HELLENIC SEAWAYS Shipping Company S.A.

Transcription

1 HELLENIC SEAWAYS Shipping Company S.A. Annual Financial Statements for the fiscal year 2009 (01/01/ /12/2009) On a consolidated and company level In accordance with the International Financial Reporting Standards (IFRS)

2 Table of Contents Page Annual Financial Statements in accordance with the International Financial Reporting Standards Financial Reports (IFRS) for fiscal year FINANCIAL POSITION STATEMENTS... 2 CHANGES IN EQUITY STATEMENTS... 4 CASH FLOW STATEMENTS... 5 Notes regarding the annual financial reports for the fiscal year General information about the Company and the Group Basis used to compile financial statements General Context New accounting standards, modifications to standards and interpretations Required standards and interpretations for the fiscal year Modifications to standards concerning a section of the IASB (International Accounting Standards Board) annual improvement plan Required standards and interpretations for the annual accounting periods which commenced on or after July 1 st, Basic accounting policies Management decisions and evaluations Consolidation Basis Subsidiaries Inter-company transactions Data conversion into foreign currency Intangible assets Tangible assets Impairment of non-current assets Reserves Financial means Customer claims / Other claims Financial assets available for sale Available cash and cash equivalents Loan obligations Liabilities to suppliers and other liabilities Provisions for employee benefits Other provisions / Contingent liabilities and contingent assets Income tax (current and deferred) Operating revenue Income recognition Expense recognition Intangible and tangible assets Investments in subsidiary companies Long-term receivables Reserves Trade and other receivables Other receivables and other current assets Financial assets available for sale Available cash and cash equivalent Share capital and premium Other reserves Results carried forward... 32

3 15. Long-term loan obligations Provisions for employee benefits and other provisions Suppliers and other obligations Short-term bank obligations Accrued expenses and expenses for the following fiscal years Turnover (sales) Sales costs Other revenue Administrative overhead Distribution costs Other costs Financial revenue Financial costs Capital gains from the acquisition of a subsidiary Income taxes Profits per share after taxes Dividends Contingent liabilities and contingent assets Contingent liabilities Contingent assets Transactions with related parties Liabilities and obligations to related parties Purchases and sales with related parties Salaries to members of the Board of Directors and main administrative executives Financial risk management Credit risk Liquidity risk Risk of market conditions Capital management Events that occurred after the date on the balance sheet... 46

4 COMPANY S.A. Auditor s Report by a Certified Public Auditor for the Shareholders of HELLENIC SEAWAYS Shipping Company, S.A. Report for the Company and Consolidated Financial Statements We audited the attached company and consolidated financial statements of HELLENIC SEAWAYS Shipping Company S.A. and its subsidiaries contained in the company and consolidated financial position statements on December 31 st, These include the company and consolidated total income statement, changes in the equity statement and cash flow statement for the fiscal year that ended on the above date, as well as a summary of the important accounting principles and methods and other explanatory information. Management s Responsibility regarding the Company and Consolidated Financial Statements Management is responsible for the compilation and reasonable presentation of the these company and consolidated financial statements in accordance with the International Financial Reporting Standards that were adopted by the European Union and like those for internal features that management has deemed necessary in order to be able to compile the company and consolidated financial statements without any inaccuracy due to fraudulence or carelessness. The Auditor s Responsibility Our responsibility is to state our knowledge about these company and consolidated financial statements based on our audit. We conducted our audit in accordance with the International Auditing Standards. These standards require that we comply with rules of ethics and that we plan and conduct our audit with the purpose of acquiring reasonable safeguards in order to ensure that the company and consolidated financial statements have no substantial inaccuracies. This audit includes procedures concerning the acquisition of auditing assumptions regarding amounts and their disclosure in the company and consolidated financial statements. The selected procedures are based on the discretion of the auditor which includes estimations of the risk of substantial inaccuracies in the company and consolidated financial statements that are due to fraudulence or carelessness. In conducting these estimations, the auditor examined all the internal safeguards regarding the compilation and reasonable presentation of the company and consolidated financial statements in order to plan auditing procedures appropriate to each case and not to express opinions about the efficiency of the company s internal safeguards. The audit also includes the evaluation of the appropriateness of the accounting standards and methods used and the justification for the evaluations made by management and the evaluation of the entire presentation of the company and consolidated financial statements. We believe that the auditing safeguards we have applied are sufficient and appropriate in order to document our auditing opinions. i

5 COMPANY S.A. Opinion In our opinion, the attached company and consolidated financial statements reasonably present, from all essential viewpoints, the financial position of both the company and its subsidiaries as of December 31 st, 2009 and their financial results and their cash flow for the fiscal year that ended on the above date in accordance with the International Financial Reporting Standards that were adopted by the European Union. Report on other Legal and Regulatory Issues We have verified that the contents of the Report by the Board of Directors are consistent with and correspond to the attached company and consolidated financial statements within the context of Law N. 2190/1920, articles 37, 43a and 107. Athens, April 19 th, 2010 Certified Public Auditor and Accountant DIMITRIOS N. PARASKEVOPOULOS ACCA Registration Number S.O.L Certified Public Accountant and Auditors S.A. 3, Fokionos Negri St Athens ACCA Company Registration Number 125 ii

6 Annual Financial Statements in accordance with the International Financial Reporting Standards (IFRS) for the fiscal year 2009 It is confirmed that the attached Financial Statements are those that were approved by the Board of Directors of HELLENIC SEAWAYS Shipping Company S.A. at the meeting held on April 15 th, Ioannis I. Vardinogiannis President and Managing Director 1

7 STATEMENTS OF FINANCIAL POSITION ASSETS Number. 31/12/ Non-current assets Intangible assets, Tangible fixed assets Investments in subsidiary companies Long-term Receivables , , , ,203 33, Total non-current assets 372, , ,411 Current assets Reserves Trade receivables Other receivables and other current assets Financial assets available for sale Available cash and cash equivalents ,270 20,865 11, ,907 1,037 16,478 14, , ,654 10, , ,994 14, ,487 Total current assets 58,750 45,936 46,428 30,594 TOTAL ASSETS 431, , , ,005 EQUITY AND LIABILITIES Equity Share capital Premium Other reserves Results carried forward Equity Share capital Minority rights ,038 9,376 1,807 33, , ,038 9,376 1,494 23, , ,038 9,376 1,807 31, , ,038 9,376 1,494 17, ,993 0 Total equity 238, , , ,993 Long-term Liabilities Long-term loan obligations Employee Benefits Provisions Other Provisions ,285 1, , ,285 1, , Total Long-term Liabilities 129, , , ,403 Short-term Liabilities Suppliers and other short-term liabilities Short-term loan obligations Accrued costs for the fiscal year and costs for the next fiscal year T t l Sh t t Li biliti ,937 29,152 2,993 63,082 23,574 13, ,447 22,850 29,152 1,220 53,222 18,973 13, ,610 Total Liabilities 192, , , ,012 TOTAL EQUITY AND LIABILITIES 431, , , ,005 Any differences in the units are due to rounding off of figures. 2

8 TOTAL INCOME STATEMENT Number Turnover (sales) , , , ,867 Sales Costs 21 (142,519) (181,015 (116,997) (147,611) Gross income 35,816 40,156 39,292 31,256 Other income 22 1,752 2,888 1,759 3,045 Administrative overhead 23 (9,125) (8,368) (7,412) (7,903) Distribution costs 24 (14,230) (18,050) (12,459) (15,792) Other costs 25 (441) (1,662) (434) (1,834) Earnings before interest & taxes 13,772 14,963 20,746 8,771 Financial income ,361 1,302 8,085 Financial costs 27 (4,626) (10,559) (4,560) (10,497) Profits from the sale of assets Capital gains from the acquisition of a subsidiary 28 3, Pre-tax profits 13,042 10,780 17,487 6,374 Income taxes 29 (354) (62) (32) (31) Distributed to: Net profits 12,687 10,718 17,456 6,343 Company shareholders 12,687 10,718 17,456 6,343 Minority shareholders Total 12,687 10,718 17,456 6,343 Profit per share after taxes Profits per common share after taxes (in Euros) 30 0,1635 0,1381 0,2249 0,0817 Profits per preferred share after taxes (in Euros) 31 0,08 0,03 SYNOPSIS OF RESULTS Earnings before interest, taxes, Depreciation & amortization (EBITDA) 31,519 31,500 34,124 22,256 Earnings before interest & taxes (ΕΒΙΤ) 13,772 14,963 20,746 8,771 Pre-tax profits 13,042 10,780 17,487 6,374 Net profits 12,687 10,718 17,456 6,343 Any differences in the units are due to rounding off the figures. 3

9 CHANGE IN EQUITY STATEMENT Share Capital Premium Other reserves Fair value reserves Results carried forward Total equity Balance 01/01/ ,038 9,376 1,485 4,479 18, Dividend approval for fiscal year 2007 (6,209) (6.209) Transfer from other reserves to results carried forward (833) Transfer from results carried forward to other reserves due to Reserve requirements 850 (850) 0 Transfer from fair value reserves to results due to sales of Financial assets (4,484) (4.484) Profits (Losses) from valuation of financial assets available for sale (3) (3) Results for period from 01/01/2009 to 31/12/ , Balance on 31/12/ ,038 9,376 1,503 (8) 23, Dividend approval for fiscal year 2008 Transfer of results carried forward to other reserves due to (2,328) (2.328) Reserve requirements 317 (317) 0 Profits (Losses) from valuation of financial assets available for sale (5) (5) Results for period from 01/01/2009 to 31/12/ , Balance on 31/12/ ,038 9,376 1,820 (13) 33, Balance 01/01/ ,038 9,376 1,485 4,479 16, Dividend approval for fiscal year 2007 (6,209) (6.209) Transfer from other reserves to results carried forward (833) Transfer from results carried forward to other reserves due to Reserve requirements 850 (850) 0 Transfer from fair value reserves to results due to sales of Financial assets (4,0484) (4.484) Profits (Losses) from valuation of financial assets available for sale (3) (3) Results for period from 01/01/2009 to 31/12/2009 6, Balance on 31/12/ ,038 9,376 1,503 (8) 17, Dividend approval for fiscal year 2008 Transfer of results carried forward to other reserves due to Reserve requirements (2.328) (2.328) 317 (317) 0 Profits (Losses) from valuation of financial assets available for sale (5) (5) Results for period from 01/01/2009 to 31/12/ , Balance on 31/12/ ,038 9,376 1,820 (13) 31, Any differences in the units are due to rounding off the figures. 4

10 CASH FLOW STATEMENT Cash flow and operating activities Pre-tax Profits (losses) 13,042 10,780 17,487 6,374 Plus / (less) adjustments for: Depreciation 17,747 16,537 13,378 13,485 Provisions 964 2, ,783 Interest paid and related costs 4,174 10,409 4,153 10,398 Exchange rate differences for valuation 32 (11) 29 (9) Results of investment activities (credit interest rates / Dividends) (217) (794) (1,162) (2,537) Results from Investments (3,473) Profits from compensation (849) (14) (849) (14) (Profits) / losses from sale of securities 0 (5,140) 0 (5,140) Results from utilization before changes in working capital 31,420 34,645 33,397 25,340 Changes in working capital (Increase) / Decrease: Reserves (1,051) 720 (195) 631 (Increase) / Decrease: Trade receivables (4,700) (6,460) (7,802) (3,021) (Increase) / Decrease: Other receivables 4,454 4,865 3,930 3,415 Increase / (Decrease): Suppliers and other liabilities 4,888 (4,870) 3,701 (5,698) Increase / (Decrease): Accrued costs - income for the next fiscal 171 (505) 736 (313) Results from utilization after changes in working capital 35,182 28,394 33,768 20,353 Interest paid and related costs paid (4,196) (10,494) (4,174) (10,482) Income tax paid (354) (226) (32) (200) Net cash flow from operating activities (a) 30,632 17,674 29,562 9,670 Cash flow and investment activities Acquisition of subsidiaries (6,663) 0 (14,573) 0 Purchase of tangible fixes assets and intangible assets (17,312) (5,060) (7,751) (310) Earnings from compensation 2, , Earnings from the sale of securities 0 8, ,068 Increase / (Decrease): Liabilities towards subsidiaries (Increase) / Decrease: Long-term receivables 2 1 (7) 1 Interest received Dividends received ,891 Net cash flow from investment activities (b) (20,927) 3,817 (18,217) 10,358 Cash flow and financial activities Earnings from borrowings 22,000 9,000 22,000 9,000 Loan repayments (19,016) (22,016) (19,016) (22,016) Earnings from subsidies Dividends paid (2,349) (6,179) (2,349) (6,179) Net cash flow from financial activities (c) 655 (19,195) 655 (19,195) Net change in available cash (a)+(b)+(c) 10,361 2,296 12, Available cash and cash equivalent at the beginning of the period 13,546 11,250 8,487 7,653 Available cash and cash equivalent at the end of the period 23,907 13,546 20,486 8,487 Any differences in the units are due to rounding off of figures. 5

11 Notes to the financial statements for the fiscal year 2009 (01/01/ /12/2009) 1. General information about the Company and the Group The parent company, HELLENIC SEAWAYS Shipping Company S.A. (henceforth the Company or the Parent Company ) is a societe anonyme shipping company whose trade name is HELLENIC SEAWAYS but is known as HELLENIC SEAWAYS MARITIME S.A. for international transactions. s previous name was HELLAS FLYING DOLPHIN SHIPPING COMPANY S.A. and before that it was called MINOAN FLYING DOLPHIN SHIPPING COMPANY S.A. originated when the CERES HELLENIC SHIPPING COMPANIES S.A. changed its name, scope and field of activity (OGG 1118/ , SA & PLC issue). The company s headquarters are located in the municipality of Piraeus (6 Astiggos St. Karaiskakis Square, ). s share capital is divided into 77,615,000 shares of common stock with a face value of 2.50 per share which are owned today by more than 2,200 natural and legal persons. Apart from the Parent Company, the HELLENIC SEAWAYS Α.Ν.Ε Group (henceforth the Group ) also includes the following subsidiary companies which are wholly owned (with 100% of total shares) by the Parent Company: Name Percentage of shares by parent company Location Hellenic Seaways Cargo N.E. 100% Greece Hellenic Seaways Management S.A. 100% Liberia Trailer Shipping Company Ltd * 100% Cyprus Easy Cruise Ltd 100% Liberia Helcat Lines S.A. 100% Marshall Islands *Inactive company. is active in the passenger shipping sector and offers sea transport services for passengers and cargo in Greece and abroad. The parent company, HELLENIC SEAWAYS Α.Ν.Ε is active mainly in coastal shipping in Greece and utilizes privately-owned passenger and passenger & car ferries that fly the Greek flag. The subsidiary company, HELLENIC SEAWAYS CARGO Ν.Ε. utilizes privatelyowned Ro Ro-type passenger & car ferries that fly the Greek flag but which sail between Greece and Italy. The foreign company, TRAILER SHIPPING COMPANY LTD utilizes ships that fly foreign flags but now these ships have been sold, the company is now inactive. The foreign company, HELLENIC SEAWAYS MANA GEMENT S.A. which is based in Greece as per Law N. 89/1967, is mainly involved in managing the Group s ships that sail internationally. The Easy Cruise company 6

12 was established on July 13 th, 2009, and is active in sea cruises. The company, Helcat Lines S.A. was founded on August 17 th, The economic fundamentals of the above subsidiary companies have been included in the consolidated financial statements of the Company by using the full consolidation method. The number of people employed by the Parent Company as of December 31 st, 2009, was 695 (of which 544 were employed as crewmembers on the ships) and the Group employed 868 people (of which 667 were employed as crewmembers on the ships). 2. Basis used to compile financial statements 2.1 General context The annual company and consolidated financial statements for December 31 st, 2009 (henceforth, the Financial Statements), were compiled in accordance with the International Accounting Standards and the International Financial Reporting Standards (IAS / IFRS) as these have been issued by the International Accounting Standards Board (henceforth, IASB ) and its Interpretations Committee and which have been adopted by the European Union. The financial statements were compiled in accordance with the going concern and the historical costs principles as these were amended with revaluations to the fair values of certain assets and liabilities. In addition, it is noted here that the Group applied IFRS 1, First time adoption of IFRS when compiling the financial statements for fiscal year 2007 which were the first to be compiled based on the IFRS with a transition date for the purpose of IFRS 1, January 1 st, New accounting standards, modifications to standards and interpretations Specific new standards modified existing standards and interpretations have been issued whose implementation is required for accounting periods that begin during the current fiscal year or afterwards. s and Group s evaluations regarding the effects of the implementation of the new standards modified existing standards and interpretations are discussed below. 7

13 2.2.1 Required standards and interpretations for the fiscal year 2009 IAS 1 (Amended 2007) Presentation of Financial Statements This applies for the annual accounting periods that begin on or after January, [Regulation (EC) number 1274/2008 of the Committee on December 17 th, 2008, L ] IAS 1 has been modified in order to update the use of information presented in the financial statements. The most important changes are: a) the changes in equity statements will now only include stock transactions; b) the entry of a new Total Revenue statement that combines all revenue and expense items which are included in the results statement as Other Total Income and c) Reprinted financial statements or retroactive applications of new accounting standards and methods must be presented from the beginning of the earliest relative period. The Regulation is accompanied by an attachment of corresponding amendments with limited extensions for several IAS, IFRS, IFRIC and SIC standards that apply for the periods that begin on or after 01/01/2009. and the Group have applied the above amendments and have made all the necessary changes when they presented the financial statements for the year IAS 23 Borrowing Costs (Amended 2007) [Regulation (EC) number 1260/2008 of the Committee on December 10 th, 2008 L ]. This applies for the annual accounting periods that begin on or after January 1 st, This standard replaces the previous IAS 23 version. The main difference relative to the previous version is that it abolishes the option to enter borrowing costs as an expense if these costs are for the acquisition of assets which require a significant time period to be put into operation or be sold. Also, other amendments were made to IFRS 1, IAS1, IAS7, IAS11, IAS38 and IFRIC 1 that were put in effect on or after 01/01/2009. and the Group have applied IAS 23 since January 1 st, IAS 32 (Amended) Financial Instruments: Presentation and IAS 1 (Amended) Presentation of Financial Statements Financial Instruments available by the owner. [Regulation (EC) number 53/2009 of the Committee on January 21 st, 2009, L ]. These have been applied for the annual accounting periods that begin on or after January 1 st, The amendment to IAS 32 requires that certain financial instruments available by the owner and obligations that arise during liquidation be entered as equity if they meet certain criteria. The amendment to IAS 1 requires the disclosure of certain information regarding these instruments entered as equity. Also, several amendments have been made to IFRS 7. 8

14 IAS 39 and IFRIC 2 apply for periods that began on or after 01/01/2009. Since the Company and the Group do not own such instruments, these amendments did not affect the financial statements for the fiscal year IAS 39 (Amended) Financial Instruments: Recognition and Measurement and IFRIC 9 Reassessment of Embedded Derivatives. [Regulation (EC) number 1171/2009 of the Committee on November 30 th, 2009, L L314-1/12/2009]. These have been applied for the annual accounting periods that begin on or after January 1 st, With the amendments to interpretation IFRIC 9 and IAS 39, it was decided to utilize derivative financial instruments that are embedded in other contracts in case a hybrid (combined) asset is reclassified from the fair value category in the results. Since the Company and the Group do not own such instruments, these amendments did not affect the financial statements for the fiscal year IAS 39 (Amended) Financial Instruments: Recognition and Measurement and IFRS 7 (Amended) Financial Instruments: Disclosures. [Regulation (EC) number 824/2009 of the Committee on September 9 th, 2009, L239 10/09/2009] These have been subsequently applied since 30/06/2008 (if a company has already submitted financial statements in accordance with Regulation (EC) number 1004/2008, it does not need to resubmit new financial statements). Amendments to IAS 39 and IFRS 7 clarify the effective start date and the measures regarding transfers established in the amendments to these standards issued by the IASB on October 13 th, 2008 (amendments that were made due to the financial crisis). Since the Company and the Group do not own such instruments, these amendments did not affect the financial statements for the fiscal year IFRS 1 (Amended) Presentation of Financial Statements and IAS 27 (Amended) Consolidated and Separate Financial Statements. [Regulation (EC) number 69/2009 of the Committee on January 23rd, 2009, L ] These have been applied for the annual accounting periods that begin on or after January 1 st, The amendment to IFRS 1 allows financial entities that are applying IFRS for the first time to use either the fair value or the accounting value as inferred cost based on previous accounting practices to measure the initial investment costs in subsidiary companies in jointly audited financial entities and related companies. This amendment also discontinues the definition of the cost method in IAS 27 and replaces it with a dividend so that they can be presented as income in the special financial statements of the investor. Also, limited amendments were made to IAS 18, IAS 21 and IAS 36 that are applicable for periods that began on or after 01/01/2009. Since the Company and all its subsidiaries have already changed to the IFRS standards, these amendments did not affect the financial statements for the fiscal year IFRS 2 (Amended) Share-based Payment Conditions, Safeguards and Cancellations [Regulation (EC) number 1261/2008 of the Committee on December, 2008, L ] 9

15 These have been applied for the annual accounting periods that begin on or after January 1 st, This amendment clarifies the definition of the conditions of the safeguards with the entry of the term conditions to not safeguard for terms used in regards to service or returns. It also clarifies that all cancellations, whether these are from the same entity or other parties, must use the same accounting approach. This amendment has not affected the financial statements for the fiscal year IFRS 7 (Amended) Financial Instruments: Disclosures. IFRS 4 (Amended) Insurance Contracts. [Regulation (EC) number 1165/2009 of the Committee on November 27 th, 2009, L314-1/12/2009] These have been applied for the annual accounting periods that begin on or after January 1 st, This amendment requires that additional disclosures be provided regarding the measurement of fair value as well as liquidity risk. Specifically, disclosures are required regarding the measurement of fair value for each category of financial assets or liabilities through a three-tier hierarchy: Tier 1) financial prices from markets with a sufficient volume of transactions; Tier 2) information issued either directly (e.g. prices) or indirectly (such as a derivative for prices), and Tier 3) information that is not based on market conditions that can be observed. Also, with regards to liquidity risk, the financial entity shall disclose its maturity analysis for derivative and non-derivative financial liabilities. The above disclosures also require certain changes in the disclosure of insurance contracts that come under the field of application for IFRS 7. This amendment has not affected the financial statements for the fiscal year IFRS 8 Operating Segments [Regulation (EC) number 1358/2007 of the Committee on November 21 st, 2007, L ] These have been applied for the annual accounting periods that begin on or after January 1 st, This standard replaces IAS 14 according to which the segments were recognized and presented based on an analysis of returns and risk. According to IFRS 8, segments make up the components of a financial entity that are examined regularly by the financial entity s Managing Director or the Board of Directors based on this internal classification. Since neither the Parent Company nor its subsidiaries are listed on the ASE, the above standard has not been implemented. IFRIC 13 Customer Loyalty Programs Regulation (EC) number 1262/2008 of the Committee on December 16 th, 2008, L ] This applies for the annual accounting periods that begin on or after July, Its interpretation clarifies the approach that must be adopted by companies that reward loyalty in some way such as the issuance of points or travel miles to customers that purchase their goods of services. This interpretation has been applied by the parent company since January 1 st,

16 2.2.2 Modifications to standards concerning a section of the IASB (International Accounting Standards Board) annual improvement plan Regulation (EC) number 70/2009 of the Committee on January 23 rd, 2009, L ] Part 1 The following amendments describe the most important changes to the IFRS as a consequence of the results of the IASB s annual improvement plan published in May, The following amendments, provided they are not defined differently, apply to all annual accounting periods that began on or after January 1 st, IAS 1 (Amended) Presentation of Financial Statements This amendment clarifies that some financial assets and liabilities that were not intended to be used for commercial purposes in accordance with IAS 39 Financial Instruments: Recognition and Measurement are examples of current assets and short-term liabilities respectively. and the Group have applied this amendment since January 1 st, However, it is not expected to affect the financial statements. IAS16 (Amended) Accounting for Property, Plant and Equipment (and the ensuing amendment to IAS 7 Cash Flow Statements ) The following amendment to IAS 7 states that any cash flows that results from the purchase, lease or sale of the assets in question are entered in the cash flow through the operating activities entry. This amendment requires that financial entities engaged in standard activities which include the leasing and subsequent sale of assets, present the sale of these assets in income and transfer the asset s depreciated value in reserves when the asset is considered available for sale. Since the standard activities of the Company and the Group do not include the leasing and subsequent sale of assets, this amendment has not affected the financial statements. IAS 19 (Amended) Employee Benefits Changes to this standard are as follows: A) An amendment to the program that results in a change in the expansion to which benefits obligations are affected by future increases in wages is a cutback and an amendment which changes benefits paid for seniority is a negative cost for length of service if this results in a reduction in the present value of fixed benefits b) The definition of the plan s return on assets has been changed so that the plan s administrative costs are deducted from the plan s return on assets balance only to the extent that these costs have been exempted from the valuation of the fixed benefits liabilities. c) The difference between short-term and long-term benefits to employees shall be based on if the benefits shall apply before or after 12 months of employee service. d) IAS 37 Provisions, Contingent Liabilities and Contingent Assets, requires that subsequent liabilities be disclosed and not recognized. IAS 19 has been amended in order to be consistent. and the Group have applied these amendments since January 11

17 1 st, However, they have not affected the financial statements. IAS 20 (Amended) Accounting for Government Grants and Disclosure of Government Assistance This amendment requires that a benefit from a government loan with an interest rate lower than the market rate shall be valued as the difference between the accounting value based on IAS 39 Financial Instruments: Recognition and Measurement and the income that results from the benefit in question with the accounting entry described in IAS 20. Since the Company and the Group have not been granted any loans from the Government, this amendment has not affected the Company or the Group s financial statements. IAS 23, Borrowing Costs (as revised in 2007)(Amended) With the amendment: (a) It is determined that the interest cost must be calculated with the effective interest method as described in IAS 39, Financial Instruments: Recognition and Measurement (b) The option to include amortization of discounts or premiums related to the repayment of the loan and the amortization of ancillary costs incurred in connection with the arrangement of borrowings in the borrowing costs has been abolished. This amendment has not affected the Company or the Group s financial statements. IAS 27 (Amended) Consolidated and Separate Financial Statements This amendment states that in cases where an investment in a subsidiary company which is accounted for in accordance with IAS 39, Financial Instruments: Recognition and Measurement has been classified as an asset held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, IAS 39 shall continue to apply. Since the Company and the Group follow the standard stating that investments in subsidiary companies are classified as cost in the special financial statements, this amendment has not affected these financial statements. IAS 28 (Amended) Investments in Associate Companies (and subsequent amendments to IAS 32 Financial Instruments: Disclosure and IFRS 7 Financial Instruments: Disclosure ) According to this amendment, an investment in an associate company is accounted for as a unique asset for the purpose of auditing depreciation and the loss by depreciation is not apportioned to any specific asset that is included in the investment. Reversals of losses by depreciation shall be classified as an adjustment to the investment s accounting balance to the extent that the recoverable amount of the investment in the associate company increases. The Company and the Group have implemented this amendment since January 1 st, IAS 28 (Amended) Investments in Associate Companies (and subsequent amendments to IAS 32 Financial Instruments: Disclosure and IFRS 7 Financial Instruments: Disclosure ) This amendment clarifies that in cases where an investment in an associate company is accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement, in addition to the required disclosure defined in 12

18 IAS 32 Financial Instruments: Disclosure and IFRS 7 Financial Instruments: Disclosure, only certain required disclosures defined in IAS 28 need to be implemented, not all of them. Since the Group follows the principle of integrating investments in associate companies into the consolidated financial statements with the equity method, this amendment has not affected the Group s financial statements. IAS 29 (Amended) Financial Reporting in Hyperinflationary Economies The directive in this principle has been amended so that it recognizes the fact that some assets and liabilities are measured by their fair value instead of their historic cost. Since no subsidiary or associate company is active in a hyperinflationary economy, this amendment has not affected the Group s financial statement. IAS 31 (Amended) Interest in Joint Ventures (and subsequent amendments to IAS 32 Financial Instruments: Presentation and to IFRS 7 Financial Instruments: Disclosure ) This amendment states that in cases where an investment in a joint venture is accounted for in accordance with IAS 39, Financial Instruments: Recognition and Measurement, in addition to the required disclosure defined in IAS 32 Financial Instruments: Disclosure and IFRS 7 Financial Instruments: Disclosure, only certain required disclosures defined in IAS 32, Interest in Joint Ventures need to be implemented, not all of them. Since the Group has no interest in joint ventures, this amendment has not affected the Group s financial statement. IAS 36 (Amended) Impairment of Assets This amendment requires that when the fair value is less than the sales cost, calculated based on discounted cash flow methodology, a disclosure that is the same as those for calculating the value due to use must be made. and the Group have implemented this amendment and shall make the necessary disclosure where applicable for the audited impairments since January, IAS 38 (Amended) Intangible Assets This amendment states that a payment may be recognized as a prepayment only if it was made before the acquisition of the right to access goods or receive services. This amendment in practice means that when the Company and the Group acquire access to goods or receive services, then the payment must be entered as a cost. and the Group have implemented this amendment since January 1 st, IAS 38 (Amended) Intangible Assets This amendment cancels the wording that states that there will be seldom, if ever indications for use of a method that results in a lower depreciation rate than that of the straight line depreciation method. This amendment has not had an effect on the Company s and Group s financial statements up to now since all intangible assets are depreciated via the straight line method. 13

19 IAS 39 (Amended) Financial Instruments: Recognition and Measurement Changes to this standard are outlined below: a) It is possible for there to be transfers to and from the fair value category in the results when a derivative starts or stops meeting its conditions as a counterbalance for cash flow or net investment. b) The definition of a financial asset or financial liability in fair value in the results concerning assets that are held as available for commercial utilization has been modified. It is now clarified that a financial asset or liability that is part of a documented indication of an actual recent short-term plan to make a profit, must be included in this type of portfolio during the initial recognition. c) The effective directive for determining and documenting compensation states that a means must involve a part that does not belong to the financial entity in question and refers to a section as an example of a financial entity. This means that in order for compensation to be implemented at the sector level, the compensation requirements must be simultaneously met by the sector that is implementing it. This amendment removes this requirement so that IAS 39 is compatible with IFRS 8 on Operating Segments which requires disclosure for segments to be based on information presented to the financial entity s Managing Director / Board of Directors. d) When the accounting value of a debt claim is measured anew during a suspension of compensation for fair value, the amendment clarifies that a revised real interest rate (calculated on the day compensation for fair value was suspended) must be used. and the Group have implemented IAS 39 (Amended) since January 1 st, It has not affected the financial statements. IAS 40 (Amended) Investment Property (and subsequent amendments to IAS 16, Property, Plant and Equipment). This amendment states that property under construction or evaluation for future use as investment property is subject to IAS 40. Subsequently, when the fair value method is applied, this property is measured by its fair value. However, if the fair value of the investment property under construction cannot be reliably measured, the property is measured at cost until the construction is completed or when the fair value can be measured reliably, whichever comes first. Since the Company and the Group does not own investment property, this amendment has not affected its activities. IAS 41 (Amended) Agriculture This amendment requires the use of a discounted market interest rate where the fair value calculations are based on discounted cash flows and the repeal of the ban should take into account biological transformations when calculating fair value. Since neither the Company nor the Group is involved in any agricultural activity, this amendment has not affected their activities. 14

20 Part II The amendments contained in part II of the Regulation refer to changes in terminology or which are of an editorial nature and do not lead to accounting changes for presentation or recognition, and consequently applicable changes will affect the Company's and Group's financial statements. The standards that made the above changes are as follows: IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors IAS 10, Events after the Balance Sheet Date IAS 20, Accounting for Government Grants and Disclosure of Government Assistance (and subsequent amendments to IAS 41, Agriculture) IAS 29, Financial Reporting in Hyperinflationary Economies IAS 34, Interim Financial Reporting IAS 40, Investment Property IAS 41, Agriculture (and subsequent amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations; IAS 2, Share-based Payment, IAS 36, Impairment of Assets) Mandatory Standards and Interpretations for Annual Accounting Periods beginning on or after July 1 st, IFRS 5 (Amended) Non-current Assets Held for Sale and Discontinued Operations (and subsequent Amendments to IFRS 1 First-time Adoption of International Standards for Financial Reporting) As applicable for annual accounting periods beginning on or after July 1 st, The amendment states that all the assets and liabilities of a subsidiary are classified as held for sale if a program available for partial sale results in a loss of control and relevant disclosures should be made if the subsidiary has fulfilled the definition of a discontinued operation. A subsequent amendment to IFRS 1 provides that these future changes will apply from the date of transition to IFRS. will apply this change to all future partial disclosures of subsidiaries from January 1 st, IAS 27 (Amended) Consolidated and Separate Financial Statements As made effective for annual accounting periods beginning on or after July 1 st, [Regulation (EC) No 494/2009 of the Commission dated June 3 rd, 2009, L /06/2009] The amended IAS 27 requires that all transactions leading to changes in the number of shares held in a subsidiary must be entered as equity. Moreover, the amended standard changes the accounting for losses by a subsidiary and the loss of control of the subsidiary. The adoption of amendments to IAS 27 15

21 implies changes to International Financial Reporting Standards (IFRS) 1, IFRS 4, IFRS 5, International Accounting Standards (IAS) 1, IAS 7, IAS 14, IAS 21, IAS 28, IAS 31, IAS 32, IAS 33, IAS 39 and interpretation of IFRIC 7 of the Standing Interpretations Committee (SIC) to ensure consistency between international accounting standards. and the Group will implement any changes to the above standards for future acquisitions and transactions with minority shareholders after the effective date. IAS 32 (Amended) Financial Instruments: Presentation Effective annually beginning on or after January 1 st, [Regulation (EU) No 1293/2009 of the Commission of 23 December 2009 L347-24/12/2009] The amendment to IAS 32 makes it clear that some rights will be accounted for when instruments issued in currencies other than the issuer's functional currency. If these resources are distributed in proportion to the issuer s existing shareholders for a specific amount of capital, that capital should be classified as equity, even if the exercise price is denominated in currencies other than the functional currency of the issuer. Specifically, the amendment is concerned with rights, options or warrants to purchase a specific number of instruments of equity. The amendment will not apply to the Company or the Group. IAS 39 (Amended) Financial Instruments: Recognition and Measurement Effective annually and beginning on or after July 1 st, [Regulation (EC) No 839/2009 of the Committee on 15 September 2009 L244-16/9/2009] This amendment clarifies how to use hedge fund accounting as part of the financial instrument that corresponds to inflation and option contracts when used as hedging instruments. The amendment does not apply to the Company and the Group, and does not follow hedge accounting in accordance with IAS 39. IFRS 1 (Amended) First Enforcement of I.F.R.S. Effective for annual accounting periods which begin on or after January 1 st, [Regulation (EC) No 1136/2009 of the Commission of 25 November 2009 L311-26/11/2009] The revised IFRS 1 replaces the existing IFRS 1, making it easier to use and its future amendment. Moreover, the revised IFRS 1 has deleted some obsolete transition guidelines from the model and includes some minor changes. The current requirements remain unchanged. This amendment will have no impact on the financial statement of the Company or the Group as they have already changed to IFRS. 16

22 IFRS 3 (Amended) Business Combinations Effective for annual accounting periods beginning on or after 1 July [Regulation (EC) No 495/2009 of the Committee of 3 June 2009, L149-12/06/2009] The revised IFRS 3 introduces a number of changes to business accounting that will affect: a) The amount of capital gains tax which will arise b) The results of the reporting period in which there was a business acquisition, and c) Future results. These changes include: a) Registering the results and the costs associated with the acquisition and b) Entering the results and subsequent changes in price. The adoption of the revised IFRS 3 requires amendments to IFRS 1, IFRS 2, IFRS 7, International Accounting Standards (IAS) 12, IAS 16, IAS 28, IAS 32, IAS 33, IAS 34, IAS 36, IAS 37, IAS 38, IAS 39, and Interpretation 9 of the Interpretation Committee of International Financial Reporting Standards (IFRS) to ensure consistency between international accounting standards. The revision is not applicable to the Company or the Group. IFRIC 12 Service Concession Arrangements [Regulation (EC) No 254/2009 of the Committee of 25 March 2009, L80-26/3/2009] Effective for annual accounting periods beginning on or after March 29 th, Implementation is allowed before that date. IFRIC 12 refers to private entities that collaborate with the government for the creation and utilization of joint tasks of common interest. International Financial Reporting Standards (IFRS) 1, IFRS 4 Determining whether an arrangement contains a lease and SIC-29 Disclosure Agreements to grant the rights to provide the Standing Interpretations Committee are amended in accordance with Appendix B of IFRIC 12 as indicated above. This interpretation is not applicable to the Company and the Group. IFRIC 15 Agreements for the Construction of Real Estate Effective for annual accounting periods which begin on or after January 1 st, [Regulation (EC) No 636/2009 of the Committee of 22 July 2009 L191-23/7/2009] This interpretation clarifies guidelines on when it should account for revenue from the construction of buildings, particularly if the construction contract is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue accounting for revenue according to the stage of completion of the property in accordance with IAS 11. Because the Company and the Group do not operate in the real estate market, this interpretation does not apply to the Company or the Group. 17

23 IFRIC 16 Hedges of a Net Investment in a Foreign Operation Effective for annual accounting periods which begin on or after 1 July [Regulation (EC) No 460/2009 of the Committee of 4 June 2009 L139-5/6/2009] This interpretation applies to an entity that hedges risk in foreign currency resulting from a net investment in overseas holdings and qualifies for hedge accounting under IAS 39. This interpretation provides guidance on how an economic entity must determine amounts reclassified from equity to results for both the hedging instrument and hedged element. Because the Company and the Group do not apply hedge accounting for any investment in foreign operations, the interpretation will not be implemented by the Company or the Group. IFRIC 17 Distribution of Non-Cash Assets Effective for annual accounting periods which begin on or after November 1 st, [Regulation (EC) No 1141/2009 of the Committee of 26 November 2009 L312-27/11/2009] This interpretation provides guidelines on how to account for the following nonreciprocal distribution of assets from the economic entity to shareholders acting in their capacity as shareholders: a) distribution of non-monetary assets and b) distribution that gives shareholders the option for non-monetary assets or capital. There have also been some changes to IFRS 15 and IAS 10. IFRIC 18 Transfers of Assets from Clients Effective for annual accounting periods which begin on or after November 1 st, [Regulation (EC) No 1164/2009 of the Committee of 27 November 2009 L134-1/12/2009] The interpretation clarifies the requirements of IFRS for agreements where an entity receives a tangible asset from a client, which must then be used to provide the client with continuous access to goods and services. In some cases, the economic entity receives cash from a client, then the capital should only be used for the acquisition or construction of tangible assets. Also, some amendments were added to IFRS 1. This interpretation would not apply to the Company and the Group. 18

24 3. Basic Accounting Policies The basic accounting policies adopted in the preparation of the financial statements for the year 2009 have been applied consistently and in the preparation of its financial statements for the previous fiscal year (2008), are as follows: 3.1 Use of Value Judgments and Estimates by the Management The preparation of financial statements in accordance with IFRS requires management to carry out value judgments and estimates that affect the assets and liabilities, income and expense amounts, and the disclosure of contingent assets and liabilities. These value judgments and estimates are based on more complete information which is available to the company s management and the markets in which it operates, and experience in relation to similar transactions or events which are reasonable under the circumstances. Subsequent possible changes to the existing conditions are taken into consideration and, if necessary, these judgments and estimates are revised. Actual results may differ from the estimates. Critical accounting estimates for the assets of the Company and the Group are those of the residual life and residual value of ships, as they significantly affect the financial statements (see accounting policy 3.5). Also, recoverability of claims, the evaluation of some others as bad, the formation of projections on the recovery of claims, or other contingent liabilities require judgments and estimates that are also important because they can significantly affect the financial statements. 3.2 Basis for Consolidation Subsidiaries s consolidated financial statements include the financial statements of the parent company and all its subsidiaries. These are controlled directly or indirectly, by the parent company, with ownership of the majority of the shares of the subsidiary (see Note 1) and control of the Boards of Directors. Subsidiaries are fully consolidated using the full consolidation on the date of purchase and cease to be consolidated when such control ceases. Accounting policies of the subsidiaries have been changed, where necessary, to be uniform with those adopted by the parent company. In the parent company s corporate financial statements, the value its subsidiaries' building costs are less any loss. 19