Eitzen Bulk Shipping A/S

Annual Report 2009 Annual Report 2009 1 Annual Report 2009 Eitzen Bulk Shipping A/S

2 Annual Report 2009 Contents Contents MANAGEMENT REVIEW About Eitzen Bulk Shipping 3 2009 highlights and 2010 outlook 4 Group key figures and ratios 5 Eitzen Bulk Shipping - a new company with a long history 6 Strategic insight 8 2009 market review 14 2010 market outlook 16 Financial review 18 Corporate governance 20 People and planet 22 About the share 25 Management biographies 26 Management s statement on the Annual Report 28 Independent auditor s report 29 ANNUAL ACCOUNTS Consolidated Financial Statement 30 Notes to the Financial Statements 35 Financial Statements- Parent 61 Group Structure 74 Definitions of key figures and financial ratios 75 Company information 76

About Eitzen Bulk Shipping Annual Report 2009 3 About Eitzen Bulk Shipping Forestry products, discharging operations Eitzen Bulk Shipping is a globally recognised dry bulk cargo operator primarily in the supramax segment and secondarily in the panamax segment. The company aim for constant profitable growth based on a diversified earnings base, an attractive financial position, long-term customers and a management team with decade-long hands-on shipping experience. A strong market recognition has been consolidated through decades of shipping activities and close long-term customer relationships that maximise our access to cargo contracts. Eitzen Bulk Shipping controls the commercial management of 50-70 vessels. The fleet size depends on market fluctuations and seasonal contractual commitments. A combination of short to medium term trading and arbitrage of vessels and cargoes, and long-term vessel charters with purchase options supports optimal flexibility and reduces the business impact of segment-specific changes in supply and demand. Eitzen Bulk Shipping reaps on its strong customer relations when expanding into shipowning to create additional value from existing operations and further increase earnings visibility. Additionally, we will make strategic investments in areas that create synergies with core shipping activities, such as cargo handling and warehousing facilities. Detailed market surveillance, risk management and planning systems have been implemented to optimise the balance between cargo contracts and tonnage commitments. The company carries no debt to financial institutions. By the end of 2009 Eitzen Bulk Shipping commercially controlled a fleet of 58 vessels and had 16 new buildings on order of which one will be fully owned and 15 long-term chartered with partly shared purchase options. The company had approximately 50 employees in offices in Copenhagen, New York, Rio de Janeiro, Singapore, Hong Kong and Beijing. In 2009 the total cargo carryings amounted to 18.7 million tons generating revenues of 376 MUSD. Eitzen Bulk Shipping is listed on Nasdaq OMX Copenhagen under the ticker name Eitzen.

4 Annual Report 2009 2009 highlights and 2010 outlook 2009 highlights and 2010 outlook In December 2009, the global dry cargo activities in the Eitzen group were carved out into the independent company Eitzen Bulk Shipping A/S and listed on NASDAQ OMX Copenhagen through a merger with Dampskibsselskabet Orion A/S. As part of the merger restructuring, employees invested in the company with a shareholding of 14.7%. The business performance in 2009 is considered satisfactory viewed in the light of the difficult market conditions. The company reported a net profit of 19.0 MUSD and an EBITDA of 20.7 MUSD, which are in line with the latest expectations as published in the company announcement regarding the merger restructuring in November 2009. Adjusted EBITDA was 28.9 MUSD down 14% from 2008, excluding the non-cash impact of the share options program. New share options program expensed in 2009 reduced EBITDA by 8.2 MUSD. Treasury shares are allocated to cover the entire program. Revenues in 2009 were 376 MUSD, down 55% from 838 MUSD in 2008, reflecting the substantial change in market rates. Gross profit margin was 12.1%, an increase from 7.0% in 2008. The fleet activity level increased to 58 vessels by the end of 2009 from 41 vessels in 2008. Total number of ship days decreased from 15,129 days to 14,361 days (-5%). The Board of Directors will propose not to pay out any dividend for 2009. As part of the merger restructuring 57 MUSD was distributed as dividends settling intercompany accounts with Camillo Eitzen & Co. ASA. No debt to financial institutions. No major counterpart losses were recorded during 2009. DEVELOPMENTS IN FOURTH QUARTER Business performance showed positive results in fourth quarter with revenues increasing 11% to 147 MUSD, compared to Q4, 2008. Quarterly earnings (EBITDA) were reduced by 8.2 MUSD due to the expensed share options program implemented 22 December 2009. Adjusted EBITDA was 6.9 MUSD compared to -7.6 MUSD in 2008. OUTLOOK 2010 EBITDA of 14-22 MUSD is expected based on the company s current coverage and market conditions. The estimate excludes the impact of the share options program and does not include provisions for any impairment on prepayments for the contracted new buildings. The shipping markets remain uncertain due to the ambiguity as to whether the current positive trend in short term economic confidence indices are sustainable or a provisional result of financial stimulus packages. Weak public finances with huge deficits in major economies require fiscal tightening and thus less spending and demand for goods transportation. Whether structural changes and increased spending in China, Brazil, South Africa and India will counterbalance the rest of the world remains uncertain. Although the bulk market will be under continued pressure and volatility is unavoidable, the volume of trade is set to grow and for an operator company such as Eitzen Bulk Shipping, opportunities to increase our activity level exists. Going into 2010 a substantial percentage of the known ship days has been covered. On December 31st 2009 the company had a cargo coverage of 86% on the known vessel days. As of 1st of March 2010 that figure remained at the same level. The company expects to increase its activities in 2010 with a corresponding increase in ship days. The current fleet activity level is around 70 vessels. In 2010 Eitzen Bulk Shipping will take delivery of two newbuilds on operational leases from Japanese shipyards as part of the newbuild program of 17 ships in total. Eitzen Bulk Shipping A/S and Camillo Eitzen & Co ASA will during 2010 aim at establishing a broader shareholder base for the company securing a larger free float and better liquidity in share of which the majority presently is owned by Camillo Eitzen & Co ASA and Eitzen Bulk Shipping A/S management and staff. At the same time, Camillo Eitzen & Co ASA has decided in the process to review other strategic opportunities for its ownership position in Eitzen Bulk Shipping A/S.

Group key figures and ratios Annual Report 2009 5 Group key figures and ratios (USD 000) 2009 2008 2007 2006 2005 INCOME STATEMENT Revenue 376,029 838,307 771,746 426,902 457,314 Gross profit (Net earnings from shipping activites) 45,495 59,092 53,245 974 43,612 Profit before depreciation etc. (EBITDA) 20,741 33,665 29,185-9,118 25,198 Profits from sale of vessels 0 49,542 54,237 0 0 Operating profit (EBIT) 20,296 82,439 84,256-9,329 25,069 Net financials 2,399 3,938-116 484 2,745 Profit before tax 22,695 86,377 84,140-8,845 27,814 Net profit 19,037 92,769 81,576-8,065 22,307 Profit for the year for the Eitzen Bulk Shareholders 18,890 92,613 81,390-8,237 22,162 STATEMENT OF FINANCIAL POSITION Non-current assets 19,862 99,921 82,908 7,215 8,958 Current assets 82,888 139,268 111,334 42,543 96,040 Total assets 102,750 239,189 194,242 49,758 104,998 Equity 25,150 57,317 83,177 13,514 50,420 Non-current liabilities 9,825 51,570 20,479 1,032 3,803 Current liabilities 67,152 129,826 90,268 34,937 50,576 Net interest-bearing debt -24,533-54,750-44,298-6,221-21,399 Cash and securities 24,806 66,052 45,029 6,842 21,925 CASH FLOW From operating activities -19,526 14,605 46,648-24,587 49,925 From investing activities 291 101,703 53,913 9,291-15,708 From financing activities -22,011-105,664-66,000 0-25,000 Total net cash flow -41,246 12,493 34,561-15,295 9,218 FINANCIAL RATIOS AND PER SHARE DATA Gross profit margin 12.1% 7.0% 6.9% 0.2% 9.5% EBITDA margin 5.5% 4.0% 3.8% -2.1% 5.5% Return on equity (ROE) 45.8% 131.8% 168.4% -25.8% 87.9% Payout ratio 48.0 105.6 81.1 0.0 112.8 Equity ratio 24.5 24.0 42.8 27.2 48.0 USD rate year-end 519.01 528.49 507.53 566.14 632.41 Average USD rate 536.09 509.86 544.56 594.70 600.34 Total number of physical ship days 14,361 15,129 18,746 21,441 22,867 Average number of employees 52 58 61 62 55 No. of shares end of period, DKK 1 each 24,638,502 24,638,502 24,638,502 24,638,502 24,638,502 No. of shares excluding treasury shares, DKK 1 each 22,174,652 24,638,502 24,638,502 24,638,502 24,638,502 Earnings per share basic (EPS basic), USD 0.77 3.76 3.30-0.33 0.90 Earnings per share diluted (EPS diluted), USD 0.77 3.76 3.30-0.33 0.90 Dividend per share, USD 0.4 4.0 2.7 0.0 1.0 Dividend per share, DKK 1.9 21.0 13.6 0.0 6.4 Proposed dividend 0 47,800 66,000 0 25,000 Interim dividend 9,102 50,000 0 0 0 Share price at year end, DKK 40.0 * * * * The key figures for 2009 and 2008 have been calculated based upon the combined figures of Eitzen Bulk Shipping A/S. The key figures for 2007, 2006 and 2005 have been calculated based upon the figures of Eitzen dry bulk cargo activities. The key figures of Dampskibsselskabet Orion A/S for 2007, 2006 and 2005 have been eliminated in order to present key figures for a five years period, which is comparable with the continuing activities of Eitzen Bulk Shipping A/S. The only activity in Dampskibsselskabet Orion A/S in the period 2005-2007 has been to carry through a closing of the former activity. The former activity of Dampskibsselskabet Orion A/S is not within the line of business or strategy of Eitzen Bulk Shipping A/S. Neither previously nor going forward. The result of Dampskibsselskabet Orion A/S is not material compared to the activity in Eitzen Bulk Shipping. Per share data for the period 2005-2009 is based upon the share capital of Eitzen Bulk Shipping A/S after the capital reduction completed 22 March 2010. The reduction has been allocated to a separate fund under the equity. The share capital at 22 March 2010 amounts to DKK 24,638,502 shares of nominal DKK 1. This due to present comparable per share data figures for the period 2005-2009 based upon a nominal share capital, which is deemed reasonable to former and current activity level of the Group. The number of shares excluding treasury shares is also calculated based on the number of treasury shares after the capital reduction. * There is no share price available for Eitzen Bulk Shipping A/S for the period 2005-2008 reflecting the activity presented in the key figures. The share price for Dampskibsselskabet Orion A/S for the period 2005-2008 is not comparable, whereas no share price is presented for the period in question.

6 Annual Report 2009 Eitzen Bulk Shipping Eitzen Bulk Shipping a new company with a long history Although presented as a new name, Eitzen Bulk Shipping A/S has roots going back to the 19th century. The origin of the company can be traced back to the ship owning company Myren, which was founded in Denmark in 1891. In 1973, Myren was taken over by the Danish shipping and trading group East Asiatic Company (EAC), which was established in 1897. EAC s initial shipping activity was a liner service between Europe and the Far East. Together with Burmeister & Wain Shipyard, EAC built the world s first diesel powered motor ship in 1912, allowing EAC to extend its shipping activities to other main trading routes. When EAC built its first containership in 1969, it was among the pioneers who started the transformation from conventional liner vessels to container ships. EAC developed into a major international conglomerate with offices around the world. In 1997 the EAC group divested its shipping activities to Norwegian Tschudi & Eitzen (T&E). T&E itself was founded in 1883 by Captain Camillo Eitzen in the name of Camillo Eitzen & Co. Captain Henry F. Tschudi joined the company as partner in 1894, and the company changed name to Tschudi & Eitzen in 1936. In 2003, the Tschudi and Camillo families decided to pursue their respective areas of interest. Since then, the dry bulk activities have been part of Camillo Eitzen & Co ASA. When taking over EAC s shipping activities in 1997, T&E decided to retain the organisation and commercial management of the fleet in Copenhagen in order to build on the existing team s skills and market insight. Since then, the dry cargo bulk activities have grown from about eight million DWT of cargo carried to almost 19 million DWT in 2009. In September 2007, Camillo Eitzen & Co ASA acquired 93.1% of the shares in the Danish listed company Dampskibselskab Orion A/S. At that time, Orion was an inactive company after 85 years of shipping activities. This acquisition paved the way for restructuring and consolidation of the Eitzen Group s bulk activities into one company.a major milestone was achieved on December 23, 2009, when shares in Eitzen Bulk Shipping A/S were traded on the NASDAQ OMX Copenhagen for the first time. Throughout more than a century entrepreneurship and dedication have been cornerstones in the company s ability to overcome market crisis and exploit growth opportunities. These are important values, which also in the future will supportthe growth for Eitzen Bulk Shipping A/S. Vision, values and promises VISION Through dedication and innovation we will make a difference VALUES High ethics Human touch Innovation Dynamics PROMISES We have transparancy in our business practices We are a dedicated and dynamic global partner We provide innovative, high quality shipping solutions We deliver Timeline 1883 1891 1894 1895 1897 1912 1936 1969 1973 Camillo Eitzen is established in Christiania (Oslo), Norway by Captain Camillo Eitzen Rederiet Myren is established in Denmark Camillo Eitzen changes name to Camillo Eitzen & Co as Captain Henry F. Tschudi becomes partner in the company From sail to steam. Camillo Eitzen & Co invests in its first steamship (S/S Uto), a 2,000 DTW tweendecker with a 650 HP steam engine The East Asiatic Company (EAC) is founded in Copenhagen, Denmark The Shipping Co. Orion Ltd. is founded EAC and Burmeister & Wain Shipyard built the world s first diesel powered motor ship Camillo Eitzen & Co changes name to Tschudi & Eitzen (T&E) EAC builts its first containership Rederiet Myren is taken over by EAC

Eitzen Bulk Shipping Annual Report 2009 7 The Eitzen Group were one of the first to develop tankers in the world, S/V Einar 1997 2001 2003 2004 2005 2006 2007 2009 T&E acquires EAC Shipping, marking the company s re-entry into the dry bulk segment The bulk segment orders the first newbuilding Camillo Eitzen & Co is reestablished following the demerger of Tschudi & Eitzen Holding Camillo Eitzen & Co ASA is listed on the Oslo Stock Exchange The bulk segment enters into first landside investment in the form Perola S/A terminal, Santos, Brazil The bulk segment opens commercial office in Beijing, PRC Entry into the panamax segment Camillo Eitzen & Co ASA acquires 93.1% of the shares in D/S Orion A/S Eitzen Bulk Shipping A/S is created and listed on NASDAQ OMX Copenhagen following a merger of D/S Orion A/S and Camillo Eitzen & Co s Shipholding Holding A/S

8 Annual Report 2009 Strategic insight Strategic insight Eitzen Bulk Shipping is organised in two business segments; 1. Operator, with a focus on short- and medium-term trading and arbitrage 2. Ship holding, with a focus on long-term activities The operator activities covers all opportunistic and arbitrage market positions that are concluded within the company. As an operator, Eitzen Bulk Shipping is not bound by a large fixed fleet, but has the flexibility to actively pursue suddenly emerging cargo or vessel opportunities. The overall principle is a year-on-year book building but with a constant focus on customer service ensuring the long-term viability of the business model. The portfolio of contracts of affreightments (CoA) represents the backbone of the company s operator activities. Nearly all of the company s coverage are done through CoAs with multiple counterparties. All contracts covering more than two cargoes are through CoAs with volume ranging from 3-60 cargoes and duration from one month to ten years under one contract. All existing long-term CoAs are based on fixed rates, except for one, which is index linked. The CoAs and associated partner relationships facilitate further opportunities for single voyage contracts as well as the potential to optimise trade legs and logistical efficiencies. Vessels are chartered in the spot market on shortor medium-term or as single trip. The Ship holding activities involves investment in vessels, charter commitments exceeding five years as well as operational and financial leases of vessels. Exposure related to ship owning is managed through coverage with industrial customers. Eitzen Bulk Shipping is focused on benefitting on the many synergies shared between the two segments whilst at the same time keeping a strict focus on the advantages of each of the strategies. In 2009, the short-term spot and arbitrage activities accounted for around 39% of ship days, while medium-term contracts of affreightments (CoA) covered with own or market tonnage, and own tonnage covered with market cargoes accounted for 61% of ship days. Long-term customer relationships, a very close market presence via the company s overseas offices and a unique real-time IT platform enables Eitzen Bulk Business model State of art information & business support systems Cargo contracts Spot and arbitrage activities Controlled Exposure Short and long term vessel charters Owned tonnage Effective market entry & exit policy Shipping to assess and act swiftly on attractive market opportunities. With the two business segments, the business model of Eitzen Bulk Shipping is tailored to combine the flexibility of a traditional operator with the long-term opportunities available to ship holders, always subject to strict exposure control and maintaining focus on profitability rather than volume. 2009 trading days Segment focus and current fleet Medium/Long 3,971 1,223 Trading/arbitrage vesseles and cargoes Short 2009 trading days Total COA s covered with Market tonnage COA s covered with own tonnage Own tonnage covered with market cargoes 3,616 8,810 (61%) 5,551 (39%) 14,361 (100%) Supramax/Handymax (45-65,000 dwt) ~55 vessels on short/medim term charters 2 vessels and 12 newbuilds on long term charters 1 owned newbuild Panamax (65-85,000 dwt) ~15 vessels on short/medim term charters 1 newbuild on long term charter Only 1223 voyage days under COAs were covered with own tonnage. The remainder of the company s positions (cargo or vessels) were covered in the market, optimising the bottom line for the company, and securing the right vessel at the right time for the customers Handysize (37,000 dwt) 2 newbuilds on long term charter Eitzen Bulk Shipping is a major player in the Supramax segment, and the company continually strives to consolidate and expand on this position, supplemented by increased trading in the Panamax segment.

Strategic insight Annual Report 2009 9 Supramax vessel, Sibulk Quality Eitzen Bulk Shipping investment highlights Asset light business model Highly flexible business model with limited capital tied up Industrial client portfolioproviding an attractive platform for growth Best-in-class trade management Highly efficient and scalable operations bestin-class trade mngmt system Leading risk management with instant markto-market exposure systems Cash flow visibility 10 years earnings visibility though substantial fixed charter coverage Approximately 10 MUSD in contrated revenues per year from 2012 Upside potential plans and potential for expanding the trading activity Attractive spot exposure and purchase options on long term charters Strong track record Highly experienced management team with senior team members having worked 20-30 years within dry-bulk shipping Team with proven trading record and also for identifying attractive asset investment opportunities Gross Profit per ship day in the Operator segment GROSS PROFIT PER SHIP DAY (USD) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 2001 500 2002 2000 0 0 10,000 2009 2003 20,000 2005 2006 30,000 2004 2008 2007 40,000 50,000 BALTIC SUPRAMAX INDEX (USD) Our operator activities are focused on getting the right combination of cargo and vessel exposure, and provided the company is correct in its market forecast, we have historically been able to generate positive earnings per ship day irrespective of prevailing market levels. Earnings from the operator segment are secured by constantly striving for improving margins; in trading as well as in the daily post fixture work. The business model demonstrates an ability to absorb substantial market fluctuations.

10 Annual Report 2009 Strategic insight WORLD WIDE TRADING ROUTES AND NETWORK Eitzen Bulk Shipping constantly strives to maintain and further develop a strong and productive network in relation to both vessel owners and cargo customers alike. The strong relationship, built on high ethics and professionalism is important to maintain, as it expands the access to the widest possible range of available cargoes and vessels and ensures the ability to position the company in the best possible way when the world trade changes. Eitzen Bulk Shipping offices and staff are strategically sited around the world in terms of regions and time zones. Through this presence we achieve direct access to cargo and contract opportunities that would not have been available otherwise. In many cultures trust is only achieved by personal contacts between the cargo owners and the owners (or their representatives), and a local office is an important tool to establish such trust and develop new business opportunities. The main bulk trading routes are determined by regional supply and demand requirements in respect of the raw materials, which can be most economically transported in dry bulk shipments, the majority of which are steel or energy related as illustrated by the Eitzen Bulk Shipping 2009 lifting. Eitzen Bulk Shipping has been able to establish a comparatively diversified cargo portfolio. Involving our fleet in transportation of a diversified portfolio of commodities ranging from the mining industry to construction and farming related products like fertilizers, we have achieved a cargo platform minimising the dependency on one single industry. 2009 Liftings 18.7 million tons Mineral/ ores Scrap 5% 11% 5% Iron Ore 5% Petcoke 11% Other Bauxite 6% 7% 40% Coal Fertilizer 10% Grain, Sugar Eitzen Bulk Shipping offices and major trading routes New York 4 employees Rio de Janeiro 3 employees Copenhagen (HQ) 31 employees Beijing 4 employees Hong Kong 4 employees Singapore 6 employees

Strategic insight Annual Report 2009 11 COMPETITIVE EDGE THROUGH TAILORED BACK OFFICE SYSTEMS Eitzen Bulk Shipping has a long track record of efficient operations and cost effective trading. The company s fleet management and control system offers single point data entry with full integration of commercial-, operational- and financial operations as well as risk management. It has been tailored to the company s requirements with a strong focus on scalability and optimal matching of cargoes and vessels. The system provides a global overview of both present and future cargo and vessel commitments, the minute a vessel and/ or a cargo commitment is concluded and inserted. The information is a live platform and is simultaneously available to all our offices and departments worldwide. This way, the company can fully utilise the local offices customer relations and access to cargoes with the global organisation s ability to provide real-time mark-to-market values of future concluded commitments for any segment, counterparty or financial period that may be required for decision making.the tailored back-office system provides a competitive edge, which together with the high activity level forms a platform that facilitates the ability to perform cost effective trading through: Efficient operations due to critical mass Minimised ballasting, by amongst other optimising of triangular trades Effective fleet scheduling Optimal matching of cargoes & vessels Hedging opportunities, due to consistent high volumes High activity level which creates opportunity for attractive spot / arbitrage trading The company has adopted a conservative but flexible risk profile and an active risk management policy tonnage and cargo commitments are matched by adjusting the physical exposure, or hedged in the FFA market. Trading and risk management systems are fully integrated giving instant mark-to-market exposure reports.

12 Annual Report 2009 Strategic insight Sibulk Quality, discharging af Perola Terminal, Santos, Brazil VALUE ADDING ACTIVITIES Whilst operator and owner activities are the primary business segments, Eitzen Bulk Shipping has also established cargo handling and port facilities. Presently cargo-handling equipment consists of 78 cargo grabs and three purpose designed grabs for log-handling. The grabs are used for own cargo handling purposes but also leased to third parties. Eitzen Bulk Shipping grab activities in India are developed through a joint venture in the name of Eitzen Logistic Services. Port facility involvement is presently in the form of investment in Perola a fertilizer terminal in Santos, Brazil. In 2009 the terminal was hit and damaged by an extreme storm. The terminal remained partly operative, but re-building and possible expansion options are currently being reviewed. Cargo handling and port facility investment opportunities are pursued in order to create value added activities and/or consolidate co-operations with core clients. The cargo handling and port facilities supports and increases trading efficiency. NEWBUILDING PROGRAM AND COVERAGE Eitzen Bulk Shipping has committed to 18 newbuildings of which two vessels are already in service. The remaining vessels will be delivered in the period 2010 to 2014. Of the 16 new buildings still to be delivered, one vessel to be delivery in 2011 will be owned. The remaining vessels are on long-term operational leases from Japanese shipowners. When securing these vessels under operational leases, Eitzen Bulk Shipping secured a long-term tonnage portfolio (up to 13 years) with fixed daily lease cost for the full contract period. The capital, cost and currency exposure rests with the operational lease counterparts. In line with the company s conservative approach to exposure, by the end of 2009, 80 per cent of all exposure related to newbuildings was covered with longterm contracts at profitable returns. All operational leases carry purchase options to Eitzen Bulk Shipping, of which the majority are partly shared. For many years it has been an industry standard that Handymax vessels has a length of 190 meters. However, after extensive analysis of the Eitzen Bulk Shipping trading pattern and in close coordination with industrial customers and ship yards, results showed that the majority of the regular ports of call wereable to accommodate a vessel with 200 meter length. The newbuilding program of Eitzen Bulk Shipping consists of 12 Supramax vessels with a length of 200 meters, which means that their cargo carrying capacity is increased by an estimated 10-15%, making them more competitive than the standard industry index for Supramax bulk carriers, the so called BSI std52 design. STABILITY DURING FINANCIAL CRISES AND PLATFORM FOR FUTURE PROFITABLE GROWTH Although many businesses are still battling against the financial crises, the dry bulk market showed an early and remarkable recovery in 2009. Seen in historical perspective 2009 did not represent at setback for Eitzen Bulk Shipping as the operational, financial and exposure control systems proved their value in allowing the company to adjust quickly and benefit from the market development. The business model proved to be an invaluable asset during 2009 in terms of controlling vessel and cargo exposure. Running in parallel to which, time and efforts are continually invested in practicing due diligence towards reviewing the creditability of new contractual counterpart as well as current clients on a regular basis. As a result thereof Eitzen Bulk Shipping only suffered losses in 2009 from one counterpart as consequence of the crises in respect of cargo contracts, Forward Freight Agreements, bunker and currency hedges. The present business model and support systems are structured to facilitate absorption of the increasing numbers of vessels, cargo and contract commitments resulting from our three to five years growth plan, without further major investment in new systems and people.

Strategic insight Annual Report 2009 13 Newbuild program expected delivery Owned Operational leasing 2007 2008 2010 2011 2012 2013 2014 Supramax Mitsui (Sibulk Initiator) 56,000 DWT Supramax Imabari (Sibulk Tradition) 53,000 DWT Supramax Oshima (Sibulk Prosperity) 60,700 DWT Imabari 61,000 DWT Supramax Imabari 61,000 DWT Oshima 60,700 DWT Imabari 61,000 DWT Panamax Sanoyasa (Sibulk Panache) 78,000 DWT Handysize Imabari 37,000 DWT Supramax Imabari 61,000 DWT Imabari 61,000 DWT Oshima 60,700 DWT Imabari 61,000 DWT Handysize Imabari 37,000 DWT Supramax Imabari 61,000 DWT Supramax Imabari 61,000DWT Oshima 60,700 DWT Tsuneishi 58,100 DWT

14 Annual Report 2009 2009 market review 2009 market review 2009 was a challenging year for many businesses and dry cargo shipping was no exception. The time charter rates for a Supramax vessel was at the beginning of the year USD 4,000 per day lower than the actual costs of operating a vessel, but by yearend the daily rate was USD 25,000 giving an annual average of USD 17,300 substantially higher than most analysts had forecasted at the beginning of the year. During 2009 the world dry bulk fleet grew from 418 to 460 million dwt. 43 million dwt entered the market as newbuildings and approximately 10 million dwt were conversions from tank to bulk. 11 million dwt of old ships were scrapped. This fleet growth would have sent hundreds of older ships into layup, and even more to the demolition yards had it not been for the strength of the emerging markets. China again demonstrated how the world has changed since the 1990 s from a world with OECD as the focal point to a situation with big emerging markets and the developed economies falling behind. The financial melt-down was an OECD problem affecting China, but irrespective of which China and other emerging economies grew as much in dry cargo volume as OECD shrank. During the financial turmoil China consumed raw materials at a level which hardly anybody had forecasted, and it naturally poses the question of shortand mid-term sustainability. In 2009 China imported 628 million tons of iron ore occupying about 25% of the world dry bulk fleet. In 2008 the corresponding figure was 440 mill tons. The long term sustainability of China s demand is considered pretty certain. China s price-corrected industrial production is now bigger than that of USA. China consumes more cars than USA, and produces as much steel as the rest of the world accumulated. China constitutes 42 percent of the world coal market. BSI and forward curves, monthly averages, USD per day Baltic historical Baltic forward feb 24, 2010 70,000 50,000 30,000 10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Eitzen Research using Baltic Exchange Data Dry Bulk Cargo Ships, million DWT In Operation Demolished Expected Delivery 80 60 40 20 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Eitzen Research