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Annual Report 2009 | Annual Report 2009 | 1
Annual Report 2009
Eitzen Bulk Shipping A/S
2 | Annual Report 2009 | Contents
MANAGEMENT REVIEW
About Eitzen Bulk Shipping 3
2009 highlights and 2010 outlook 4
Group key fi gures and ratios 5
Eitzen Bulk Shipping - a new company with a long history 6
Strategic insight 8
2009 market review 14
2010 market outlook 16
Financial review 18
Corporate governance 20
People and planet 22
About the share 25
Management biographies 26
Management’s statement on the Annual Report 28
Independent auditor’s report 29
ANNUAL ACCOUNTS
Consolidated Financial Statement 30
Notes to the Financial Statements 35
Financial Statements- Parent 61
Group Structure 74
Defi nitions of key fi gures and fi nancial ratios 75
Company information 76
Contents
About Eitzen Bulk Shipping | Annual Report 2009 | 3
Eitzen Bulk Shipping is a globally recog-
nised dry bulk cargo operator primarily in
the supramax segment and secondarily in
the panamax segment.
The company aim for constant profi t-
able growth based on a diversifi ed earn-
ings base, an attractive fi nancial position,
long-term customers and a management
team with decade-long hands-on shipping
experience.
A strong market recognition has been
consolidated through decades of shipping
activities and close long-term customer
relationships that maximise our access
to cargo contracts. Eitzen Bulk Shipping
controls the commercial management of
50-70 vessels. The fl eet size depends on
market fl uctuations and seasonal con-
tractual commitments.
A combination of short to medium term
trading and arbitrage of vessels and car-
goes, and long-term vessel charters with
purchase options supports optimal fl ex-
ibility and reduces the business impact of
segment-specifi c changes in supply and
demand.
Eitzen Bulk Shipping reaps on its strong
customer relations when expanding into
shipowning to create additional value
from existing operations and further in-
crease earnings visibility. Additionally, we
will make strategic investments in areas
that create synergies with core shipping
activities, such as cargo handling and
warehousing facilities.
Detailed market surveillance, risk man-
agement and planning systems have been
implemented to optimise the balance be-
tween cargo contracts and tonnage com-
mitments.
The company carries no debt to fi nan-
cial institutions.
About Eitzen Bulk Shipping
By the end of 2009 Eitzen Bulk Shipping
commercially controlled a fl eet of 58 ves-
sels and had 16 new buildings on order
of which one will be fully owned and 15
long-term chartered with partly shared
purchase options.
The company had approximately 50
employees in offi ces in Copenhagen, New
York, Rio de Janeiro, Singapore, Hong
Kong and Beijing. In 2009 the total cargo
carryings amounted to 18.7 million tons
generating revenues of 376 MUSD.
Eitzen Bulk Shipping is listed on Nas-
daq OMX Copenhagen under the ticker
name Eitzen.
Forestry products, discharging operations
4 | Annual Report 2009 | 2009 highlights and 2010 outlook
In December 2009, the global dry cargo
activities in the Eitzen group were carved
out into the independent company Eitzen
Bulk Shipping A/S and listed on NASDAQ
OMX Copenhagen through a merger with
Dampskibsselskabet Orion A/S. As part
of the merger restructuring, employees
invested in the company with a sharehold-
ing of 14.7%.
The business performance in 2009
is considered satisfactory viewed in the
light of the diffi cult market conditions.
The company reported a net profi t of 19.0
MUSD and an EBITDA of 20.7 MUSD, which
are in line with the latest expectations as
published in the company announcement
regarding the merger restructuring in No-
vember 2009.
• Adjusted EBITDA was 28.9 MUSD down
14% from 2008, excluding the non-cash
impact of the share options program.
• New share options program expensed
in 2009 reduced EBITDA by 8.2 MUSD.
Treasury shares are allocated to cover
the entire program.
• Revenues in 2009 were 376 MUSD,
down 55% from 838 MUSD in 2008, re-
fl ecting the substantial change in mar-
ket rates.
• Gross profi t margin was 12.1%, an in-
crease from 7.0% in 2008.
• The fl eet activity level increased to 58
vessels by the end of 2009 from 41 ves-
sels in 2008.
• Total number of ship days decreased
from 15,129 days to 14,361 days (-5%).
• The Board of Directors will propose not
to pay out any dividend for 2009.
• As part of the merger restructuring
57 MUSD was distributed as dividends
settling intercompany accounts with
Camillo Eitzen & Co. ASA.
• No debt to fi nancial institutions.
• No major counterpart losses were re-
corded during 2009.
DEVELOPMENTS IN FOURTH
QUARTER
Business performance showed positive
results in fourth quarter with revenues
increasing 11% to 147 MUSD, compared
to Q4, 2008. Quarterly earnings (EBITDA)
were reduced by 8.2 MUSD due to the
expensed share options program imple-
mented 22 December 2009. Adjusted
EBITDA was 6.9 MUSD compared to -7.6
MUSD in 2008.
OUTLOOK 2010
EBITDA of 14-22 MUSD is expected based
on the company’s current coverage and
market conditions. The estimate excludes
the impact of the share options program
and does not include provisions for any
impairment on prepayments for the con-
tracted new buildings.
The shipping markets remain uncertain
due to the ambiguity as to whether the
current positive trend in short term eco-
nomic confi dence indices are sustainable
or a provisional result of fi nancial stimulus
packages. Weak public fi nances with huge
defi cits in major economies require fi scal
tightening and thus less spending and de-
mand for goods transportation. Whether
structural changes and increased spend-
ing in China, Brazil, South Africa and India
will counterbalance the rest of the world
remains uncertain.
Although the bulk market will be under
continued pressure and volatility is una-
voidable, the volume of trade is set to
grow and for an operator company such
as Eitzen Bulk Shipping, opportunities to
increase our activity level exists.
Going into 2010 a substantial percent-
age of the known ship days has been cov-
ered. On December 31st 2009 the com-
pany had a cargo coverage of 86% on the
known vessel days. As of 1st of March
2010 that fi gure remained at the same
2009 highlights and 2010 outlook
level. The company expects to increase
its activities in 2010 with a corresponding
increase in ship days. The current fl eet ac-
tivity level is around 70 vessels.
In 2010 Eitzen Bulk Shipping will take
delivery of two newbuilds on operational
leases from Japanese shipyards as part
of the newbuild program of 17 ships in to-
tal.
Eitzen Bulk Shipping A/S and Camillo
Eitzen & Co ASA will during 2010 aim
at establishing a broader shareholder
base for the company securing a larger
free fl oat and better liquidity in share of
which the majority presently is owned by
Camillo Eitzen & Co ASA and Eitzen Bulk
Shipping A/S management and staff. At
the same time, Camillo Eitzen & Co ASA
has decided in the process to review other
strategic opportunities for its ownership
position in Eitzen Bulk Shipping A/S.
Group key fi gures and ratios | Annual Report 2009 | 5
Group key fi gures and ratios
(USD ‘000) 2009 2008 2007 2006 2005
INCOME STATEMENT Revenue 376,029 838,307 771,746 426,902 457,314
Gross profi t (Net earnings from shipping activites) 45,495 59,092 53,245 974 43,612
Profi t before depreciation etc. (EBITDA) 20,741 33,665 29,185 -9,118 25,198
Profi ts from sale of vessels 0 49,542 54,237 0 0
Operating profi t (EBIT) 20,296 82,439 84,256 -9,329 25,069
Net fi nancials 2,399 3,938 -116 484 2,745
Profi t before tax 22,695 86,377 84,140 -8,845 27,814
Net profi t 19,037 92,769 81,576 -8,065 22,307
Profi t for the year for the Eitzen Bulk Shareholders 18,890 92,613 81,390 -8,237 22,162
STATEMENT OF FINANCIAL POSITION Non-current assets 19,862 99,921 82,908 7,215 8,958
Current assets 82,888 139,268 111,334 42,543 96,040
Total assets 102,750 239,189 194,242 49,758 104,998
Equity 25,150 57,317 83,177 13,514 50,420
Non-current liabilities 9,825 51,570 20,479 1,032 3,803
Current liabilities 67,152 129,826 90,268 34,937 50,576
Net interest-bearing debt -24,533 -54,750 -44,298 -6,221 -21,399
Cash and securities 24,806 66,052 45,029 6,842 21,925
CASH FLOW From operating activities -19,526 14,605 46,648 -24,587 49,925
From investing activities 291 101,703 53,913 9,291 -15,708
From fi nancing activities -22,011 -105,664 -66,000 0 -25,000
Total net cash fl ow -41,246 12,493 34,561 -15,295 9,218
FINANCIAL RATIOS AND PER SHARE DATA Gross profi t margin 12.1% 7.0% 6.9% 0.2% 9.5%
EBITDA margin 5.5% 4.0% 3.8% -2.1% 5.5%
Return on equity (ROE) 45.8% 131.8% 168.4% -25.8% 87.9%
Payout ratio 48.0 105.6 81.1 0.0 112.8
Equity ratio 24.5 24.0 42.8 27.2 48.0
USD rate year-end 519.01 528.49 507.53 566.14 632.41
Average USD rate 536.09 509.86 544.56 594.70 600.34
Total number of physical ship days 14,361 15,129 18,746 21,441 22,867
Average number of employees 52 58 61 62 55
No. of shares end of period, DKK 1 each 24,638,502 24,638,502 24,638,502 24,638,502 24,638,502
No. of shares excluding treasury shares, DKK 1 each 22,174,652 24,638,502 24,638,502 24,638,502 24,638,502
Earnings per share basic (EPS basic), USD 0.77 3.76 3.30 -0.33 0.90
Earnings per share diluted (EPS diluted), USD 0.77 3.76 3.30 -0.33 0.90
Dividend per share, USD 0.4 4.0 2.7 0.0 1.0
Dividend per share, DKK 1.9 21.0 13.6 0.0 6.4
Proposed dividend 0 47,800 66,000 0 25,000
Interim dividend 9,102 50,000 0 0 0
Share price at year end, DKK 40.0 * * * *
The key fi gures for 2009 and 2008 have been calculated based upon the combined fi gures of Eitzen Bulk Shipping A/S. The key fi gures for 2007, 2006 and 2005 have been
calculated based upon the fi gures of Eitzen dry bulk cargo activities. The key fi gures of Dampskibsselskabet Orion A/S for 2007, 2006 and 2005 have been eliminated in
order to present key fi gures for a fi ve years period, which is comparable with the continuing activities of Eitzen Bulk Shipping A/S.
The only activity in Dampskibsselskabet Orion A/S in the period 2005-2007 has been to carry through a closing of the former activity. The former activity of Dampskib-
sselskabet Orion A/S is not within the line of business or strategy of Eitzen Bulk Shipping A/S. Neither previously nor going forward. The result of Dampskibsselskabet
Orion A/S is not material compared to the activity in Eitzen Bulk Shipping.
Per share data for the period 2005-2009 is based upon the share capital of Eitzen Bulk Shipping A/S after the capital reduction completed 22 March 2010. The reduc-
tion has been allocated to a separate fund under the equity. The share capital at 22 March 2010 amounts to DKK 24,638,502 shares of nominal DKK 1. This due to present
comparable per share data fi gures for the period 2005-2009 based upon a nominal share capital, which is deemed reasonable to former and current activity level of the
Group. The number of shares excluding treasury shares is also calculated based on the number of treasury shares after the capital reduction.
* There is no share price available for Eitzen Bulk Shipping A/S for the period 2005 - 2008 refl ecting the activity presented in the key fi gures. The share price for Damp-
skibsselskabet Orion A/S for the period 2005 - 2008 is not comparable, whereas no share price is presented for the period in question.
6 | Annual Report 2009 | Eitzen Bulk Shipping
Although presented as a new name, Ei-
tzen Bulk Shipping A/S has roots going
back to the 19th century. The origin of
the company can be traced back to the
ship owning company Myren, which was
founded in Denmark in 1891.
In 1973, Myren was taken over by the
Danish shipping and trading group East
Asiatic Company (EAC), which was estab-
lished in 1897. EAC’s initial shipping activ-
ity was a liner service between Europe and
the Far East. Together with Burmeister &
Wain Shipyard, EAC built the world’s fi rst
diesel powered motor ship in 1912, al-
lowing EAC to extend its shipping activi-
ties to other main trading routes. When
EAC built its fi rst containership in 1969, it
was among the pioneers who started the
transformation from conventional liner
vessels to container ships. EAC developed
into a major international conglomerate
with offi ces around the world. In 1997 the
EAC group divested its shipping activities
to Norwegian Tschudi & Eitzen (T&E).
T&E itself was founded in 1883 by
Captain Camillo Eitzen in the name of
Camillo Eitzen & Co. Captain Henry F.
Tschudi joined the company as partner
in 1894, and the company changed name
to Tschudi & Eitzen in 1936. In 2003, the
Tschudi and Camillo families decided to
pursue their respective areas of interest.
Since then, the dry bulk activities have
been part of Camillo Eitzen & Co ASA.
When taking over EAC’s shipping ac-
tivities in 1997, T&E decided to retain the
organisation and commercial manage-
ment of the fl eet in Copenhagen in order
to build on the existing team’s skills and
market insight. Since then, the dry cargo
bulk activities have grown from about
eight million DWT of cargo carried to al-
most 19 million DWT in 2009.
In September 2007, Camillo Eitzen &
Co ASA acquired 93.1% of the shares in
the Danish listed company Dampskibsel-
skab Orion A/S. At that time, Orion was an
inactive company after 85 years of ship-
ping activities. This acquisition paved the
way for restructuring and consolidation of
the Eitzen Group’s bulk activities into one
company.A major milestone was achieved
on December 23, 2009, when shares in
Eitzen Bulk Shipping A/S were traded on
the NASDAQ OMX Copenhagen for the
fi rst time.
Throughout more than a century en-
trepreneurship and dedication have been
cornerstones in the company’s ability
to overcome market crisis and exploit
growth opportunities. These are impor-
tant values, which also in the future will
supportthe growth for Eitzen Bulk Ship-
ping A/S.
Eitzen Bulk Shipping – a new company with a long history
Vision, values and promises
VISION“ Through dedication and innovation we will make a difference”
VALUES• High ethics • Human touch • Innovation• Dynamics
PROMISES• We have transparancy in our business
practices• We are a dedicated and dynamic global
partner• We provide innovative, high quality shipping
solutions• We deliver
Timeline
1883 1891 1894 1895 1897 1912 1936 1969 1973
Camillo Eitzen is established in Christiania
(Oslo), Norway by Captain
Camillo Eitzen
Rederiet Myren is
established in Denmark
Camillo Eitzen changes name
to Camillo Eitzen & Co as Captain Henry
F. Tschudi becomes
partner in the company
From sail to steam.
Camillo Eitzen & Co invests
in its fi rst steamship
(S/S Uto), a 2,000 DTW
tweendecker with a 650 HP steam engine
The East Asiatic
Company (EAC) is
founded in Copenhagen,
Denmark
The Shipping Co. Orion Ltd.
is foundedEAC and
Burmeister & Wain
Shipyard built the world’s fi rst diesel
powered motor ship
Camillo Eitzen & Co
changes name to Tschudi & Eitzen (T&E)
EAC builts its fi rst
containership
Rederiet Myren is taken
over by EAC
Eitzen Bulk Shipping | Annual Report 2009 | 7
T&E acquires EAC Shipping,
marking the company’s
re-entry into the dry bulk
segment
The bulk segment
orders the fi rst newbuilding
Camillo Eitzen & Co is re-
established following the demerger of
Tschudi & Eitzen Holding
Camillo Eitzen & Co ASA is listed on the
Oslo Stock Exchange
The bulk segment
enters into fi rst landside
investment in the form Perola S/A
terminal, Santos, Brazil
The bulk segment
opens commercial
offi ce in Beijing, PRC
Entry into the panamax
segment
Camillo Eitzen & Co
ASA acquires 93.1% of the
shares in D/S Orion A/S
Eitzen Bulk Shipping A/S
is created and listed on
NASDAQ OMX Copenhagen
following a merger of
D/S Orion A/S and Camillo
Eitzen & Co’s Shipholding Holding A/S
1997 2001 2003 2004 2005 2006 2007 2009
The Eitzen Group were one of the fi rst to develop tankers in the world, S/V Einar
8 | Annual Report 2009 | Strategic insight
Eitzen Bulk Shipping is organised in two
business segments;
1. Operator, with a focus on short- and
medium-term trading and arbitrage
2. Ship holding, with a focus on long-term
activities
The operator activities covers all oppor-
tunistic and arbitrage market positions
that are concluded within the company.
As an operator, Eitzen Bulk Shipping is
not bound by a large fi xed fl eet, but has
the fl exibility to actively pursue suddenly
emerging cargo or vessel opportunities.
The overall principle is a year-on-year
book building but with a constant focus on
customer service ensuring the long-term
viability of the business model.
The portfolio of contracts of affreight-
ments (CoA) represents the backbone of
the company’s operator activities. Nearly
all of the company’s coverage are done
through CoAs with multiple counterpar-
ties. All contracts covering more than two
cargoes are through CoAs with volume
ranging from 3-60 cargoes and duration
from one month to ten years under one
contract. All existing long-term CoAs are
based on fi xed rates, except for one, which
is index linked. The CoAs and associated
partner relationships facilitate further
opportunities for single voyage contracts
as well as the potential to optimise trade
legs and logistical effi ciencies. Vessels
are chartered in the spot market on short-
or medium-term or as single trip.
The Ship holding activities involves
investment in vessels, charter commit-
ments exceeding fi ve years as well as op-
erational and fi nancial leases of vessels.
Exposure related to ship owning is man-
aged through coverage with industrial
customers.
Eitzen Bulk Shipping is focused on ben-
efi tting on the many synergies shared
between the two segments whilst at the
same time keeping a strict focus on the
advantages of each of the strategies.
In 2009, the short-term spot and arbi-
trage activities accounted for around 39%
of ship days, while medium-term con-
tracts of affreightments (CoA) covered
with own or market tonnage, and own
tonnage covered with market cargoes ac-
counted for 61% of ship days.
Long-term customer relationships,
a very close market presence via the
company’s overseas offi ces and a unique
real-time IT platform enables Eitzen Bulk
Shipping to assess and act swiftly on at-
tractive market opportunities.
With the two business segments, the
business model of Eitzen Bulk Shipping
is tailored to combine the fl exibility of a
traditional operator with the long-term
opportunities available to ship holders,
always subject to strict exposure con-
trol and maintaining focus on profi tability
rather than volume.
Strategic insight
Eitzen Bulk Shipping is a major player in the Supramax segment, and the company continually strives to consolidate and expand on this position, supplemented by increased trading in the Panamax segment.
Only 1223 voyage days under COAs were covered with own tonnage. The remainder of the company’s positions (cargo or vessels) were covered in the market, optimising the bottom line for the company, and securing the right vessel at the right time for the customers
Segment focus and current fl eet
Supramax/Handymax (45-65,000 dwt)• ~55 vessels on short/medim term charters• 2 vessels and 12 newbuilds on long term
charters• 1 owned newbuild
Panamax (65-85,000 dwt)• ~15 vessels on short/medim term charters• 1 newbuild on long term charter
Handysize (37,000 dwt)• 2 newbuilds on long term charter
Business model
2009 trading days
Stat
e of a
rt information & business support system
s
Controlled Exposure
Short and long
term vessel
charters
Owned
tonnage
Cargo
co
ntra
cts
Spot and arbitrage
activities
Effective market entry & exit policy
8,810 (61%)
5,551 (39%)
14,361 (100%)
3,6161,2233,971
Trading/arbitrage vesseles and cargoes
2009 trading days
Medium/Long
Short
Total
COA’s covered with Market tonnage
COA’s covered with own tonnage
Own tonnage covered with market cargoes
Strategic insight | Annual Report 2009 | 9
Asset light business model• Highly fl exible business model with limited
capital tied up• Industrial client portfolioproviding an
attractive platform for growth
Best-in-class trade management• Highly effi cient and scalable operations – best-
in-class trade mngmt system• Leading risk management with instant mark-
to-market exposure systems
Gross Profi t per ship day in the Operator segment
50,00040,00030,00020,000
BALTIC SUPRAMAX INDEX (USD)
GROSS PROFIT PER SHIP DAY (USD)
10,00000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
2000
2001
20022003
2004
2005
2006
2007
2008
2009
Our operator activities are focused on getting the right combination of cargo and vessel exposure, and provided the company is correct in its market forecast, we have histori-cally been able to generate positive earnings per ship day irrespective of prevailing market levels. Earnings from the operator segment are se-cured by constantly striving for im-proving margins; in trading as well as in the daily post fi xture work. The business model demonstrates an ability to absorb substantial market fl uctuations.
Eitzen Bulk Shipping investment highlights
Cash fl ow visibility• 10 years earnings visibility though substantial
fi xed charter coverage• Approximately 10 MUSD in contrated revenues
per year from 2012
Upside potential• plans and potential for expanding the trading
activity• Attractive spot exposure and purchase options
on long term charters
Strong track record• Highly experienced management team with
senior team members having worked 20-30 years within dry-bulk shipping
• Team with proven trading record and also for identifying attractive asset investment opportunities
Supramax vessel, Sibulk Quality
10 | Annual Report 2009 | Strategic insight
40%5%
5%
7%
10%
5%
6%11%
11%
CoalPetcoke
Iron Ore
Mineral/ores Other
BauxiteFertilizer
Grain, Sugar
Scrap
WORLD WIDE TRADING ROUTES
AND NETWORK
Eitzen Bulk Shipping constantly strives
to maintain and further develop a strong
and productive network in relation to both
vessel owners and cargo customers alike.
The strong relationship, built on high eth-
ics and professionalism is important to
maintain, as it expands the access to the
widest possible range of available car-
goes and vessels and ensures the ability
to position the company in the best pos-
sible way when the world trade changes.
Eitzen Bulk Shipping offi ces and staff
are strategically sited around the world in
terms of regions and time zones. Through
this presence we achieve direct access
to cargo and contract opportunities that
would not have been available otherwise.
In many cultures trust is only achieved
by personal contacts between the cargo
owners and the owners (or their repre-
sentatives), and a local offi ce is an impor-
tant tool to establish such trust and de-
velop new business opportunities.
The main bulk trading routes are deter-
mined by regional supply and demand
requirements in respect of the raw ma-
terials, which can be most economically
transported in dry bulk shipments, the ma-
jority of which are steel or energy related
as illustrated by the Eitzen Bulk Shipping
2009 lifting. Eitzen Bulk Shipping has been
able to establish a comparatively diversi-
fi ed cargo portfolio. Involving our fl eet in
transportation of a diversifi ed portfolio
of commodities ranging from the min-
ing industry to construction and farming
related products like fertilizers, we have
achieved a cargo platform minimising the
dependency on one single industry.
Eitzen Bulk Shipping offi ces and major trading routes
31 employees
Copenhagen (HQ)
3 employeesRio de Janeiro
4 employeesNew York
6 employees
Singapore
4 employees
Hong Kong
4 employees
Beijing
2009 Liftings 18.7 million tons
Strategic insight | Annual Report 2009 | 11
COMPETITIVE EDGE THROUGH
TAILORED BACK OFFICE SYSTEMS
Eitzen Bulk Shipping has a long track
record of effi cient operations and cost ef-
fective trading. The company’s fl eet man-
agement and control system offers single
point data entry with full integration of
commercial-, operational- and fi nancial
operations as well as risk management.
It has been tailored to the company’s re-
quirements with a strong focus on scal-
ability and optimal matching of cargoes
and vessels.
The system provides a global overview
of both present and future cargo and ves-
sel commitments, the minute a vessel and/
or a cargo commitment is concluded and
inserted. The information is a live platform
and is simultaneously available to all our
offi ces and departments worldwide. This
way, the company can fully utilise the lo-
cal offi ces’ customer relations and access
to cargoes with the global organisation’s
ability to provide real-time mark-to-mar-
ket values of future concluded commit-
ments for any segment, counterparty or
fi nancial period that may be required for
decision making.The tailored back-offi ce
system provides a competitive edge, which
together with the high activity level forms
a platform that facilitates the ability to
perform cost effective trading through:
• Effi cient operations due to critical mass
• Minimised ballasting, by amongst other
optimising of triangular trades
• Effective fl eet scheduling
• Optimal matching of cargoes & vessels
• Hedging opportunities, due to consist-
ent high volumes
• High activity level which creates op-
portunity for attractive spot / arbitrage
trading
The company has adopted a con-servative but fl exible risk profi le and an active risk management policy – tonnage and cargo commitments are matched by adjusting the physi-cal exposure, or hedged in the FFA market. Trading and risk manage-ment systems are fully integrated giving instant mark-to-market expo-sure reports.
12 | Annual Report 2009 | Strategic insight
Of the 16 new buildings still to be deliv-
ered, one vessel to be delivery in 2011 will
be owned. The remaining vessels are on
long-term operational leases from Japa-
nese shipowners. When securing these
vessels under operational leases, Eitzen
Bulk Shipping secured a long-term ton-
nage portfolio (up to 13 years) with fi xed
daily lease cost for the full contract pe-
riod. The capital, cost and currency ex-
posure rests with the operational lease
counterparts.
In line with the company’s conserva-
tive approach to exposure, by the end of
2009, 80 per cent of all exposure related
to newbuildings was covered with long-
term contracts at profi table returns. All
operational leases carry purchase options
to Eitzen Bulk Shipping, of which the ma-
jority are partly shared.
For many years it has been an industry
standard that Handymax vessels has a
length of 190 meters. However, after ex-
tensive analysis of the Eitzen Bulk Shipping
trading pattern and in close coordination
with industrial customers and ship yards,
results showed that the majority of the
regular ports of call wereable to accom-
modate a vessel with 200 meter length.
The newbuilding program of Eitzen Bulk
Shipping consists of 12 Supramax vessels
with a length of 200 meters, which means
that their cargo carrying capacity is in-
creased by an estimated 10-15%, making
them more competitive than the standard
industry index for Supramax bulk carriers,
the so called BSI std52 design.
STABILITY DURING FINANCIAL
CRISES AND PLATFORM FOR FUTURE
PROFITABLE GROWTH
Although many businesses are still bat-
tling against the fi nancial crises, the dry
bulk market showed an early and remark-
able recovery in 2009. Seen in historical
perspective 2009 did not represent at
setback for Eitzen Bulk Shipping as the
operational, fi nancial and exposure con-
trol systems proved their value in allowing
the company to adjust quickly and benefi t
from the market development.
The business model proved to be an
invaluable asset during 2009 in terms of
controlling vessel and cargo exposure.
Running in parallel to which, time and ef-
forts are continually invested in practicing
due diligence towards reviewing the cred-
itability of new contractual counterpart as
well as current clients on a regular basis.
As a result thereof Eitzen Bulk Shipping
only suffered losses in 2009 from one
counterpart as consequence of the crises
in respect of cargo contracts, Forward
Freight Agreements, bunker and currency
hedges.
The present business model and sup-
port systems are structured to facilitate
absorption of the increasing numbers of
vessels, cargo and contract commitments
resulting from our three to fi ve years
growth plan, without further major invest-
ment in new systems and people.
VALUE ADDING ACTIVITIES
Whilst operator and owner activities are
the primary business segments, Eitzen
Bulk Shipping has also established cargo
handling and port facilities. Presently
cargo-handling equipment consists of 78
cargo grabs and three purpose designed
grabs for log-handling.
The grabs are used for own cargo han-
dling purposes but also leased to third par-
ties. Eitzen Bulk Shipping grab activities in
India are developed through a joint venture
in the name of Eitzen Logistic Services.
Port facility involvement is presently
in the form of investment in Perola a fer-
tilizer terminal in Santos, Brazil. In 2009
the terminal was hit and damaged by an
extreme storm. The terminal remained
partly operative, but re-building and pos-
sible expansion options are currently being
reviewed.
Cargo handling and port facility invest-
ment opportunities are pursued in order to
create value added activities and/or con-
solidate co-operations with core clients.
The cargo handling and port facilities sup-
ports and increases trading effi ciency.
NEWBUILDING PROGRAM
AND COVERAGE
Eitzen Bulk Shipping has committed to
18 newbuildings of which two vessels are
already in service. The remaining vessels
will be delivered in the period 2010 to
2014.
Sibulk Quality, discharging af Perola Terminal, Santos, Brazil
Strategic insight | Annual Report 2009 | 13
Newbuild program – expected delivery
2007
Supramax
Mitsui (Sibulk Initiator)
56,000 DWT
2010
Supramax
Oshima (Sibulk Prosperity)
60,700 DWT
Imabari 61,000 DWT
2011
Supramax
Imabari61,000 DWT
Oshima60,700 DWT
Imabari61,000 DWT
Panamax
Sanoyasa (Sibulk Panache)
78,000 DWT
2013
Handysize
Imabari37,000 DWT
Supramax
Imabari61,000 DWT
2014
Supramax
Imabari61,000DWT
2012
Handysize
Imabari37,000 DWT
Supramax
Imabari61,000 DWT
Imabari61,000 DWT
Oshima60,700 DWT
Imabari61,000 DWT
Oshima60,700 DWT
Tsuneishi58,100 DWT
2008
Supramax
Imabari (Sibulk Tradition)
53,000 DWT
Owned Operational leasing
14 | Annual Report 2009 | 2009 market review
2009 was a challenging year for many
businesses and dry cargo shipping was no
exception.
The time charter rates for a Supramax
vessel was at the beginning of the year
USD 4,000 per day – lower than the actual
costs of operating a vessel, but by year-
end the daily rate was USD 25,000 giving
an annual average of USD 17,300 – sub-
stantially higher than most analysts had
forecasted at the beginning of the year.
During 2009 the world dry bulk fl eet
grew from 418 to 460 million dwt. 43
million dwt entered the market as new-
buildings and approximately 10 million
dwt were conversions from tank to bulk.
11 million dwt of old ships were scrapped.
This fl eet growth would have sent hun-
dreds of older ships into layup, and even
more to the demolition yards had it not
been for the strength of the emerging
markets.
China again demonstrated how the
world has changed since the 1990’s from
a world with OECD as the focal point to a
situation with big emerging markets and
the developed economies falling behind.
The fi nancial ‘melt-down’ was an OECD
problem affecting China, but irrespective
of which China and other emerging econo-
mies grew as much in dry cargo volume as
OECD shrank. During the fi nancial turmoil
China consumed raw materials at a level
which hardly anybody had forecasted, and
it naturally poses the question of short-
and mid-term sustainability. In 2009
China imported 628 million tons of iron
ore occupying about 25% of the world dry
bulk fl eet. In 2008 the corresponding fi g-
ure was 440 mill tons.
The long term sustainability of China’s
demand is considered pretty certain. Chi-
na’s price-corrected industrial production
is now bigger than that of USA. China con-
sumes more cars than USA, and produces
as much steel as the rest of the world ac-
cumulated. China constitutes 42 percent
of the world coal market.
2009 market review
BSI and forward curves, monthly averages, USD per day
2001
Eitzen Research using Baltic Exchange Data
2002 2003 2004 2009 2010 2011 20122005 2006 2007 2008
30,000
10,000
50,000
70,000
Baltic historical Baltic forward feb 24, 2010
Dry Bulk Cargo Ships, million DWT
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
In Operation Demolished Expected Delivery
80
60
40
20
Eitzen Research
2009 market review | Annual Report 2009 | 15
Dry Bulk Commodity Imports in Million Tonnes – China’s Cut
Ship capacity caught in congestion, million DWT
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
500
1,500
2,500
3,500
Rest of world China
Eitzen Research, Reuters Ecowin, Various other sources
2008 2009
USWCIndonesiaPanamaIndiaSouth AfricaChina
Brazil
Australia20
40
60
Eitzen Research, Industry Sources
Monthly Major Dry Bulk Commodity, Exports, 000 tonnes
JAN 08
FEB 08
MAR 08
APR 08
MAJ 08
JUN 08
JUL 08
AUG 08
SEP08
OCT 08
NOV 08
DEC 08
JAN 09
FEB 09
MAR 09
APR 09
MAJ 09
JUN 09
JUL 09
AUG 09
SEP09
OCT 09
NOV 09
DEC 09
Dry Bulk Exports to China Dry Bulk Exports to Rest of World
140,000
100,000
60,000
20,000
Eitzen Research
As the year closed, a harsh winter sent a
clear message to the dry bulk market that
coal may be the next big feedstock nec-
essary to import in increasingly large vol-
umes to China. Despite being the biggest
producer of coal in the world, with 2.9 bil-
lion tons, requirements for increased im-
port came up as China scoured the world
coal markets for more input.
In total, global dry bulk volumes were
about the same in 2009 as in 2008, but
with a drastic change in trading patterns
as illustrated by the monthly exports
2008 to 2009 where Chinese destina-
tions jumped in share of total exports.
Due to the change in trading patterns, the
average voyage distance and necessary
ballasting increased about 5 percent.
In addition, recorded vessels tied up in
congestion at ports around the world in-
creased from 30 mill dwt to 50 mill dwt,
corresponding to about 7 and 11 percent
of the world bulk fl eet.
16 | Annual Report 2009 | 2010 market outlook
Dry bulk shipping demand from OECD
countries should continue to recover in
2010 and Chinese and Indian demand
growth is expected to continue at una-
bated pace. China is still at a moderate
development level and has a big potential
for higher steel consumption per capita,
and in addition, Chinese energy supply
seems to be increasingly reliant on coal
from Australia and Indonesia. In 2008
China imported 40 million tons of coal
growing to 127 million tons in 2009 of
which about 85 mill tons were seaborne.
If Chinese coal production stalled in 2010
another 400 mill tons would probably
have to be imported.
India has a fast developing coal demand
with 55 million tons of coal imported in
2008 and 65 mill tons in 2009. This de-
mand is driven by developments in the In-
dian energy and steel sectors. The Indian
market potential is less than China’s but
signifi cant enough in setting freight rates.
The fact that demand keeps increas-
ing makes it diffi cult for many publicly
controlled ports to catch up and capac-
ity growth keeps lagging behind demand
growth. Therefore it is expected that ship
capacity volumes caught in congestion
will persist or even increase.
Due to the growing demand in Asia the
increasing imbalance of trade to the Pa-
cifi c from the Atlantic will grow. The long
term trend of trading patterns are thus
believed to require more ballasting from
the Pacifi c to the Atlantic, though OECD
recovery may pause this growing imbal-
ance in 2010.
Deliveries of new ships will probably ac-
celerate in 2010 compared to 2009. After
four years with high dry bulk freight rates,
2009 was the fi rst year that dry bulk ship
deliveries accelerated. But actual deliver-
1950 1954 1958 1962 1982 1986 1990 1994 19981966 1970 1974 1978 20062002
800
400
1,200
1,600
US Japan China India Korea
Eitzen Research using data from ICAP, SBB, WorldSteel, Thomson-Reuters
Orderbook Snapshots, Dry Bulk, millions DWT
Steel consumption per capita, kilogram
2005 2006 2007 2008 2009 2010 2011 2012
Jan 09
On Order ExpectedDelivered
23 25 25 22 72 112 78
6
30 23 25 25 24 42 6
117
99 452005 2006 2007 2008 2009 2010 2011 2012
Feb 10
Eitzen Research, Industry Sources
2010 market outlook
ies were only 66% of what was scheduled
and such delays are expected to con-
tinue.
The shipping markets remain uncer-
tain due to the ambiguity of the current
positive trend in short term economic
indicators that could be sustainable or
a provisional result of fi nancial stimulus
packages. Weak public fi nances with huge
defi cits in major economies require fi scal
tightening and thus less spending and de-
mand for goods transportation.
The volume of trade is set to grow and
therefore opportunity to grow the market
exists for EBS. Volatility has been inherent
in the dry bulk market since 2003 when
Chinese imports became decisive for the
market balance and volatility is expected
to continue.
2010 market outlook | Annual Report 2009 | 17
Eitzen Bulk Shipping head offi ce in Copenhagen
18 | Annual Report 2009 | Financial review
Eitzen Bulk Shipping has adopted all new
or amended and revised accounting stand-
ards and interpretations (IFRS’s) endorsed
by the EU effective for the accounting pe-
riod beginning on 1 January 2009.
The IFRS 8 replacing IAS 14 has an im-
pact on the presentation and disclosure
of the consolidated fi nancial statements,
representing a change from last year. The
Group had previously one segment, the dry
bulk cargo segment. Following the merger
restructuring, the operating segments are
reported in a manner consistent with the
internal reporting provided to Executive
Management and the Board of Directors
of Eitzen Bulk Shipping. For management
reporting purposes, the Group operates
in two global business segment based
on the operator and shipholding activities
within the dry bulk cargo industry.
Please see note 1 ‘Group accounting
policies’ and note 3 ‘Segment information’
for additional information.
NET PROFIT
The business performance in 2009 is
considered satisfactory in the light of the
diffi cult market conditions, and net profi t
amounted to 19.0 MUSD.
EBITDA
The EBITDA of 20.7 MUSD developed in
line with expectations. The result was
substantially impacted by the share op-
tions program being expensed in 2009.
Adjusted EBITDA of 28.9 MUSD was down
14% compared to 33.7 MUSD in 2008.
Revenues in 2009 were 376 MUSD
down 55% from 838 MUSD in 2008 re-
fl ecting the substantial drop in market
rate levels.
The company adjusted its commercial
activities and cost base to the changed
market conditions. Closing down the Mel-
bourne offi ce late 2008 and cutting back
on staff related costs, although partly
counterbalanced by restructuring costs,
reduced the overall cost base compared
to 2008.
GROSS PROFIT (NET EARNINGS
FROM SHIPPING ACTIVITIES)
The gross profi t was 45.5 MUSD in 2009
corresponding to a gross margin of 12.1%
compared to 7.0% in 2008.
Number of ship days was 14,361, a de-
crease of 5% compared to 2008. The ac-
tivity level in terms of vessels has grown
throughout 2009 and was 59 at the end of
2009. Current fl eet activity is around 70
vessels.
The freight market in 2009 reached
an average BSI time charter rate of USD
17,300 per day compared to USD 42,500
per day in 2008, corresponding to a drop
in 59%. Eitzen Bulk Shipping’s gross profi t
per ship day have historically varied in line
with the time charter rates, but in 2009
the company outperformed the signifi -
cant drop in rates in 2008 with a gross
profi t per ship day of USD 3,200 in 2009
compared to 3,900 in 2008, a drop of only
18%.
FAIR VALUE ADJUSTMENT
The group enters FFA agreements to
hedge contracts concluded on both COA
and vessels (T/C). The fair value adjust-
ment that did not qualify for hedge ac-
counting under IFRS constituted an in-
come of 3.0 MUSD.
Financial review
2007 2008 2009
53 59 45
2007 2008 2009
18,746 15,129 14,361
Q1, 09
* Q1, 2010 ESTIMATE
Q2, 09 Q1, 10*Q3, 09 Q4, 09
3,193 3,017 3,907 4,243 5,000
Gross Profi t (MUSD)
Ship days
Ship days
Financial review | Annual Report 2009 | 19
NET FINANCIAL ITEMS AND TAX
Financial income was 1.3 MUSD compared
to 3.3 MUSD primarily refl ecting lower in-
terest from settling loans with Camillo
Eitzen & Co ASA as part of the merger re-
structuring. Financial expenses amounted
to 0.2 MUSD as the company continues
to have no debt to fi nancial institutions.
Other fi nancial items were 1.3 MUSD, an
increase of 0.9 MUSD from 2008, prima-
rily due to foreign currency gains.
Tax on profi t was 3.7 MUSD corre-
sponding to an effective tax rate of 16.1%,
an increase from -7.4% in 2008, primarily
related to the tonnage tax.
CASH FLOW
Cash and cash equivalents were 24.8
MUSD down from 66.1 MUSD in 2008, and
consisted of USD and DKK cash at bank
and bank deposits at year-end.
Cash fl ow from operating activities
was -19.5 MUSD compared to 14.6 MUSD
in 2008. The cash fl ow in 2009 was im-
pacted by the relative high profi t split
payment from gains on ship sale, a rather
steep increase in vessel activity level by
the end of 2009, and onerous contracts
related to two vessels sold and delivered
in 2008, which required the company to
charter relatively more expensive tonnage
to lift cargo obligations committed against
same vessels. Provisions for the onerous
contracts in 2009 and 2010 totalling 33
MUSD was made in 2008 of which 25.5
MUSD was reversed in 2009.
ASSETS
Total assets amounted to 102.8 MUSD.
Non-current assets decreased to 19.9
MUSD from 100.0 MUSD in 2008, prima-
rily due to fair value adjustments of deriva-
tives and settling of loans and receivables
from Camillo Eitzen & Co ASA as part of
the merger restructuring. Current assets
decreased by 56.3 MUSD to 82.9 MUSD,
primarily due to lower liquidity and fair
value adjustment of derivatives.
The company has one newbuilding on
order with delivery in 2011. The prepay-
ments in 2008 were fi nanced through
cash fl ow from operations, whereas the
remaining instalments will take place in
2011. No impairments were recognised in
2009 with respect to prepayments on the
newbuild contract.
LIABILITIES
Total liabilities amounted to 77.0 MUSD,
a decrease of 104.4 MSUD from 2008.
This was primarily due to fair value adjust-
ments of derivatives, onerous contracts
and the profi t split agreement).
EQUITY
Total equity amounted to 25.8 MUSD, and
earnings per share were 0.8 USD.
DividendAt the Annual General Meeting on 21 April
2010, the Board of Directors will propose
not to pay out any dividend for 2009 to
maximise the company’s fi nancial fl exibil-
ity and thus be prepared for the business
opportunities that may arise.
As part of the merger restructuring 57
MUSD was distributed as dividends set-
tling loans and receivables with Camillo
Eitzen & Co. ASA in 2009.
Share options programThe Board of Directors approved 21 De-
cember 2009 a share options program.
Management and employees (70% of total
staff) were granted 2,537,766 share op-
tions by 22 December corresponding to
10.3% of the total number of outstanding
shares.
The estimated theoretical fair value of
the share option program is assessed to
16.5 MUSD with a non-cash expense in the
income statement for 2009 of 8.2 MUSD.
Legal casesEitzen Bulk Shipping is party to a number
of legal cases. See key legal issues and
information on contingencies for pending
litigations on note 30.
20 | Annual Report 2009 | Corporate governance
The Board of Directors and Executive
Management of Eitzen Bulk Shipping A/S
is convinced that effi cient and clear divi-
sion of responsibilities as well as trans-
parent decision making processes are pre-
requisites of a company’s long term value
creation. Eitzen Bulk Shipping therefore
reviews at least annually the company’s
practices in the fi eld against corporate
governance principles vested in legisla-
tion, customs and recommendations. As
part of this process, the Board and Execu-
tive Management assess the company’s
strategy, organisation, business proc-
esses, risks, control mechanisms and re-
lations with its shareholders, customers,
employees and other stakeholders.
CORPORATE GOVERNANCE
IN DENMARK
It is mandatory for companies listed on
Nasdaq OMX Copenhagen to account for
their governance practices in relation to
the recommendations issued by the Dan-
ish Committee on Corporate Governance.
As the main objective of the recommen-
dations is to make company management
structure transparent it is emphasised
by the committee that explaining non-
compliance is just as legitimate as com-
plying with a specifi c recommendation.
The committee is currently revising the
recommendations. Eitzen Bulk Shipping
follows this development closely, but re-
ports according to the present set of rec-
ommendations.
Eitzen Bulk Shipping presents an over-
view of corporate governance in this an-
nual report while a full disclosure of cor-
porate governance practices is provided
on the company’s website. As a general
rule, the company complies with the rec-
ommendations. Any exceptions are ac-
counted for here in the annual report.
MANAGEMENT STRUCTURE
Eitzen Bulk Shipping is a Danish listed
company with a two-tier management
structure. The Board of Directors de-
termines the company’s objectives,
strategies, budgets and supervises the
company’s performance and day-to-day
management, which is run by a manage-
ment group consisting of CEO and CFO
(registered with the Danish Commerce
and Companies Agency) as well as fi ve
Executive- and Senior Vice Presidents.
The management group determines the
required action plans and is responsible
for the execution of same to fulfi l the ob-
jectives as set out by the Board of Direc-
tors. In addition, the management group
delivers feedback to the Board of Direc-
tors on developments and opportunities
in the market, which will enable timely
adjustments to the strategies carrying
the company forward.
SHAREHOLDER STRUCTURE AND
INTERACTION WITH MANAGEMENT
Eitzen Bulk Shipping A/S was listed on
Nasdaq OMX Copenhagen in December
2009 with one share class with one vote
per share and no limits to voting rights or
sale of individual shares. The company ex-
pects to establish a broader shareholder
base thereby securing a larger free fl oat
and higher liquidity of the shares, of which
Camillo Eitzen & Co. and the manage-
ment group of Eitzen Bulk Shipping A/S
presently own the majority.
Opportunities for consolidation are pur-
sued on an ongoing basis and the compa-
ny’s listing is considered a natural source
for funding of these investments through
new share issues.
The general meeting constitutes the
highest authority of the company through
its election of the Board of Directors and
approves the annual report, and it is con-
vened by two to four weeks notice includ-
ing the agenda with summary of each
item. Financial reports, presentations and
other relevant information is available on
the company’s website. Regulatory dis-
closures are distributed through estab-
lished communication channels.
THE ROLE OF STAKEHOLDERS
The Company has adopted a code of con-
duct, which sets the ethical standards
expected from all employees regarding
behaviour, attitude and performance to-
wards stakeholders. The code addresses
issues such as health, safety & environ-
ment, business integrity, legal compli-
ance, IPR and internal control and it is
every employee’s responsibility to be
aware of and live up to the guidelines set
forth in the code.
OPENNESS AND TRANSPARENCY
Eitzen Bulk Shipping A/S aims to be per-
ceived as transparent, accessible, reliable
and open to dialogue with the company’s
shareholders. The Investor Relations
function headed by the CFO will provide
relevant, accurate, consistent and timely
information to the capital market that
may infl uence the pricing of the Eitzen
Bulk Shipping shares, while observing the
rules and regulation for listed companies
on Nasdaq OMX Copenhagen, including:
• Full year- and quarterly fi nancial state-
ments and annual report
• Special investor section on the com-
pany’s website
• Presentations at investor conferences
• One-on-one- and group meetings with
Danish and international investors- and
equity analysts
DUTIES AND RESPONSIBILITIES OF
THE BOARD OF DIRECTORS
The work of the Board of Directors is gov-
erned by a written set of procedures stat-
ing that it is the responsibility of the Board
to approve the company’s short- and
long-term strategies, to establish policies
for capital structure, risk management
and to monitor fi nancial- and organisa-
tional performance. The Board approves
all large investments and contractual ar-
rangements related to cargo and tonnage
running beyond 36 months and it is con-
currently informed about such obligations
lasting less than 36 months.
The Board meets a minimum of fi ve
times a year in connection with the
processing and approval of fi nancial re-
porting. Additional meetings are con-
vened as needed. In 2009, the board met
5 times.
Executive Management reports
monthly to the Board about market de-
velopments and macroeconomic factors
with relevance for the bulk market, budg-
ets, fi nancial key ratios, exposures and
counterparty risks. The chairman of the
Board and the CEO are in proactive dia-
logue when developments in the market
or key projects require extra attention.
Corporate governance
Corporate governance | Annual Report 2009 | 21
The Board of Directors currently attends
to the audit committee function. This re-
quires that no members of the Board of
Directors are also members of Executive
Management and that at least one mem-
ber of Board of Directors is both independ-
ent of the company and has qualifi cations
within accounting and auditing. The Board
of Directors acknowledges this responsi-
bility and will perform renewed assess-
ment of this.
COMPOSITION OF THE BOARD
OF DIRECTORS
The Board is elected by the annual gen-
eral meeting. Potential board candidates
are reviewed by the Board based on regu-
lar discussions about the composition of
the Board, including its competences and
experiences. On the company’s website
there is a presentation of each member of
the Board.
The Danish Committee on Corporate
Governance recommends that at least
half of the board members elected by
the general meeting are independent per-
sons. Additionally, it is recommended that
members of the executive management of
a company are not members of the board
of directors of the same company.
The Board of Directors at Eitzen Bulk
Shipping A/S consists currently of the
chairman of the board and CEO of the ma-
jority shareholder, Camillo Eitzen & Co., a
partner from the company’s lawyer, Gor-
rissen Federspiel, and two Executive Vice
Presidents from the company’s manage-
ment group. As such, Eitzen Bulk Shipping
has given priority to signifi cant market
insight and shipping experience over in-
dependence. That said, the Board of Di-
rectors is determined to adopt members
independent of the company.
REMUNERATION OF BOARD OF
DIRECTORS AND EXECUTIVE
MANAGEMENT
The Danish Public Companies Act pro-
vides that shareholders adopt, at the gen-
eral meeting, guidelines for incentive pay
to members of the company’s board and
it’s executive management. Such guide-
lines was adopted by the extraordinary
general meeting in December 2009, and,
in accordance with the Act, Eitzen Bulk
Shipping will propose a set of guidelines
at the ordinary general meeting in April
2010. The main elements of the current
guidelines are set out below. The com-
plete guideline is available on the com-
pany’s website.
Board of DirectorsThe Board of Directors has refrained from
receiving any compensation for their work
in 2009. From 2010, members of the
Board of Directors will receive a fi xed an-
nual fee, which must be approved by the
annual general meeting in April 2010. If
company activities require a temporary,
but extraordinary workload by the Board,
a supplement to the fi xed annual fee can
be authorised. The members of the Board
receive no incentive pay for their Board of
Directors work.
Executive ManagementMembers of the Executive Management
are employed under executive service
contracts, and all terms of their remu-
neration are fi xed by the Board based on
the guidelines approved by the general
meeting.
The Executive Management of Eitzen
Bulk Shipping consists currently of the
CEO and CFO. Members of Executive
Management receive a competitive re-
muneration package consisting of four
elements; a fi xed salary, benefi ts such as
company car and phone, cash bonus and
share options.
In 2009, a total of 0,3 MUSD was paid
in salaries to the Executive Management.
In addition, 0,2 MUSD was expensed in
bonus.
Share options programThe share options program for the com-
pany’s management and key employees,
a total of 37 persons, was approved by the
general meeting in December 2009 and
gives the option holders a right to acquire
shares corresponding to a total of 10.3%
of the company share capital as of 22
December 2009. The share options will
be vested with 50% in 2009, 25% in 2010
and 25% in 2011, and can be exercised in
the period from 1 March 2010 through
31 March 2016 on a 4 year rolling basis.
Treasury shares have been allocated to
cover the entire program.
The exercise price for the share options
will be determined as 1% of the market
price for the company’s shares at the time
of granting the share options to the holder.
The exercise price can be adjusted in the
event of changes to the capital structure.
The estimated theoretical present value
of the scheme is assessed to 16.5 MUSD
using the Black & Scholes model and in
accordance with IFRS.
In 2009, 8.2 MUSD was expensed cov-
ering the share options program.
RISK MANAGEMENT
Main risk exposures and risk management
processes are described in note 27.
AUDIT
The overall responsibility for the internal
control in relation to fi nancial reporting
including compliance with applicable leg-
islation and other fi nancial reporting regu-
lations rests with the Board of Directors
and Executive Management.
Nomination of external auditors is done
annually by the general meeting. The au-
ditor agreement and fees are agreed be-
tween the Board and auditors. The Board
has approved the use of the company’s
external auditors for non-audit services
provided these services are kept within
the guidelines of approved strategy and
budgets.
In connection with the audit of the an-
nual report, external accountant review
all internal controls and fi nancial proce-
dures. The external auditor’s report is re-
viewed by the Board.
22 | Annual Report 2009 | People and planet
8%
11%
59%
6%
8%
8%
NYC
CPH
BJG
SIN
RIO
HKG25%
4%
50%
17%
4%
Chartering
Postfixture
Business support
Finance & operations
control
Ship-holding
Geographical split of employeesEmployees split by functionEitzen Bulk is built on a philosophy
whereby staff is considered to be one of
the company’s most important resources
and assets. A conscious effort is made to
maintain a fl at organisational structure,
where all directly involved persons are
also part of the related decision making
process. Annual strategic reviews are
made in order to regularly align individual
efforts to the ever-changing needs of our
clients and address prevailing market con-
ditions. These reviews are staff focused
and where all participate on a level foot-
ing, regardless of status. In consequence
of which a culture has been established
and maintained which promote the Eitzen
Bulk Shipping team spirit.
By the end of 2009, Eitzen Bulk Ship-
ping employed 52 people, of which 31
were based in Copenhagen. In order to
provide optimal round the clock service to
customers, the company has established
6 regional offi ces employing 21 people,
strategically sited around the world in
terms of regions and time zones. The in-
tegrated back offi ce system has been
designed to promote and enable decision
making on business level irrespective of
the geographical location. At the same to-
ken the back offi ce system enables prompt
and exact knowledge sharing across func-
tional and geographical borders strength-
ening team spirit world-wide.
The employees can roughly be divided
into fi ve main functions; Chartering, Post
fi xture, Ship holding, Business Support
and Finance & Operations Control.
Requirements in respect of research,
fuel procurement and HR services are
provided through service agreements with
Camillo Eitzen (Denmark) A/S shared with
Eitzen Chemical ASA and Eitzen Gas A/S.
The average employment time in the com-
pany is seven years, with many managers
having served the company for 10 to 15
years.
People and planet
Eitzen Bulk Shipping does not currently
own any ships and therefore sea-going
personnel fall under the responsibility
of the ship owners from whom vessels
are chartered. The company select their
chartered fl eet based on the analysis of
international vetting agencies as well as
membership of the International Group
of P&I clubs, a type of mutual insurance
scheme for ship owners covering mainly
personal injuries, cargo damage and pol-
lution.
DedicationQuality
Dynamic
Trust
Innovation
Human touchPartner
Integrity
Eitzen Bulk Shipping value chain connecting cargoes and vessels
People and planet | Annual Report 2009 | 23
15.3%
4.6%
18.2%
0.5%0.6%
35%
1.9%
2.7%
21.3%
Electricity and heat production
OtherManufacuting industries and
construction
Other transport (road)
Rail
International aviationInternational shipping
Domestic shipping & fishing
Other energy industries
Second IMO GHG Study 2009 (MEPC 59/INF. 10)
Shipping contribution to global CO2 emissions
Human resource development and focus
HUMAN RESOURCE DEVELOPMENT
A career at Eitzen Bulk Shipping is a glo-
bal and constant evolving experience. The
company provides a fl exible competence
development package, which may include
professional and personal development
as well as language courses and expatria-
tion. Attention is given to meeting specifi c
needs of the individual rather than just ad-
herence to standard course participation
patterns.
A career development plan has been
established for all employees, ranging
from trainee to senior manager. Trainee
programs are managed in association with
the Danish Shipowners’ Association, and
junior employees can enrol in TutorShip,
a 2-3 year long distance learning program
offered by the Institute of Chartered Ship-
brokers that qualifi es for an ICS Founda-
tion Diploma, which is an accredited and
internationally recognised qualifi cation.
The traineeship resolves around a rota-
tion plan, whereby all main areas of com-
mercial and operational activities are ad-
dressed. In addition to in-house training,
the company encourages participation in
external training and courses for shipping
professionals as well as selected personal
development and management courses.
Theoretical training is complimented with
orientation visits to ports, vessels etc. in
order to give practical experience.
Eitzen Bulk Shipping is a globally op-
erating company and to be a successful
operator, it is a prerequisite to be in close
contact with customers locally, and to
have knowledge of the specifi c trading
conditions in the local areas; interacting
with agents and stevedores, knowing the
special features of a given port and be
conversant with the characteristics of the
cargo etc. The company therefore provides
extensive ‘on-the-job’ training and expa-
triation, which is managed through an ex-
change program between the company’s
offi ces and also frequently with business
partners.
CORPORATE SOCIAL
RESPONSIBILITY
Eitzen Bulk Shipping acknowledges a re-
sponsibility to manage the company in a
way that balance the business results with
respect for climate changes, health and
safety of seafarers and other employees
as well as for business ethics. These con-
siderations are vested in the corporate cul-
ture and refl ected in the company’s code of
conduct. The company obeys all relevant
legislation set by national or international
legal bodies such as the International Mar-
itime Organisation (IMO) and The Maritime
Labour Convention. The company intend
for none of its practices to be contrary to
the UN Global Compact’s ten principles
that have become a global standard for
corporate social responsibility.
For the shipping industry, climate
changes are of special attention. In total,
shipping account for about 90% of global
trade and approximately 3% of man-made
CO2 emissions. Measured per ton of trans-
ported goods, shipping is the least environ-
mentally damaging means of transport.
Despite the fact that shipping is impacting
the climate less than comparable forms
of transportation, such as airfreight and
truck, Eitzen Bulk Shipping is committed
to reduce its contribution further.
When planning a cargo voyage, Eitzen
Bulk Shipping aims to optimise the vessel
speed and thus fuel consumption, which
is the most infl uential parameter on CO2-
emissions. Also, in the development of a
newly designed Supramax vessel, Eitzen
Bulk Shipping have together with Japa-
nese shipyards succeeded in designing a
vessel that carry an additional 6.3 percent
cargo per metric ton fuel consumed, as
compared with previous designs.
Main engines contracted for the new
building program have been upgraded
from original design specifi cations to the
latest version of environmental friendly
engine available.
Management & Leadership
Traineeship
Personal development
Professional compentences
24 | Annual Report 2009 | People and planet
Propeller installation at ship yard
About the share | Annual Report 2009 | 25
INVESTOR RELATIONS
Eitzen Bulk Shipping A/S was listed on
Nasdaq OMX Copenhagen in December
2009 and the company aims to be per-
ceived as transparent, accessible, reliable
and open to dialogue with our existing and
potential shareholders.
Opportunities for consolidation are pur-
sued on an ongoing basis and the compa-
ny’s listing is considered a natural source
for funding of these investments.
The company will provide relevant, ac-
curate, consistent and timely information
to the capital market to facilitate a trans-
parent and effi cient pricing of the com-
pany shares, while observing the rules
and regulation for listed companies on
Nasdaq OMX Copenhagen.
The main communication channels are
the company’s website, annual reports
and quarterly fi nancial statements as
well as operational company announce-
ments. In addition, the Executive Man-
agement will engage in regular meetings
with investors in Europe and US. The
Board and management regularly review
feedback from shareholders and potential
investors to ensure effi cient transmission
of information.
THE SHARE CAPITAL
The share capital consist of 24,638,502
shares with a nominal value of 1 DKK in
one share class with one vote per share
and no limits to voting rights or sale of
individual shares. By 31 December 2009
the company had 427 registered share-
holders.
The following shares and shares op-
tions were owned by senior management
at 31 December 2009:
The Board of Directors receives a cash
remuneration, which is approved by the
shareholders in general meeting in con-
nection with the approval of the annual
report. The Board of Directors does not
receive share-based remuneration and
did not receive any remuneration for their
work in 2009.
By the end of 2009, employees and
executives owned a total of 14.7% of the
company’s share capital. Eitzen Bulk Ship-
ping owned 2,463,850 of treasury shares
corresponding to 10.0% of the share capi-
tal to fulfi l company obligations regarding
the share options program. The Company
does not intend to own company shares
beyond what is required to fulfi l such ob-
ligations.
The shareholder register is maintained
by Computershare, Kongevejen 418, DK-
2840 Holte.
DIVIDEND POLICY
The dry bulk shipping market and the re-
lated investment opportunities are cycli-
cal, and the current global economic crisis
has opened new possibilities for consoli-
dation and investments. To maximise the
company’s fi nancial fl exibility and thus be
prepared for the business opportunities
that may arise, Eitzen Bulk Shipping pro-
poses to the annual general meeting 2010
not to pay out dividends for 2009.
SHARE PRICE AND TURNOVER
In 2009 Eitzen Bulk Shipping had only six
trading days from the fi rst day of listing,
21 December 2009. The share price at
year-end was 40 DKK against 37.5 DKK
on the fi rst trading day, a development
of 6.7%. The market capitalisation of the
listed shares was approximately 1 billion
DKK at year-end, corresponding to 190
million USD.
FINANCIAL CALENDAR 2010
24 MarchAnnual Report 2009
21 AprilAnnual General Meeting
20 MayFinancial Statements Q1 2010
24 August Financial Statements 1H 2010
19 NovemberFinancial Statements Q3 2010
All regulatory releases and fi nancial ac-
counts are available in Danish and English
on the company website
www.eitzen-bulk.com.
IR CONTACT
Bjarne Skov Faber
Chief Financial Offi cer
Direct tel.: +45 3997 0401
Mobile tel.: +45 2630 9501
E-mail: [email protected]
Camillo Eitzen House
Amerika Plads 38
DK-2100 Copenhagen
Denmark
14.7%
74.3%
0.7%
10.3%
Camillo Eitzen & Co. ASA
Staff
Treasurey shares allocated to stock
options program
Minority Shareholders
Eitzen Bulk Shipping ownership after merger
About the share
No. of share Name Position No. of shares optionsPer Lange CEO 739,886 (3.00%) 359,648
Bjarne Skov Faber CFO 0 0
Henrik Sleimann Petersen Board member and
Executive Vice
President 386,550 (1.57%) 201,555
Hans-Christian Olesen Board member and
Executive Vice
President 355,362 (1.44%) 188,004
Kaare Grenness Senior Vice President 393,548 (1.60%) 201,125
Søren C. Thomsen Senior Vice President 209,950 (0.85%) 140,372
Klaus Munk Andersen Senior Vice President 250,327 (1.02%) 159,784
26 | Annual Report 2009 | Management biographies
BOARD OF DIRECTORS
Axel C. Eitzen (b. 1954), ChairmanNorwegian citizen
Chairman of Camillo Eitzen & Co ASA
(2008-)
Elected for the Board fi rst time in 2009,
term expires in 2010
Education
1976-1980: Master of Mechanical
Engineering
1973-1975: M.Sc. Economics
Former positions
2003-2008: CEO, Camillo Eitzen
& Co ASA
1980-2003: Partner & CEO, Tschudi &
Eitzen AS
Management assignments
Eitzen Chemical ASA (CM)
Eitzen Maritime Services ASA (CM)
Gard AS (M)
Peter D. Knudsen (b. 1957), Norwegian citizen
CEO, Camillo Eitzen & Co
ASA (2008-)
Elected for the Board fi rst time in 2009,
term expires in 2010
Education
1979: Master of Business Adm.
1977: Bachelor Finance
Former positions
2007-2008: General Manager, Nordea
Bank Singapore Pte. Ltd.
1993-2007: Senior Vice President,
Nordea Bank Norge ASA, shipping, oil
services and international division
Management assignments
Eitzen Maritime Services ASA (M)
Eitzen Solvang Ethylene A/S (M)
Subsidiaries of Camillo Eitzen & Co ASA
(M)
Peter Appel (b. 1961)Danish citizen
Managing Partner, Gorrissen Federspiel
(2010-), partner since 1994
Elected for the Board fi rst time in 2009,
term expires in 2010
Education
1990: Master of Law, London school of
Economics
1985: Maritime Law, Oslo University
1985: Master of Law, Copenhagen
University
Former positions
1994-2009: Partner, Gorrissen
Federspiel
Management assignments
Bimco Informatique A/S (M)
P.E.P. Shipping A/S (M)
European Maritime Law Organisation (M)
Maritime and Transport Law Committee,
International Bar Association (CM)
Management biographies
Management biographies | Annual Report 2009 | 27
Henrik Sleimann Petersen (b. 1966)Danish citizen
Executive Vice President, Eitzen Bulk
Shipping A/S (2009-)
Elected for the Board fi rst time in 2009,
term expires in 2010
Education
2004: Wharton School of Business, USA
– EDP Program
1988: A.P. Møller/Maersk Shipping
Academy
Former positions
2008-: Managing Director, Eitzen Bulk
Shipholding A/S
2007-2008: General Manager – Eitzen
Bulk A/S
2006-2008: Board member, Perola SA,
Brazil
1997-2006: CEO, Eitzen Bulk (USA) Inc.
Management assignments
Subsidiaries of Eitzen Bulk Shipping A/S
(M)
EXECUTIVE MANAGEMENT
Per Lange (b. 1960), CEODanish citizen
Employed with the Eitzen Group since
1995
Education
1992: Executive development program,
Penn State University, USA
1981: A. P. Moller – Maersk Shipping
School
Former positions
2007-2009: CEO, Eitzen Bulk A/S
2004-2007: Director, Eitzen Bulk
1995-2004: General manager, EAC
Shipping/Eitzen Bulk
1981-1995: General manager, Maersk
Bulk, A. P. Moller – Maersk
Management assignments
Subsidiaries of Eitzen Bulk Shipping A/S
(M)
Bjarne Skov Faber (b. 1968), CFODanish citizen
Employed with the Eitzen Group since
2009
Education
2007: Program for Executive
Development, IMD, Switzerland
1993: M.Sc. in Economics and Financing
Former positions
2005-2008: CFO, Energy Markets, DONG
Energy A/S
2004-2005: Vice President Finance,
Trade & Supply, DONG A/S
1997-2004: Head of various Finance
areas, Novo Nordisk A/S
Management assignments
Subsidiaries of Eitzen Bulk Shipping A/S
(M)
Hans-Christian Olesen (b. 1968)Danish citizen
Executive Vice President, Eitzen Bulk
Shipping A/S (2009-)
Elected for the Board fi rst time in 2009,
term expires in 2010
Education
1996: Graduate Diploma in International
trade, Copenhagen Business School
Former positions
2009-: Executive Vice President, Eitzen
Bulk Shipping A/S
1997-2008: Various positions, Tschudi &
Eitzen A/S & Eitzen Bulk A/S
1987-1997: Various positions, East Asiatic
Company A/S
Management assignments
Cedrela Transport Ltd., Bahamas (M)
Perola S.A., Brazil (M)
Eitzen Logistic Services Ltd., India (M)
28 | Annual Report 2009 | Statement of the Board of Directors and Executive Management on the Annual Report
Statement of the Board of Directors and Executive Management on the Annual Report
The Board of Directors and Executive management have prepared the 2009 Annual Report. The Annual Report was considered and
adopted today.
The Annual Report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and ad-
ditional Danish annual reporting requirements for listed companies.
We consider the accounting policies used appropriate and the accounting estimates made reasonable, and in our opinion the consoli-
dated fi nancial statements and the fi nancial statement of the parent company provide the relevant information for assessing the fi -
nancial position of the Group and the parent company. In our opinion the consolidated fi nancial statements and the fi nancial statement
of the parent company give a true and fair view of the assets, liabilities and fi nancial position of the Group and the parent company and
the results of the Group’s and the parent company’s operation and cash fl ows for the period 1 January - 31 December 2009.
In our opinion the Management’s review in the preceding pages gives a true and fair presentation of the development in the activities
and the fi nancial position of the Group and the parent company, the results for the year and of the Group’s and the parent company’s
fi nancial position in general. Further, in our opinion the Management’s review describes the most signifi cant risks and uncertainties
that may affect the Group and the parent company.
We recommend that the Annual Report is adopted at the annual general meeting.
Copenhagen, 24 March 2010
EXECUTIVE MANAGEMENT
Per Lange Bjarne Skov Faber
CEO CFO
BOARD OF DIRECTORS
Axel C. Eitzen Peter D. Knudsen Peter Appel
Chairman
Henrik Sleimann Petersen Hans Christian Olesen
Independent Auditors’ Report | Annual Report 2009 | 29
Independent Auditors’ Report
We have audited the fi nancial statements and the consolidated fi nancial statements for Eitzen Bulk Shipping A/S for the fi nancial
year ended 31 December 2009, which comprise a summary of signifi cant accounting policies, the income statement, balance sheet,
statement of changes in equity, cash fl ow statement for the year then ended and notes for the Parent Company and the Group. The
fi nancial statements and the consolidated fi nancial statements have been prepared in accordance with International Financial Re-
porting Standards as adopted by the EU and additional Danish disclosure requirements for listed companies.
THE EXECUTIVE MANAGEMENT AND BOARD OF DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS, THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE MANAGEMENT’S REVIEW
The executive management and the board of directors are responsible for the preparation and fair presentation of these fi nancial
statements and consolidated fi nancial statements in accordance with International Financial Reporting Standards as adopted by
the EU and additional Danish disclosure requirements for listed companies. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of fi nancial statements, consolidated fi nancial state-
ments and a Management’s Review that are free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
AUDITOR’S RESPONSIBILITY AND BASIS OF OPINION
Our responsibility is to express an opinion on the fi nancial statements and the consolidated fi nancial statements based on our audit.
We conducted our audit in accordance with Danish Standards on Auditing. Those standards require that we comply with ethical re-
quirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements and the consolidated
fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and
consolidated fi nancial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks
of material misstatement of the fi nancial statements and the consolidated fi nancial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
fi nancial statements and consolidated fi nancial statements which gives a true and fair description in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s inter-
nal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the executive management and board of directors, as well as evaluating the overall presentation of the fi nancial
statements and the consolidated fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
The audit did not result in any qualifi cation.
OPINION
In our opinion, the fi nancial statements and the consolidated fi nancial statements give a true and fair view of the Company’s and the
Group’s fi nancial position at 31 December 2009 and of the results of the Parent Company’s and the Group’s operations and its cash
fl ows for the fi nancial year then ended in accordance with International Financial Reporting Standards as adopted by the EU and ad-
ditional Danish disclosure requirements for listed companies.
STATEMENT ON THE MANAGEMENT’S REVIEW
The executive management and the board of directors are responsible for the preparation of a management’s review that includes a
fair review in accordance with additional Danish disclosure requirements for listed companies.
The audit has not included the management’s review. Pursuant to the Danish Financial Statements Act, we have, however, read the
management’s review. We have not performed any further procedures in addition to the audit of the consolidated fi nancial statements
and the fi nancial statements.
On this basis, it is our opinion that the information in the management’s review is consistent with the consolidated fi nancial state-
ments and the fi nancial statements.
Copenhagen, 24 March 2010
ERNST & YOUNG
Godkendt Revisionspartnerselskab
Henrik Kofoed Bent Jensen
State Authorised Public Accountant State Authorised Public Accountant
30 | Annual Report 2009 | Consolidated Income Statement
(USD ‘000) Note 2009 2008
Freight income 376,029 838,307
Voyage related expenses -105,111 -116,790
Time-charter hire -225,537 -662,567
Other income 114 142
Gross profi t (Net earnings from shipping activities) 45,495 59,092
Other external expenses -7,292 -8,437
Staff costs 5 -17,462 -16,990
Profi t before depreciations etc. (EBITDA) 20,741 33,665
Profi t on sale of vessels etc. 0 49,542
Depreciations 6 -445 -768
Operating profi t (EBIT) 20,296 82,439
Share of associates’ profi t after tax 15 -295 475
Financial income 7 1,331 4,396
Financial expenses 8 -211 -828
Other fi nancial items, net 9 1,574 -105
Profi t before tax 22,695 86,377
Tax 10 -3,658 6,392
Net profi t 19,037 92,769
Attributable to: Profi t attributable to the equity holders of the parent 18,890 92,613
Profi t attributable to the minority 147 156
19,037 92,769
Earnings per share 11 Earnings per share – basic earnings per share USD 0.77 3.76
Earnings per share – diluted earnings per share USD 0.77 3.76
Consolidated Income Statement1 January - 31 december
Consolidated Statement of Comprehensive Income | Annual Report 2009 | 31
USD ‘000) Note 2009 2008
Profi t/loss (-) for the year 19,037 92,769
Other comprehensive income Value adjustments of hedging instruments 3,301 -3,071
Tax effect -836 819
Value adjustments of hedging instruments after tax 2,465 -2,252
Exchange adjustments of foreign entities 1,043 167
Other adjustments -656 -226
Fair value adjustments other investments (gain/-loss) 186 -656
Other comprehensive income for the year, net of tax 3,038 -2,967
Total comprehensive income for the year, after tax 22,075 89,802
Attributable to: Equity holders of the parent 21,928 89,646
Non-controlling 147 156
22,075 89,802
Consolidated Statement of Comprehensive Income
32 | Annual Report 2009 | Consolidated Balance Sheet
Consolidated Balance Sheet1 January - 31 december
ASSETS(USD ‘000) Note 2009 2008
Owned vessels 12 0 0
New building contracts 13 6,695 6,695
Fixtures, fi ttings and equipement 14 1,008 1,056
Total tangible assets 7,703 7,751
Investment in associates 15 2,894 3,047
Other investments 645 437
Derivative fi nancial instruments, non-current 31 5,440 33,404
Other fi nancial assets, non-current 16 210 47,492
Deferred tax assets 24 2,970 7,790
Financial assets, non-current 12,159 92,170
Total non-current assets 19,862 99,921
Inventories 17 8,332 3,482
Trade and other receivables 18 29,827 14,751
Prepayments 19 10,374 7,081
Derivative fi nancial instruments, current 31 9,549 47,902
Cash and short-term deposits 20 24,806 66,052
Current assets 82,888 139,268
TOTAL ASSETS 102,750 239,189
EQUITY AND LIABILITIES(USD ‘000) Note 2009 2008
Share capital 21 46,941 46,941
Retained earnings -23,134 12,071
Other reserves 1,343 -1,695
Total equity of majority interest 25,150 57,317Minority interest 623 476
Total equity 25,773 57,793
Interest bearing loans and borrowings 25 25 236
Financial liabilities, non-curent 26 0 10,388
Provisions 23 0 7,422
Derivative fi nancial instruments 31 9,800 33,524
Total non-current liabilities 9,825 51,570
Trade and other payables 28 45,949 51,926
Interest-bearing loans and borrowings 25 248 678
Provisions 23 8,422 26,510
Derivative fi nancial instruments 31 12,378 49,161
Income tax payable 155 1,551
Total current liabilities 67,152 129,826Total liabilities 76,977 181,396
TOTAL EQUITY AND LIABILITIES 102,750 239,189
Consolidated Cash Flow Statement | Annual Report 2009 | 33
Consolidated Cash Flow Statement1 January - 31 december
(USD ‘000) Note 2009 2008
Profi t/loss(-) before tax 22,695 86,377
Paid tax including added interest on tax -75 1,893
Adjustment to reconsile profi t before tax to net cash fl ows
Non-cash:
Gain on sale of vessel, plant and equipment 0 -49,542
Impairment, depreciation and amortisation 6,13,14 445 768
Share-based payments, expense 35 8,239 0
Bonus (profi t split) 1,281 7,853
Share of gain/loss in associated companies 15 295 -475
Interest expenses 8 211 828
Interest income 7 -1,331 -4,396
Net foreign exchange differences, realised -828 355
Net forward contract activity 5,492 -2,785
Movement in onerous contracts for the year -25,510 -24,363
Other changes -4,575 224
Working capital adjustments: 32
Change in current assets -22,815 7,265
Change in current liabilities -3,051 -9,399
Net cash fl ows from operating activities -19,526 14,605
Proceeds from sale of vessel, plant and equipment 13,14 0 105,690
Investments in tangible fi xed assets -397 -3,987
Interest received 688 2,206
Net cash fl ows from investing activities 291 103,909
Dividends paid to equity holders and minority interests -9,102 -50,000
Intercompany loan 0 -45,000
Interest paid -211 -357
Other changes -12,698 -10,664
Net cash fl ows from fi nancing activities -22,011 -106,021
Net change in cash and cash equivalents -41,246 12,493
Cash and cash equivalents at 1 January 20 66,052 53,559
Cash and cash equivalents at 31 December 20 24,806 66,052
34 | Annual Report 2009 | Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity1 January - 31 december
Attributable to equity holders of the parent company Total
Majority Minority Total
interest interest Equity
Other reserves
Share Retained Hedging Trans- Other Total
capital earnings reserves lation other
(USD ‘000) (Note 21) reserve reserves
At 1 January 2009 46,941 12,071 -1,016 167 -846 -1,695 57,317 476 57,793Total comprehensive income - 18,890 2,466 1,041 -469 3,038 21,928 147 22,075
Total comprehensive income 0 18,890 2,466 1,041 -469 3,038 21,928 147 22,075Other changes - -5,432 0 0 0 -5,432 0 -5,432
Share-based payment 8,239 8,239 8,239
Treasury shares received from Parent 17,721 17,721 17,721
Value of treasury shares -17,721 -17,721 -17,721
Dividend - -56,902 0 0 0 0 -56,902 - -56,902
Changes during the year - -54,095 0 0 0 0 -54,095 0 -54,095At 31 December 2009 46,941 -23,134 1,450 1,208 -1,315 1,343 25,150 623 25,773
Attributable to equity holders of the parent company Total
Majority Minority Total
interest interest Equity
Other reserves
Share Retained Hedging Trans- Other Total
capital earnings reserves lation other
(USD ‘000) (Note 20) reserve reserves
At 1 January 2008 4,196 14,941 1,236 0 0 1,236 20,373 320 20,693Increase of share capital through
merger with Shipholding Holding A/S 42,745 20,517 0 0 0 0 63,262 63,262
Total comprehensive income 0 92,613 -2,252 167 -882 -2,967 89,646 156 89,802
Total comprehensive income 0 92,613 -2,252 167 -882 -2,967 89,646 156 89,802Other changes 0 0 0 36 36 36 36
Dividend 0 -116,000 0 0 0 0 -116,000 0 -116,000
Changes during the year 0 -116,000 0 0 36 36 -115,964 0 -115,964At 31 December 2008 46,941 12,071 -1,016 167 -846 -1,695 57,317 476 57,793
Increase in share capital due to merger with Shipholding Holding A/SThe merger with Shipholding Holding A/S was approved on the shareholders meeting on 21 December 2009 in accordance with the merger plan on 20
November 2009. In connection with the merger all assets and liabilities of Shipholding Holding A/S were taken over. The increase in share capital was
registering on 21 December 2009. The increase in share capital equal to 42.7 MUSD is presented in the consolidated statement of changes in equity for
2009. The merger is accounted for using the pooling of interest method in the consolidated fi gures for 2008 and 2009.
Notes to the Financial Statements | Annual Report 2009 | 35
Notes to the Financial Statements
1. Group accounting policies 36 2. Signifi cant accounting judgment, estimates and assumptions 41 3. Segment information 42 4. Fees to auditor appointed at the annual general meeting 43 5. Staff costs 43 6. Depreciation 43 7. Financial income 44 8. Financial expenses 44 9. Other fi nancial items 44 10. Tax 44 11. Earnings per share 45 12. Owned vessels 45 13. New building contracts 45 14. Fixtures, fi ttings and equipment 46 15. Investments in associates 46 16. Other fi nancial assets, non-current 47 17. Inventories 47 18. Trade and other receivables 47 19. Prepayments 47 20. Cash and cash equivalents 47 21. Share capital 48 22. Treasury shares 48 23. Provisions 48 24. Deferred tax 49 25. Interest bearing loans and borrowings 49 26. Financial liabilities, non-current 49 27. Financial risk management, objectives and policies 50 28. Trade and other payables 52 29. Operating lease commitments 52 30. Contingent assets and liabilities 53 31. Financial instruments 53 32. Change in net working capital 56 33. Mortgage and security 56 34. Related party transactions 57 35. Share-based payment 58 36. Liquidity risk 59 37. Subsequent event 60 38. New fi nancial reporting regulation 60
36 | Annual Report 2009 | Notes to the Financial Statements
Note 1 Group accounting policies
Eitzen Bulk Shipping A/S is a public limited com-
pany domiciled in Denmark. Eitzen Bulk Shipping
A/S is a result of the merger between Damp-
skibsselskabet Orion A/S and Shipholding Hold-
ing A/S, both companies with Camillo Eitzen &
Co ASA Group. The merger was approved on the
shareholders meeting in Dampskibsselskabet
Orion A/S and Shipholding Holding A/S, respec-
tively, on 21 December 2009 in accordance with
the merger plan on 20 November 2009.
Dampskibsselskabet Orion A/S has in connec-
tion with the merger taken over all assets and li-
abilities of Shipholding Holding A/S. Dampskibs-
selskabet Orion A/S has in the same connection
changed its name to Eitzen Bulk Shipping A/S.
Please refer to the section below in regard to
the accounting policies for common control
transactions.
The annual report for the period 1 January – 31
December 2009 comprises both the consoli-
dated fi nancial statements of Eitzen Bulk Ship-
ping A/S and its subsidiaries (the Group) and the
separate parent company fi nancial statements.
The annual report of Eitzen Bulk Shipping A/S
for 2009 has been prepared in accordance with
International Financial Reporting Standards as
adopted by the EU and additional Danish disclo-
sure requirements for annual reports of listed
companies, see the OMX Nordic Exchange Co-
penhagen A/S’ disclosure requirements for an-
nual reports of listed enterprises and the statu-
tory order on the adoption of IFRS by enterprises
subject to the Danish Financial Statements Act
issued pursuant to the Danish Financial State-
ments Act.
Basis of preparationThe annual report has been prepared on the
historical cost basis except all fi nancial assets
and liabilities held for trading and all fi nancial
assets that are classifi ed as available for sale.
These fi nancial assets and liabilities have been
measured at fair value. The carrying values of
recognised assets and liabilities that are hedged
items in fair value hedges and otherwise car-
ried at cost are adjusted to record changes in
the fair values attributable to the risks that are
being hedged.
The accounting policies set out below have been
used consistently in respect of the fi nancial year
and the comparative fi gures.
The annual report has been presented in USD
thousands (USD ´000), except when otherwise
indicated.
Accounting standards effective in 2009Eitzen Bulk Shipping has adopted all new or
amended and revised accounting standards and
interpretations (IFRSs´) endorsed by the EU ef-
fective for the accounting period beginning on 1
January 2009. Based on an analysis made by
Eitzen Bulk Shipping A/S, most of the IFRSs ef-
fective for 2009 have no material impact or are
not relevant to the Group. However, the follow-
ing revised standard has a material impact on
the presentation and disclosure of the consoli-
dated fi nancial statements:
• IAS 1 (Revised), `Presentation of Financial
Statements´. The revised standard separates
owner and non-owner changes in the equity.
The statement of changes in equity includes
only details of transactions with owners, with
non-owner changes in equity presented in a
reconciliation of each component of equity. In
addition, the standard introduces the state-
ment of comprehensive income: It presents
all items of recognised income and expense,
either in one single statement, or in two
link statements. The Group has elected to
present two statements. Since the change in
accounting policy only impacts presentation
aspects, there is no impact on net profi t, eq-
uity or earnings per share.
• IFRS 8 replaced IAS 14 Segment Reporting
upon its effective date. The Group previously
had one segment. After the merger the Group
operates in two global business segment
based on operator and shipholding activities
within the dry bulk cargo industry.
• Amended IFRS 7’ Financial Instruments: Dis-
closure’. This amendment concerns disclo-
sure about fi nancial instruments and requires
presentation of additional disclosures about
fi nancial instruments that are recognized at
fair value, including fair value hierarchy and
further disclosures about liquidity risks.
• ‘Improvements to International Financial
Reporting Standards 2008’, which has led to
change in terminology and presentation, but
does not affect recognition or measurement.
Common control transactionsCommon control transactions are accounted
for using the pooling of interest method. The re-
ceiving company of the net assets initially rec-
ognizes the assets and liabilities transferred at
their carrying amount. The result of operations
for the period in which the transfer occurs is
presented as though the transfer had occurred
at the beginning of the period. Financial state-
ments and fi nancial information for prior years
are restated to provide appropriate comparative
information.
The fi gures for 2008 in regard to the con-
solidated fi nancial statements of Eitzen Bulk
Shipping A/S are prepared on the basis of the
consolidation of the audited reports for the
companies that constituted the dry cargo activi-
ties within the Eitzen Group, i.e. Eitzen Bulk A/S,
Eitzen Bulk Shipholding A/S, Sibulk (Singapore)
Pte Ltd. as well as the audited report for Damp-
skibsselskabet Orion A/S.
Basis of consolidationThe consolidated fi nancial statements com-
prise the parent company Eitzen Bulk Shipping
A/S and subsidiaries in which Eitzen Bulk Ship-
ping A/S has control, i.e. the power to govern the
fi nancial and operating policies so as to obtain
benefi ts from its activities. Control is obtained
when the Company directly or indirectly holds
more than 50% of the voting rights in the sub-
sidiary or which it, in some other way, controls.
Enterprises over which the Group exercises sig-
nifi cant infl uence, but which it does not control,
are considered associates. Signifi cant infl uence
is generally obtained by direct or indirect owner-
ship or control of more than 20% of the voting
rights but less than 50%.
When assessing whether Eitzen Bulk Shipping
A/S exercises control or signifi cant infl uence,
potential voting rights which are exercisable at
the balance sheet date are taken into account.
The consolidated fi nancial statements have
been prepared as a consolidation of the par-
ent company’s and the individual subsidiaries’
fi nancial statements prepared according to the
Group accounting policies. On consolidation,
intra-group income and expenses, sharehold-
ings, intra-group balances and dividends, and
realised and unrealised gains on intra-group
transactions are eliminated. Unrealised gains
on transactions with associates are eliminated
in proportion to the Group’s ownership share of
the enterprise. Unrealised losses are eliminated
in the same way as unrealised gains to the ex-
tent that impairment has not taken place.
The accounting items of subsidiaries are in-
cluded in full in the consolidated fi nancial
Notes to the Financial Statements
Notes to the Financial Statements | Annual Report 2009 | 37
statements. Non-controlling interests’ share
of the profi t/loss for the year and of the equity
of subsidiaries which are not wholly owned are
included in the Group’s profi t/loss and equity,
respectively, but are disclosed separately.
Foreign currency translationFor each of the reporting entities in the Group,
a functional currency is determined. The func-
tional currency is the currency used in the pri-
mary fi nancial environment in which the report-
ing entity operates. Transactions denominated
in other currencies than the functional currency
are foreign currency transactions.
On initial recognition, foreign currency transac-
tions are translated to the functional currency
at the exchange rates at the transaction date.
Foreign exchange differences arising between
the transaction date and at the date of payment
are recognised in the income statement as fi -
nancial income or fi nancial expenses.
Receivables and payables and other monetary
items denominated in foreign currencies are
translated to the functional currency at the
exchange rates at the balance sheet date. The
difference between the exchange rates at the
balance sheet date and at the date at which the
receivable or payable arose or was recognised
in the latest annual report is recognised in the
income statement as fi nancial income or fi nan-
cial expenses.
In the consolidated fi nancial statements, the
income statements of entities with another
functional currency than USD are translated
at the exchange rates at the transaction date
and the balance sheet items are translated at
the exchange rates at the balance sheet date.
An average exchange rate for each month is
used as the transaction date exchange rate to
the extent that this does not signifi cantly distort
the presentation of the underlying transactions.
Foreign exchange differences arising on trans-
lation of the opening balance of equity of such
foreign operations at the exchange rates at the
balance sheet date and on translation of the
income statements from the exchange rates at
the transaction date to the exchange rates at
the balance sheet date are recognised in other
comprehensive income and presented in equity
under a separate translation reserve.
Derivative fi nancial instruments and hedgingEitzen Bulk Shipping uses derivative fi nancial in-
struments such as forward currency contracts,
bunker hedge and FFA’s to hedge part of risks.
Such derivative fi nancial instruments are initially
recognised at fair value on the date on which a
derivate contract is entered into and are subse-
quently re-measured at fair value. Derivates are
carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair
value on derivates that do not qualify for hedge
accounting are taken directly to profi t or loss.
The fair value of forward currency contracts is
calculated by reference to current forward ex-
change rates for contracts with similar maturity
profi les. The fair value of bunker and the fair
value of FFA’s are determined by reference to
market values for similar instruments. For the
purpose of accounting, hedges are classifi ed as:
• fair value hedges when hedging the exposure
to change in fair value of a recognised asset
or liability or an unrecognised fi rm commit-
ment (except for foreign currency risk); or
• cash fl ow hedge when hedging exposure to
variability in cash fl ow that is either attribut-
able to a particular risk associated with a rec-
ognised asset or liability or a highly probable
forecast transaction or the foreign currency
risk in an unrecognised fi rm commitment.
At time of entering into a hedge relationship, Ei-
tzen Bulk Shipping designates and documents
the hedge relationship to which Eitzen Bulk
Shipping wishes to apply for hedge account-
ing and the risk management objectives and
strategy for undertaking the hedge. The docu-
mentation includes identifi cation of the hedging
instrument, the hedges item or transaction, the
nature of the risk being hedged and how the en-
tity will assess the hedging instrument’s effec-
tiveness in offsetting the exposure to changes
in the hedged item’s fair value or cash fl ows at-
tributable to the hedged risk, Such hedges are
expected to be highly effective in achieving off-
setting changes in fair value or cash fl ows and
are assessed on an ongoing basis to determine
that they actually have been highly effective
throughout the fi nancial reporting periods for
which they were designated.
The criteria for classifying a derivate as a hedg-
ing instrument are as follows:
• the hedge is expected to be effective in
achieving offsetting changes in fair value or
cash fl ows attributable to the hedged item
— a hedging effi ciency within the range of
80—125 per cent over the life of the hedging
relationship is expected,
• the effectiveness of the hedge can be reliably
measured,
• there is adequate documentation when the
hedge is entered into that the hedge is ex-
pected to be effective,
• for cash fl ow hedges of forecast transaction,
the transaction must be highly probable, and
• the hedge is evaluated regularly and has
proven to be effective.
Hedges which meet the criterias for hedge ac-
counting are accounted for as follows:
Fair value hedges
Derivatives designated as hedging instruments
are measured at fair value and changes in fair
value are recognised in the income statement.
Correspondingly, a change in the fair value of
the hedged item attributable to the hedged
risk is recognised in the income statement. The
fair value hedge accounting is discontinued if
the hedging instrument expires or is sold, ter-
minated or exercised, or the hedge no longer
meets the criteria far hedge accounting stated
above.
Cash fl ow hedges
Changes in the fair value of a hedging instru-
ment that meet the criteria for cash fl ow hedge
accounting are recognised in comprehensive
income. The ineffective part of the hedging in-
strument is recognised directly in the income
statement. Gains and losses that are recog-
nised in comprehensive income are taken to the
income statement in the same period or periods
as the cash fl ow which comprises the hedged
item is recognised in the income statement. The
principle also applies if the hedged forecasted
transaction results in an asset or liability being
recognised in the balance sheet. If the cash fl ow
hedge no longer meets the criteria for hedge ac-
counting, hedge accounting is discontinued. The
cumulative gain or loss of the hedging instru-
ment recognised in comprehensive income re-
mains separately recognised in comprehensive
income until the forecast transaction occurs. If
the cash fl ow hedged transaction is no longer
expected to occur, any previously accumulated
gain or loss of the hedging instrument that has
been recognised in comprehensive income will
be carried to profi t or loss. Derivates not ac-
counted for as hedging instruments are clas-
sifi ed as fi nancial assets at fair value through
profi t or loss and measured at fair value.
Notes to the Financial Statements
38 | Annual Report 2009 | Notes to the Financial Statements
Changes in the fair value of such derivates are
recognised in the income statement.
Determination of fair value
The fair value of fi nancial assets and liabilities is
measured on the basis of quoted market prices
of fi nancial instruments traded in an active mar-
ket. If an active market exists, fair value is based
on the most recent observed market price at the
end of the reporting period.
If an active market does not exist, the fair value
is measured according to generally accepted
valuation techniques. Market-based parameters
are used to measure fair value.
For bunker contracts the price is based on ob-
servable stock market in Rotterdam and Singa-
pore. The value of FFAs is assessed on basis of
daily recorded prices from the Baltic Exchange.
Segment informationOperating segments are reported in a manner
consistent with the internal reporting provided
to Executive Management and the Board of
Directors of Eitzen Bulk Shipping. For manage-
ment reporting purposes, the Group operates in
two global business segment based on opera-
tor and shipholding activities within the dry bulk
cargo industry.
Segment revenue and costs and segment as-
sets and liabilities comprise items which are
directly attributable to the individual segment
and the items which can be allocated to the indi-
vidual segment on a reliable basis. Unallocated
items primarily comprise assets and liabilities
and income and costs related to the Group’s
administrative functions, investment activities,
income taxes, etc. Non-current segment assets
comprise non-current assets used directly in
the operating activities of the segment, includ-
ing intangible assets, property, plant and equip-
ment, and investments in associates. Current
segment assets comprise current assets used
directly in the operating activities of the seg-
ment, including inventories, trade receivables,
other receivables, prepayments and cash at
bank and in hand. Segment liabilities comprise
liabilities resulting from the operating activities
of the segment, including trade payables and
other payables.
Minority interests Minority interests represent the portion of profi t
or loss and net assets not held by Eitzen Bulk
Shipping A/S and are presented separately in
the income statement and within equity in the
consolidated balance sheet, separately from the
parent shareholders’ equity. Initially the minor-
ity interest is recognised based on their share
of the fair value of the assets and liabilities ac-
quired.
INCOME STATEMENT
Revenue and expenses All voyage revenues and voyage expenses are
recognised on a percentage of completion basis.
Eitzen Bulk Shipping A/S uses a discharge-to-
discharge basis in determining percentage of
completion for all spot voyages and voyages
servicing contract of affreightment (CoA). With
this method, voyage revenue is recognised
evenly over the period from the departure of a
vessel from its original discharge part to depar-
ture from the next discharge port. Vessels with-
out signed contracts in place at discharge have
no revenue before a new contract is signed. Voy-
age related expenses incurred for vessels in the
idle time are expensed. Demurrage is included
if a claim is considered probable. Losses arising
from time or voyage charter are provided for in
full when they become probable.
Profi t from the sale of vessels etc.Profi ts from the sale of vessels are stated as the
difference between the sales price of the vessel
less selling costs and the carrying amount of
the vessel at the time of delivery.
Profi t from investments in associatesThe proportionate share of the result after tax
of associates is recognized in the consolidated
income statement after elimination of the pro-
portionate share of intra-group profi ts/losses.
Financial income and expensesFinancial income and expenses comprise inter-
est income and expense, gains and losses on
payables and transactions denominated in for-
eign currencies, amortisation of fi nancial assets
and liabilities. Furthermore, realised and unreal-
ised gains and losses on derivative fi nancial in-
struments which are not designated as hedging
instruments are included.
Taxes Eitzen Bulk Shipping A/S is jointly taxed with all
Danish subsidiaries. The current Danish corpo-
ration tax is allocated between the jointly taxed
companies in proportion to their taxable income.
In relation to the shipping activities Eitzen Bulk
Shipping A/S participates in the Danish Tonnage
Tax Scheme. Companies that use tax losses in
other companies pay the joint tax contribution
to the parent company at an amount corre-
sponding to the tax value of the tax losses used.
Companies whose tax losses are used by other
companies receive joint tax contributions from
the parent company corresponding to the tax
value of the losses used (full absorption). The
jointly taxed companies are taxed under the tax
prepayment scheme.
Tax for the year comprises current tax and
changes in deferred tax for the year. The tax ex-
pense relating to the profi t/loss for the year is
recognised in the income statement. Tax attrib-
utable to entries directly under comprehensive
income is recognised directly in other compre-
hensive income.
BALANCE SHEET
Tangible assetsTangible assets are measured at cost less accu-
mulated depreciation and impairment losses.
Cost comprises the purchase price and any
costs directly attributable to the acquisition un-
til the date when the asset is available for use.
Instalments and costs incurred during the con-
struction period on new building contracts are
capitalised as they are paid. Borrowing costs
(interest) that are attributable to the construc-
tion of the vessels are capitalised and included
as part of the cost. The capitalised value is re-
classifi ed from newbuildings to vessels upon
delivery from the yard.
Where individual components of an item of tan-
gible assets have different useful lives, they are
depreciated separately. Depreciation is provided
on a straight-line basis over the expected useful
lives of the assets/components. The expected
useful lives are as follows:
• Vessels, 20 - 25 years
• Fixtures, fi ttings and equipment; 3 - 10 years
Depreciation is calculated on the basis of the re-
sidual value and impairment losses, if any. The
useful life and residual value is determined at
the acquisition date and reassessed annually. If
the residual value exceeds the carrying amount,
depreciation is discontinued. The residual value
of the vessels is estimated as the lightweight
tonnage of each vessel multiplied by scrap
value per ton.
Notes to the Financial Statements
Notes to the Financial Statements | Annual Report 2009 | 39
When changing the depreciation period or the
residual value, the effect on the depreciation
is recognised prospectively as a change in ac-
counting estimates.
The carrying values of vessels and newbuildings
are reviewed for impairments when events or
changes in circumstances indicate that the car-
rying value may not be recoverable. Valuations
are performed frequently to ensure that the
fair value of the asset does not differ materially
from its carrying amount.
Investments in associatesInvestments in associates are recognised in the
consolidated fi nancial statements according
to the equity method. Investments in associ-
ates are measured at the proportionate share
of the enterprises’ net asset values calculated
in accordance with the Group’s accounting poli-
cies minus or plus the proportionate share of
unrealised intra-group profi ts and losses and
plus additional value on acquisition, including
goodwill. Investments in associates are tested
for impairment when impairment indicators are
identifi ed.
Investments in associates with negative net as-
set values are measured at USD 0 (nil). If the
Group has a legal or constructive obligation to
cover a defi cit in the associate, the remaining
amount is recognised under provisions.
Amounts owed by associates are measured at
amortised cost. Write-down is made for bad
debt losses.
Other investmentsShares and bonds not included in the Group’s
trading portfolio (available-for-sale) are recog-
nised under non-current assets at cost at the
trade date and are measured at fair value cor-
responding to the market price of quoted secu-
rities and for unquoted securities an estimated
fair value computed on the basis of current
market data and generally accepted valuation
methods. Unrealised value adjustments are
recognised directly in comprehensive income
except for impairment losses as well as foreign
exchange adjustments of bonds denominated in
foreign currencies, which are recognised in the
income statement as fi nancial income or fi nan-
cial expenses. On realisation, the accumulated
value adjustment recognised in in comprehen-
sive income is transferred to fi nancial income or
fi nancial expenses in the income statement.
Impairment of non-current assetsDeferred tax assets are subject to annual im-
pairment tests and are recognised only to the
extent that it is probable that the assets will be
utilised.
Impairment of vessels and new building con-
tracts are described separately cf. note 2. The
carrying amount of other non-current assets
is tested annually for indicators of impairment.
When there is an indication that assets may be
impaired, the recoverable amount of the asset
is determined. The recoverable amount is the
higher of an asset’s fair value less expected
costs to sell and its value in use. Value in use
is the present value of the future cash fl ows ex-
pected to be derived from an asset or the cash-
generating unit to which the asset belongs.
An impairment loss is recognised if the carrying
amount of an asset or a cash-generating unit,
respectively, exceeds the recoverable amount
of the asset or the cash-generating unit. Im-
pairment losses are recognised in the income
statement in a separate line item.Impairment is
reversed only to the extent of changes in the as-
sumptions and estimates underlying the impair-
ment calculation. Impairment is only reversed
to the extent that the asset’s increased carrying
amount does not exceed the carrying amount
that would have been determined (net of amor-
tisation or depreciation) had no impairment loss
been recognised for the asset in prior years.
Receivables
Receivables are measured at amortised cost.
Write-down is made for bad debt losses when
there is objective evidence that a receivable or
a portfolio of receivables has been impaired. If
there is objective evidence that an individual re-
ceivable has been impaired, write-down is made
on an individual basis.
Inventories Inventories are valued at the lower of cost and
net realisable value. Cost is determined an a
fi rst-in, fi rst-out (FIFO) basis, Net realisable
value is the estimated selling price in the ordi-
nary course of business, less applicable variable
selling expense. Costs of bunkers include the
transfer from equity to profi t and loss on quali-
fying cash fl ow hedges.
Cash and cash equivalents Cash and cash equivalents in the balance sheet
comprise cash at bank and in hand and short-
term deposits with an original maturity of three
months or less.
Statement of changes in equityDividends
Dividends are recognised as a liability at the
date when they are adopted at the annual gen-
eral meeting (declaration date). The proposed
dividend payment for the year is disclosed as
a separate item under equity. Interim dividends
are recognised as a liability at the date when the
decision to pay interim dividends is made.
Treasury share
The acquisition and sale of treasury shares and
dividends thereon are taken directly to retained
earnings under equity.
Translation reserve
The translation reserve comprises foreign ex-
change differences arising on translation of
fi nancial statements of entities that have a
functional currency different from USD. On full
or partial realisation of the net investment, the
foreign exchange adjustments are recognised in
the income statement.
Hedging reserve
The hedging reserve comprises the cumulative
net change in the fair value of hedging transac-
tions that qualify for recognition as a cash fl ow
hedge and where the hedged transaction has
not been realised.
Treasury shares received from Parent
Treasury shares received from Parent without
any kind of service etc. is rendered, are recog-
nised directly on equity.
ProvisionsProvisions are recognised when Eitzen Bulk
Shipping A/S has a present obligation (legal or
constructive) as a result of a past event, it is
probable that the obligation has to be settled
and that a reliable estimate of the obligation
can be made.
Financial liabilitiesOther liabilities, including trade payables, paya-
bles to related parties as well as other paya-
bles, are measured at amortised cost, which
corresponds to the net realizable value in all
essentials.
Notes to the Financial Statements
40 | Annual Report 2009 | Notes to the Financial Statements
LeasesAll signifi cant leases are classifi ed as opera-
tional lease. The payments (time-charter hire
or bare boat hire) are recognised as an expense
and charged to profi t or loss on a straight line
basis over the term for the lease.
Deferred taxAll signifi cant Danish entities within the Group
entered into the Danish tonnage taxation
scheme for a binding 10 year period with effect
from 1 January 2007. Under the Danish tonnage
taxation scheme, taxable income is not calcu-
lated on the basis of income and expenses as
under the normal corporate taxation. Instead,
taxable income is calculated with reference to
the tonnage used during the year. The taxable
income for a company for a given period is cal-
culated as the sum of the taxable income from
the activities under the tonnage taxation scheme
and the taxable income from the activities that
are not covered by the tonnage taxation scheme
made up in accordance with the ordinary Danish
corporate tax system.
If the participation in the Danish tonnage taxa-
tion scheme is abandoned, or if the entities level
of investment and activity is signifi cant reduced,
a deferred tax liability will become payable. The
deferred tax liability related to vessels is meas-
ured on the basis of the difference between the
tax value of the vessels at the date of entry into
the tonnage taxation scheme and the lower of
the cost and the realized or realizable sales
value of the vessels.
In regarding to the taxable income made up in
accordance the ordinary corporate tax system
a deferred tax is recognized in each period end
and is accounted for using the balance sheet
liability method, Deferred tax assets, including
the tax value of tax loss carryforwards, are rec-
ognised under other non-current assets at the
expected value of their utilisation; either as a
set-off against tax on future income or as a set-
off against deferred tax liabilities in the same
legal tax entity and jurisdiction.
Deferred tax assets and liabilities are offset if
the Company has a legally enforceable right to
set off current tax liabilities and tax assets or
intends either to settle current tax liabilities and
tax assets on a net basis or to realise the assets
and settle the liabilities simultaneously.
Share based paymentThe Executive management and employees
participate in a share-based payment program,
where the employees are granted share op-
tions. The program does not provide the choice
of cash settlement instead of shares. The fair
value of the shares and options are measured at
the grant date and is recognised in the income
statement as under administration expenses
over the vesting period. The counter item is rec-
ognised in equity. The fair value is based on the
Black-Schools model.
Cash fl ow statementThe cash fl ow statement shows the cash fl ows
from operating, investing and fi nancing activities
for the year, the year’s changes in cash and cash
equivalents as well as cash and cash equiva-
lents at the beginning and end of the year.
Cash fl ows from operating activities are calcu-
lated according to the indirect method as the
profi t/loss before tax adjusted for non-cash
operating items, changes in working capital,
interest, payments, dividends and income taxes
paid.
Cash fl ows from investing activities comprise
payments in connection with acquisitions and
disposals of businesses and of intangible as-
sets, property, plant and equipment and other
non-current assets as well as acquisition and
disposal of securities not classifi ed as cash and
cash equivalents.
Cash fl ows from fi nancing activities comprise
changes in the share capital and related costs
as well as the raising of loans, repayment of
interest-bearing debt, acquisition and disposal
of treasury shares and payment of dividends to
shareholders.
Cash and cash equivalents comprise cash and
short-term marketable securities with a term
of three months or less at the acquisition date
which are subject to an insignifi cant risk of
changes in value.
Cash fl ows in other currencies than the func-
tional currency are translated using average ex-
change rates unless these deviate signifi cantly
from the rate at the transaction date.
Notes to the Financial Statements
Notes to the Financial Statements | Annual Report 2009 | 41
Note 2 Signifi cant accounting judgment, estimates and assumptions
The preparation of the Group’s consolidated
fi nancial statements requires management to
make judgments, estimates and assumptions
that affect the reported amounts of revenues,
expenses, assets and liabilities and the disclo-
sure of contingent liabilities, at the end of the
reporting period. However, uncertainty about
these assumptions and estimates could result
in outcomes that require a material adjust-
ments to the carrying amounts of asset and li-
ability affected in future periods.
JudgmentsIn the process of applying Eitzen Bulk Shipping
A/S’s accounting policies, management has
made the following judgments which have the
most signifi cant effect on the amounts recog-
nised in the fi nancial statements.
Hedge accounting
In connection with forward freight agreements
(FFA’s), purchase of bunkers and currencies Ei-
tzen Bulk Shipping A/S uses hedge accounting.
Several qualifi cations have to be met before a
hedge is qualifi ed as hedge accounting. One of
the qualifi cations is that the hedge is expected
to be highly effective. If a hedge is subsequently
measured as ineffective, and therefore deviates
from the original judgment, the result must
be carried to profi t and loss immediately. This
could result in a dislocation of the result from
one accounting year to another.
Operational versus fi nancial lease of vessels
Based on the contents of the lease agreements
it is determined if the lease is considered as an
operational or a fi nancial lease agreement. In
this determination, assumptions are made, that
is same were judged differently, it could have
an effect on the income statement and the bal-
ance sheet. The most signifi cant judgment is
the forecasted future market value of the ves-
sel at the dates where the purchase options can
be utilized.
Estimates and assumptionsThe key assumptions concerning the future and
other key sources of estimation uncertainty at
the reporting date, that have a signifi cant risk
of causing a material judgment to the carrying
amount of assets and liabilities within the next
fi nancial year are discussed below.
Impairment new building contracts
Eitzen Bulk Shipping A/S assesses at each re-
porting date whether there is indications of
impairment. If any indication exists or when an-
nual impairment testing for an asset is required,
Eitzen Bulk Shipping A/S estimates the assets
recoverable amount.
The recoverable amount is measured using the
highest of the fair value less cost to sell or value
in use approach, and impairment is charged if
the highest of the fair value less cost to sell or
value in use is less than the carrying amount of
the assets. The fair value less cost to sell is es-
timated based on two independent broker valu-
ations and historical sale price in the present
market conditions. The broker valuations and
sale prices will give a range for what is expected
to be the fair value of the assets. The exact
value used to measure the impairment charges
is encumbered with uncertainty and is based on
what the Company believes is the best estimate
of the fair value. The value in use is calculated
as the present value of the total expected cash
fl ows during the rest of the vessels economic
lives including entered COAs, time charters and
by using estimated rates on the basis of histori-
cal data for uncovered capacity.
Onerous contract
At each balance sheet date Eitzen Bulk Shipping
A/S assesses if there are contracts in which the
unavoidable costs of meeting the obligations
under the contract exceed the economic ben-
efi ts expected to be received. These are defi ned
as onerous contracts. Eitzen Bulk Shipping A/S
assesses the contracts as a total value within
the separate segments. If the contracts within
the separate segments are onerous, the present
obligation under the contract will be measured
and recognised as a provision.
Notes to the Financial Statements
42 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 3 – Business segment reporting
Year ended 31 December 2009 Business segments Adjustments
and
(USD ‘000) Operator Shipholding eliminations Total Group
Condensed income statement Freight income 376,029 0 0 376,029
Inter-segment revenue 0 20,206 -20,206 0
Voyage related expenses -104,966 -145 0 -105,111
Charter hire -233,658 -12,086 20,206 -225,538
Sale of goods and other income 110 4 0 114
Gross profi t (net earnings from shipping activities) 37,515 7,979 0 45,495
Profi t before depreciation etc. (EBITDA) 14,886 6,015 -160 20,741
Profi t/loss on sale of vessel etc. 0 0 0 0
Depreciation -441 -4 0 -445
Operating profi t (EBIT) 14,445 6,011 -160 20,296
Condensed balance sheet Total non-current assets 26,419 6,707 -13,264 19,862
Total assets 96,809 15,225 -9,284 102,750
Total liabilities 69,350 8,770 -1,143 76,977
Year ended 31 December 2008 Business segments Adjustments
and
(USD ‘000) Operator Shipholding eliminations Total Group
Condensed income statement Freight income 841,333 0 -3,026 838,307
Inter-segment revenue 0 21,413 -21,413 0
Voyage related expenses -116,736 -54 0 -116,790
Charter hire -678,699 -6,553 22,685 -662,567
Sale of goods and other income 142 35 -35 142
Gross profi t (net earnings from shipping activities) 46,040 14,841 -1,789 59,092
Profi t before depreciation etc. (EBITDA) 21,826 13,861 -2,022 33,665
Profi t/loss on sale of vessels etc. 0 49,542 0 49,542
Depreciation -751 -17 0 -768
Operating profi t (EBIT) 21,075 63,386 -2,022 82,439
Condensed balance sheet Total non-current assets 85,488 6,698 7,735 99,921
Total assets 228,743 20,363 -9,917 239,189
Total liabilities 176,154 7,018 -1,776 181,396
Adjustments and eliminations in the condensed income statement are mainly due to elimination of inter-segment revenues and cost. The condensed
income statement is reconciled to profi t before fi nancial items and tax. These items are managed on group basis. The Group provides information on op-
erating assets and liabilities. The remaining operations, which amongst other are refl ected in adjustment and eliminations, do not constitute an individual
operating segment.
Transfer prices between the business segments are set on arm´s length basis in a manner similar to transactions with third parties. Segment revenue,
segment expenses and segment results include transfers between business segments. Those transfers are eliminated in the consolidation.
Notes to the Financial Statements | Annual Report 2009 | 43
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 4 – Fees to auditor appointed at the annual general meeting Audit 271 94
Other assurance service 0 0
Tax consultancy 0 0
Other services 245 107
Total 516 201
Note 5 – Staff costsFixed salaries 6,636 7,854
Pensions - defi ned contribution plan 261 433
Other expenses for social security etc. 1,045 880
Cash bonus (profi t split) 1,281 20,127
Share-based payments 8,239 0
17,462 29,294
Staff costs included in administration expenses 17,462 16,990
Staff costs included in gain on sale of vessels 0 12,304
17,462 29,294
Average number of employes 52 58
2009 2008
Board of Executive Board of Executive
(USDm) Directors Management * Directors Management
Remuneration for the Management Fixed salaries 0 323 0 299
Other expenses for social security etc. 0 1 0 1
Cash bonus (profi t split) 0 172 0 2,745
Share-based payment 0 1,167 0 0
Total remuneration for the Board of directors and executive management 0 1,663 0 3,045
*Bjarne Skov Faber was appointed CFO and member of the executive management as from 6 November 2009.
The executive management and a number of the executives are covered by a bonus scheme. The bonus scheme is based upon 5% of the profi t before tax
in the operator segment. For a description of the share-based payment please refer to note 35.
The members of the executive management are subject to a notice of up to 18 months and can resign from management with a notice up to 9 month.
No severance payment applies.
(USD ‘000) 2009 2008
Note 6 – DepreciationDepreciation vessels 0 231
Depreciation fi xtures, fi ttings and equipment 445 537
Total 445 768
44 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 7 – Financial income
Bank interest receivable 149 1,066
Other interest income 1,182 3,330
Total 1,331 4,396
Note 8 – Financial expenses
Interest on debt and borrowings 1 0
Interests on leasing debt 23 37
Other interest expenses 188 791
Total 211 828
Note 9 – Other fi nancial itemsForeign exchange gain 3,775 1,927
Derivate fi nancial instruments, not designated as hedge 456 318
Other fi nancial income 0 32
Other fi nancial income 4,231 2,277Foreign exchange loss -2,208 -1,855
Derivate fi nancial instruments, not designated as hedge -318 0
Other fi nancial expenses -131 -527
Other fi nancial expenses -2,657 -2,382Total 1,574 -105
Note 10 – TaxCurrent tax on profi t for the year -156 1,551
Deferred tax on profi t for the year 3,014 -7,943
Tax on profi t for the year 2,858 -6,392Adjustments related to previous years - current tax 0 0
Adjustments related to previous years - deferred tax 800 0
Tax in the income statement 3,658 -6,392
Computation of effective tax rate:
Statutory corporate income tax rate in Denmark 25.0 25.0
Effects from Tonnage Tax Scheme -4.4 -33.1
Effects of adjustments related to prior years -3.5 0.0
Deviation in foreign subsidiaries' tax rates compared to the Danish tax rate (net) -5.9 0.4
Effects of share purchase program 4.7 0.0
Non-tax income less non-tax deductible expenses (net) 0.2 0.3
Effective tax rate 16.1 -7.4
Tax on fair value adjustments on fi nancial instruments 836 -819
Tax relating to other comprehensive income 836 -819
Notes to the Financial Statements | Annual Report 2009 | 45
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 11 – Earnings per shareNet profi t for the year 19,037 92,769
Profi t attributable to the minority -147 -156
Profi t attributable to the equity holders of the parent 18,890 92,613
Average number of shares outstanding 24,638,502 24,638,502
Average number of treasury shares -47,252 0
Average number of shares 24,591,250 24,638,502
Dilutive effect of share options 61,838 0
Weighted average number of ordinary shares adjusted for the effect of dilution 24,653,088 24,638,502
Basic earnings per share USD 0.77 3.76
Diluted earnings per share USD 0.77 3.76
Note 12 – Owned vessels
Cost: Cost at 1 January 0 0
Additions through merger with Shipholding Holding A/S 0 0
Exchange adjustment 0 0
Additions for the year 0 40,733
Disposals for the year 0 -40,733
Cost at 31 December 0 0
Depreciation and impairment at 1 January 0 0
Additions merger with Shipholding Holding A/S 0 0
Exchange adjustment 0 0
Depreciation for the year 0 -231
Impariment for the year 0 0
Reversed depreciation and impairment for the year 0 231
Depreciation and impairment at 31 December 0 0
Carrying amount at 31 December 0 0
Note 13 – New building contracts
Cost: Cost at 1 January 6,695 0
Additions through merger with Shipholding Holding A/S 0 3,105
Exchange adjustment 0 0
Additions for the year 0 3,590
Disposals for the year 0 0
Transferred during the year to vessels 0 0
Cost at 31 December 6,695 6,695
Impairment at 1 January 0 0
Exchange adjustment 0 0
Impariment for the year 0 0
Transferred during the year to vessels 0 0
Impairment at 31 December 0 0
Carrying amount at 31 December 6,695 6,695
46 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 14 – Fixtures, fi ttings and equipmentCost:
Cost at 1 January 5,924 0
Additions through merger with Shipholding Holding A/S 0 6,065
Exchange adjustment 0 0
Additions for the year 397 37
Disposals for the year -178
Cost at 31 December 6,321 5,924
Depreciation and impairment at 1 January -4,868 0
Additions merger with Shipholding Holding A/S 0 -4,466
Exchange adjustment 0 0
Depreciation for the year -445 -537
Impairment for the year 0 0
Reversed depreciation and impairment for the year 0 135
Depreciation and impairment at 31 December -5,313 -4,868
Carrying amount at 31 December 1,008 1,056
Note 15 – Investments in associatesCost:
Cost at 1 January 2,572 0
Additions through merger with Shipholding Holding A/S at 1 January 2009 0 2,800
Exchange adjustment 646 -228
Additions for the year 0 0
Disposals for the year 0 0
Cost at 31 December 3,218 2,572
Value adjustment at 1 January 475 0
Exchange adjustment 0 0
Share of the result for the year -295 475
Reversed value adjustments on disposals for the year 0 0
Dividends paid -504 0
Value adjustment at 31 December -324 475
Carrying amount at 31 December 2,894 3,047
The carrying amount can be specifi ed as follows:
Pérola S.A., interest 20,41% 2,894 3,047
Key fi gures for investment in associates:
Assets 15,028 13,602
Liabilities -3,340 -3,415
Net assets 11,688 10,187
Revenues 5,762 1,679
Profi t/loss 1,447 2,327
Notes to the Financial Statements | Annual Report 2009 | 47
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 16 – Other fi nancial assets, non-currentLoan to Camillo Eitzen & Co. ASA 0 47,294
Other 210 198
Total 210 47,492
The loan to Camillo Eitzen & Co ASA has been distributed as a non-cash distribution to the owners in connection with
the restructuring process of the ultimate parent and the establishment of Eitzen Bulk Shipping Group. Further to the
distribution of the loan above including accumulated interest for 2009 approximately 9.1 MUSD has been distributed
to the ultimate parent in 2009.
Note 17 – InventoriesBunker (at cost) 8,332 3,482
Total inventories at lower of cost and net realisable value 8,332 3,482
Bunker expenses recognised in profi t and loss 76,720 77,577
Part of the bunker consumption has been hedged in accordance with the Groups risk management policy.
This is described in note 27.
Note 18 – Trade and other receivables (current)Customers (trade receivables) 8,669 6,599
Accrued income (trade receivables) 10,315 2,541
Other receivables 10,843 5,612
Total 29,827 14,751
Trade receivables are non-interest bearing and are generally of 5 - 30 day terms.
Trade receivables neither impaired nor past due on the reporting date 0 0
Trade receivables not impaired on the reporting date and past due in the
following periods:
- less than 30 days 5,396 4,118
- between 30 and 60 days 3,273 2,481
Carrying amount of trade receivables 8,669 6,599
Trade receivables at initial value impaired and fully provided for 1,073 443
Note 19 – PrepaymentsCharter hire 7,396 4,222
Insurance 2,737 2,704
Others 240 155
Total 10,374 7,081
Note 20 – Cash and cash equivalentsCash at bank and in hand 20,254 60,295
Bank deposits 4,552 5,757
Total 24,806 66,052
48 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 21 – Share capital
Number
of shares DKK'000 USD'000
2004 and before 2,500,000 25,000 4,196
2005 2,500,000 25,000 4,196
2006 2,500,000 25,000 4,196
2007 2,500,000 25,000 4,196
At 1 January 2008 2,500,000 25,000 4,196Increase of share capital through merger with Shipholding Holding A/S 22,138,502 221,385 42,745
At 1 January 2009 24,638,502 246,385 46,941At 31 December 2009 24,638,502 246,385 46,941
No shares confer any special rights upon its holder. No restrictions have been imposed on the negotiability of the shares or on voting rights. All issued
shares are fully paid. Distribution of dividends to shareholders of Eitzen Bulk Shipping A/S has no taxable consequences for Eitzen Bulk Shipping A/S. No
dividend is proposed distributed at the general meeting at 21 April 2010.
The general meeting at 21 December 2009 has adopted a resolution concerning reduction of the share capital by the nominal amount of 221,746,518 DKK
to be allocated to a separate fund, which may only be applied pursuant to a resolution by the general meeting. The capital reduction has been applied
after the expiry of the three month notice period.
(USD ‘000) 2009 2008
Note 22 – Treasury shares
Number of treasury shares Holding at the beginning of the year 0 0
Treasury shares received from Parent 2,463,850 0
Sale during the year 0 0
Number of treasury shares at the end of the year 2,463,850 0
Treasury shares as a % of share capital at the end of the year 10.0 0
The treasury shares are related to the adoption of a share option program for the management and employees in the Group.
The treasury shares are regarded as hedges for the share option program.
Note 23 – Provisions
Provisions - onerous contracts, non-current 0 7,422
Provisions - onerous contracts, current 8,422 26,510
Total 8,422 33,932
Provisions at 1 January 33,932 1,000
Applied for the year -25,510 0
Provisions for the year 0 32,932
Provisions at 31 December 8,422 33,932
Notes to the Financial Statements | Annual Report 2009 | 49
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 24 – Deferred taxAt 1 January 7,790 56
Additions through merger with Shipholding Holding A/S at 1 January 2009 0 -939
Deferred tax on profi t for the year -3,014 7,943
Adjustments related to previous years -800 0
Deferred tax on items recognised on other comprehensive income -836 819
Exchange rate adjustments -170 -89
Total deferred tax assets/-liabilities, net at 31 December 2,970 7,790
Deferred tax gross:
Deferred tax assets 2,970 7,790
Deferred tax liabilities 0 0
Total deferred tax assets/-liabilities, net at 31 December 2,970 7,790
Deferred tax are allocable to the various items in the balance sheet:
Tangible assets -1,649 -1,664
Provisions for doubtful trade and other receivable etc. 1,064 1,673
Provisions 250 250
Financial instruments -2,396 -19,502
Other liabilities 1,191 7,986
Tax-loss carried forward 3,510 19,047
Share-based payment programme 1,000 0
Deferred tax, net 2,970 7,790
Note 25 – Interest bearing loans and borrowingsLeasing debt, non-current 25 236
Leasing debt, current 248 248
Other interest-bearing loans and borrowings 0 430
Total 273 914
Note 26 – Financial liabilities, non-currentPayables to Group Entreprises 0 10,388
Total 0 10,388
50 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 27 – Financial risk management, o bjectives and polices
Risk management overviewGenerally the market conditions for shipping ac-
tivities are volatile and, as a consequence, the
company’s results may vary from year to year
and even from quarter to quarter. In addition,
the company is exposed to a number of differ-
ent fi nancial market risks arising from the com-
pany’s normal business activities.
MARKET RISKS
Freight ratesThe business model for an operator is to build a
portfolio of vessels on the one hand and a port-
folio of cargoes on the other. Depending on the
market expectations the company can decide on
being long on cargoes (typically when expecting
a decreasing market) or long on vessels (typi-
cally when expecting an increasing market).
Unexpected fl uctuation in freight rates is the
key factor affecting cash fl ow and the value of
committed assets. The level of risk depends
fi rstly on the level of such unexpected fl uctua-
tions and secondly on the size of the imbalance
between the commitment on cargoes and com-
mitment on vessels taken by the company.
Eitzen Bulk Shipping A/S’s business model is to
maintain a relatively balanced book building and
to constantly keep a strict control of the level of
exposure by utilising state of the art back offi ce
exposure systems, which allows the company
to timely adjust its book building.
Cargo coverage at end of 2009 was 86% on
the known ship days. A drop in freight rates of
40% at the end of 2009, would reduce expected
earnings before tax in 2010 by -4 MUSD, all
other things being equal.
Fuel PricesContracts of Affreightment (cargo contract
containing multiple cargoes) are based on fi xed
freight rates, which exposes the company to
fl uctuations on fuel prices.
The Company seeks to reduce the exposure
to fl uctuating bunker fuel prices through com-
pensation clauses in contracts with clients. On
contracts (CoA’s) where this is not possible the
Company use commodity based derivative to
reduce bunker exposure.
Counterparty riskThe company’s main credit risks are related
to its counterparty risk. The risk profi le is de-
termined by the counterparty’s solvency and
the type legal contract upon which the deal is
based.
Single cargoes
It is industry standard that freight payment is
made within very few days of departing from
the loading port. It is also an industry standard
that the vessel owner has a lien in the cargo,
should the freight payment not have been paid
prior to the arrival at the discharge port. The
counterparty risk on these types of deals is
therefore limited.
Contract of Affreightment (multiple cargoes)
It is important for Eitzen Bulk Shipping to care-
fully evaluate counterparty risk on CoA con-
tracts, as the company is highly dependent on
the counterparty’s solvency and its ability and
willingness to fulfi ll their obligations.
Approval of CoA counterparties is done on sen-
ior management level only, and involves the fol-
lowing elements:
• Positive credit rating report from a London
based maritime credit rating bureau
• Positive industry references
• Satisfactory performance on existing com-
mitments, if any, between Eitzen Bulk Ship-
ping and the counterpart
• Positive reference from the fuel purchase
market
Approval of counterparties may vary from one
cargo to multiple year contracts.
Timecharter out
Eitzen Bulk Shipping does only on a limited ba-
sis use ‘timecharter out’, however occasionally
Eitzen Bulk Shipping vessels are on shorter or
longer time charter to other ship operators. The
approval process is very similar to that outlined
above, with extra emphasis on positive industry
references.
Timecharter in
Although it is Eitzen Bulk Shipping paying hire to
the owners of the vessel, there is a risk that the
owners may default and the contract terminate
early. The loss of such charter may represent a
signifi cant risk, wherefore Eitzen Bulk Shipping
evaluates these types of contracts in line with
those of the CoAs and timecharter out.
Derivative fi nancial instruments are only en-
tered with highly rated fi nancial institutions,
which imply that the credit exposures for these
transactions are expected to be at an accept-
able level.
FINANCIAL RISKS
Forward Freight Agreements (FFA)Several contract types are being offered in the
derivatives market, Eitzen Bulk Shipping how-
ever only utilizes SWAPs.
FFAs are utilised both as an instrument for
hedge and speculation, for cargo as well as
vessel commitments. The company utilises
extensive risk management systems in order
to control the market value of all open posi-
tions. Based on the risk systems, the company
is able to monitor the market position on a daily
basis. The strategy is that the overall maximum
exposure, i.e. FFAs and physical commitments
in monetary terms, is directed by the Board of
Directors and is furthermore not exceeding 20
percent of the anticipated physical activity with-
out prior approval of the Board of Directors. As
a rule, the FFA exposure in non-hedge related
deals are not to exceed fi ve net trading years.
Set out below is the exposure. The percentages
are measured as unfi xed CoA cover of commit-
ted vessel days as of December 31, 2009, i.e. the
percentage of vessel days which does not have
any income as of December 31, 2009.
Interest rate risk exposure Interest rate and currency risks are moderate
fi nancial risks for Eitzen Bulk Shipping. Man-
agement periodically reviews and assesses the
primary fi nancial market risks. Eitzen Bulk Ship-
ping will use fi nancial derivates to manage such
risks. These may include interest rate swaps,
forwards contracts and options.
The Company’s exposure to interest rate risk is
insignifi cant as the company continues to have
no loans to fi nancial institutions.
Notes to the Financial Statements | Annual Report 2009 | 51
Notes to the Financial Statements
Currency risk The company’s reporting currency is USD. Most
of the company’s revenues and expenses are de-
nominated in USD. The company has no owned
vessels, but will as part of the new building
program own one vessel from 2011. The com-
pany’s strategy is to fi nance the vessels in the
same currency as the vessels receive income.
As a consequence, the vessel is expected be fi -
nanced in USD. The newbuilding is contracted in
Japanese Yen, but at the moment the company
has not entered into any currency hedges to
mitigate the exposure. The company may use fi -
nancial derivatives to reduce the net operational
currency exposure.
Currency risks on administrative expenses have
been hedged for a period of 6 month corre-
sponding to 1.5 MUSD.
Liquidity exposure It is the company’s objective to maintain a bal-
ance between continuity of funding and fl ex-
ibility through the usage of available bank fa-
cilities, either in the form of overdraft facilities,
or through revolving credit facilities. Currently,
funding from bank facilities is not needed. The
company’s surplus liquidity is placed in bank
accounts with interest on deposits, or through
term deposits.
Capital management The primary objective of the Company’s capi-
tal management is to ensure that it maintains
an adequate capital ratio in order to support
its business and maximise shareholder value.
Eitzen Bulk Shipping manages its capital struc-
ture and makes adjustments to it, in light of
changes in economic conditions. To maintain or
adjust the capital structure, the company can
acquire own shares, make dividend payment to
shareholders, return capital to shareholders or
issue new shares.
OTHER RISKS
EnvironmentThe vessels controlled by Eitzen Bulk Shipping
are chartered and therefore the majority of risk
in connection with environmental issues rests
the owner of the vessel. There are however
situations, whereby Eitzen Bulk Shipping may
become liable for spills or other environmental
impacts. Eitzen Bulk Shipping has an insurance
against these types of accidents limited to USD
350 million for each single incident.
PiracyPiracy has become an integral part of the Soma-
lian economy, and the risks encountered trans-
iting Somalian waters are substantial. It is the
policy of the company that transit within 600
NM of the coast of Somalia is subject to Man-
agement approval. The company is constantly
following the recommendations made by the
UN subsidiary International Maritime Organisa-
tion (IMO), and the recommendations made by
the underwriters.
52 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 28 – Trade and other payables (current)Trade payables 23,286 14,199
Prepaid income 1,105 2,872
Accrued expenses 4,267 388
Other payables 16,010 14,340
Payable profi t-split Eitzen Bulk key employees 1,281 20,127
Total 45,949 51,926
Terms and conditions of the above fi nancial liabilities: • Trade payables are non-interest bearing and are normally settled on 30 days terms.
• Other payables are non-interest bearing and have an average term of six months.
• Payable profi t-split are normally settled after the approval of the annual report at the general meeting.
Note 29 – Operating lease commitmentsLease agreements have been entered into with a mutually interminable lease period up to 10 years. As a general rule,
leases include an option to renew for one additional year a time for up to three years. The lease agreements include
a purchase option, typically exercisable as from the end of the fi fth year to the expiry of the period of renewal. Exercise
of the purchase option on the individual vessel is based on an individual assessment.
Charter hire for vessels with purchase option, not delivered Falling due within one year 1,535 0
Falling due between one and fi ve years 202,555 138,697
Falling due after fi ve years 595,642 672,059
Total 799,732 810,756
Eitzen Bulk Shipping has purchase options on all 17 operational leases however the majority of such purchase options are partly shared. The table below
illustrates the earliest possible time of declaration of the purchase option:
Year of earliest possible declaration of purchase option Segment 2012 2013 2014 2015 2016 2017 2018 2019 Total
Handy size 1 1 2
Supramax 1 1 2 1 6 1 2 14
Panamax 1 1
1 1 0 2 2 7 2 2 17
(USD ‘000) 2009 2008
Charter hire for vessels on timecharter with purchase option, delivered Falling due within one year 7,650 7,756
Falling due between one and fi ve years 21,898 25,506
Falling due after fi ve years 5,487 9,424
Total 35,035 42,685
Charter hire for vessels on timecharter without purchase option Falling due within one year 92,921 64,452
Falling due between one and fi ve years 6,795 27,008
Falling due after fi ve years 0 0
Total 99,716 91,460
Other leases (operational lease) Falling due within one year 1,486 588
Falling due between one and fi ve years 1,614 1,578
Falling due after fi ve years 0 0
Total 3,100 2,166
* Other operating leases include premises, cars and photocopier
Notes to the Financial Statements | Annual Report 2009 | 53
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 30 - Contingent assets and liabilities
Contingent assetsFollowing a customer default to perform under a three year Contract of Affreightment, Eitzen Bulk Shipping initiated
arbitration against the customer. An arbitration award was made in favor of Eitzen Bulk Shipping in the amount of 36.4
MUSD. The claim is to be enforced. At this point in time, Eitzen Bulk Shipping cannot predict how long the enforcement
will take or when the company will be able to provide additional information.
Contingent liabilitiesA vessel captured by Pirates in the Gulf of Aden mid 2008, was back in the about same position as captured later same
year. The ship owner has initiated arbitration of 12.2 MUSD against Eitzen Bulk Shipping. The claim relates to compen-
sation for off-hire and expenses in relation to the prolonged piracy incident. At this point in time, Eitzen Bulk Shipping
cannot predict how long the investigation will take or when the company will be able to provide additional information.
In addition to the above, Eitzen Bulk Shipping is engaged in certain litigation proceedings. In the opinion of management,
settlement or continuation of these proceedings are not expected to have a material effect on Eitzen Bulk Shipping’s
fi nancial position, operating profi t or cash fl ow.
New building commitmentsAgreements for future delivery of newbuildings Remaining contract amount until delivery in local currency (JPY) 3,040,000 3,040,000
Remaining contract amount until delivery in USD translated at the exchange rate at year end 32,832 33,744
The remaining contract amounts in USD is payable as follows:
With in one year 0 0
Between one and two years 32,832 33,744
Total 32,832 33,744
Note 31 – Financial instruments
Carrying amount and fair value of fi nancial items by class of fi nancial assets and liabilitiesSet out below is a decomposition of the fi nancial assets into categories as defi ned in IAS 39. Furthermore, the table below includes a comparison of the
carrying amount and fair value of fi nancial assets by class of assets.
Judgment is required to develop estimates of fair value. Hence, the estimates provided herein are only indicative of the amounts that could be realised
in the market.
54 | Annual Report 2009 | Notes to the Financial Statements
Note 31 – Financial instruments (continued)
31 December 2009 Held for trade
(Hedge Loan and Available Carrying Fair
(USD ‘000) derivatives) receivables for sale amount value
Other fi nancial assets - 210 - 210 210
Other investments 645 645 645
Derivate fi nancial instruments 5,440 - - 5,440 5,440
Total non-current fi nancial assets 5,440 210 645 6,295 6,295
Cash and short-term deposits - 24,806 - 24,806 24,806
Derivate fi nancial instruments 9,549 - - 9,549 9,549
Trade and other receivables - 29,827 - 29,827 29,827
Prepayments - 10,374 - 10,374 10,374
Total current fi nancial assets 9,549 65,007 - 74,556 74,556 Total fi nancial assets 14,989 65,217 645 80,851 80,851
Leasing debt - 25 - 25 25
Derivative fi nancial instruments 9,800 9,800 9,800
Total non-current fi nancial liabilities 9,800 25 - 9,825 9,825
Trade and other payables - 45,949 - 45,949 45,949
Leasing debt, current portion - 248 - 248 248
Derivate fi nancial instruments 12,378 - - 12,378 12,378
Total current fi nancial liabilities 12,378 46,197 - 58,575 58,575
31 December 2008 Held for trade
(Hedge Loan and Available Carrying Fair
(USD ‘000) derivatives) receivables for sale amount value
Other fi nancial assets - 47,492 - 47,492 47,492
Other investments 437 437 437
Derivate fi nancial instruments 33,404 - - 33,404 33,404
Total non-current fi nancial assets 33,404 47,492 437 81,333 81,333
Cash and short-term deposits - 66,052 - 66,052 66,052
Derivate fi nancial instruments 47,902 - - 47,902 47,902
Trade and other receivables - 14,751 - 14,751 14,751
Prepayments - 7,081 - 7,081 7,081
Total current fi nancial assets 47,902 87,884 - 135,786 135,786 Total fi nancial assets 81,306 135,376 437 217,119 217,119
Leasing debt - 236 - 236 236
Derivate fi nancial instruments 33,524 33,524 33,524
Other non-current liabilities - 10,388 - 10,388 10,388
Total non-current fi nancial liabilities 33,524 10,624 - 44,148 44,148
Trade and other payables - 51,926 - 51,926 51,926
Leasing debt, current portion - 678 - 678 678
Derivative fi nancial instruments 49,161 - - 49,161 49,161
Total current fi nancial liabilities 49,161 52,604 - 101,765 101,765
Notes to the Financial Statements
Notes to the Financial Statements | Annual Report 2009 | 55
Notes to the Financial Statements
Note 31 – Financial instruments (continued)
Bunker hedgeEitzen Bulk Shipping A/S has entered into contracts in order to hedge future bunker expenses. The contracts are accounted for as cash fl ow hedges, when
the criteria are in compliance with the criteria for cash fl ow hedge accounting.
The bunker hedges are entered simultaneously with the Contracts of Affreightment (CoA), as part of the Group’s risk management. The bunker hedges
cover the bunker expenses in connection with the CoA and the duration of the bunker hedge is therefore similar to the duration of the CoA. The remaining
durations of the bunker hedge agreements as per 31 December 2009 are between one and 12 months at an average price between USD 285 and USD
518 per MTS. The trade dates are between 11 July 2005 and 17 December 2009.
Currency derivatives Risk related to general and administration expenses
The Board of Eitzen Bulk Shipping A/S has agreed to hedge 50 per cent of the currency risk related to the budgeted general and administration expenses
in Denmark (DKK) for 2010. The exposure was hedged in February 2010 through foreign exchange forward contracts.
Hedge accounting reserve in equity The following table sets out the recorded amount in the equity for the cash fl ow hedging fi nancial derivatives:
Bunker Foreign Total
hedge currency reserve
Balance 31.12.2007 1,236 396 1,632Recorded to equity - -885 -885
Removed from equity and incl. in income statement -2,194 - -2,194
Removed from equity and incl. in balance sheet -58 - -58
Balance 31.12.2008 -1,016 -489 -1,506Recorded to equity 833 833
Removed from equity and incl. in income statement -1,035 - -1,035
Removed from equity and incl. in balance sheet 3,501 - 3,501
Balance 31.12.2009 1,450 344 1,794
The main part of the bunker hedge reserve is expected to be recorded through profi t and loss within the next year.
Effect of hedge accounting in the income statement (- expense) Forward
Bunker Freight Total
hedge agreement reserve
2009 Voyage related expenses 1,035 - 1,035
Charter hire (hedging instrument) - -28,560 -28,560
Charter hire (hedging item) - 31,601 31,601
Net effect of hedge accounting in the income statement 1,035 3,041 4,076
Bunker Freight Total
hedge agreement reserve
2008 Voyage related expenses 2,194 - 2,194
Charter hire (hedging instrument) - -28,468 -28,468
Charter hire (hedging item) - 26,237 26,237
Net effect of hedge accounting in the income statement 2,194 -2,231 -37
56 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 31 – Financial instruments (continued)
Fair value hedge (Forward Freight Agreement) Gain(loss) on hedging instruments -11,776 -80,415
Gain(loss) on hedging items 12,586 78,184
Net gain (loss) on fair value hedge 810 -2,231
Eitzen Bulk Shipping has entered into Forward Freight Agreement contracts in order to hedge future Contracts of
Affreightment / Time Charter contracts for the period 2010 to 2011. The Forward Freight Agreement contracts are
accounted for as fair value hedges using the principles of a fi rm commitment when the criteria are in compliance with
the criteria for fair value hedge accounting.
The ineffective part of the hedge has been recorded as a gain and loss in the profi t and loss account.
Note 32 – Change in net working capitalChange in inventories -4,849 5,133
Change in trade and other receivables -14,672 -12,467
Change in prepayments -3,294 14,600
Change in trade and other payables -3,051 -9,400
Total -25,866 -2,134
Note 33 – Mortgages and securityThe group has not issued any form of guarantees or securities.
Notes to the Financial Statements | Annual Report 2009 | 57
Notes to the Financial Statements
Note 34 – Related party transactionsEitzen Bulk Shipping A/S is controlled by Eitzen Bulk (Denmark) A/S (incorporated in Denmark), which owns 81,04% of the shares in Eitzen Bulk Shipping
A/S. Please refer to page 25 in the management review for further information regarding shareholders. The ultimate parent of the Group is Camillo Eitzen
& Co ASA (incorporated in Norway) and listed on Oslo Stock Exchange.
Other related parties are considered to be companies within Camillo Eitzen & Co Group, associated companies, the directors and offi cers of the entities
and management of Eitzen Bulk Shipping A/S.
The Group has the following material transactions with related parties:
Sale/ Sale/
(Purchases) (Purchases) Amounts Amounts
to/from to/from owed by/(to) owed by/(to)
(USD ‘000) related parties related parties related parties related parties
Related party Type of transaction 2009 2008 2009 2008
The ultimative parent and subsidiaries hereof
Eitzen Holding AS Group Corporate administration - - -
Eitzen Bulk (Denmark) A/S Treasury shares 17,721 -
Eitzen Bulk (Denmark) A/S Distribution of non-cash assets -47,800 -
Companies which are part of the
Eitzen Holding AS Group:
Eitzen Holding AS and subsidiaries Corporate administration 924 1,753
Corporate administration -47 -
Advisory fee 1,280 1,000
Interest income -602 -2,907 47,294
Interest expenses 17 - (10,388)
Purchase of shares -80,058 -
IT services 346 318 -
Rent 451 316 -
Others:
Gorrissen Federspiel Legal assistance 464 6
There have not been any material transactions with any member of the board of directors, executive management of Eitzen Bulk Shipping A/S, Camillo
Eitzen & Co Group, or associated companies. For information on remuneration to the board of directors and executive management of Eitzen Bulk Ship-
ping A/S, please refer to note 5.
Transactions with related parties are made at normal market prices. Outstanding balances at year-end apart from loans are short-term, unsecured, inter-
est free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. The Group has
not made any provision for doubtful debts relating to amounts owed by related parties. The assessment hereof is undertaken each fi nancial year through
examining the fi nancial position of the related party and the market in which the related party operates.
Joint taxation
The Danish companies in the Group are in jointly taxation with the other Danish companies in Eitzen Holding AS Group.
58 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 35 – Share-based payment
Share options program - 2009The Board of Directors approved 22 December 2009 a share options program following the listing on Nasdaq OMX Copenhagen 21 December 2009. Key
employees were 22 December 2009 granted 2,537,766 share options corresponding to 10.3% of the total number of outstanding shares. The company
holds 10% of treasury shares as a hedge for the share option program.
The share options will be vested with 50% in 2009, 25% in 2010 and 25% in 2011, and can be exercised in the period from 1 March 2010 through 31 March
2016 on a 4 year rolling basis. The exercise price for the share options is 1% of the market price for the Company’s shares at the time the share options
are granted to the holder corresponding to a price per share of 37.5 DKK. The estimated theoretical fair value of the Share Option Scheme is assessed to
be 16.5 MUSD. The expense recorded in income statement for the year 2009 is 8.2 MUSD, corresponding to number of options vested in 2009.
The only vesting condition mentioned in the Agreement is a service condition. The Agreement states in the event that an employee terminates his em-
ployment or the Company terminates the employment due to the employee’s breach, then the options that have not already vested are forfeited. On the
other hand, if employment is terminated for other reasons or if an employee retires, the options are still expected to vest as stated above
The Board of Directors may at its sole discretion offer the employees the opportunity to elect cash settlement instead of early exercise of the options
following certain events.
Outstanding share options can be specifi ed as follows at 31 December 2009:
Executive
No. of share options management Employees Total
Granted 22 December 2009 359,648 2,178,118 2,537,766
At 31 December 2009 359,648 2,178,118 2,537,766
Eitzen Bulk Shipping A/S has used the Black & Scholes option pricing model based on the exercise price. The assumptions underlying the calculation of
the grant date fair values are as follows 2009, 2010 and 2011 respectively:
2009 2010 2011
Dividend yield (%) 0% 0% 0%
Expected volatility (%) 90 % 90 % 90 %
Risk-free interest rate (%) 2,86% 2,86% 2,86%
Expected life of option (years) 4.27 5.27 6.27
Weighted average share price (DKK) 34 34 34
The expected lifetime of the options are based on studies as Eitzen Bulk Shipping A/S has no previous programs that could provide information. The data
is not necessarily the exercise patters that may occur. The expected volatility refl ects the historical volatility for a peer group of shipping companies. The
historical volatility refl ects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which
may also not necessarily be the actual outcome.
Notes to the Financial Statements | Annual Report 2009 | 59
Note 36 – Liquidity risk
The terms to maturity of fi nancial assets and liabilities are disclosed by category and class, distributed on maturity periods.
Financial instruments measured at fair value are divided in accordance with the following accounting hierachy:
• Level 1: observable market prices for identical instruments
• Level 2: valuations models primarily based on observable prices or trading prices of comparable instruments
• Level 3: valuation models primarily based on non-observable prices
2009 Maturity
(USD ‘000) Within 1 year 1-3 years Total
Financial Assets at fair value through profi t or loss Forward Freight agreements - payments received 1) 7,146 7,146
Forward Freight agreements - payments made 1) 9,718 9,718
Bunker contracts 1) 2,403 2,403
Total 9,549 9,718 19,267
Financial Liabilities at fair value through profi t or loss Forward Freight agreements - payments received 1) 1,933 1,933
Forward Freight agreements - payments made 1) -14,589 -9,800 -24,389
Total -12,656 -9,800 -22,456
Loans and receivables measured at amortised cost Cash and cash equivalents 24,806 24,806
Freight receivables 8,669 8,669
Other receivables 5,843 5,000 10,843
Total 39,318 5,000 44,318
Financial Liabilities measured at amortised cost Trade and other receivables 30,834 4,800 35,634
Total 30,834 4,800 35,634
2008 Maturity
(USD ‘000) Within 1 year 1-3 years Total
Financial Assets at fair value through profi t or loss Forward Freight agreements - payments received 1) 48,862
Forward Freight agreements - payments made 1) -1,762 33,404 31,642
Total 47,099 33,404 31,642
Financial Liabilities at fair value through profi t or loss Forward Freight agreements - payments made 1) -49,161 -33,524 -82,685
Total -49,161 -33,524 -82,685
Loans and receivables measured at amortised cost Cash and cash equivalents 66,052 66,052
Freight receivables 6,599 6,599
Other receivables 5,612 5,612
Total 78,263 78,263
Financial Liabilities measured at amortised cost Trade and other receivables 41,676 41,676
Total 41,676 41,676
60 | Annual Report 2009 | Notes to the Financial Statements
Note 37 – Subsequent eventsNo signifi cant events have occurred between the reporting period and the publication of the annual report that have not been included and adequately
disclosed in the annual report at that materially affect the income statement or the balance sheet.
Note 38 – New fi nancial reporting regulation During 2009 IASB issued a number of IFRSs, amendments and interpretations which have been endorsed by the EU as per 31 December 2009 and are
mandatory for the Group’s accounting periods beginning on or after the 1 January 2010.
Eitzen Bulk Shipping A/S has assessed the impact of the IFRSs, amendments and interpretations that are not yet effective and determined that most of
them including IFRS 9 ‘Measurement and classifi cation of fi nancial assets will not have material impact on the consolidated fi nancial statements going
forward. Consequently, no early adoption has been made.
2009 Annual report of Eitzen Bulk Shipping A/S - Parent | Annual Report 2009 | 61
2009 Annual report of Eitzen Bulk Shipping A/S - Parent
Income statement 62Statement of comprehensive income 63Balance sheet 64Statement of changes in equity 65Cash fl ow statement 66
Notes to the Annual Report
1. Accounting policies 67 2. Signifi cant accounting judgment, estimates and assumptions 67 3. Effect of the transition to IFRS 68 4. Fees to auditor appointed at the annual general meeting 71 5. Staff costs 71 6. Financial income 71 7. Financial expenses 71 8. Tax 71 9. Investment in subsidiaries 72 10. Other investments 72 11. Receivables from Group enterprises and other receivables 72 12. Equity 72 13. Payables to Group enterprises and other payables 72 14. Mortgages and security 73 15. Contingent assets and liabilities 73 16. Related party transactions 73 17. Subsequent events 73 18. New fi nancial reporting regulation 73
62 | Annual Report 2009 | Income Statement
(USD ‘000) Note 2009 2008
Administration expenses 4, 5 -116 -118
Profi t before tax and fi nance costs (EBIT) -116 -118
Financial income 6 62 191
Financial expenses 7 -134 -72
Profi t before tax -188 1
Tax 8 -73 16
Net profi t -261 17
Income Statement
Statement of Comprehensive Income | Annual Report 2009 | 63
(USD ‘000) Note 2009 2008
Profi t/loss (-) for the year -261 17
Other comprehensive income Fair value adjustments other investments (gain/-loss) 186 -656
Other comprehensive income for the year, net of tax 186 -656
Total comprehensive income for the year, after tax -75 -639
Statement of Comprehensive Income
64 | Annual Report 2009 | Balance Sheet
Balance Sheet
ASSETS(USD ‘000) Note 2009 2008 2007
Investment in subsidares 9 84,845 4,787 4,787
Other investments 10 645 437 0
Deferred tax 67 56 70
Total fi nancial non-current assets 85,557 5,280 4,857
Total non-current assets 85,557 5,280 4,857
Receivables from Group entreprises and other receivable 11 12 2,655 2,640
Corporate tax 0 71 0
Cash and short-term deposits 2,539 2 144
Total current assets 2,551 2,728 2,784
TOTAL ASSETS 88,108 8,008 7,641
EQUITY AND LIABILITIES(USD ‘000) Note 2009 2008 2007
Share capital 12 46,941 4,196 4,196
Retained earnings 23,658 3,402 3,385
Other reserves -470 -656 0
Total equity 70,129 6,942 7,581
Payables to Group enterprises and other payables 13 17,931 1,066 60
Income tax payable 48 0 0
Total current liabilities 17,979 1,066 60Total liabilities 17,979 1,066 60
TOTAL EQUITY AND LIABILITIES 88,108 8,008 7,641
Statements of Changes in Equity | Annual Report 2009 | 65
Share Retained Total
(USD ‘000) capital earnings equity
At 1 January 2009 4,196 2,746 6,942Profi t for the year - -261 -261
Other comprehensive income - 186 186
Total comprehensive income 0 -75 -75Increase of share capital through merger with Shipholding Holding A/S 42,745 20,517 63,262
Treasury shares received from Parent - 17,721 17,721
Value of treasury shares - -17,721 -17,721
Dividend - 0 0
At 31 December 2009 46,941 23,188 70,129
Share Retained Total
(USD ‘000) capital earnings equity
At 1 January 2008 4,196 3,385 7,581Profi t for the year - 17 17
Other comprehensive income - -656 -656
Total comprehensive income - -639 -639Dividend - 0 0
At 31 December 2008 4,196 2,746 6,942
Eitzen Bulk Shipping A/S has 23 December 2009 received a treasury shares from the Parent company in connection with the adoption of a share option
program in Eitzen Bulk Shipping A/S. The treasury shares has been provided in form of 10% of the nominal share capital in Eitzen Bulk Shipping A/S equal
to 2.463.850 shares. The quoted market value of the shares the 23 December 2009 was 17.2 MUSD.
Statements of Changes in Equity
66 | Annual Report 2009 | Cash Flow Statements
(USD ‘000) Note 2009 2008
Profi t/loss(-) before tax -188 1
Paid/received tax including added interest on tax 0 0
Adjustment to reconsile profi t before tax to net cash fl ows
Non-cash:
Interest income/expense 116 0
Other changes -105 4
Working capital adjustments:
Change in current assets 2,643 -15
Change in current liabilities 70 1,005
Net cash fl ows from operating activities 2,537 996
Purchase of other investments 0 -1,138
Net cash fl ows from investing activities 0 -1,138
Other changes 0 0
Net cash fl ows from fi nancing activities 0 0
Net change in cash and cash equivalents 2,537 -142
Net foreign exchange difference
Cash and cash equivalents at 1 January 2 144
Cash and cash equivalents at 31 December * 2,539 2
Cash Flow Statements
Notes to the Financial Statements | Annual Report 2009 | 67
Notes to the Financial Statements
Note 1 – Summary of signifi cant accounting policies The accounting policies of the Parent; Eitzen
Bulk Shipping A/S, are identical with the poli-
cies applicable to the consolidated fi nancial
statements, except for the following:
Dividends from investments in subsidiaries and associatesDividends from investments in subsidiaries and
associates are recognised as income in the Par-
ent’s income statement under fi nancial income
in the fi nancial year in which dividends are de-
clared.
Investments in subsidiaries in the Parent’s fi -nancial statements Investments in subsidiaries are measured at
cost. Impairment tests are conducted when
there is an indication of impairment. Write-down
is made to the recoverable amount if this is
lower than the carrying amount.
Changes in accounting policy and disclosuresFor all periods up to and including the year
ended 31 December 2008, the Parent Eitzen
Bulk Shipping A/S (formerly Dampskibsselska-
bet Orion A/S) prepared its fi nancial statements
in accordance with the provisions of the Danish
Financial Statements Act (Class D) and other
accounting regulations for companies listed on
Nasdaq OMX Copenhagen. The fi nancial state-
ments, for the year ended 31 December 2009,
are the fi rst the Parent has prepared in accord-
ance with International Financial Reporting
Standards (IFRS).
Accordingly, the Parent has prepared fi nancial
statements which comply with IFRS applicable
for periods beginning on or after 1 January 2009
as described in the accounting policies for the
Group except for the above mentioned. In pre-
paring the fi nancial statements, the Parent’s
opening statement of fi nancial position was pre-
pared as at 1 January 2008, the Parent’s date of
transition to IFRS. Note 3 explains the principal
adjustments made by the Parent in restating its
Danish Financial Statements Act statement of
fi nancial position as at 1 January 2008 and its
previous published Danish Financial Statements
Act (Class D) fi nancial statements for the year
ended 31 December 2008.
Note 2 Signifi cant accounting judgment, estimates and assumptionsThe preparation of the Parent’s fi nancial state-
ments requires management to make judg-
ments, estimates and assumptions that affect
the reported amounts of revenues, expenses,
assets and liabilities and the disclosure of con-
tingent liabilities, at the end of the reporting pe-
riod. However, uncertainty about these assump-
tions and estimates could result in outcomes
that require a material adjustments to the car-
rying amounts of asset and liability affected in
future periods.
In the process of applying the Parent’s account-
ing policies, management deems the following
estimates and the pertaining assessments to
be essential for the preparation of the Annual
Report of the Parent.
Investments in subsidiariesManagement assesses annually whether there
is an indication of impairment of investments
in subsidiaries. In the assessment of Manage-
ment, there is no such indication at 31 Decem-
ber 2009, and there investments in subsidiaries
have not been tested for impairment.
68 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 3 – Effect of the transition to IFRSIFRS 1 First-Time Adoption of International Financial Reporting Standards allows fi rst-time adopters certain exemptions from the retrospective applica-
tion of certain IFRSs effective for December 2009 year-ends.
The Parent has applied the following exemptions:
Under the Danish Financial Statements Act, subsidiaries were measured according to the equity method. The Parent has elected to regard the booked
value as at 1 January 2008 under the Danish Financial Statements Act translated to USD as deemed cost.
Reconciliation of equity as at 1 January 2008 (date of transition to IFRS)
Local GAAP* Local GAAP* Remea-
Notes DKK '000 USD '000 surements IFRS
Non-current assets
Investments in subsidiaries A) 26,059 4,787 4,787
Total non-current assets 26,059 4,787 0 4,787
Current assets Other receivables 14,372 2,640 2,640
Deferred tax 381 70 70
Cash 783 144 144
Total current assets 15,536 2,854 0 2,854 0
TOTAL ASSETS 41,595 7,641 0 7,641
Equity Share capital 22,842 4,196 4,196
Retained earnings 18,427 3,385 3,385
41,269 7,581 0 7,581
Current liabiliteis Trade and other payables 326 60 60
Total current liabilites 326 60 0 60
Total liabilites 326 60 0 60 TOTAL EQUITY AND LIABILITES 41,595 7,641 0 7,641
* Danish Financial Statements Act
Notes to the Financial Statements | Annual Report 2009 | 69
Notes to the Financial Statements
Note 3 – Effect of the transition to IFRS (continued)
Reconciliation of equity as at 31 December 2008
Local GAAP* Local GAAP* Remea-
Notes DKK ‘000 USD ‘000 surements IFRS
Non-current assets
Investments in subsidiaries A) 27,329 5,171 -384 4,787
Other investments 2,307 437 437
Total non-current assets 29,636 5,608 -384 5,224
Current assets Other receivables 14,032 2,654 2,655
Deferred tax 298 56 56
Corporate tax 373 71 71
Cash 9 2 2
Total current assets 14,709 2,783 0 2,783 0
TOTAL ASSETS 44,348 8,391 -384 8,007
Equity Share capital 25,000 4,196 4,196
Net revaluation reserve accrording to the
equity method 1,269 384 -384 0
Other reserves 0 0 -656 -656
Retained earnings 12,449 2,746 656 3,402
38,718 7,326 -384 6,942
Current liabiliteis Trade and other payables 5,630 1,065 1,065
Total current liabilites 5,630 1,065 0 1,065 Total liabilites 5,630 1,065 0 1,065 TOTAL EQUITY AND LIABILITES 44,348 8,391 -384 8,007
* Danish Financial Statements Act
70 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
Note 3 – Effect of the transition to IFRS (continued)
Reconciliation of the income statement and comprehensive income for 1 January - 31 December 2008 Local GAAP* Local GAAP* Remea-
Notes DKK ‘000 USD ‘000 surements IFRS
Administration expenses -597 -118 -118
Profi t before tax and fi nance cost (EBIT) -597 -118 0 -118
Share of profi ts of subsidiaries using the
equity method A) 1,268 384 -384 0
Financial income 710 191 191
Financial expenses B) -4,028 -728 656 -72
Profi t before tax -2,647 -271 272 1
Tax 96 16 0 16
Net profi t -2,551 -255 272 17
Comprehensive income Net profi t -2,551 -255 272 17
Unrealised value adjustments on securites 0 0 -656 -656
Other comprehensive income 0 0 -656 -656Total comprehensive income -2,551 -255 -384 -639
* Danish fi nancial Statements Act
Restatement of equity from Danish Financial Statements Act to IFRS Notes to the reconciliation of equity as at 1 January 2008 and 31 December 2008
* Under the Danish Financial Statements Act the fi nancial statement for the parent company has been presented in DKK. After the adoption of IFRS the
parent company has determined to use USD as functional currency as USD best refl ects the economic sustance of the activity.
A) Investments in subsidiaries Under the Danish Financial Statements Act, subsidiaries were measured according to the equity method. Under IFRS subsidiaries are recognised and
measured at cost. The parent company has decided, that all subsidiaries at the date of the transition to IFRS shall be recognised and measured at
deemed cost equal to the booked value under the Danish Financial Statements Act as at 1 Januzry 2008 translated to USD.
B) Securities Under the Danish Financial Statements Act, asecurites were measured fair value. Unrealised value adjustments were recognised in the income state-
ment. Under IFRS unrealised value adjustments value are recognised directly in equity.
Notes to the Financial Statements | Annual Report 2009 | 71
Notes to the Financial Statements
(USD ‘000) 2009 2008
Note 4 – Remuneration to the auditor appointed at the general meeting Other assurance service 0 0
Tax consultancy 0 0
Other services 0 5
Total 18 19
Note 5 – Staff costs Salaries and wages 0 0
Pension cost 0 0
Other expenses for social security 0 0
Share-based payments 0 0
0 0 Average number of employees 0 0
Note 6 – Financial income Bank interest receivable 62 191
Total 62 191
Note 7 – Financial expenses Interest on debt and borrowings 134 72
Total 134 72
Note 8 – Tax Current tax on profi t for the year 48 0
Deferred tax on profi t for the year 0 0
Tax on profi t for the year 48 0
Adjustments related to previous years - current tax 36 -30
Adjustments related to previous years - deferred tax -11 14
Tax in the income statement 73 -16
The tax of profi t breaks down as follows:
Calculated 25% tax on profi t for the year before tax 48 0
Adjustment of tax relating to prior years 25 -16
Total tax of profi t for the year 73 -16
72 | Annual Report 2009 | Notes to the Financial Statements
Notes to the Financial Statements
(USD ‘000) 2009 2008 2007
Note 9 – Investments in subsidiaries Cost:
Cost at 1 January 4,787 4,787 4,787
Additions through merger with Shipholding Holding A/S 80,058 0 0
Additions for the year 0 0 0
Disposals for the year 0 0 0
Cost at 31 December 84,845 4,787 4,787
Impairment at 1 January 0 0 0
Impairment charge for the year 0 0 0
Impairment at 31 December 0 0 0
Carrying amount at 31 December 84,845 4,787 4,787
Ownershipshare Sharecapital
2009 2008 Registred offi ce in DKKm
Eitzen Bulk A/S 100 - Copenhagen, Denmark 1.0
Sibulk A/S 100 - Copenhagen, Denmark 81.8
Eitzen Bulk Shipholding A/S 100 - Copenhagen, Denmark 1.0
P.E.P. Shipping A/S 100 100 Copenhagen, Denmark 1.0
ApS KBUS 8 Nr. 674 100 100 Copenhagen, Denmark 0.3
(USD ‘000) 2009 2008 2007
Note 10 – Other investments
Eitzen Maritime Services ASA 645 437 0
Total 645 437 0
Note 11 – Receivables from Group enterprises and other receivables
Receivables from Group entreprises 0 2,649 2,634
Other receivables 12 6 6
Total 12 2,655 2,640
The carrying amount of the receivables is deemed to correspond to fair value.
Note 12 – EquityThe composition of the share capital and treasury shares is presented in note 21 and 22
to the consolidated fi nancial statements.
The targets for the capital structure of Eitzen Bulk Shipping A/S is determined and assessed for the
Group as a whole, for which reason no operational goals or policies is set for the parent company.
Please refer to note 27 to the consolidated fi nancial statements.
Note 13 – Payables to Group enterprises and other payables
Payables to Group entreprises 17,900 0 0
Other payables 31 1,065 60
Total 17,931 1,065 60
The fair value of payables to Group enterprises and other payables equals the carrying amount.
Notes to the Financial Statements | Annual Report 2009 | 73
Notes to the Financial Statements
Note 14 – Mortgages and securityFor information on mortgages and security, please refer to the consolidated fi nancial statements, note 33.
Note 15 – Contingent assets and liabilitiesFor information regarding contingent assets and liabilities, please refer to the consolidated fi nancial statements, note 30.
Note 16 – Related party transactionsFor information on transaction with related parties, please refer to the consolidated fi nancial statements, note 34.
Note 17 – Subsequent eventsFor subsequent events, please refer to the consolidated fi nancial statements, note 37.
Note 18 – New fi nancial reporting regulationFor new fi nancial reporting regulation, please refer to the consolidated fi nancial statements, note 38. The new fi nancial reporting
regulation is not expected to be of any importance for the fi nancial statements of the Parent.
74 | Annual Report 2009 | Group structure
Group structure
Eitzen BulkShipping A/S
Sibulk A/S
Sibulk SingaporePte. Ltd.
ApS KBUS 8Nr. 674
Eitzen Bulk A/S
Eitzen Bulk(Hong Kong) Ltd.
Eitzen Bulk doBrazil Ltda.
CedrelaTransport
Eitzen Logistic Services (India)
(51%)
P.E.P.Shipping A/S
Eitzen Bulk(Singapore)
Pte. Ltd.
Eitzen Bulk(USA) Ltd.
Perola SA(20.41%)
Eitzen BulkShipholding A/S
Operator activities
Ship holding activities
Previous subsidiaries of D/S Orion
100% owned unless specifi ed otherwise
Defi nitions of key fi gures and fi nancial ratios | Annual Report 2009 | 75
Defi nitions of key fi gures and fi nancial ratios
The fi nancial ratios were computed in accordance with “Recommendations and Ratios 2005” issued by the Danish Society of Financial Analysts.
The ratios listed in the key fi gures and ratios section were calculated as follows:
Gross profi t margin = Gross profi t x 100
Revenue
EBITDA = EBITDA x 100
Revenue
Return of equity in % (ROE) = Profi t or loss for the year x 100
Average equity, excluding minority interests
Payout ratio = Dividend x 100
Profi t or loss for the year, excluding minority interests
Equity ratio = Equity at year-end, excluding minority interest x 100
Total assets
USD exchange rate at year-end = The USD exchange rate quoted on the NASDAQ OMX Copenhagen at the balance sheet date
Average USD exchange rate = The average USD exchange rate quoted on the NASDAQ OMX Copenhagen for the year
Net interest-bearing debt = Interest-bearing debt less cash and cash equivalents at year-end
76 | Annual Report 2009 | Defi nitions of key fi gures and fi nancial ratios
Eitzen Bulk Shipping A/SAmerika Plads 382100 Copenhagen
Denmark
www.eitzen-bulk.com
Financial year: 1 January – 31 DecemberCompany registration no. (CVR): 20702419