Golden Close Maritime Corp. Ltd. - ISIN NO 0010789456 ISIN NO 001072202.8 Report Q3 2017 (unaudited) Golden Close Maritime Corp. Ltd. (Issuer) Golden Close Maritime Corp. Ltd. Group (Issuer Group) Business activities Following the end of the contract in South-East Asia, Deepsea Metro I was moved back to Labuan, Malaysia, where it is laid-up awaiting new employment. The vessel is being marketed for potential contracts world-wide. Market Outlook and Risk Factors The Issuer provides drilling services for the oil and gas industry, which historically has shown a cyclical development. The level of activity in the offshore oil and gas industry will, among other things, depend on the general climate in the global economy, oil and gas prices, investment patterns for oil and gas exploration, production and drilling, and regulatory issues with respect to operational safety and environmental hazards. Financial performance will also depend on the demand and supply balance for mobile drilling units. The weakening of the drilling and oil service market has further continued in 2017 and the Issuer does not see any signs of material improvement near- to medium term. Oil and gas companies still focus on cost cutting programs and capital discipline which have led to reduced demand for drilling capacity. There is still a substantial pipeline of newbuild UDW drillships coming from yards, and the trend of postponing deliveries has continued. The results are an increasing number of stacked units and continued downward pressure on day rates and asset values. There are contract opportunities for Deepsea Metro I in the current and near term market, but competition is fierce. The Issuer expects the deep- and ultra deepwater market to be oversupplied for a period going forward. The Issuer and the drillship manager seek new drilling contracts for Deepsea Metro I wherever possible, in an effort to keep the drillship employed and avoid long-term stacking. Financial risk factors The Issuer`s objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its investments and future operations in accordance with its strategic plan. The Issuer monitors its liquidity risk by considering the maturity of both its financial investments and financial assets and projected future cash flow from operations. On 29 March 2017 the Issuer completed restructuring with respect to its USD 400 million bond agreement. The restructuring includes extending the drillship management agreement and amending the bond agreement. The restructuring implies inter alia that the Issuer has significantly reduced interest bearing debt, new working capital of USD 10 million through issue of super senior secured bonds and additional USD 40 million in possible issue of super senior secured bonds. The restructuring as well as cost saving measures and other measures to reduce the Issuer's liquidity risk ensures that the Issuer can secure and fulfil new contracts for the drillship. The contracts awarded in 2017 also contribute to secure
operational cash flow in 2017. The Company is dependent of new drilling contracts in the future to secure operational cash flow or capital contribution to fulfil its operational and financial obligations. The Issuer Group and the drillship manager focus on securing employment for Deepsea Metro I and thereby avoid cold stacking of the drillship. There is a joint understanding between the Issuer Group and its bondholders that keeping the unit warm and occupied on short- to medium term contracts in today s challenging drilling market is the best way of maintaining the value of the drillship, even if prevailing market day rates may not fully cover operational costs, nor allow the Issuer to properly service its debt obligations. Interest risk From and including 30 March 2017, interest will accrue on Senior Secured Bond of USD 100 millions and Super Senior Secured Bond of USD 10 million. The Issuer may elect cash or non-cash payment of the interest with a quarterly coupon of 8% p.a. if paid in cash and 12% p.a. if paid in kind through the issuance of additional bonds for the Senior Secured Bond and 10% p.a or 15% p.a for the Super Senior Secured Bond. The Issuer will consider entering into interest hedging in connection with any other future external long-term debt obligations. Ownership Golden Close Maritime Corporation Ltd. ( the Parent ) was incorporated under the laws of Bermuda as a private limited liability company on 4 September 2008. As of 30 September 2017, the authorised share capital of the Parent was USD 400,000,000. Issued share capital of the Parent was 4,572,694 whereof 2,286,347 shares were issued at par value USD 2. Each share carries one vote, and otherwise confers equal rights in the Parent. The Parent is a drillship-owning company and holding Company for five companies with limited activity, which it owns 100 per cent. Financial information The financial figures have been prepared in accordance with simplified IFRS (International Financial Reporting Standards) pursuant to section 3-9 of the Norwegian Accounting Act and with the Directives of simplified IFRS specified by the Norwegian Ministry of Finance on 21 January 2008. Golden Close Maritime Corp. Ltd. Group The Issuers Group s operating revenue was USD 9.1 million in Q3 2017. In Q2 2017 the Issuers Group s operating revenue was USD 8.2 million. Operating expenses in the Issuer Group amounted to USD 14.5 million in Q3 2017, a decrease from USD 18.7 million in Q2 2017, due to decreased activity in Q3 following the termination of the contract in South-East Asia. The operating loss was USD 5.4 million in Q3 2017 compared to a loss of USD 10.1 million in Q2 2017. Net financial loss in the Issuer Group was USD 3.5 million in Q3 2017 compared to USD 3.3 in Q2 2017. As of 30 September 2017, the total assets of the Issuer Group amounted to USD 359 million, compared to USD 367 million as of 30 June 2017.
Cash and cash equivalents in the Issuer Group were USD 21.2 million as of 30 September 2017 compared to USD 26.0 million as of 30 June 2017. Other current assets were USD 19.7 million at 30 September 2017, compared to USD 17.4 million at 30 June 2017. The book value of Deepsea Metro I was USD 318 million at 30 September 2017. The Issuer has received broker valuations of Deepsea Metro I from two independent brokers. The valuations are dated in August 2017. The average of the broker valuations is USD 362.5 million. The lowest point in the valuation is USD 275 million and the highest is USD 425 million. The valuations are excluding any charter values and otherwise based on market standard assumptions. Due to market conditions, current employment and market outlook the board is of the opinion that the book value reflects a best estimate. Long- term liabilities as of 30 September 2017 amounted USD 116.8 million and comprise USD 10.8 million in super senior secured bond, USD 106 million in senior secured bond. Total liabilities amounted to USD 127 million as per 30 September 2017, compared to USD 125 million as per 30 June 2017. The increase is due to conversion of interest to bonds. On 30 September 2017, the total equity of the Issuer Group was positive of USD 232 million compared to USD 241 million as per 30 June 2017. The change in equity is explained by loss of USD 9 million in the period. Events after the reporting day: There are not substantial events after the reporting day. 24 November 2017 The Board of Directors Golden Close Maritime Corp. Ltd. Hamilton, Bermuda ENCLOSURE Significant accounting principles The accounting principles used in the preparation of this third quarter report for 2017 are consistent with those used in the annual financial statements for the year ending 31 December 2016. These consolidated condensed financial statements should be read together with the annual financial statements for 2016, which include a full description of the group s accounting policies.
GOLDEN CLOSE MARITIME CORP LTD. GROUP - ISSUER GROUP REPORT Q3 2017 (UNAUDITED) INCOME STATEMENT 2017 2017 2017 2017 2016 2016 2016 (USD) Operating revenues 17 941 750 9 083 803 8 612 347 245 600 16 179 331 15 381 9 956 786 Operating expenses (44 319 372) (14 499 433) (18 661 133) (11 158 806) (66 576 611) (13 146 077) (18 994 349) Operating profit / (loss) (26 377 622) (5 415 630) (10 048 786) (10 913 206) (50 397 280) (13 130 697) (9 037 563) Interest income 216 438 53 071 129 099 34 268 149 751 29 070 37 373 Interest cost (18 880 001) (3 479 063) (3 374 991) (12 025 947) (36 000 448) (9 000 000) (9 000 028) Other finance income / (costs) (39 600 016) (23 773) (27 963) (39 548 281) (1 351 928) 36 531 (362 457) Pre-tax profit / (loss) (84 641 202) (8 865 395) (13 322 641) (62 453 166) (87 599 905) (22 065 095) (18 362 674) Taxes (22 015) (22 026) 11 - (1 337 820) - (476 206) Net profit / (loss) (84 663 216) (8 887 420) (13 322 630) (62 453 166) (88 937 725) (22 065 095) (18 838 880) BALANCE SHEET 2017 2017 2017 2017 2016 2016 2016 Fixed assets Mobile Drilling Units 318 340 537 318 340 537 323 263 519 328 115 892 331 850 172 331 850 172 336 972 101 Other non-current assets - - - - - Current assets Other current assets 19 657 884 19 657 884 17 407 464 18 954 116 14 913 522 14 913 522 25 072 062 Cash and cash equivalents 21 236 770 21 236 770 25 960 297 26 666 551 24 392 582 24 392 582 27 115 593 Total assets 359 235 192 359 235 192 366 631 280 373 736 560 371 156 277 371 156 277 389 159 756 Equity Issued capital 4 572 694 4 572 694 4 572 694 45 735 947 10 000 10 000 10 000 Other contribued capital 820 472 986 820 472 986 820 472 986 779 494 509 439 690 967 439 690 967 439 690 967 Retained earnings (592 760 811) (592 760 811) (583 873 390) (570 560 661) (508 107 495) (508 107 495) (486 042 399) Debt - Long-term liabilities 116 759 451 116 759 451 113 275 296 109 531 842 - - - Short-term liabilities 10 190 872 10 190 872 12 183 694 9 534 922 439 562 804 439 562 804 435 501 188 Total equity and liabilities 359 235 192 359 235 192 366 631 280 373 736 560 371 156 276 371 156 276 389 159 756 CASH FLOW STATEMENT 2017 2017 2017 2017 2016 2016 2016 Cash flow from operations (12 035 754) (4 806 603) (906 914) (6 322 237) (24 522 652) (2 413 859) (5 719 477) Cash flow from investment activities (667 282) 72 421 (525) (739 178) (11 675 938) (299 635) (5 740 882) Cash flow from financing activities 9 547 224 10 655 201 186 9 335 384 (44 508) (9 517) (32 094) Cash flow for the period (3 155 812) (4 723 527) (706 254) 2 273 969 (36 243 098) (2 723 011) (11 492 453) Cash and cash equiv. at start of period 24 392 582 25 960 298 26 666 551 24 392 582 60 635 680 27 115 593 38 608 046 Cash and cash equiv. at end of period 21 236 771 21 236 771 25 960 298 26 666 551 24 392 582 24 392 582 27 115 593 Changes in Equity 2017 2017 2017 2017 2016 2016 2016 Shareholders' equity at beginning of period (68 406 528) 241 172 290 254 669 795 (68 406 528) 20 531 197 (46 341 432) (27 502 552) Contributions and other changes in equity 385 354 613 - (174 875) 385 529 489 - - - Profit/(loss) at end period (84 663 216) (8 887 420) (13 322 630) (62 453 166) (88 937 725) (22 065 096) (18 838 880) Equity at end of period 232 284 870 232 284 870 241 172 290 254 669 795 (68 406 528) (68 406 528) (46 341 432) Shares 2017 2017 2017 2017 2016 2016 2016 Number of shares 2 286 347 2 286 347 2 286 347 45 735 947 10 000 10 000 10 000
GOLDEN CLOSE MARITIME CORP LTD. - ISSUER REPORT Q3 2017 (UNAUDITED) INCOME STATEMENT 2017 2017 2017 2017 2016 2016 2016 (USD) Operating revenues 17 941 750 9 083 803 8 612 347 245 600 8 012 149 0 1 804 985 Operating expenses (44 041 725) (15 092 887) (18 348 714) (10 600 124) (58 017 789) (12 608 108) (11 077 722) Operating profit (26 099 975) (6 009 084) (9 736 367) (10 354 524) (50 005 640) (12 608 107) (9 272 737) Income /(loss) from subsidiaries (50 166) - (50 166) - - - - Interest income 208 531 49 655 126 268 32 608 146 236 26 414 36 913 Interest cost (18 880 001) (3 479 063) (3 374 991) (12 025 947) (36 000 416) (9 000 000) (9 000 016) Other finance income / (costs) (39 614 552) (30 761) (25 145) (39 558 646) (1 331 309) (294 644) (318 261) Pre-tax profit (84 436 163) (9 469 253) (13 060 401) (61 906 509) (87 191 129) (21 876 338) (18 554 102) Taxes - - - - (861 615) - - Net profit/loss (84 436 163) (9 469 253) (13 060 401) (61 906 509) (88 052 743) (21 876 338) (18 554 102) BALANCE SHEET 2017 2017 2017 2017 2016 2016 2016 Fixed assets Mobile Drilling Units 318 340 537 318 340 537 323 263 519 328 115 892 331 850 172 331 850 172 336 972 101 Investments in subsidiaries - - - 50 166 50 166 50 166 50 166 Current assets - Other current assets 18 012 901 18 012 901 16 609 385 19 362 734 14 171 991 14 171 991 18 922 506 Cash and cash equivalents 19 896 794 19 896 794 24 360 820 24 812 098 22 180 926 22 180 926 26 809 347 Total assets 356 250 233 356 250 233 364 233 723 372 340 889 368 253 254 368 253 254 382 754 119 Equity Issued capital 4 572 694 4 572 694 4 572 694 45 735 947 10 000 10 000 10 000 Other contribued capital 820 472 986 820 472 986 820 472 986 779 494 509 439 690 967 439 690 967 439 690 967 Retained earnings (595 632 871) (595 632 871) (586 163 618) (573 113 117) (511 206 608) (511 206 608) (489 330 270) Debt - Long-term liabilities 116 759 451 116 759 451 113 275 296 109 531 842 - - - Short-term liabilities 10 077 973 10 077 973 12 076 365 10 691 708 439 758 895 439 758 895 432 383 422 Total equity and liabilities 356 250 233 356 250 233 364 233 723 372 340 889 368 253 254 368 253 254 382 754 119 CASH FLOW STATEMENT 2017 2017 2017 2017 2016 2016 2016 Cash flow from operations (11 160 554) (4 545 770) (649 749) (5 965 035) (22 043 835) (4 380 018) (5 716 333) Cash flow from investment activities (667 282) 72 421 (525) (739 178) (11 726 104) (299 635) (5 791 048) Cash flow from financing activities 9 543 703 9 323 198 997 9 335 384 28 556 51 232 (11 100) Cash flow for the period (2 284 133) (4 464 026) (451 277) 2 631 170 (33 741 384) (4 628 421) (11 518 481) Cash and cash equiv. at start of period 22 180 926 24 360 819 24 812 096 22 180 926 55 922 310 26 809 347 38 327 827 Cash and cash equiv. at end of period 19 896 793 19 896 793 24 360 819 24 812 096 22 180 926 22 180 926 26 809 347 Changes in Equity 2017 2017 2017 2017 2016 2016 2016 Shareholders' equity at beginning of period (71 505 641) 238 882 063 252 117 339 (71 505 641) 16 547 101 (49 629 303) (31 075 202) Contributions and other changes in equity 385 354 613 - (174 875) 385 529 489 - - - Profit/(loss) at end period (84 436 163) (9 469 253) (13 060 401) (61 906 508) (88 052 743) (21 876 337) (18 554 102) Equity at end of period 229 412 809 229 412 809 238 882 063 252 117 339 (71 505 641) (71 505 641) (49 629 303) Shares 2017 2017 2017 2017 2016 2016 2016 Number of shares 2 286 347 2 286 347 2 286 347 45 735 947 10 000 10 000 10 000