Year ended 31 december 2007 Annual report and accounts

Transcription

1 annual report 2007

2 Year ended 31 december 2007 Annual report and accounts 100 th financial year Premuda This report is based on Premuda's annual report For the period ending 31 December The Premuda financial statements were audited by Deloitte & Touche S.p.A. and are available in Italian. 000

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4 table of contents Board of Directors Group's Structure Group s Fleet Financial highlights Premuda S.p.A.: Management report Financial Statements Premuda Group: Management report Financial Statements Notes

5 4 Memorandum of Association of Società di Navigazione G.L. Premuda, Trieste, 21 December 1907.

6 Board of directors Board of directors chairman deputy chairman managing director directors general managers Alcide Rosina Giacomo Costa Stefano Rosina Raffaele Agrusti Amerigo Borrini Claudio Campana Antonio Gozzi Anna Rosina Alessandro Zapponini Stefano Rosina Marco Tassara Board of statutory auditors chairman auditors alternate auditors Giorgio Carbone Giuseppe Alessio Vernì Alfio Lamanna Luigi Barberi Pier Luca Bubbi Audit company Deloitte & Touche S.p.A. The mandate of the Board of Directors and of the Board of Statutory Auditors will expire once the Financial Statements at December 31, 2007 are approved. 5

7 6 Costruire by Raimondo Sirotti th painting realized for the 100 Anniversary of the Company.

8 Group s Structure at 31 December 2007 Premuda Spa 100% Premuda International Sah Luxembourg m/t. Four Island m/t. Four Bay m/t. Framura m/t. Four Springs m/t. Four Moon m/v. Four Etoiles m/v. Four Coal m/t. Four Sun * m/t. Four Smile * m/t. Four Schooner * m/v. Doric Spirit * 100% 100% 100% Four Vanguard Serviços e Navegaçao Lda. Madeira FPSO Four Vanguard Moon Shipping Serviços e Navegaçao Lda. Madeira m/t. Four Atlantica ** m/t. Four Antarctica ** Jep Navegaçao Lda. Madeira 100% Premuda (Atlantic) Inc. Houston USA 100% 100% Australian FPSO Management Pty. Ltd. Perth Australia Suezmax Navegaçao Lda. Madeira 100% m/v. Four Earth Brig Shipping Lda. Madeira TBN Bulk dwt (2010) TBN Bulk dwt (2010) TBN Bulk dwt (2009) TBN Bulk dwt (2010) TBN Bulk dwt (2010) TBN Bulk dwt (2011) TBN Bulk dwt (2011) TBN Bulk dwt (2011) TBN Bulk dwt (2011) TBN Bulk dwt (2012) 90% Premuda (Monaco) Sam Monaco 43% (#) Premuda Chartering Navegaçao Lda. Madeira TBN Aframax dwt (2010) TBN Aframax dwt (2010) TBN Aframax dwt (2010) 100% Premuda Bulk Navegaçao Lda. Madeira 100% Panamax Navegaçao Lda. Madeira Holding Company ShipManagement Company Commercial Company Shipowning Company Non Operative Company * : long term timecharter in ** : long term bareboat out (#) : 33% within vessels delivery 7

9 Chinese Sea: m/t. Four Moon at sea after the reconversion in tanker. 8

10 Group s Fleet at 31 March 2008 As at the end of March 2008 the Group's Fleet consists of the following: name type hull design year built dwt tankers Four Antarctica * Four Atlantica * Four Island Four Bay Framura Four Springs Four Moon aframax Ice Class aframax Ice Class aframax tanker aframax tanker aframax tanker aframax tanker panamax tanker DH DH DH DH DH DH DH / , ,900 94,000 94,000 94,000 94,000 65,100 total owned tankers in service 670,800 FPSO 8 Four Vanguard FPSO DH 1992/ ,000 total owned FPSO in service 94,000 bulk carriers Four Coal Four Earth Four Etoiles panamax bulk panamax bulk panamax bulk DB DB DB ,400 78,000 54,500 total owned bulk carriers in service 206,900 total owned Fleet in service 971,700 new buildings TBN (33%) TBN (33%) TBN (33%) TBN TBN TBN TBN TBN TBN TBN TBN TBN TBN TBN TBN aframax product aframax product aframax product handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk handy bulk DH DH DH DH DH DH DH DH DH DH DH DH DH DH DH , , ,700 34,000 34,000 34,000 34,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 total new buildings on order 760,100 chartered in Four Sun ** Four Smile ** Four Schooner ** Doric Spirit ** Four Shinano ** Four Kitakami ** Four Mogami ** suezmax tanker suezmax tanker panamax tanker handymax bulk handymax bulk handymax bulk handymax bulk DH DH DH DB DB DB DB , ,000 73,100 52,500 56,300 56,000 56,000 total chartered in tonnage 613,900 total fleet as at 31 March ,345,700 * : renamed Stena Antarctica and Stena Atlantica (longterm bareboat out) **: longterm timecharter in 9

11 The 160,000 dwt suezmax tanker Four Sun at sea. 10

12 Financial highlights (1) 2007 (1) 2006 (1) (1) Fixed assets Liabilities net of current assets Net equity (2) ( /000) 347, , ,438 ( /000) 324, , ,208 ( /000) 285, , ,292 ( /000) 314, , ,764 ( /000) 428, , ,375 EBITDA Financial items (3) Depreciation Cashflow (4) Net profit (2) Dividends (5) Extraordinary dividends (6) ( /000) 69,745 7,909 23,809 59,040 33,118 8,451 8,450 ( /000) 58,448 5,457 24,136 52,129 24,108 8,451 ( /000) 64,865 6,129 29,299 56,807 25,376 8,451 ( /000) 70,968 9,486 35,075 64,608 24,847 8,049 ( / 000) 41,603 8,933 28,330 43,614 12,103 4,969 Net profit per share (2) Dividend per ordinary share Dividend per saving share (*) (*) (*) ( ) ( ) ( ) (*) (*) (*) (*) (*) (*) (*) (*) (*) ( ) ( ) Debt/equity Cashflow/financial charges Average debt of cost Return on investment (ROI) Return on equity (ROE) (2) Cashflow/net equity 5.5% 19.5% 16.0% 28.5% 4.8% 17.1% 13.0% 27.3% 4.0% 22.6% 15.2% 32.2% 4.0% 22.0% 16.5% 39.4% 4.2% 9.1% 10.3% 32.3% (1) : Financial statements prepared under IFRS Gaap (2) : Group's interest (3) : exchange differences not included (4) : net profit + depreciation (5) : on profit for the year paid in the following year (6) : paid in December 2007 to celebrate the Company s Centennial * : par value 0.50 after splitting 11

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14 Management Report Premuda S.p.A. 13

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16 Dear Shareholders, First of all we wish to remind you that your Company's Board of Directors for the years 2005, 2006 and 2007 included Raffaele Agrusti, Amerigo Borrini, Claudio Campana, Giacomo Costa, Antonio Gozzi, Alcide Rosina, Anna Rosina, Stefano Rosina and Alessandro Zapponini. The Chairman of the Board is Alcide Rosina, whose powers include, amongst others, legal representation towards third parties as well as ordinary and extraordinary administration, excluding however those acts reserved by law to the Board, as well as acts having economic relevance with amounts exceeding certain limits, such as: sale and purchase of ships; contracts for the employment of vessels exceeding 36 months; acquisition and ale of subsidiaries; granting of medium/longterm loans to subsidiaries; provision of guarantees. The Managing Director is Stefano Rosina, legal representative towards third parties, in charge of running and coordinating the commercial activity and fleet operations, as well as the activity and administration of Group Companies. The Deputy Chairman is Giacomo Costa, Independent Director. The Board has established two Committees, one for Internal Control and one for Remuneration. The purpose of the Committee for Internal Control is to address issues related to the company's activities with proposals and consultancy functions. Its members are Giacomo Costa and Claudio Campana. The meetings of this Committee are attended by the Chairman of the Board of Statutory Auditors. The members of the Committee for Remuneration are the Chairman Alcide Rosina, Raffaele Agrusti and Antonio Gozzi. The role of this Committee is to advise the Board of Directors on matters relating to the remuneration of the Chairman and the Managing Director and to set the remuneration criteria for the Senior Management of the Company and the Group. The meetings of this Committee are also attended by the Chairman of the Board of Statutory Auditors. In 2007, the Board of Directors convened on six occasions. The meetings were all attended by the Board of Statutory Auditors. The attendees received, pursuant to a wellestablished procedure, updated information on: market performance, commercial coverage and technical management of the Fleet, dynamics of costs and profit/loss, performance and activity of subsidiaries, financial position, as well as all other operations and events concerning management. During the Financial Year there were no unusual transactions in relation to the ordinary business management to report and there were no significant nonrecurrent transactions with related parties or determining a conflict of interest. 15

17 In 2007, as in the year before, the only intergroup transactions that took place were related to the Group's operational structure and were all concluded with or between subsidiaries or affiliated companies. These transactions mainly consisted of management activities, timecharters and financial support to which ordinary fees or remunerations were applied, always consistent with normal practice and carried out at market value. All transactions, whether intragroup or with related parties, are summarised in the appendix to the Notes. Subsidiaries or affiliates The activities carried out by our subsidiaries and affiliates during the Financial Year are detailed hereunder. Nonetheless, we refer you to the Notes for further information on each company. 1.0 Premuda International S.A.H., Luxembourg, a whollyowned subsidiary, is the holding company for the Group's foreign assets. Its Financial Statements for 2007 showed a profit of 13,290,124 ( 20,446,390 in 2006). Premuda International S.A.H. owns the following companies: 1.1 Brig Shipping Lda., Madeira, a whollyowned subsidiary, placed an order for two 34,000 dwt bulk carriers with a Vietnamese shipyard basis contractual delivery 2008/2009 (now expected 2010) for a cumulative investment of approximately USD 57 Mln. The Company also ordered eight 35,000 dwt bulk carriers to a Korean shipyard for delivery 2009/2012 for a cumulative investment of approximately USD 290 Mln. In February 2007 the Company ordered four 53,000 dwt bulk carriers that were subsequently resold in August 2007 for a cumulative profit of approximately USD Mln. In the financial year 2007 the Company booked an overall profit of 15,970,602 ( 379,340 in 2006). 1.2 Premuda Bulk Navegaçao Lda., Madeira, formerly a 75% subsidiary, now whollyowned, at the beginning of the year owned the panamax bulk carrier Four Euro, sold in February In 2007 the company booked a cumulative profit of 8,436,607 (our share 6,327,455) compared to 15,422,063 in 2006 (our share 11,566,547). 16

18 1.3 Moon Shipping Serviços e Navegaçao Lda., Madeira, a whollyowned subsidiary, is the owner of two aframax IceClass tankers, which were delivered in May and November 2006 and chartered to the Stena Group under longterm bareboat agreements. The company closed the Financial Year with a profit of 10,227,503 ( 4,258,023 in 2006). 1.4 JEP Navegaçao Lda., Madeira, a whollyowned subsidiary, owns the panamax bulk carrier Four Earth, which was purchased in February The financial result shows a profit of 1,038,968 (a loss of 2,203,395 in 2006). 1.5 Panamax Navegaçao Lda., Madeira, a whollyowned subsidiary, remained virtually inactive during the year, showing a profit of 13,121 (a loss of 97,397 in 2006). 1.6 Four Vanguard Serviços e Navegaçao Lda., Madeira, a whollyowned subsidiary, owner of the FPSO Four Vanguard, deployed in Australia since 2003 for crude oil extraction. In 2007 the company booked a profit of 1,646,503 (a loss of 2,987,384 in 2006) after a 7,500,000 vessel depreciation charges. 1.7 Australian FPSO Management PTY LTD, Australia, a whollyowned subsidiary, in charge of the technical and operational management of the FPSO Four Vanguard. In 2007, the company booked a profit of AU$ 289,094 (approximately 172,205) after a profit of AU$ 493,104 in Premuda (Monaco) S.A.M., a 90% subsidiary, in charge of the commercial and operational management of all of the Group's foreignflagged units, which logged a profit of 40,829 (a profit of 33,224 in 2006). Premuda (Atlantic) Inc., Delaware, a whollyowned subsidiary, which handles the chartering of our fleet in American waters. In 2007 the company booked a loss of US$ 103,900 (a profit of US$ 22,615 in 2006). Suezmax Navegaçao Lda., Madeira, a whollyowned subsidiary which provides administrative services to the other Madeirabased subsidiaries. The company generated a loss of 14,820 (a loss of 136,469 in 2006). 17

19 Premuda international S.A.H. also holds a 43% stake in Premuda Chartering Navegaçao Lda., Madeira, which ordered three 114,700 dwt product carriers from Samsung shipyard basis delivery in 2010 with a cumulative investment of approximately USD 225 Mln, of which USD 150 Mln related to third parties. The Company booked a loss of 206,808. According to the agreement with the other shareholders (Efibanca S.p.A. and Messina Group), the Premuda International's stake will be reduced to 33,33% upon delivery of the vessels. As already anticipated in the Annual Report 2006, in the Semi Annual Report 2007 and in the Notes to the present Report, we disposed of our 25% stake in Sider Navi S.p.A. Please refer to the above mentioned documents for any information. Please refer to the Consolidated Financial Statements for a more detailed analysis of the markets in which the Company and its subsidiaries operate. Miscellaneous data and information In line with the existing legislation in the majority of EU countries, Italy introduced, with the Tonnage Tax, a flatrate income tax for shipping companies. According to this tax regime, income generated by ships listed in the International Register is assessed on tonnage. The adoption of this new tax regime is on a voluntary basis, however, once implemented it must remain in force for a minimum period of ten years and must cover all owned units. Premuda S.p.A. formally adopted it on January 1st The average exchange rate euro/dollar was ( in 2006). At the end of 2007 the euro/dollar exchange rate was ( at the end of 2006), with a 10.50% yearonyear depreciation of the US currency (a 20.90% drop since end 2005). It is important to underline that our revenue is almost exclusively generated in dollars and the fleet value is markedtomarket in the same currency, whereas only some of the costs are normally sustained in dollars. Consequently, a strong dollar generally has a positive effect, both in terms of Balance Sheet as well as Profit and Loss. On the other hand, the effect of converting Dollar denominated loans into Euros at the year end exchange rate is also to be taken into account. Premuda's common stock was regularly listed on the Stock Exchange. It is to be noted that 73,361,991 shares were exchanged in 2007 (81,241,820 in 2006). The total traded value through the Stock Exchange was /Mln (about /Mln 134 in 2006). According to data provided by Borsa Italiana S.p.A., our stock had a positive performance of 2.79% on an annual basis, compared to 8% of the MIB index. 18

20 Based on the data available, as at the end of 2007 the Company had 4,351 shareholders (5,676 in 2006). The stakeholders Navigazione Italiana S.p.A. and Assicurazioni Generali S.p.A., members of the Shareholders' Agreement , have renewed it for a further period of three years until December The agreement (as the previous ones) is aimed to ensure consistent and steady management control. This agreement forbids the transfer of the allocated shares and regulates the appointment of the Company officers, identifying Navigazione Italiana S.p.A. as the sole body in control of Premuda S.p.A. through the Shareholder's Agreement without, however, exercising management and coordination activities, pursuant to art of the Italian Civil Code. The Agreement refers to n. 62,925,000 ordinary shares (44.70% of the ordinary share capital) which were allocated by: Navigazione Italiana S.p.A. (29.80%) Assicurazioni Generali S.p.A. (14.90%). Duferco Italia Holding S.p.A., which in 2004 had already reduced its allocated stake from 10% to 5%, consistent with such strategy and due to the (mainly) financial nature of its investment, opted to definitely exit the agreement. Nevertheless, Duferco has expressed its satisfaction at the results thus far achieved by the Premuda Group and confirms its unconditional confidence in the Company and its Management. The Financial Statements as at 31 st December 2007 were audited by Deloitte & Touche S.p.A., whose appointment for the threeyear period was approved at the Shareholders' Meeting of 23 rd April Deloitte & Touche S.p.A. also audited the halfyear Report In accordance with the provisions of art of the Italian Civil Code, we hereby inform you that: the Company did not carry out any research and development activity; the Company does not own treasury shares; the Company does not own shares or quotas of parent companies; none of the subsidiaries own Company shares; the Company has implemented a hedging strategy for risks arising from the variations in exchange rates and interest rates through derivative financial instruments. Further details are available in the Notes to the Financial Statements. The shares held and/or traded by Directors, Statutory Auditors and General Managers are mentioned in a specific prospectus drawn up in accordance with art. 79 of the Regulation implementing the Legislative Decree No. 58/98 (T.U.F.) enclosed with the audited Italian Financial Statements. 19

21 All information required by art. 123 bis of T.U.F. is enclosed with this report and is also available at website in the investor relations area. This also includes the annual report of compliance with the self regulation code for listed companies. A plan for the remuneration of, and incentives to, the Top Management is in force, as recommended by the Remuneration Committee and resolved by the Board of Directors. The plan refers to the year period and consists of three elements: a) an annual compensation, based on the financial result logged in each year, equal to 5% of the consolidated net profit generated by the Company exceeding 5% of the consolidated Net Equity at the beginning of the period. This amount is allocated: 50% to the Chairman, 25% to the Managing Director, 10% to the General Manager and the residual 15% is shared amongst other Managers. b) a compensation based on the growth of the Group's net equity in the 3year period, payable at the end of This compensation is equal to 5% of the differential between the consolidated Net Equity at the end of the period and the consolidated Net Equity at the beginning of the period, increased by 15%; the proportional allocation is as detailed in item a). c) a nominal stock option plan (socalled phantom stock ) with a compensation equal to the differential between the monthly average of Premuda stock price on the option allocation date and its price in the week preceding the option declaration. as listed on the Milan Stock Exchange This plan was approved and ratified by the Shareholders' Meeting of 23 April The options refer to a maximum cumulative amount of 2,700,000 shares per year and are to be exercised within 36 months starting from January 1st of the following year. The options assigned refer to 1,350,000 shares for the Chairman, 810,000 for the Managing Director and 540,000 for the General Manager. The initial share value is 1.80 for the options assigned in 2005, for the options assigned in 2006 and for the options assigned in To date, the General Manager has exercised 540,000 options and the Managing Director has exercised 400,000, all of them referred to year The 2007 compensation amount to be paid to the Top Management, as per items a) and b) has already been charged to the Profit & Loss account through a specific provision of /Mln This amount is in addition to the prorata provisions accrued in the past two years to cover the multiannual premium as per point b) above, to be paid upon approval of the Annual Report

22 We have also already booked in our Financial Statements a liability of approximately /Mln 1.10 covering the fair value of the residual stock option plans as described in item c). In conformity with the Legislative Decree 196/2003 (concerning the protection of Privacy) the Company has set up the relevant implementation plan chart. We hereby inform you that, as already applied for the 2006 Annual Report, the 2007 annual Financial Statements of Premuda S.p.A. have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The impact of the transition to IFRS on the initial Balance Sheet as at December 31, 2004 and on both Balance Sheet and Profit & Loss for the year 2005 were reported in the Italian version of both the 2006 Semi Annual Report and the 2006 Annual Report: please refer to them. The financial position is summarized (in '000 euros) in the following table; at the end of the financial year our net financial exposure was /Mln ( /Mln as at end 2006) with a cash availability of /Mln Financial Position Financial Position Cash Other liquid assets Total liquid assets Short term bank debt Short term portion of longterm debt Other shortterm debt Total shortterm debt Shortterm net debt Loan to controlled companies Longterm financial credit Longterm bank debt Longterm debt Total longterm net borrowing Total net borrowing at ,417 6,566 (19,484) (19,484) (12,918) 28,000 28,000 (57,518) (57,518) (29,518) (42,436) at ,025 28,225 (19,305) (19,305) 8,920 20,478 20,478 (77,377) (77,377) (56,899) (47,979) All Premuda S.p.A. s loans are currently denominated in Euro. The amount of borrowings and their structuring appear to be entirely satisfactory in relation to the size and quality of our Fleet and its ability to generate adequate cash flow. 21

23 Risk management Credit risk: The Company is exposed to the credit risk affecting the shipping industry: an activity towards a limited number of clients, usually major companies or shipping operators. This risk is, however, significantly reduced by our standard payment rules (in advance for time charter hire and within completion of discharge for spot voyages) and by the large availability of information on clients' credit standing. Receivables are monitored at all times and, when necessary, impaired, based on historical experience and on newly available information on clients' standing. At the accountclosing date, less than 2.50% of receivables had been due for over one year. Of these, about 14% consisted of demurrage, usually requiring a longer period for agreement and settlement. Please refer to the Notes for a more detailed analysis. Liquidity risk: Cashflow, financial requirements and liquidity are strictly monitored and assessed in order to efficiently manage the Company's financial resources. Short and longterm cash requirements are regularly assessed in order to ensure timely and adequate acquisition of financial resources, as well as proper employment of cash excess. Please refer to the Notes for any information regarding the repayment schedule of longterm loans. Exchange risk: Certain assets and liabilities are exposed to risks arising from exchange rate fluctuations (mainly related to the Euro/Dollar rate). It is company's policy to partially cover this risk by derivative hedging instruments as well as by natural hedging. As at the end of 2007 the main USDdenominated assets and liabilities are summarized as follows: Assets Cash and cash equivalent Commercial credit Financial credit Other credit Total Liabilities Bank debts Suppliers Financial debts Other debts Total US$/000 5,876 5,235 1,310 12,421 6, ,405 The USDdenominated loans, converted into Euro by crosscurrency swap, are not included in the above data. 22

24 Please refer to the Notes for a deeper analysis of the most important Dollardenominated balance sheet items. According to the sensitivity index, should the average and the yearend exchange rates Euro/Dollar for 2007 be the same as in the previous year ( & respectively), both the Net Profit and the Net Equity would be increased by Euro/Mln 4.20, all other factors unchanged. Interest rate risk: The majority of longterm bank loans are based on floating interest, therefore, the Company is exposed to interest rate fluctuation risk. It is Company's policy to reduce such a risk through financial derivatives, fixing the interest rates for certain periods. Please refer to the Notes for all information on the financial derivatives transactions entered by the Company. According to the sensitivity index, should interest rates for the year 2007 be on average higher/lower by 100 basis points, both the Net Profit and the Net Equity would decrease/increase by Euro/Mln 0.50, all other factors unchanged and all derivative transactions duly considered. Freight rates volatility risk: The Company operates in a very volatile freight market. Risks related to market rates fluctuations may be reduced by longterm timecharters or by derivative contracts (Forward Freight Agreements, FFA's). According to the sensitivity index, a 10% variation of 2007 average freight rates would have affected both Net Profit and Net Equity by Euro/Mln 1.50, all other factors unchanged. This variation refers only to the time/vessel portion still uncovered at the beginning of the year (thus, subject to market volatility). As to management conduct of the Company and business outlook, we have no particular issue to underline; nonetheless, we invite Shareholders to examine the Consolidated Annual Report Significant events after the balance sheet date and business outlook 23

25 Dear Shareholders, Premuda S.p.A. closed the 2007 financial year with a net profit of /Mln 3 after depreciation charges of /Mln (net profit of /Mln after depreciation charges of /Mln in 2006). The cash flow for 2007 was /Mln ( /Mln in 2006). We recommend the following profit allocation for the year 2007: Net income Plus retained earnings from previous years Profits available for distribution to ordinary shares to savings shares retained earnings 3,004,466 14,881,615 17,886,081 (8,445,690) (5,246) 9,435,145 The above recommendations correspond to 25.50% of the consolidated net profit attributable to the Group. Distributed profit, unchanged from the previous year (excluding the extraordinary dividend of 0.06 per share paid in December 2007 to commemorate the centennial of the Company), correspond to a dividend of 0.06 per common share and 0.07 per savings share. After distribution of the proposed dividends, shareholders' equity will be: Share capital Legal reserve Other reserves Retained earnings Total 70,418,225 14,083,650 16,445,023 9,435, ,382,043 equal to per share. To provide a proper overview of the Group led by Premuda S.p.A., we attach the Management Report on the Consolidated Financial Statements, which shall be an integral and substantial part of this report. This Management Report provides, compared with information given in relation to previous financial years, additional elements on the markets we operate in, on fleet performance, on costs and revenues of the employed vessels, on all significant events occurred after the accountclosing date, on the business outlook. 24

26 Dear Shareholders, The Year 2007 is number 100 since the establishment of the Company (Trieste, December 21, 1907). Not many shipping companies can show such a long history and we are very proud of our origin and activities. Nowadays Premuda is an important entity, well known and respected in the international shipping community, which can look at the future with utmost confidence. We wish to express our gratitude to Capt. G.L. Premuda (founder of the Company); to all those that, during the course of this century, worked with and for the benefit of the Company; and to all of the Group's employees for their precious cooperation, ashore and at sea, and assure them of our gratitude and firm confidence for the future. 26 March 2008 the Board of Directors 25

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28 Financial Statements Premuda Spa 27

29 Premuda Spa Balance Sheet on 31 December 2007 (Euro) ASSETS at at Fixed Assets Tangible fixed assets Vessels Real estate Other fixed assets Participations Controlled companies Associated companies Other companies Other financial assets Loans Other investments Total Fixed Assets 118,151, ,590, , ,204 55,757,966 55,754,170 3,796 28,002,111 28,000,000 2, ,911, ,376, ,048, , ,263 61,257,966 55,754,170 5,500,000 3,796 20,480,015 20,477,904 2, ,114,146 Current Assets Inventories Consumables Voyages in progress Receivables Clients Prepayments Other receivables 3,732,963 1,977,114 1,755,849 8,758,354 3,833,649 3,099,470 1,825,235 3,697,816 2,080,941 1,616,875 11,786,733 6,639,746 3,015,674 2,131,313 Financial current assets Cash and cash equivalents Total Current Assets TOTAL ASSETS 282,075 6,283,702 19,057, ,968, ,921 28,044,102 43,709, ,823,718 28

30 LIABILITIES AND SHAREHOLDERS' EQUITY at at Shareholder s Equity Share capital Legal reserve Other reserves Retained profit Profit for the year Total shareholder s equity 70,418,225 14,083,650 16,445,023 14,881,615 3,004, ,832,979 70,418,225 14,083,650 16,445,023 19,571,105 12,209, ,727,890 LongTerm Liabilities Bank loans Provisions Provision for staff leaves Total LongTerm Liabilities 57,518, , ,235 59,057,272 77,376, ,000 1,459,931 79,536,656 Current Liabilities Bank loans Suppliers Corporate tax Accruals Other debts Total Current Liabilities Total Liabilities TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 19,483,593 9,383, ,437 6,697,633 7,030,607 43,078, ,135, ,968,629 19,305,234 6,882, ,465 6,874,402 4,187,057 37,559, ,095, ,823,718 29

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32 Premuda Spa Income Statement on 31 December 2007 (Euro) year 2007 year 2006 Net revenue Voyage costs TimeCharter revenues Charter hire Running costs Fleet margin Profit on vessel sale Administrative expenses Other income/(costs) Depreciation Operating profit Financial items Profit before tax Tax on profit Net profit for the year Net profit per share 81,259,997 (9,981,069) 71,278,928 (24,626,925) (18,638,232) 28,013,771 3,493,581 (13,172,942) 1,045,487 (11,752,668) 7,627,229 (4,222,763) 3,404,466 (400,000) 3,004, ,118,002 (8,923,505) 78,194,497 (23,585,355) (19,894,363) 34,714,779 3,374,335 (9,585,603) (92,683) (12,150,804) 16,260,024 (3,265,286) 12,994,738 (784,851) 12,209,

33 Premuda Spa Cash Flow Statement (Euro) year 2007 year 2006 A) NET CASH POSITION AT YEAR START (373,491) B) CASH FLOW FROM OPERATING ACTIVITIES Profit for the year Unrealized exchange differences Interest charges (P&L) Interest income (P&L) Tax on income Depreciation Net change in other provisions (Profit) / loss on assets disposal Net change in Staff s leave provision Subtotal: Cash flow from operating activities before working capital changes Change in receivables Change in inventories Change in suppliers and other current liabilities Net change in deferred taxation Total cash flow from operating activities 3,004,466 1,059,460 5,410,122 (2,874,214) 400,000 11,752,668 (100,000) (4,539,068) (520,696) 13,592,738 2,927,225 (35,147) 3,859,476 20,344,292 12,209, ,839 4,955,183 (2,282,969) 784,851 12,150, ,000 (3,411,609) (94,857) 25,322,129 (1,262,776) (1,627,413) (902,030) 230,426 21,760,336 C) CASH FLOWS FROM INVESTING ACTIVITIES Investments in assets: tangible financial Sale of tangible fixed assets Sale of financial fixed assets Interest income (cash) Total cash flow from investing activities ( ) 4,112,927 6,500,000 2,874,214 7,385,320 (3,523,477) (4,250,000) 27,248,699 2,282,969 21,758,191 D) CASH FLOW FROM FINANCING ACTIVITIES Repayment of bank loan Net change in financial fixed assets Interest charges (cash) Dividends Other changes Total cash flow from financing activities (19,858,688) (7,522,096) (5,388,210) (16,901,123) 1,746 (49,668,371) (19,535,005) (1,477,904) (4,943,379) (8,450,936) 1,056 (34,406,168) E) CASH FLOW OF THE PERIOD (B + C + D) (21,938,759) 9,112,359 F) NET CASH POSITION AT THE END OF THE PERIOD (A + E) (13,199,891) 8,738,868 32

34 Statements of changes in Shareholder s Equity (Euro) Share Capital Reserve for premium on issued share Legal Reserve Other Reserve Retained Profit Profit for the Year Total As at ,418,225 14,083,650 16,445,023 18,547,460 9,473, ,967, Profit Allocation to legal reserve to dividends to retained profit (8,450,936) 9,473,527 (9,473,527) (8,450,936) Various 1,054 1, Net Profit 12,209,887 12,209,887 As at ,418,225 14,083,650 16,445,023 19,571,105 12,209, ,727, Profit Allocation to legal reserve to dividends to retained profit (8,450,936) 12,209,887 (12,209,887) (8,450,936) Extraordinary dividend (8,450,187) (8,450,187) Various 1,746 1, Net Profit 3,004,466 3,004,466 As at ,418,225 (1) (2) (3) 14,083,650 16,445,023 14,881,615 3,004, ,832,979 (1) : available to cover future losses (2) : of which 3,666,410 to be taxed when used other than to cover future losses (3) : of which 2,827,699 not to be distributed 33

35

36 Management Report on the consolidated financial statements 35

37

38 Dear Shareholders, As occurred over the past four years, 2007 also benefited from broadly sustained rates markets for all of the Group's activity sectors, despite high volatility and significant differences between the various fleet segments. Tanker markets particularly showed a declining trend, whilst dry bulk markets reached skyhigh levels, unheard of in the past. The large, continuous, increase of the fleet size was (particularly for dry cargo) absorbed by a booming Chinese economy, which provided demand of tonnage with its huge volumes of raw and manufactured goods. Scenarios for each sector are outlined below. In 2007 the tanker fleet grew by 5.54% over 2006, exceeding 385 million deadweight tons. This strong growth confirms recent years trend (over 30% increase in the last five years). Most noteworthy is the 2007 shipyards orderbook, with deliveries stretching until 2012: at the end of year, the tanker orderbook was Mls ts dwt, or 41.30% of the current trading fleet ( Mln ts or 36.90% in 2006). New orders for 865 vessels, including chemical tankers, were placed in Tanker sector 2007 scrapping volumes remained as low as 3.20 Mln ts dwt, confirming recent years' trend (3 Mln ts dwt scrapped in 2006 and 4.20 Mln ts dwt in 2005); consequently, scrap prices reached US$ 510/ton in 2007 (US$ 410/ton in 2006 and US$ 305/ton in 2005). In 2007, sale and purchase transactions for secondhand tonnage kept a sustained pace, both in terms of volumes and prices. Sales involved 397 units of Mln ts dwt worth US$ Bln ( 2006: 321 units of 28.8 Mln ts dwt were sold, worth US$ Bln). Of these 397 vessels, 52 were VLCC, 42 suezmax, 68 aframax and 235 handysize. No doubt freight rates were satisfactory, though 9% lower on average compared to the record level of 2004/2006, as shown in table 5 below. Further details on this sector are presented in the following tables. 37

39 Table 1 shows demand for tanker tonnage and volumes of seaborne transportation of crude oil and refined products: little (0.50%) or no variation in total volumes between 2007 and (Table 1) Quantities transported by sea (millions of tons) year crude oil quantity change 1,656 1,684 1,667 1,770 1,850 1,885 1,933 1, % 1.0% 6.2% 4.5% 1.9% 2.5% 0.5% products quantity change % 0.2% 7.2% 6.7% 8.1% 8.5% 0.4% The tables below show the development of the tanker fleet in recent years, including new tonnage deliveries, scrapping and newbuilding orderbook. (Table 2) Tanker fleet at end Order book of the year (Mln dwt ts) as of end Total % of Fleet VLCC Suezmax Aframax Panamax Small Total + 200, /200,000 80/120,000 55/80,000 10/55, % 40.4% 41.1% 40.3% 47.4% 41.3% (Table 3) Newbuilding deliveries/scrapping (Mln dwt ts) ) VLCC + 200,000 Suezmax 120/200,000 Aframax 80/120,000 Panamax 55/80,000 Small 10/55,000 Total

40 The age profile of the tanker fleet is indicated in table 4. (Table 4) Age profile of the tanker fleet as at 1st September 2007 (Mln dwt ts) 09 years 1014 years 1519 years > 20 years total av.age VLCC Suezmax Aframax Panamax Small Total + 200, /200,000 80/120,000 60/80,000 10/60, The world fleet's age is obviously a significant element for the assessment of its future development and tonnage supply growth. During the last few years, the average age has progressively decreased and it is evident that the renewal process will proceed according to the volume of new deliveries and the tonnage due for compulsory demolition in upcoming years (with particular reference to 2010). Table 5 shows average freight rates (USD/day, timecharter equivalent) for spot voyages, related to different tonnage classes. (Table.5) Average freight rates for spot voyages year $/g 15,718 12,486 9,872 18,467 24,950 13,940 22,032 27,707 29,954 27,174 26,016 clean chg 21% 21% 87% 35% 44% 58% 26% 8% 9% 4% $/g 21,109 16,425 13,059 33,150 30,759 18,954 34,212 49,592 41,650 39,356 35,810 aframax chg 22% 20% 154% 7% 38% 80% 45% 16% 6% 9% suezmax $/g 23,753 21,277 15,189 39,390 30,420 18,647 41,648 74,975 53,579 53,097 44,825 chg 10% 29% 159% 23% 39% 123% 80% 29% 1% 16% $/g 34,691 31,968 19,775 50,353 36,017 22,029 52,433 96,055 60,319 63,073 57,147 VLCC chg 8% 38% 155% 28% 39% 138% 83% 37% 5% 9% clean: 20/35,000 dwt vessels used to transport clean petroleum products aframax: 80/110,000 dwt vessels suezmax: 110/160,000 dwt vessels VLCC: modern construction 250/320,000 dwt vessels 39

41 bulk sector In 2007 the bulker fleet grew at a rate of 6.50% overtaking, for the first time, (both in number of vessels and total tonnage) the tanker fleet, reaching Mln ts dwt. At the end of 2007, the bulkcarrier orderbook was Mln ts dwt or 56.80% of the current trading fleet (82.40 Mln dwt ts or 22.30% of the active fleet in 2006) scrapping volumes were only 0.40 Mln ts dwt, the lowest value for the past decades, mainly due to high tonnage demand and exceptionally high freights levels. Scrap prices went from USD 390 to USD 470 per displacement ton (+20.50%). In 2007, secondhand sales transactions reached record levels, both in volumes and prices. Sales involved 752 units equivalent to 45 Mln ts dwt and USD Bln in value (2006: 580 units for Mln dwt ts and USD 13.5 Bln). Of these 752 vessels, 90 were capesize, 182 panamax, 185 handymax and 295 handy. Freight rates were extremely satisfactory, as shown in table 5 below. The average returns for the year, both for Capesize and Panamax vessels, were 145% higher than in In the first few months of 2008 the market broadly held the same values; at the moment it is difficult to predict a significant decrease of rates, at least short term basis, also taking into consideration projections given by futures. Over the last few months dry bulk rates have boomed despite a strong tonnage supply growth resulting from newbuilding deliveries; this trend is totally due to the voracity of the Chinese economy, gobbling up ever growing volumes of raw materials, semifinished goods and energy resources. In some periods freight rates were also positively affected by inadequate port facilities, unable to cope with huge volumes, thus causing heavy congestion, especially at loading terminals. Further details on dry bulk sectors are reported in the following tables. Table 1 shows the volumes of seaborne transportation of dry bulk commodities. Over the last five years, a significant increase occurred, from 2,291 Mln ts in 2003 to 2,790 Mln ts in 2007 (+21.80%). (Table 1) Quantities transported by sea (millions of tons) year minerals coal grain other total changes ,040 2,096 2,170 2,291 2,469 2,564 2,703 2, % 3.5% 5.6% 7.8% 3.8% 5.4% 3.2% 40

42 The tables below show the development of the bulker fleet in recent years, including newbuilding deliveries, scrapping and shipyards' orderbook. (Table 2) Trading fleet as at end of year (Mln dwt ts) Order book as at end of 2007 Total % of fleet Capesize Panamax Handymax Handy Total + 100,000 60/100,000 40/60,000 10/40, % 44.2% 55.4% 24.5% 56.8% (Table 3) Newbuilding deliveries/scrapping (Mln dwt ts) Capesize Panamax Handymax Handy Total + 100,000 60/100,000 40/60,000 10/40, (Table 4) Age profile of the bulker fleet as at 1st September 2007 (Mln dwt ts) 09 years 1014 years 1519 years > 20 years total av.age VLBC Capesize Panamax Handymax Handy + 160, /160,000 60/100,000 40/60,000 10/40, The world fleet's age profile is obviously a key element to estimate the fleet's future pattern and, therefore, tonnage supply growth. It is, however, noteworthy that, over the last few years, the fleet's average age has gradually decreased: it is, therefore, apparent that the renewal process will continue, as a result of massive newbuilding deliveries. Table 5 shows the progress of bulk freight rates for spot voyages (USD/day time charter equivalent), for different tonnage classes (Clarkson index). 41

43 (Table 5) Average freight rates for spot voyages year $/g 24,724 15,524 11,654 37,563 70,395 51,613 43, ,757 capesize chg 37% 25% 228% 87% 27% 16% 159% panamax $/g 10,700 8,709 7,284 19,091 33,950 22,931 21,427 49,349 chg 19% 16% 162% 78% 32% 7% 130% handymax $/g 8,970 8,206 8,761 16,706 31,987 24,020 22,583 47,582 chg 9% 6% 93% 91% 25% 6% 110% FPSO sector The substantial development of the offshore petroleum sector is holding its remarkably positive trend determined by the high level of crude oil prices. There are currently 130 FPSO in service with a dramatic growth over the last decade and 50 new buildings under construction. The existing and scheduled FPSO can be broadly divided in two groups: The first group is mainly characterized by high technology and a high level of investment, operating in deepwaters highpotential oilfields. The complexity of the equipment is also due to the growing exploitation of wells yielding ever increasing gas volumes together with crude oil. This involves working with gas processing facilities to enable transportation by gas carrier vessels. The second group of FPSO, technologically less complex, requires a lower level of capital investment and involves shallow to medium depth petroleum wells yielding a smaller percentage of gas in relation to the crude oil extracted. VLCC are the best suited vessels for conversion into FPSO for Brazilian and West African oilfields, wheres aframaxes are the most in demand for Far Eastern and Australian markets, currently undergoing a substantial development. Despite its significant complexity and the high levels of investments required, the FPSO sector will most likely continue its expansion as a result of booming demand for crude oil. The Fleet The following changes occurred to the Group's Fleet during 2007: in February: the controlled company Premuda Bulk Navegaçao Lda., Madeira, (then 75% participated) sold the 64,200 dwt panamax bulk Four Euro, built The transaction generated a profit of /Mln 8.30; in May: Premuda S.p.A. sold the 51,300 dwt panamax tanker Four Lochs, built in 1981, with a profit of /Mln

44 During the year, the following investments were also implemented for vessels that, by yearend, had not yet started operating: in February: the controlled company Brig Shipping Lda., Madeira, ordered from the Statecontrolled Vietnam Shipyards four 53,000 dwt bulkcarriers, delivery 2009/2010, with an estimated total investment of US$ 144 Mln; the contracts were resold in August with a net profit of about US$ Mln; in May: the controlled company Brig Shipping Lda., Madeira, ordered from the Korean shipyard SPP Shipyards Co. six 35,000 dwt handy bulkcarriers for delivery , with an estimated total investment of US$ 212 Mln; in October: the controlled company Brig Shipping Lda., Madeira, ordered from the Korean shipyard SPP Shipyards Co. two additional 35,000 dwt handy bulkcarriers for delivery , with an estimated total investment of US$ 78 Mln. Changes to Premuda's owned Fleet that occurred after yearend: in March: the controlled company Brig Shipping Lda., Madeira took over a company which had ordered two 34,000 dwt handy bulkcarriers for delivery 2009, with an estimated cumulative investment of approximately /Mln 48. The consistency of the Company Fleet at the date of this report is hereby detailed on page 9. The management of the Premuda fleet, both tankers and bulk carriers, has been carried out smoothly and eventless. The use of available vesseltime is summarised in the following table, and includes time spent for routine survey and drydock on five vessels. Management Information Compared with 2006, time available for commercial operations has decreased due to the higher number of vessels undergoing routine drydock and due to increasing time lost waiting for employment, resulting from tonnage demand volatility throughout the year. % of vessel/time: year commercial operations waiting for employment technical offhires (*) % 93.3% 95.2% 95.0% 90.7% 3.1% 1.1% 0.3% 0.6% 2.3% 7.9% 5.6% 3.8% 4.4% 7.0% (*): includes vessel positioning to drydock 43

45 The next table reports the daily income booked by our vessels on a timecharter equivalent basis over the last five years, subdivided into the most possible homogenous categories. It should be noted that, in timecharter contracts, voyage operating costs associated with the utilization of the vessel such port costs, canal transit rights, fuel, etc., are borne by the charterer. Time Charter Equivalent (US Dollars/Day) tankers bulk carriers year aframax panamax suezmax panamax ,351 32,727 29,142 26,180 24,934 18,284 18,452 18,205 18,500 21,628 27,799 30,698 27,173 34,110 34,398 20,290 22,232 16,733 19,818 The following table shows the running costs incurred by our vessels, subdivided into the most possible homogenous categories. Running costs include insurance, crew, maintenance and repairs, spares and stores, lubricants, classification, security and safety costs etc.; general expenses and voyage costs associated with the commercial utilization of the vessels (such as port costs, canal transit rights, fuel, etc) are not included. Running Costs (US Dollars/Day) year aframax tankers panamax bulk carriers panamax ,721 8,726 8,523 8,683 10,353 6,977 7,732 6,831 6,744 8,359 5,015 5,207 6,646 7,129 The overall increase in daily running costs occurred in 2007 is mainly due to: the significant extent of extraordinary repairs carried out during routine drydocks; a general increase in manning costs (regardless of crew nationality); the impact of a weak dollar on the eurodenominated share of running costs. 44

46 The consolidated financial position, duly detailed in the Notes, is summarized (in '000 euros) in the following table; at the end of 2007 the net financial exposure was /Mln ( /Mln at the end of 2006) with a cash availability of /Mln Financial Position Financial Position Cash Other liquid assets Total liquid assets Shortterm bank debt Shortterm portion of longterm debt Other shortterm debt Total shortterm debt Shortterm net debt at ,592 43,755 (28,088) (28,088) 15,667 at ,057 41,108 (23,334) (23,334) 17,774 Longterm financial investments Loan granted to associated companies Total longterm financial assets Longterm bank debt Longterm debt Longterm net debt Total net borrowing 20,346 5,453 25,799 (148,670) (148,670) (122,871) (107,204) (147,173) (147,173) (147,173) (129,399) Nearly all of Premuda S.p.A. loans are currently Eurodenominated, whereas loans related to foreignflag ships are expressed in US Dollars. Taking into account the extent of new investments, the amount and structuring of borrowings appear to be adequate to the size and quality of our Fleet and its ability to generate sufficient cash flow. At the end of 2007, advances already paid to shipyards on account of newbuildings totalled approximately /Mln 64; commitments for investments in progress were about /Mln spread over five years, of which /Mln relate to minority shareholders). Additional investments committed during the first quarter of 2008 amount to about /Mln 48.10, spread over the years Cumulatively, current outstanding investments aimed at Fleet expansion amount to approximately /Mln , of which about /Mln 84 have already been paid to Shipyards (about /Mln related to minority shareholders). 45