 216 | |
| Trade payables and other current liabilities | 17 | 31 984 | 37 183 |
| Total current liabilities | 105 857 | 130 183 | |
| Total liabilities and shareholders' equity | 1 343 993 | 1 188 471 |
See accompanying notes that are an integral part of these financial statements
| (in thousands of \$) | 2014 | 2013 | |
|---|---|---|---|
| Notes | Jan-Jun | Jan-Jun | |
| OPERATING ACTIVITIES | Unaudited | Unaudited | |
| Profit for the period | 11 173 | 50 261 | |
| Adjustments for: | |||
| Value of services under stock option scheme | 260 | 684 | |
| Stock options paid in cash | (54) | - | |
| Sale/Impairment marketable securities | (1 364) | - | |
| Share of (profit) / loss from associates/JV's | 12 | (7 621) | (583) |
| Gain from refundable installments for cancelled newbuildings | (10 537) | - | |
| Interest expense | 10 870 | 4 917 | |
| Interest income | (595) | (516) | |
| Depreciation | 7,8 | 22 518 | 18 821 |
| Amortisation of deferred charges | 678 | 300 | |
| Net change in: | |||
| Other items | - | (426) | |
| Amount due to related parties | (682) | (702) | |
| Derivative instrument receivable / payable amounts | 13 | (676) | (9 717) |
| Trade and other receivables | 11 | (731) | (14 470) |
| Inventories | (556) | (8 684) | |
| Trade payables and other current liabilities | 17 | (5 350) | 6 618 |
| Net cash provided by operating activities | 17 333 | 46 503 | |
| INVESTING ACTIVITIES | |||
| Changes in restricted cash | 1 146 | (346) | |
| Interest received | 595 | 516 | |
| Payments on vessels and vessels under construction | 7,9 | (153 717) | (40 435) |
| Capitalised docking and periodic maintenance | (9 766) | - | |
| Investment in Joint Venture | 12 | - | (18 250) |
| Proceeds from cancelled newbuildings | 56 233 | - | |
| Sale of short term investments | 1 364 | - | |
| Net cash provided by / (used in) investing activities FINANCING ACTIVITIES |
(104 145) | (58 515) | |
| Payment of financing charges | |||
| Interest paid | (3 647) | (601) | |
| (6 267) | (4 852) | ||
| Repayment of obligations under finance leases | (3 417) | (3 204) | |
| Repayment of long term debt Proceeds from long term debt |
(39 188) | (26 612) 24 017 |
|
| Proceeds from issue of new shares | - | ||
| Payment of dividends | 36 | - - |
|
| Proceeds from Convertible bonds | (27 357) | ||
| Net cash (used in) / provided by financing activities | 200 000 120 160 |
- (11 252) |
|
| Net change in cash and cash equivalents | |||
| Cash and cash equivalents at beginning of period | 33 347 | (23 264) 104 359 |
|
| Cash and cash equivalents at end of period | 10 | 93 881 127 228 |
81 095 |
Consolidated Statement of
(in thousands of \$)
| Additional | Non | ||||||
|---|---|---|---|---|---|---|---|
| Share | paid in | Retained | Controlling | Total | |||
| Capital | capital Other Reserves | Earnings | Total | interests | Equity | ||
| Balance at January 1, 2013 | 44 726 | 99 156 | 16 635 | 377 288 | 537 806 | 491 | 538 296 |
| Comprehensive income for the period | - | - | 6 916 | 83 875 | 90 792 | 617 | 91 409 |
| Dividend paid | - | - | - | (4 473) | (4 473) | - | (4 473) |
| Value of services under stock options scheme | - | - | - | 1 132 | 1 132 | - | 1 132 |
| Balance at December 31, 2013 | 44 726 | 99 156 | 23 551 | 457 824 | 625 257 | 1 108 | 626 364 |
| Comprehensive income for the period | - | - | (1 438) | 11 569 | 10 130 | (396) | 9 735 |
| Equity portion Convertible Bond | - | - | 28 115 | - | 28 115 | - | 28 115 |
| Issue of new share capital | 5 | 31 | - | - | 36 | 21 | 57 |
| Currency translation / other | - | - | - | (5) | (5) | - | (5) |
| Dividend paid | - | - | - | (26 836) | (26 836) | (521) | (27 356) |
| Value of services under stock options scheme | - | - | - | 206 | 206 | - | 206 |
| Balance at June 30, 2014 | 44 731 | 99 187 | 50 227 | 442 757 | 636 903 | 212 | 637 115 |
The condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. A full description of the accounting principles used in preparing the consolidated financial statements for Golden Ocean Group Ltd. is included in note 2 in the annual report for 2013. The annual consolidated financial statements are prepared in accordance with IFRS as adopted by the EU. There have been no changes in the accounting principles in 2014 except as noted below.
The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014.
IFRS 10 'Consolidated financial statements' (effective 1 January 2014). The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entity (an entity that controls one or more other entities) to present consolidated financial statements. The standard defines the principle of control, and establishes controls as the basis for consolidation. The standard also sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee.
IFRS 11 'Joint arrangements' (effective 1 January 2014). IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.
IFRS 12 'Disclosures of interest in other entities' (effective 1 January 2014). IFRS 12 includes the disclosure requirements for all forms of interest in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.
The adaption of the new standards has no material affect in the 2014 financial statements.
Preparation of the interim financial statements in accordance with IFRS implies use of estimates, which are based on judgments and assumptions that affect the application of accounting principles and the reported amounts of assets, liabilities, revenues and expenses. Actual amounts might differ from such estimates.
The Company has not tested any of the vessels for impairment this quarter due to lack of indicators.
The Company has had arbitration processes ongoing in relation to nine construction contracts cancelled at Zhoushan Jinhaiwan Shipyard Co. Ltd. As of the date of the report, three of these are concluded. The Company received in the second quarter \$56.2 million as refund for two contracts, covering installments of \$45.8 million and interest of \$10.4 million. This exceeded the book value in relation to these contracts with \$3.9 million and reduced the amount under Refundable installments for cancelled newbuildings with \$52.3 million.
Further, the Company received end July additional \$47.3 million, covering installments of \$38.6 million and \$8.7 million in interest for the third contract. The receivable was reassessed to the amount actual received and this exceeded book value with \$3.8 million. This amount received in July will reduce the amount under Refundable installments for cancelled newbuildings with \$43.5 million in the third quarter.
For the remaining six contracts the Company has now received preliminary awards concluding that the Company was entitled to cancel the contracts and therefore also entitled to refunds. On two out of these contracts the Company was not awarded interest, but installments only. These contracts have been appealed to court and the court is currently considering whether it will grant leave to appeal.
The Company's remaining claim towards the yard is secured by refund guarantees from two of the top four Chinese banks. The Company has in aggregate paid \$90.8 million in installments on the last six vessels. Installments and accumulated interest to now exceeds the book values by \$3.6 million, and the receivables have been revalued in order to take into account the amount exceeding book value.
| (in thousands of \$) | 6/30/2014 - |
6/30/2013 |
|---|---|---|
| Impairment of newbuilding Management fee revenues |
671 | 508 |
| Other revenues | 5 329 | 30 000 |
| Total other revenue | 6 000 | 30 508 |
Other revenue of \$5.3 million is related to compensation for a default on a charter contract received in the second quarter.
| (in thousands of \$) | 6/30/2014 | 6/30/2013 |
|---|---|---|
| Impairment of newbuilding Gain/(loss) on Forward freight agreements |
(6 235) | 281 |
| Gain/(loss) on bunkers derivatives | (40) | (496) |
| Gain /(loss) from refundable installments for cancelled newbuildings | 10 537 | - |
| Income from associates / JV's | 7 621 | 583 |
| Total other gains/(losses) net | 11 883 | 368 |
The refundable installments and accrued interest for cancelled newbuildings have been revalued following actual amounts received and according to preliminary awards on the remaining contracts (see note 2).
| (in thousands of \$) | 6/30/2014 | 6/30/2013 |
|---|---|---|
| Interest on bank overdrafts and loans | 13 158 | 6 371 |
| Interest on obligations under finance leases | 3 860 | 4 137 |
| Total interest expense | 17 018 | 10 508 |
| Less amounts included in the cost of qualifying assets | (1 610) | (1 154) |
| Net interest expense | 15 408 | 9 354 |
| (in thousands of \$) | 6/30/2014 | 6/30/2013 |
|---|---|---|
| Interest swap | (5 108) | 7 955 |
| Dividend received | 325 | - |
| Other financial items | 1 369 | (127) |
| Total other financial items | (3 414) | 7 828 |
Total interest rate swap loss in the second quarter was \$3.4 million. The unrealized portion of the interest rate swap was a loss of \$2.9 million while the realized portion was a loss of \$0.5 million. The Company received dividend from Greenship Bulk Trust in the first quarter of 2014. The Company sold 55,000 shares in Korea Line Corporation in the second quarter. A related gain of \$1.3 million is reported as other financial items.
The Group has the following owned vessels at June 30, 2014.
| Vessel | Built | DWT | Flag | |
|---|---|---|---|---|
| Channel Alliance | 1996 | 171 978 | Hong Kong | |
| Channel Navigator | 1997 | 172 058 | Hong Kong | |
| Golden Saguenay | 2008 | 75 500 | Hong Kong | |
| Golden Opportunity | 2008 | 75 500 | Hong Kong | |
| Golden Ice | 2008 | 75 845 | Hong Kong | |
| Golden Feng | 2009 | 170 500 | Marshall Island | |
| Golden Strength | 2009 | 75 745 | Hong Kong | |
| Golden Shui | 2009 | 170 500 | Marshall Island | |
| Golden Beijing | 2010 | 176 000 | Hong Kong | |
| Golden Eminence | 2010 | 79 447 | Hong Kong | |
| Golden Empress | 2010 | 79 600 | Hong Kong | |
| Golden Endeavour | 2010 | 79 600 | Hong Kong | |
| Golden Endurer | 2011 | 79 600 | Hong Kong | |
| Golden Enterprise | 2011 | 79 471 | Hong Kong | |
| Golden Zhoushan | 2011 | 175 834 | Hong Kong | |
| Golden Suek | 2011 | 74 500 | Hong Kong | |
| Golden Bull | 2012 | 74 500 | Hong Kong | |
| Golden Brilliant | 2013 | 74 500 | Hong Kong | |
| Golden Pearl | 2013 | 74 187 | Hong Kong | |
| Golden Diamond | 2013 | 74 187 | Hong Kong | |
| Golden Magnum | 2009 | 179 788 | Hong Kong | |
| Golden Daisy | 2012 | 81 507 | Marshall Island | |
| Golden Ginger | 2012 | 81 487 | Marshall Island | |
| Golden Rose | 2012 | 81 585 | Marshall Island | |
| Golden Ruby | 2013 | 74 500 | Hong Kong | |
| (in thousands of \$) | Docking and | |||
| periodic | Fixtures and | |||
| Vessels | maintenance | Equipment | Total | |
| Cost: | ||||
| At January 1, 2013 | 768 452 | 7 482 | 486 | 776 420 |
| Additions | 51 803 | 3 486 | 10 | 55 299 |
| Transferred from vessels under construction (note 9) | 29 214 | 1 000 | - | 30 214 |
| At December 31, 2013 | 849 469 | 11 968 | 496 | 861 932 |
| At January 1, 2014 | 849 469 | 11 968 | 496 | 861 932 |
| Additions | 173 660 | 9 743 | 25 | 183 428 |
| Transferred to non-current assets held for sale At June 30, 2014 |
- 1 023 129 |
- 21 711 |
- 521 |
- 1 045 360 |
| Accumulated depreciation and impairment: | ||||
| At January 1, 2013 | ||||
| 161 414 | 3 081 | 408 | 164 903 | |
| Depreciation | 27 192 188 606 |
2 025 5 106 |
25 433 |
29 241 194 144 |
| At December 31, 2013 | ||||
| At January 1, 2014 | 188 606 | 5 106 | 433 | 194 144 |
| Impairment (note 2) | - | - | - | - |
| Depreciation | 15 519 | 2 310 | 17 | 17 846 |
| At June 30, 2014 | 204 125 | 7 416 | 450 | 211 990 |
| Carrying amount: | ||||
| At June 30, 2014 | 819 004 | 14 295 | 71 | 833 370 |
The Group has pledged most of it's owned vessels to secure various banking facilities (note 15).
| Vessel | Built | DWT | Flag |
|---|---|---|---|
| Golden Lyderhorn | 1999 | 74 242 | Hong Kong |
| Ocean Minerva | 2007 | 75 698 | Panama |
| Golden Heiwa | 2007 | 76 662 | Panama |
| Golden Eclipse | 2010 | 79 600 | Hong Kong |
| (in thousands of \$) | |||
| Cost: | |||
| At January 1, 2013 Transferred to non-current assets held for sale |
176 159 | ||
| At December 31, 2013 | 176 159 | ||
| At January 1, 2014 | 176 159 | ||
| Additions Transferred to non-current assets held for sale |
22 | ||
| At June 30, 2014 | - 176 181 |
||
| Accumulated depreciation: | |||
| At January 1, 2013 | 35 942 | ||
| Depreciation | 9 422 | ||
| At December 31, 2013 | - 45 364 |
||
| At January 1, 2014 | 45 364 | ||
| Depreciation Transferred to non-current assets held for sale |
4 672 | ||
| At June 30, 2014 | - 50 037 |
||
| Carrying amount: | |||
| At June 30, 2014 | 126 145 | ||
| At December 31, 2013 | 130 795 | ||
The Group has the following vessels on financial lease at June 30, 2014.
Vessels held under finance lease are normally depreciated on the same basis as owned vessels.
| (in thousands of \$) | |
|---|---|
| At January 1, 2013 | 116 082 |
| Additions | 22 288 |
| Cancellations - transferred to short term receivables | (92 012) |
| Transferred to vessels and equipment (note 7) | (30 214) |
| At December 31, 2013 | 16 144 |
| At January 1, 2014 | 16 144 |
| Additions | 10 550 |
| At June 30, 2014 | 26 694 |
Additions include instalments, interest and supervision on newbuildings.
| At June 30, 2014 | 133 335 | 98 841 |
|---|---|---|
| Restricted cash | 6 107 | 4 960 |
| Cash and cash equivalents, non restricted | 127 228 | 93 881 |
| Short-term deposits | 62 500 | 12 500 |
| Cash at bank and in hand | 64 728 | 81 381 |
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Trade receivables, net | 5 996 | 7 343 |
| Other receivables | 23 222 | 15 867 |
| Prepayments | 5 596 | 10 873 |
| Accrued income | 34 814 | 34 083 |
| Less non-current portion: other receivables | (8 883) | (8 588) |
| Current portion | 25 931 | 25 495 |
| UFC | Golden Magnum | Golden Opus | Golden Azalea | Seateam | Totals | |
|---|---|---|---|---|---|---|
| (in thousands of \$) | Inc. | Inc. | Inc. | Management | ||
| Ownership | 50 % | 50 % | 50 % | 50 % | 25 % | |
| At 1 January , 2013 | 1248 | - | - | - | - | 1 248 |
| Additions | - | 6 350 | 6 924 | 6 400 | - | 19 674 |
| Disposals/Dividends | - | - | - | (7 653) | - | (7 653) |
| Share of profit | 673 | 834 | 1 276 | 1 253 | 114 | 4 150 |
| At 31 December, 2013 | 1921 | 7 184 | 8 200 | - | 114 | 17419 |
| At 1 January , 2014 | 1921 | 7 184 | 8 200 | - | 114 | 17 419 |
| Additions | - | - | - | - | - | |
| Disposals/Dividends | (1 500) | (7 405) | - | - | (8 905) | |
| Share of profit | 739 | 221 | 463 | - | 1 423 | |
| At 30 June, 2014 | 1 160 | - | 8 663 | - | 114 | 9 937 |
The figures reflect the Group's investment in the above companies.
| UFC | Golden Magnum | Golden Opus Inc. | Seateam | Totals | |
|---|---|---|---|---|---|
| (in thousands of \$) | Inc. | Management | |||
| Ownership | 50 % | 50 % | 50 % | 25 % | |
| At June 30, 2014 | |||||
| Current | |||||
| Cash and cash equivalents | 3 070 | - | 3 422 | - | 6 492 |
| Other current assets | 1 580 | - | 2 246 | 456 | 4 282 |
| Total current assets | 4 650 | - | 5 668 | 456 | 10 774 |
| Financial liabilities | - | - | 458 | - | 458 |
| Other current liabilities | 2 330 | - | 622 | - | 2 952 |
| Total current liabilities | 2 330 | - | 1 080 | - | 3 410 |
| Non-current | |||||
| Assets | - | - | 33 025 | - | 33 025 |
| Financial liabilities | - | - | 20 287 | - | 20 287 |
| Total non-current liabilites | - | - | 20 287 | - | 20 287 |
| Net total assets | 2 320 | - | 17 326 | 456 | 20 102 |
| UFC | Golden Magnum | Golden Opus Inc. | Seateam | Totals | |
|---|---|---|---|---|---|
| (in thousands of \$) | Inc. | Management | |||
| Ownership | 50 % | 50 % | 50 % | 25 % | |
| At December 31, 2013 | |||||
| Current | |||||
| Cash and cash equivalents | 3 606 | 804 | - | - | 4 410 |
| Other current assets | 1 848 | 4 586 | 4 845 | 456 | 11 735 |
| Total current assets | 5 454 | 5 390 | 4 845 | 456 | 16 145 |
| Financial liabilities | - | 952 | 458 | - | 1 410 |
| Other current liabilities | 1 612 | 1 077 | 295 | - | 2 984 |
| Total current liabilities | 1 612 | 2 029 | 753 | - | 4 394 |
| Non-current | |||||
| Assets | - | 33 310 | 33 630 | - | 66 940 |
| Financial liabilities | - | 22 303 | 21 322 | - | 43 625 |
| Total non-current liabilites | - | 22 303 | 21 322 | - | 43 625 |
| Net total assets | 3 842 | 14 368 | 16 400 | 456 | 35 066 |
The tables above reflect the total assets and liability for the Group's JV/associated companies.
The Group bought the remaining 50% of Golden Magnum Inc. in the first quarter of 2014 and it is now considered as a fully owned subsidiary where all assets and liability are consolidated into the Group's financial statement.
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Interest derivatives | 3 339 | 2 566 |
| Bunkers derivatives | 72 - |
169 |
| Forward freight agreements Derivative financial instruments, net |
3 411 | 2 735 |
| (in thousands of \$) | 6/30/14 | 12/31/13 |
|---|---|---|
| At 1 January, 2014 | 16 916 | - |
| Additions | - | 10 000 |
| Net gains/(losses) transfer to equity | (1 438) | 7 255 |
| Disposals | - | (339)- |
| At 30 June, 2014 | 15 478 | 16 916 |
| (in thousands of \$) | 6/30/14 | 12/31/13 |
| Listed Equity securities: | ||
| Korea Line Corporation - Asia | 2 667 | 4 166 |
| Knightsbridge Tankers Limited - US | 167 | 107 |
| Unlisted Equity securities: | ||
| Greenship Bulk Trust - Europe | 12 644 | 12 644 - |
| Total available for sale-financial assets | 15 478 | 16 916 |
| (in thousands of \$) | 6/30/14 | 12/31/13 |
| Currencies: | ||
| NOK (Norwegian kroner) | 12 644 | 12 644 |
| KRW (Korean Won) | 2 667 | 4 166 |
| US dollar | 167 | 107- |
| Total available for sale-financial assets | 15 478 | 16 916 |
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Within one year | 66 144 | 84 414 |
| Between one and two years | 151 013 | 77 451 |
| Between two and five years | 347 925 | 180 172 |
| After five years | - | 67 373 |
| Total debt | 565 082 | 409 410 |
| Current portion | (66 144) | (84 414) |
| Long-term debt, nominal value | 498 938 | 324 996 |
| Value of sellers credit | (774) | (1 029) |
| Deferred transaction costs | (6 070) | (4 362) |
| Long-term debt, net | 492 094 | 319 605 |
All debt is secured by mortgages over sailing vessels and vessels under construction.
All debt related to the cancelled newbuildings has been classified as short term debt as it falls due following the final arbitration award.
| Long-term debt and finance lease liabilities: | ||
|---|---|---|
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
| Non-current | ||
| Bank borrowings and sellers credit | 315 281 | 319 605 |
| Convertible Bond | 176 813 | - |
| Finance lease liabilities | 107 174 | 110 416 |
| 599 268 | 430 021 | |
| Current | ||
| Bank borrowings and sellers credit | 66 144 | 84 414 |
| Finance lease liabilities | 7 195 | 7 370 |
| 73 339 | 91 784 | |
| Total borrowings | 672 607 | 521 805 |
All debt is denominated in US Dollars and the bank debt has an interest rate at LIBOR plus a fixed margin of an average of 2.70 percent. The interest rate is mainly repriced on a monthly basis, while some facilities are repriced on a quarterly basis. The Convertible bond debt (\$ 200 million) has a fixed coupon of 3.07% p.a.
| Within one year | 2-5 years | 6-10 years | Total | |||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of \$) | 6/30/2014 | 12/31/2013 6/30/2014 | 12/31/2013 | 6/30/2014 | 12/31/2013 | 6/30/2014 | 12/31/2013 | |
| Minimum Lease Payments | ||||||||
| Interest | 7 349 | 7 501 | 27 894 | 28 652 | 1 880 | 4 609 | 37 123 | 40 762 |
| Purchase option | - | - | 55 017 | 55 017 | 33 550 | 33 550 | 88 567 | 88 567 |
| Instalments | 7 195 | 7 370 | 17 327 | 18 852 | 1 280 | 2 996 | 25 802 | 29 218 |
| Total Minimum Lease Payments |
14 544 | 14 871 | 100 238 | 102 521 | 36 710 | 41 155 | 151 492 | 158 547 |
| Present Value of Lease Obligations | 114 369 | 117 785 | ||||||
| Current portion | 7 195 | 7 370 | ||||||
| Non-current portion | 107 174 | 110 416 |
The Group has recorded finance leases on four vessels at June 30, 2014 (and 2013).The Group has purchase options and the exercise price of the option changes based upon the date the option is exercised.
The table below lays out the approximate latest exercisable dates and purchase option amounts based on the date the purchase options are calculated to be exercisable, and the first lease renewal date.
| (in thousands of \$) | Purchase option expected exercisable date |
Purchase option amount |
Lease renewal date |
|---|---|---|---|
| Golden Lyderhorn | September 2016 | 11 500 | September 2016 |
| Ocean Minerva | January 2018 | 21 052 | January 2015 |
| Golden Heiwa | March 2017 | 22 465 | March 2015 |
| Golden Eclipse | April 2020 | 33 550 | April 2020 |
The purchase option exercise prices at the final exercise date for Ocean Minerva and Golden Heiwa are denominated in JPY, and are JPY1.64 billion and JPY1.75 billion respectively. The purchase option amount in USD above is based on the exchange rate at September 30, 2012. The same purchase option exercise prices based on the exchange rate at June 30, 2014 would have been \$16.2 million related to Ocean Minerva and \$17.3 million on Golden Heiwa. In the third quarter of 2012 the Company reassessed the likelihood of exercising the purchase option denominated in JPY. The Company then assumed to be redelivering the vessels at the end of the charter period. The JPY lease liabilities relating to the purchase
options are therefore considered non-monetary liabilities and are translated at the historical exchange rate at the date of reassessment was made (shown in the table above).
All lease payments are denominated in US Dollars. The Group's finance lease obligations are secured by the lessor's title to the leased assets.
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Trade payables | 5 305 | 1 512 |
| Accruals | 11 002 | 6 273 |
| Deferred revenue | 14 057 | 27 540 |
| Other current liabilities | 1 620 | 1 858 |
| Total | 31 984 | 37 183 |
Deferred revenue relates to time charter revenue received in advance for future periods.
The Company received \$14.1 million dollars as income in advance during the fourth quarter of 2013. The amount relates to prepaid hire for 1 year for three vessels.
The Group has not recognized contingent liabilities in respect of legal claims arising in the ordinary course of business.
| (in thousands of \$) | Within one year | 2-5 years | Total | |||
|---|---|---|---|---|---|---|
| 6/30/2014 - |
12/31/2013 6/30/2014 - |
- | 12/31/2013 6/30/2014 - |
- | 12/31/2013 - |
|
| Vessels and equipment Vessels under construction |
114 839 | 23 511 | 69 862 | 171 764 | 184 701 | 195 275 |
| Total | 114 839 | 23 511 | 69 862 | 171 764 | 184 701 | 195 275 |
Five of the Supramax vessels are expected to be delivered during first half of 2015 while the remaining three are expected to be delivered during first half of 2016. None of the vessels under construction are currently financed.
The future minimum rental payments under the Group's non-cancellable operating leases as of June 30, 2014 are as follows:
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Within one year | 6 571 | 25 099 |
| In the second to fifth years | 581 - |
17 351 - |
| Later than five years Total minimum lease payments |
7 151 | 42 450 |
Total rental expense for the second quarter of 2014 for operating leases was \$13.2 million (Second quarter 2013:\$17.8 million).
The minimum future revenue payments (including owned vessels) to be received under the Group's noncancellable operating leases as of June 30, 2014 are as follows:
| (in thousands of \$) | 6/30/2014 | 12/31/2013 |
|---|---|---|
| Within one year | 74 274 | 67 251 |
| In the second to fifth years | 165 165 | 164 207 |
| Later than five years | 38 997 | 55 918 |
| Total minimum lease revenue | 278 436 | 287 376 |
Total rental income from operating leases was \$67.2 million in the second quarter of 2014 (Second quarter 2013:\$74.5 million).
Through its activities the Group is exposed to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group makes use of derivative financial instruments such as foreign exchange forward contracts and interest rate swaps to moderate certain risk exposures.
The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2013. There have been no changes in the risk management department or in any risk management policies since the prior year end.
The following table presents the Group's assets and liabilities that are measured at fair value at June 30, 2014:
| (in thousands of \$) | Level 1 | Level 2 | Total |
|---|---|---|---|
| At June 30, 2014 | |||
| Assets | |||
| Available-for-sale financial assets | 2 834 | 12 644 | 15 478 |
| Derivative financial instruments (interest swap) | - | 3 411 | 3 411 |
| Total assets | 2 834 | 16 055 | 18 889 |
| (in thousands of \$) | Level 1 | Level 2 | Total |
| At December 31, 2013 | |||
| Assets | |||
| Available-for-sale financial assets | 4 272 | 12 644 | 16 916 |
| Derivative financial instruments (interest swap) | - | 2 735 | 2 735 |
| Total assets | 4 272 | 15 379 | 19 651 |
Level 1 is the fair value of financial instruments traded in active markets based on quoted market prices at the balance sheet date. Level 2 is defined as inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). The fair value of financial instruments that are not traded in an active (for example, over the counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 2 trading and hedging derivatives comprise forward foreign exchange contracts and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.
The fair value of borrowings, trade and other receivables, other current financial assets, cash and cash equivalents (excluding bank overdrafts), and trade and other payables approximate their carrying amount.
Details of the share options outstanding during the quarter are as follows:
| 6/30/2014 | 12/31/2013 | |||
|---|---|---|---|---|
| Number of share options |
Weighted average exercise price USD |
Number of share options |
Weighted average exercise price USD |
|
| At the beginning of the year | 4 945 000 | 0,81 | 5 000 000 | 0,91 |
| Exercised year to date | (90 000) | (55 000) | ||
| Outstanding | 4 855 000 | 0,76 | 4 945 000 | 0,81 |
| Exercisable | 1 480 000 | 0,93 | 1 570 000 | 0,97 |
Total outstanding share options relates to the program issued in 2012 (4,355,000) and the 500,000 options issued in year 2009 that will expire in November 2014.
The Company received from Jinhaiwan end July \$47.3 million, covering installments of \$38.6 million and \$8.7 million in interest for the third contract that was cancelled at the yard. The receivable was reassessed in the second quarter to the amount actual received and this exceeded book value with \$3.8 million. The refundable installments for cancelled newbuilding will be reduced by \$47.3 million in the third quarter.
We confirm to the best of our knowledge that the condensed set of interim financial statements for the period 1 January to 30 June 2014 has been prepared in accordance with IAS 34 Interim Financial Reporting and gives a true and fair view of the Golden Ocean group's assets, liabilities, financial position and the result taken as a whole. We also confirm to the best of our knowledge that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of interim financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties transactions.
Hamilton, 27 August 2014
The Board of Directors of Golden Ocean Group Limited
John Fredriksen Tor Olav Trøim Kate Blankenship Director Director Director
BY:/s/ John Fredriksen BY:/s/ Tor Olav Trøim BY:/s/ Kate Blankenship
BY:/s/ Hans Christian Børresen BY:/s/ Georgina Sousa BY:/s/ Herman Billung Hans Christian Børresen Georgina Sousa Herman Billung Director Director President and CEO
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