Interim Balance Sheet per 31 August 2018
Songa Bulk ASA Interim balance sheet per 31 August 2018 Assets in $ thousands Note 31 August 2018 31 December 2017 Investments in subsidiaries 2 31 904 205 376 Other receivables - 3 055 Total financial non-current assets 31 904 208 431 Total non-current assets 31 904 208 431 Accounts receivable 210 2 490 Receivables from group companies 376 77 505 Other receivables 2 016 59 Total receivables 2 602 80 054 Market based shares 4 12 153 - Total investments 12 153 - Cash and cash equivalents 5 5 461 28 160 Total current assets 20 217 108 214 TOTAL ASSETS 52 121 316 645 Page 2
Songa Bulk ASA Interim balance sheet per 31 August 2018 NOTES FINANCIAL STATEMENTS Note 1 Accounting principles The accounts are prepared in accordance with the 1998 Norwegian Accounting Act and Generally Accepted Accounting Principles in Norway (NGAAP). The purpose of the interim balance sheet is to increase the equity to be used as basis for dividend distribution to the shareholders of the Company. Note 2 Investment in subsidiaries The following subsidiaries were owned by the Company as at 31 August 2018: Subsidiary Business office Shareholding / voting rights Songa Maru AS Oslo 100% Songa Marlin AS Oslo 100% Songa Glory AS Oslo 100% Songa Genesis AS Oslo 100% Songa Delmar AS Oslo 100% Songa Flama AS Oslo 100% Songa Haddock AS Oslo 100% Songa Res 5 AS Oslo 100% Songa Mountain AS Oslo 100% Songa Grain AS Oslo 100% Songa Opus AS Oslo 100% Songa Devi AS Oslo 100% Songa Moon AS Oslo 100% Songa Hirose AS Oslo 100% Songa Sky AS Oslo 100% Songa Claudine AS Oslo 100% Note 3 Liabilities to group companies In connection with subsidiaries sale of vessels to Star Bulk the consideration received by each subsidiary was distributed to Songa Bulk ASA as dividend. All consideration excess of the dividend capacity was purchased by Songa Bulk ASA against seller credit to each subsidiary. The sellers credit is considered a short term liability, nominated in NOK and is free of interests until 31 August 2018. From 1 September 2018 the sellers credit will carry interest of NIBOR + a margin of 3% p.a. Note 4 Market based shares Market based shares consist of 949 490 shares in Star Bulk Carriers Corp. Approximately 246 500 of the shares are resolved distributed to shareholders, but are held on the Company s account in anticipation of shareholders submitting representation and warranties letter. Page 4
Songa Bulk ASA Interim balance sheet per 31 August 2018 Note 5 Cash and cash equivalents in $ thousands 31 August 2018 2017 Bank deposits denominated in USD 5 010 27 732 Bank deposits denominated in NOK 451 428 Total cash and cash equivalents 5 461 28 160 Restricted cash related to employee taxes at 31 August 2018 was $55 thousand. Note 6 Equity in $ thousands Share capital Share premium Other paid-in capital Retained earnings Total equity Balance at 1 January 2018 21 620 153 619 574 924 176 738 Dividend 22 March 2018 - -3 586 - - -3 586 Dividend 6 July 2018 - -150 033-574 -393-151 000 Share capital reduction 21 August 2018-21 499 - - - -21 499 Translation differences - - - 517 517 Net profit per 31 August 2018 - - - 19 387 19 387 Balance at 31 August 2018 121 - - 20 435 20 556 Note 7 Share capital and shareholders Number of shares Share capital (USD) Share premium (USD) Balance at 1 January 2018 35 860 000 21 620 153 619 Dividend 22 March 2018 - - -3 586 Dividend 6 July 2018 - - -150 033 Share capital reduction 21 August 2018 - -21 499 - Balance at 31 August 2018 35 860 000 121 - Authorized share capital is NOK 1 000 000. All issued shares are fully paid at 31 August 2018. Note 8 Dividends Dividends payable as at 31 August 2018: Dividend resolved not paid 2 929 Share capital reduction resolved not paid 248 Total 3 177 Page 5
Songa Bulk ASA Interim balance sheet per 31 August 2018 Note 9 Risk factors The Company is through its ownership of shares in Star Bulk exposed to the dry bulk market. Other risks worth to mention is the risk of any unforeseen conditions resulting in claims either way from the transaction with Star Bulk. However, at the date of this report, there are no indications of such circumstances. Note 10 Related party transactions All related party transactions are carried out at marked terms. The Company has entered into a corporate service agreement with Arne Blystad AS for the rendering of administrative services, IT and office services and accounting and reporting services. In addition, the agreement covers hire of Chief Financial Officer. Arne Blystad AS is a company owned and controlled by the Chairman Arne Blystad and his immediate family. Total expenses under the agreement per 31 August 2018 is $415 thousand. Page 6
To the General Meeting of Songa Bulk ASA Auditor s Report to the Interim Balance Sheet Opinion We have audited the Interim Balance Sheet of Songa Bulk ASA as at 31 August 2018 showing an equity of USD 20 556 000. The interim balance sheet comprise the balance sheet, selected notes to the financial statements, and a summary of significant accounting policies. In our opinion, the accompanying Interim Balance Sheet in all material respects, express the financial position of the company in accordance with the accounting principles as set out in note 1. Basis for Opinion We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company as required by laws and regulations, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter Basis of accounting and Restriction on Distribution We draw attention to Note 1 to the Interim Balance Sheet, which describes the basis of accounting. The Interim Balance Sheet is prepared to assist Songa Bulk ASA to distribute dividends (asal 8-2). As a result, the Interim Balance Sheet may not be suitable for another purpose. Our report is intended solely for the Songa Bulk ASA and should not be distributed to parties other than Songa Bulk ASA. Our opinion is not modified in respect of this matter. Responsibilities of the Board of Directors and the Managing Director for the Interim Balance Sheet The Board of Directors and the Managing Director (management) are responsible for the preparation in accordance with the accounting principles as set out in note 1, and for such internal control as management determines is necessary to enable the preparation of the Interim Balance Sheet that are free from material misstatement, whether due to fraud or error. In preparing the Interim Balance Sheet, management is responsible for assessing the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The Interim Balance Sheet use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. Auditor s Responsibilities for the Audit of the Interim Balance Sheet Our objectives are to obtain reasonable assurance about whether the Interim Balance Sheet as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with laws, regulations, and auditing standards and practices generally accepted in PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org.no.: 987 009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm
Independent Auditor's Report Songa Bulk ASA Norway, including ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Interim Balance Sheet. As part of an audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: identify and assess the risks of material misstatement of the Interim Balance Sheet, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit 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 Company s internal control. evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the Interim Balance Sheet or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the Interim Balance Sheet represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Oslo, 10 September 2018 PriceWaterhouseCoopers as Bjørn Lund State Authorised Public Accountant (2)