KDM Shipping PLC

Quarterly Report • Aug 30, 2016

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

CONTENTS

	Page
Board of Directors and other officers
Declaration of the Members of the Board of Directors and the person responsible for the preparation of the condensed consolidated interim financial statements of the Company	2
Independent Auditors' Report on review of condensed consolidated interim financial statements	3 & 4
Condensed consolidated statement of profit or loss and other comprehensive income	5
Condensed consolidated statement of financial position	6
Condensed consolidated statement of changes in equity	7
Condensed consolidated statement of cash flows	8
Notes to the condensed consolidated interim financial statements	$9 - 26$

BOARD OF DIRECTORS AND OTHER OFFICERS

Board of Directors

Audit Committee

Remuneration Committee

Secretary

Independent Auditors

Registered Office

Konstiantyn Molodkovets - Executive Director, CEO

Denys Molodkovets - Executive Director, CFO

Konstantin Anisimov - Non-executive Director (resigned on 25 August 2015)

Mykhailo Chubai - Non-executive Director (resigned on 25 August 2015)

Denys Molodkovets - Head of Committee (appointed on 25 August 2015)

Konstiantyn Molodkovets (appointed on 25 August 2015)

Konstantin Anisimov - Head of Committee (resigned on 25 August 2015)

Mykhailo Chubai (resigned on 25 August 2015)

Konstiantyn Molodkovets - Head of Committee (appointed on 25 August 2015)

Denys Molodkovets (appointed on 25 August 2015)

Mykhailo Chubai - Head of Committee (resigned on 25 August 2015)

Konstantin Anisimov (resigned on 25 August 2015)

Boomer Secretarial Limited 3 Michael Koutsofta Str. 3031, Limassol Cyprus

KPMG Limited

3 Michael Koutsofta Str. 3031, Limassol Cyprus

Declaration of the Members of the Board of Directors and the person responsible for the preparation of the condensed consolidated interim financial statements of the Company

In accordance with Article 9, sections $(3)(c)$ and $(7)$ of the Transparency Requirements (Securities for Trading on Regulated Market) Law of 2007 ("Law"), we the members of the Board of Directors and the other responsible persons for the condensed consolidated interim financial statements of KDM Shipping Public Limited for the period of six months ended 30 June 2016 we confirm that, to the best of our knowledge:

• $a)$ the condensed consolidated interim financial statements that are presented on pages 5 to 26:
• $(i)$ have been prepared in accordance with the International Accounting Standard (IAS) 34 "Interim Financial Reporting" and in accordance with the provisions of Article 9, section (4) of the Law, and
• $(ii)$ give a true and fair view of the assets and liabilities, the financial position and the profit or losses of KDM Shipping Public Limited and the entities included in the condensed interim consolidated financial statements as a whole, and
• the report of the Board of Directors provides a fair review of the developments and performance $(b)$ of the business as well as the position of KDM Shipping Public Limited and of the entities included in the condensed interim consolidated financial statements, as a whole, together with a description of the major risks and uncertainties that they face.

Members of the Board of Directors

Denys Molodkovets

Person responsible for the preparation of the condensed consolidated interim financial statements for the six months ended 30 June 2016

L Denys Molodkovets

Nicosia, 26 August 2016

KPMG I imited Chartered Accountants 14 Esperidon Street, 1087 Nicosia, Cyprus P.O. Box 21121, 1502 Nicosia, Cyprus T: +357 22 209000, F: +357 22 678200

INDEPENDENT AUDITORS' REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

TO THE MEMBERS OF

KDM SHIPPING PUBLIC LIMITED

Introduction

We have reviewed the accompanying condensed consolidated statement of financial position of KDM Shipping Public Limited (the "Company") and its subsidiary companies (together with the Company referred to as "the Group") as at 30 June 2016, the condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and notes to the interim financial statements ("the condensed consolidated interim financial statements"). Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.

Scope of Review

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

Board Members: N.G. Syrimis, A.K. Christofides, P.G. Loizou, A.M. Gregoriades, A.A. Demetriou, N.G. Syrimis, A.K. Christofides, P.G. Loizou, A.M. Gregoriades, A.A. Demetriou, D.S. Vakis, A.A. Apostolou, S.A. Loizides, M.A. Loizides, S.G. Sofocleous,
M.M. Antoniades, C.V. Vasiliou, P.E. Antoniades, N.J. Halios, M.P.

Limassol P.O. Box 50161 3601 T: +357 25 869000
F: +357 25 363842

Larnana P.O. Box 40075, 6300
T: +357 24 200000

Paralimni / Avia Nana P.O. Box 33200, 5311
T: +357 23 820080 $F: +35723820084$

Polis Chrysocho P.O. Box 66014, 8330 $T: +3572632209$ $F: +35726322722$

KPMG Limited, a private company limited by shares, registered in Cyprus under registration
number HE 132822 with its registered office at 14, Esperidon Street, 1087, Nicosia, Cyprus.

P.O. Box 60288, 8101 P.O. bux duzed, d.
T: +357 26 943050
F: +357 26 943062

$F: +35724200200$

Paphos

3

Emphasis of matter

We draw attention to notes 2 (c) and 2 (e) to the condensed consolidated interim financial statements, which describe the political and social unrest and regional tensions in Ukraine. The impact of the events referred to in notes 2 (c) and 2 (e) about the continuing economic and political crisis in Ukraine and their final resolution cannot be determined and may adversely affect the Ukrainian economy and the operations of the Group.

Conclusion

Based on pur review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements as at 30 June 2016 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.

Marie A. Papacosta, FCCA Certified Public Accountant and Registered Auditor for and on behalf of

KPMG Limited Certified Public Accountants and Registered Auditors 14 Esperidon Street 1087 Nicosia Cyprus

26 August 2016

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2016

	Note	30 June 2016 USD'000	30 June 2015 USD'000
Continuing operations Revenue Cost of sales Gross (loss)/profit		13 576 (13835) (259)	9 1 0 7 (9036) 71
Other operating income Selling and distribution expenses Administrative expenses Other operating expenses Operating loss	6	47 (49) (227) (1917) (2405)	36 (60) (212) (3333) (3498)
Finance income Finance cost	7 7	$\mathbf{1}$ (68)	(5)
Net finance cost	7	(67)	(5)
Loss before taxation Taxation Loss from continuing operations		(2472) 37 (2435)	(3503) (324) (3827)
Discontinued operation Loss from discontinued operation Loss for the period	5	(170) (2605)	(75) (3902)
Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Effect from translation into presentation currency Total comprehensive income for the period		39 (2566)	(570) (4 472)
Loss for the period attributable to: Owners of the Company Non-controlling interests		(2610) 5 (2605)	(3902) (3902)
Total comprehensive income attributable to: Owners of the Company Non-controlling interests		(2563) (3) (2566)	(4492) 20 (4472)
Basic and fully diluted loss per share (cent)	16	(28,08)	(41,98)
Basic and fully diluted loss per share - continuing operations (cent)	16	(26,19)	(41, 17)

The notes on pages 9 to 26 are an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the six months ended 30 June 2016

	Note	30 June 2016 USD'000	31 December 2015 USD'000
Assets
Vessels, property, plant and equipment Non-current assets	9	13 165 13 165	15 959 15 959
Inventories	11	131	4 197
Trade and other receivables	12	7575	5972
Cash and cash equivalents Assets classified as held for sale		21 094	19864
Current assets	8	1814 30 614	٠ 30 033
Total assets		43 779	45 992
Equity Share capital	13	118	118
Share premium		23 570	23 570
Foreign currency translation reserve		(17433)	(17480)
Retained earnings		31 243	33 853
Equity attributable to owners of the Company		37498	40 061
Non-controlling interests		28	31
Total equity		37 5 26	40 092
Liabilities
Loans and borrowings	14	63
Deferred tax liabilities		498	604
Other long-term liabilities		39	71
Non-current liabilities		600	675
Loans and borrowings	14	4 1 4 3	4 0 0 0
Short term notes		29	38
Trade and other payables Liabilities classified as held for sale	15	1 1 6 7	1 187
Current liabilities	8	314 5 6 5 3	5 2 2 5
Total liabilities		6 2 5 3	5 900
Total equity and liabilities		43 779	45 992

On 26 August 2016 the Board of Directors of KDM Shipping Public Limited authorised for issue these condensed consolidated interim financial statements.

Ll

Konstiantyn Molodkovets Director, CEO

.......... Benys Molodkovets

Director, CFO

The notes on pages 9 to 26 are an integral part of these condensed consolidated interim financial statements.

			Attributable to owners of the Company
	Share capital USD'000	USD'000 premium Share	translation USD'000 currency Foreign reserve	USD'000 Retained earnings	USD'000 Total	Non-controlling interests USD'000	Total equity USD'000
Balance at 1 January 2015	$\frac{8}{1}$	23570	(16939)	39693	46 442	62	46504
Effect of translation into presentation currency Total comprehensive expense for the period Comprehensive expense Loss for the period			(590) (590)	(3902) (3.902)	(3902) (590) (4492)		(3902) (570) (4472)
Balance at 30 June 2015		23570	17529	35791	41950		42 032
Balance at 1 January 2016		23570	(17480)	33853	40 06		40092
Effect from translation into presentation currency Total comprehensive expense Comprehensive expense Loss for the period				(2610) (2610)	(2610) (2.563) 47	ම ىغ	(2,566) (2605) 39
Balance at 30 June 2016		23570	(17433)	31 243	37498		37526

$\ddot{\phantom{a}}$

The notes on pages 9 to 26 are an integral part of these condensed consolidated interim financial statements.

$\overline{ }$

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2016

KDM SHIPPING PUBLIC LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2016

	USD'000	30 June 2016 30 June 2015 USD'000
Cash flows from operating activities
Loss for the period	(2605)	(3902)
Adjustments for:
Depreciation of vessels, property, plant and equipment	585	494
Provision for bad debts	1 3 4 6	2 3 0 1
Payables written-off	$\blacksquare$	(27)
Loss on disposal of vessels, property, plant and equipment		126
Impairment charge - assets held for sale	394
Interest income	(1)
Discount of notes issued	3	5
Taxation	107	319
Exchanges differences Cash flows from operations before working capital changes	177	1 0 0 5
	6	321
Decrease in inventories	4 0 5 0	86
(Increase)/decrease in trade and other receivables	(2959)	264
Increase/(decrease) in trade and other payables	264	(754)
Cash flows from/(used in) operations	1 3 6 1	(83)
Tax paid	-	$\blacksquare$
Net cash flows from/(used in) operating activities	1 3 6 1	(83)
Cash flows from investing activities
Payment for acquisition of vessels, property, plant and equipment	(62)	(848)
Proceeds from disposal of vessels, property, plant and equipment		170
Interest received
Net cash flows used in investing activities	(61)	(678)
Cash flows from financing activities Proceeds from non-bank loans
Net cash flows from financing activities	206
	206
Net increase in cash and cash equivalents	1 2 3 0	337
Cash and cash equivalents at the beginning of the period	19864	18833
Effect of translation into presentation currency	(276)	1 0 9 8
Cash and cash equivalents at the end of the period	21 094	19 170

The notes on pages 9 to 26 are an integral part of these condensed consolidated interim financial statements.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

1. INCORPORATION AND PRINCIPAL ACTIVITIES

KDM Shipping Public Limited (the "Company") was incorporated in Cyprus on 2 December 1999 as a private limited liability company under the Cyprus Companies Law, Cap. 113. Its registered office is at 3 Michael Koutsofta Str., 3031, Limassol, Cyprus.

The Company was initially established under the name V.S. Marine Engineering Services Limited. On 21 December 2011, the Company was re-registered as a public limited company and changed its name to KDM Shipping Public Limited.

These condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2016 comprise the Company and its subsidiaries (together with the Company referred to as "the Group").

The principal activities of the Group are the cargo freight, ship repair, passenger transportation and trading in grain.

On 9 August 2012, the shares of the Company were admitted on the regulated market of the Warsaw Stock Exchange. On 11 June 2013, following the second public offering 2 000 000 new shares subscribed at issue price of PLN 30 per share.

The parent company of the Group is KDM Shipping Public Limited, with an issued share capital of 9 296 000 ordinary shares with nominal value of $\epsilon 0.01$ per share. The shares were distributed as follows:

		30 June 2016	31 December 2015
Owner	Number of	Ownership	Number of	Ownership
	shares	Interest	shares	Interest
		$\%$		℅
Konstiantyn Molodkovets (KM Management	5 100 000	54,86	5 100 000	54,86
Limited)
Denys Molodkovets (1)	1 197 321	12.88	1 197 321	12,88
Oleksyi Veselovskyy (2)	200 000	2,15	200 000	2,15
Konstantin Anisimov		$\overline{\phantom{0}}$
Liudmila Molodkovets
Iurii Molodkovets
Public	2798676	30,11	2 798 676	30,11
	9 296 000	100,00	9 296 000	100.00

(1) Direct and indirect holding.

(2) Since Mr. Veselovskyy passed away on 25 March 2012, these Shares in the Issuer constitute a part of estate to be transferred to heirs of Mr. Veselovskyy. The heir(s) will enter into possession of the Shares not earlier than after 6 months from the date of death, while the title to the shares will have passed to the relevant heir(s) as of the date of death.

For the six months ended 30 June 2016

2. BASIS OF PREPARATION

(a) Statement of compliance

These condensed consolidated interim financial statements as at and for the six months ended 30 June 2016 have been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting", and should be read in conjunction with the Group's annual consolidated financial statements as at and for the year ended 31 December 2015 ('last annual financial statements'). These condensed consolidated interim financial statements do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last financial statements.

(b) Basis of measurement

These condensed consolidated interim financial statements have been prepared under the historical cost convention.

(c) Use of judgments and estimates

In preparing these condensed consolidated interim financial statements, Management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgments made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements as at and for the year ended 31 December 2015.

Ukrainian operating environment

Ukraine's political and economic situation has deteriorated significantly since the Government's decision not to sign the Association Agreement and the Deep and Comprehensive Free Trade Agreement with the European Union in late November 2013. Political and social unrest combined with rising regional tensions has deepened the ongoing economic crisis and has resulted in a widening of the state budget deficit and a depletion of the National Bank of Ukraine's foreign currency reserves and, as a result, a further downgrading of the Ukrainian sovereign debt credit ratings. Since February 2014 when administrative restrictions were imposed number of Export orientated businesses suffering greatly. The final resolution and the effects of the political and economic crisis are difficult to predict but may have further severe effects on the Ukrainian economy.

The uncertain economic conditions in Ukraine have affected the cash flow forecasts of the Group's management in relation to the impairment assessment for financial and non-financial assets. The Group's management has assessed whether any impairment provisions are deemed necessary for the Group's financial assets carried at amortised cost by considering the economic situation and outlook at the end of the reporting period.

Although, Group's management considers that all necessary actions are being performed to maintain financial stability of the Group in current situation, continuation of crisis may adversely affect results and financial position of the Group, but it is currently impossible to estimate the effect. These condensed consolidated interim financial statements reflect current management estimation of Ukrainian business environment influence on the financial position of the Group. Situation development may differ from management expectations. These financial statements were not adjusted to reflect events after the reporting period.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

2. BASIS OF PREPARATION (continued)

(d) Functional and presentation currency

The functional currency of most of the companies of the Group is US Dollar ("USD"). Transactions in currencies other than the functional currency of the Group's companies are treated as transactions in foreign currencies. The Group's management decided to use US dollar ("USD") as the presentation currency for financial and management reporting purposes for the convenience of its principal users. Exchange differences arising from the translation to presentation currency are classified as equity and transferred to the foreign currency translation reserve.

The exchange rates used in the preparation of these condensed consolidated financial statements are as follows:

Currency	30 June 2016	Weighted average for the 6 months ended 30 June 2016	31 December 2015	Weighted average for the 6 months ended 30 June 2015
UAH - US dollar	24,8544	25,4578	24,0070	21,3649
RUB - US Dollar	64,2575	70,2583	72,8827	57,3968

(e) Going concern basis

These condensed consolidated interim financial statements have been prepared under the going concern basis, which assumes the realisation of assets and settlement of liabilities in the course of ordinary economic activity. Renewals of the Group's assets, and the future activities of the Group, are significantly influenced by the current and future economic environment in Ukraine. The Board of Directors and Management are closely monitoring the events in the current operating environment of the Group described in Note 2 (c) and consider that the Group is able to continue its operations on a going concern.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Group's annual consolidated financial statements as at and for the year ended 31 December 2015.

Certain comparative amounts in the condensed consolidated statements of profit or loss and other comprehensive income have been reclassified as a result of an operation discontinued during the current period (note 5).

Discontinued operations

A discontinued operation is a component of the Group's business, the operation and cash flows of which can be clearly distinguished from the rest of the Group and which:

• represents a separate major line of business or geographic area of operations;
• is a part of a single co-ordinated plan to dispose of a separate major line of nosiness or geographic area of operations; or
• is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of comparative period.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property and biological assets, which continue to be measured in accordance with Group's other accounting policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognized in profit or loss.

Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

4. OPERATING SEGMENTS

A reportable segment is a separable component of a business entity that produces goods or provides services to individuals (or groups of related products or services) in a particular economic environment that is a subject to risks and generate revenues other than risks and income those that are peculiar to other reportable segments.

The Group has four reportable segments, as described below, which are the Group's strategic divisions. The strategic divisions offer different services and are managed separately. Information regarding the results of each reportable segment is included below:

			Passenger
30 June 2016			transportation
	Freight	Ship repair	(Discontinued)	Grain trading	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Revenue	1 5 0 5	345	60	11726	13 636
Cost of sales	(1935)	(470)	(39)	(11431)	(13875)
Gross profit/ (loss)	(430)	(125)	21	295	(239)
Operating expenses	(1596)	(154)	(48)		(1798)
Impairment charge of vessels,
property, plant and equipment			(394)		(394)
Operating loss	(2026)	(279)	(421)	295	(2431)
Net finance cost	(65)	(2)			(67)
Loss before taxation	(2091)	(281)	(421)	295	(2498)
Taxation		37	(144)		(107)
Net profit/ (loss) for the period	(2091)	(244)	(565)	295	(2605)
Non-current assets	9982	3 1 8 3			13 165
Current assets	21 351	281	1814	7 1 6 8	30 614
Total assets	31 333	3 4 6 4	1814	7168	43 779
Non-current liabilities	63	566			629
Current liabilities	4951	347	314		5 6 12
Total liabilities	5014	913	314		6 2 4 1

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

4. OPERATING SEGMENTS (continued)

30 June 2015 transportation Freight Ship repair Total Grain trading (Discontinued) USD'000 USD'000 USD'000 USD'000 USD'000 1971 Revenue 199 6936 91 9 1 9 7 Cost of sales (1735) (6802) (293) (241) (9071) Gross profit / (loss) 236 (94) (150) 134 126 Operating expenses (2442) (925) (268) (69) (3704) Operating profit/ (loss) (2206) (1019) (418) 65 (3578) Net finance cost (5) (5) (2206) (1024) Loss before taxation (418) 65 (3583) Taxation (326) (319) Net profit / (loss) for the period (2206) (1350) (411) 65 (3902) As at 31 December 2015 Freight Ship repair Total Grain trading Passenger transportation (Discontinued) USD'000 USD'000 USD'000 USD'000 USD'000 Non-current assets 11722 3 5 1 1 726 15 959 Current assets 25 753 180 66 4 0 34 30 033 Total assets 37475 3691 792 4 0 3 4 45 992 Non-current liabilities 627 48 675 Current liabilities 607 4 1 1 4 502 5 2 2 4				Passenger
	Total liabilities	607	4 741	550	5899

Reconciliation of reportable segments profit or loss

	For the six 30 June 2016 USD'000	For the six months ended months ended 30 June 2015 USD'000
Total profit before tax for reportable segments	(2605)	(3902)
Elimination of discontinued operations	565	411
Profit before tax	(2 040)	(3 491)

$14$

KDM SHIPPING PUBLIC LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

5. DISCONTINUED OPERATIONS

In June 2016, the management of the Group decided to discontinue the passenger transportation segment. The management committed to a plan to sell this segment in the second half of 2016. The comparative condensed consolidated statement of profit or loss and other comprehensive income has been restated to show the discontinued operation separately from continuing operations.

a. Results of discontinued operation

	For the six months ended 30 June 2016 USD'000	For the six months ended 30 June 2015 USD'000
Revenue	60	91
Expenses	(86)	(171)
Result from operating activities	(26)	(80)
Income tax	(144)
Result from operating activities, net of tax	(170)	(75)
Loss for the period	(170)	(75)
Basic and diluted earnings per share (USD)	(0,02)	(0,01)

The loss for the period from the discontinued operation of 170 thousand (30 June 2015: loss of 75 thousand) was attributable entirely to the owners of the Company.

b. Cash flows from/ (used in) discontinued operations

	For the six months ended 30 June 2016 USD'000	For the six months ended 30 June 2015 USD'000
Net cash from (used in) operating activities	(287)	206
Net cash used in investing activities	(52)	(4)
Net cash flow for the period	(339)	202

The above cash flows analysis on discontinued operation is not disclosed separately on the face of the condensed consolidated interim financial statements.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

6. OTHER OPERATING EXPENSES

	Note	USD'000	30 June 2016 30 June 2015 USD'000
Loss from foreign exchange difference, net	a)	168	927
Loss on disposal of vessels, property, plant and equipment			106
Impairment of groups held for sale	8	394
Fines and penalties		4	۰
Provision for impairment of receivables		1 3 4 3	2 3 0 0
Other expenses
		1917	3 3 3 3

a) Loss from foreign exchange difference relates to intercompany loan between companies with different functional currencies which is not eliminated on consolidation.

7. FINANCE COST

	30 June 2016 30 June 2015 USD'000	USD'000
Finance income Bank interest
Interest expense
Other finance expenses Discount of notes issued Other financial expenses	(3) (65) (68)	(5) (5)
Total finance costs	(67)

8. DISPOSAL GROUP HELD FOR SALE

In 2016, management committed to a plan to sell the passenger transportation segment. Accordingly, this segment is presented as a disposal group held for sale. Efforts to sell the disposal group have started and a sale is expected in 2016.

As at 30 June 2016, the disposal group comprised assets of USD 1 814 thousand less liabilities of USD 314 thousand detailed as follows:

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

DISPOSAL GROUP HELD FOR SALE (continued) 8.

	30 June 2016 USD'000
Vessels, property, plant and equipment	1 720
Inventories	13
Cash and cash equivalents
Trade and other receivables	78
Trade and other payables	(120)
Deferred tax liabilities	(194)
	500

An impairment loss of USD 394 thousand writing down the carrying amount of the disposal group to its fair value less costs to sell has been included in 'other operating expenses' in the condensed consolidated statement of profit or loss and other comprehensive income (note 6).

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9. VESSELS, PROPERTY, PLANT AND EOUIPMENT

hand the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state
30 June 2016	Land an buildings	Vessels	Vessels under	equipment Plant and	Vehicles	Furniture and fittings	Other	Total
Cost	USD'00	JSD'000	construction USD'000	OOOGGSC	JSD'000	JSD'000	DOOGCIST	USD'000
Balance at 1 January 2016 Additions	563	15579	3182	993 $\mathbb{S}$				25580
Disposals
Reclassification to assets held for sale Exchange differences	नि (194)		(42) (3180	(29) (33)	35	$\overline{\omega}$ $\mathbf{\overset{\circ}{\mathbf{1}}}$	$\widehat{\mathbf{c}}$	(282) (3385
Balance at 30 June 2016	5432	15459		95				21975
Balance at 1 January 2016 Depreciation	2943	5075		270			67	9621
Depreciation for the period		478		29				585
Exchange differences On disposals	(100)
Reclassification to assets held for sale Balance at 30 June 2016	2914	5499 ق		$\widetilde{\varepsilon}$ 28 4				1283 8810

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For the six months ended 30 June 2016

9. VESSELS, PROPERTY, PLANT AND EQUIPMENT (continued)

30 June 2015	Land and buildings	Vessels	Vessels under	equipment Plant and	Vehicles	Furniture and fittings	Other	Total
Cost	USD'000	OOOGSSC	construction USD'000	JSD'000	JSD'000	JSD'000	DOOGCISL	JSD'000
Balance at 1 January 2015	6873 1246	$\begin{array}{c} 16\,238 \ 837 \ (1\,743) \ (79) \end{array}$	4258	586	157	85		28 283
Additions				668				2758
Disposals					(59)			(1803)
Exchange differences	(1696)		(391)	(126)	(40)			(2355)
Internal transfer
Balance at 30 June 2015	$rac{1}{6423}$	15260	3859					26883
Depreciation
Balance at 1 January 2015	4279		1196	342				10290
Depreciation for the period		4 287 4 1 2						494
On disposals		(52)			(25)			$\binom{77}{198}$
Exchange differences				$^{\circ}$
Balance at 30 June 2015	$\frac{(1067)}{3275}$	4628	$\frac{1}{9}$	272				9509

18

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For the six months ended 30 June 2016

9. VESSELS, PROPERTY, PLANT AND EQUIPMENT (continued)

31 December 2015	buildings Land and	Vessels	construction Vessels under	equipment Plant and	Vehicles	Furniture and fittings	Other	Total
Cost	USD'000	JSD'000	USD'000	OOOLISE	JSD'000	JSD'000	OOOGSL	OOO.CIST
Balance at 1 July 2015	6423	15260	3859	1128	84			26883
Additions		336						498
Disposals
Exchange differences	(793)	(17)	(115)	(183)	$\circledast$	$\mathcal{L}$	$\widetilde{\mathcal{S}}$	(1128)
Reclassification to inventory			(673)					(673)
Balance at 31 December 2015	$rac{1}{5630}$	15579	3182	993	56	64		25580
Depreciation
Balance at 1 July 2015	$3275$ $82$ $-414$ $2943$	4628 454	1196				౩
Depreciation for the period				$\frac{27}{3}$				9509 576
Exchange differences				(35)				(464)
Balance at 31 December 2015		5075	$\frac{196}{2}$				67	9621
Carrying amounts
Balance at 30 June 2016	2518	9960		667				13165
Balance at 31 December 2015	$-2687$	10504	1986					15959
Balance at 30 June 2015	3148	$-10632$	$\frac{2663}{2}$	856				17374

19

For the six months ended 30 June 2016

10. INVESTMENTS IN SUBSIDIARIES

The Group's subsidiaries, their principal activities, place of incorporation and effective ownership interests are as follows:

				30 June 2016 31 December
	Country of	Principal activities		2015
Company name	registration		Effective	Effective
			holding	holding
			$\frac{9}{6}$	$\frac{9}{6}$
KD Shipping Co. Limited Inc.	Panama	Bear Boat Charterer of vessels	100,00	100,00
LLC Danapris	Ukraine	Ukrainian holding company	99,84	99,84
LLC Capital Shipping Company	Ukraine	Ship owner, safety and technical license	99,57	99,57
LLC Hylea-Servise	Ukraine	Ship repair services	99,57	99,57
LLC Riverest Tur	Ukraine	Passenger transportation	99,88	99,88
Infoland Incorporated	Panama	Management services	100,00	100,00
LLC Kuybyshev KSRY	Ukraine Russian	Ship repair services	100,00	100,00
LLC Marine Management	Federation	Ships' operator	100,00	100,00
Bemax Marketing LTD	Marshall Islands Dormant		100,00
Intention Development LTD	Marshall Islands Dormant		100,00
Promo Ring LTD	Marshall Islands Dormant		100,00
Star Value LTD	Marshall Islands Dormant		100,00
Terra Empire LTD	Marshall Islands Dormant		100,00
Inlimited Mark LTD	Marshall Islands Dormant		100,00
KD Bulk	Marshall Islands Dormant		100,00
KD Curgo	Marshall Islands Dormant		100,00
KD Logistics	Marshall Islands Dormant		100,00
KD Maritime	Marshall Islands Dormant		100,00

In 2015 LLC Riverest Tur increased its shareholding in LLC Rivertime to 99,82% through an increase of share capital.

As from 2016 the company LLC Riverest Tour has been classified as held for sale since the management has decided to discontinue the passenger transportation segment.

The Representative office of KD Shipping Co. Limited has been established without the right to conduct commercial activity in Ukraine.

The company LLC Capital Shipping Company is in the process of liquidation.

$\overline{a}$

$\sim$ $\sim$

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

11. INVENTORIES

	30 June 2016 USD'000	31 December 2015 USD'000
Raw materials Work in progress Goods for resale Fuel Other materials	89 5 $\blacksquare$ 37	95 13 4 0 3 3 54
	131	. Q 7

In 2015 Management decided not to continue the repair of a vessel under construction due to the big investment required and rather use it as scrap metal in the ship repair activities. Therefore the net carrying amount of the vessel was reclassified to inventory.

During 2015 an impairment of USD 589 thousand was recognised in profit or loss to write down inventories at their net realisable value.

12. TRADE AND OTHER RECEIVABLES

	30 June 2016	31 December 2015
	USD'000	USD'000
Trade receivables	261	389
Less: Provision for impairment of trade receivables	(107)	(354)
Trade receivables - net	154	35
Prepayments	7439	7682
Less: Provision for prepayments	(215)	(1924)
VAT recoverable	160	157
Other receivables	37	44
Less: Provision for other receivables		(22)
	7 5 7 5	5 972
Current portion	7575	5972
	7575	5972

For the six months ended 30 June 2016

13. SHARE CAPITAL

	30 June 2016 Number of shares	30 June 2016 USD'000	31 December 31 December 2015 Number of shares	2015 USD'000
Authorised Ordinary shares of USD 0,01 each (Euro 0.01 each)	20 000 000	265	20 000 000	265
Issued and fully paid Balance at 1 January	9 296 000	118	9 296 000	118
Balance at 30 June/31 December	296 000	118	9 296 000

The owners of the Company were as follows:

	As at 30 June 2016	As at 31 December 2015
	USD'000	USD'000
Konstiantyn Molodkovets	65	65
Denys Molodkovets	15	15
Oleksiy Veselovskyy	2	$\overline{2}$
Public	36	36
	118	-18

On 11 June 2013 the Company issued 2 000 000 new shares following the second public offering. The offer price for each Company's share was established at PLN 30 (USD 9,31/EURO 7,34) and the investors subscribed for 2 000 000 shares of the Company which represent 21,5% of the total issued share capital.

As a result of the above the ordinary share capital increased to USD 118 thousand and is divided into 9 296 000 ordinary shares of $\epsilon$ 0,01 each and share premium of USD 23 570 thousand net of transactions costs.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2016

14. LOANS AND BORROWINGS

	30 June 2016	31 December 2015
	USD'000	USD'000
Long term liabilities Non-bank loans	63	-
Short term liabilities Bank loans Non-bank loans	4 0 0 0 143	4 0 0 0
Total	4 2 0 6	4 0 0 0

The bank loans are secured by mortgage against the vessels with net book value of USD 3 133 thousand $(31$ December 2015: USD 3 285 thousand).

15. TRADE AND OTHER PAYABLES

	30 June 2016	31 December 2015
	USD'000	USD'000
Trade payables	285	458
Advances received	27	31
Payable to directors/ owners	122	154
Salaries, contributions and other related taxes	154	106
Other accounts payable	329	175
Other taxes payable	3	14
Deferred income	4	4
Interest payable	243	245
	1 167	187

For the six months ended 30 June 2016

16. LOSS PER SHARE

The calculation of basic loss per share for the 6 months ended 30 June 2016 and 30 June 2015 was based on the loss attributable to the owners of the Company, and a weighted average number of ordinary shares as follows:

Loss attributable to the owners of the Company:

	30 June 2016 USD'000	30 June 2015 USD'000
From continuing operations From discontinued operations	(2435) (170)	(3827) (75)
Loss for the period	(2610)	(3 902)
Weighted average number of shares:
	30 June 2016 '000	30 June 2015 '000
Issued ordinary shares at 1 January	9296	9 296
Weighted average number of ordinary shares at 30 June	9 296	9 296
Basic and fully diluted loss per share
From continuing operations (cent)	(26,19)	(41,17)
Basic and fully diluted loss per share (cent)	(28,08)	(41,98)

17. RELATED PARTY TRANSACTIONS

The majority of the Company's share capital is held by Molodkovets Konstiantyn who owns 54,86% and Molodkovets Denys who owns 12,88%.

For the purposes of these condensed consolidated interim financial statements, parties are considered to be related if one party has the ability to control the other party, is under common control, or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. The Group enters into transactions with both related and unrelated parties.

According to these criteria the related parties of the Group are divided into the following categories:

A. Key management;

B. Companies whose activities are significantly influenced by the Group's owners.

$\overline{a}$

$\sim$ $\sim$ $\sim$

For the six months ended 30 June 2016

17. RELATED PARTY TRANSACTIONS (continued)

(i) Remuneration of key management

Salary costs of key management for the six months ended 30 June 2016 and 30 June 2015 were as follows:

	30 June 2016 30 June 2015 USD'000 USD'000
Salaries Contributions to pension funds Total	30 42 6 6 36 48
Number of key management personnel was as follows:	31 December 30 June 2016 2015
Number of key management personnel, persons	21 21
(ii) Transactions with related parties
Sales Administrative expenses	30 June 2016 30 June 2015 USD'000 USD'000 607 (22) (4)
Other income	(9) 13 576 $\mathbf Q$
(iii) Amounts receivable from directors/owners
	30 June 2016 31 December 2015 USD'000 USD'000
Receivable from directors/owners	9

The amount receivable from owners is interest free, and has no specific repayment date.

(iv) Amounts payable to directors/owners

	30 June 2016 31 December
	USD'000	2015 USD'000
Payable to directors/owners		154

For the six months ended 30 June 2016

17. RELATED PARTY TRANSACTIONS (continued)

(v) Outstanding balances with related parties

Companies whose activities are significantly influenced by the Group's owners:

		30 June 2016 31 December
	USD'000	2015 USD'000
Non-bank loans	207	٠

18. FINANCIAL RISK MANAGEMENT

The Group has exposure to the following risks arising from use of financial instruments: credit risk. liquidity risk and market risk (including foreign currency risk and interest rate risk).

For the six months ended 30 June 2016 USD 4 904 thousand (30 June 2015: USD 4 476 thousand) or 36,13% (30 June 2015: 49,15%) from the Group's revenue refers to the sales transactions carried out with one of the Group's client.

Other aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2015.

19. EVENTS AFTER THE REPORTING PERIOD

There were no material events after the reporting period, which affect the condensed consolidated interim financial statements as at 30 June 2016, except as described below:

Ship repair segment is still negatively affected by economic situation in Ukraine. There is a low demand for ship repair services from third parties. Group is still implementing cost cutting strategy.

Freight performed weaker in comparison to the same period last year. Freight tariffs during first 6 months were at low levels.

On 15 July 2016 the Group took into commercial management coster vessel of 4 050 DWT for the period of 1 year with an option of prolongation to maximum period of 5 years.

On 26 August 2016 the Board of Directors of KDM Shipping Public Limited authorised for issue these condensed consolidated interim financial statements.