A15761609 - D`Amico International Shipping

Transcription

(a société anonyme incorporated under the laws of the Grand Duchy of Luxembourg with registered office at 25 C Boulevard Royal, L-2449
Luxembourg, Grand Duchy of Luxembourg and listed under the trading symbol “DIS” on the STAR segment of the MTA of Borsa Italiana
(the “Company” or the “Issuer”))
Offering with Preferential Subscription Rights of 209,929,867 New Shares with 209,929,867 Warrants issued simultaneously at an
Issuance Price of EUR 0.31 per New Share in the Ratio of 7 New Shares with 7 Warrants issued simultaneously for 5 Preferential
Subscription Rights and admission to trading of the New Shares, Warrants and Warrant Shares
This Prospectus relates to a rights issue addressed to the shareholders of the Company which consists of (i) an offering by the Company with preferential
subscription rights (the “Preferential Subscription Rights”) of new shares of the Company (the “New Shares”) with warrants issued simultaneously (the “Warrants”)
to be exercised into shares (the “Warrant Shares”) (the “Rights Offering”) and (ii) a public auction organised by the Société de la Bourse de Luxembourg S.A. (the
“Luxembourg Stock Exchange”) for the sale of the unexercised Preferential Subscription Rights (the “Public Auction” and together with the Rights Offering, the
“Offering”).
The shareholders of the Company as at the closing of the Mercato Telematico Azionario (the “MTA”), the Italian automated screen-based trading market organised
and managed by Borsa Italiana S.p.A. (“Borsa Italiana”), on 9 November 2012 (the “Record Date”) are entitled to one Preferential Subscription Right per existing
share (an “Existing Share”) they hold at such Record Date. The Preferential Subscription Rights will be tradable over the counter/off the MTA from
12 November 2012 up to and including 11 December 2012 (the “Rights Subscription Period”) and will be tradable on the MTA from 12 November 2012 up to and
including 4 December 2012. The Existing Shares will be traded ex rights as from 12 November 2012. Any sale of Shares prior to closing of the MTA on
9 November 2012 will be settled “cum rights”. Any Shares sold after the closing of the MTA on 9 November 2012 will be settled “ex rights”.
Subject to applicable securities laws, the following categories of investors are able to subscribe to the New Shares with Warrants issued simultaneously and the
Warrant Shares: (i) the initial holders of Preferential Subscription Rights, i.e. the shareholders on the Record Date, not located in a jurisdiction in which such
subscription would be restricted (“Ineligible Jurisdiction”); (ii) persons located outside Ineligible Jurisdictions, including the United States, who have acquired
Preferential Subscription Rights during the Rights Subscription Period; and (iii) investors located outside Ineligible Jurisdictions, including the United States, who
have acquired Preferential Subscription Rights at the Public Auction.
The Company has received from d’Amico International S.A. (the “Controlling Shareholder”) an irrevocable take up commitment as set out in more detail in
section 3.8.1.
This Prospectus relates to a rights issue addressed to the shareholders of the Company and the level of disclosure in this Prospectus is proportionate to that type of
issue and complies with the requirements of Annexes XXIII and XXIV of Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive
2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and
publication of such prospectuses and dissemination of advertisements, as amended (the “Prospectus Regulation”).
This Prospectus was approved by the Commission de Surveillance du Secteur Financier in Luxembourg (the “CSSF”), which is the competent authority in
Luxembourg for the purposes of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when
securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, as amended (the “Prospectus Directive”) and the relevant
implementing measures in Luxembourg, in particular the Luxembourg law of 10 July 2005 relating to prospectuses for securities, as amended (the “Luxembourg
Prospectus Law”). The Company has requested the CSSF to provide the competent authority in Italy, i.e. the Italian Companies and Stock Exchange Commission
(Commissione Nazionale per le Società e la Borsa) (“CONSOB”) and the Company, with a certificate of approval attesting that this Prospectus has been prepared in
accordance with the Luxembourg Prospectus Law. In accordance with article 7 of the Luxembourg Prospectus Law, the CSSF’s approval does not imply any
judgement on the economic or financial merits of the Offering, nor on the quality or solvency of the Company.
An application was filed for the admission of the Warrants to trading on the STAR segment of the MTA and Borsa Italiana admitted the Warrants to trading on the
MTA by decision 7582 of 30 October 2012.
The New Shares and Warrant Shares will be admitted to trading on the MTA. Pursuant to article 2.4.1 of the rules of the markets organised and managed by Borsa
Italiana in force at the time of this Prospectus, the New Shares and the Warrant Shares will be automatically traded on the same market on which the existing shares
of the Company (the “Existing Shares”) will be traded at the time of their issuance, i.e. the MTA.
Trading of the Preferential Subscription Rights on the MTA is expected to commence on 12 November 2012 and end on 4 December 2012. Trading of the New
Shares on the MTA is expected to commence on 14 December 2012 as regards the New Shares subscribed during the Rights Subscription Period and on
27 December 2012 as regards the New Shares subscribed during the Public Auction. The first date of trading of the Warrants on MTA will be determined by Borsa
Italiana with an appropriate notice in accordance with the rules of the markets organised and managed by Borsa Italiana in force at the time of this Prospectus,
subject to the prior verification of the sufficient circulation and availability of the financial instruments to the persons entitled thereto.
The Company is not taking any action to permit an offer to the public of the Preferential Subscription Rights, the New Shares, the Warrants or the Warrant Shares in
any jurisdiction outside the Grand Duchy of Luxembourg and Italy. The distribution of this Prospectus outside the Grand Duchy of Luxembourg and Italy may in
certain jurisdictions be restricted by law. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any circumstances
in which such offer or solicitation is unlawful. The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares have not been, and will
not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other
jurisdiction of the United States. The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares are being offered and sold outside of
the United States in accordance with Regulation S under the Securities Act (“Regulation S”), and may not be offered, sold or delivered within the United States,
except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state and other securities
laws of the United States. This Prospectus has been prepared by the Company solely for use in connection with the offer and sale of the Preferential Subscription
Rights, the New Shares, the Warrants and the Warrant Shares outside the United States pursuant to Regulation S. See also the section on “Disclaimers and notices –
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Certain restrictions on the distribution of this Prospectus” and section 3.7.
The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares have been accepted for settlement through Clearstream Banking, société
anonyme (“Clearstream Luxembourg”), Euroclear Bank SA/NV, as operator of the Euroclear System (“Euroclear”) and Monte Titoli S.p.A. (“Monte Titoli”).
Delivery of the Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares is to be made through the facilities of these clearing systems.
Delivery of the New Shares and the Warrants to subscribers who subscribed during the Rights Subscription Period is expected to occur on 14 December 2012 and
delivery of the New Shares and the Warrants to subscribers who subscribed during the Public Auction is expected to occur on 27 December 2012.
The Preferential Subscription Rights are expected to trade under common code 084899852 and ISIN code LU0848998521. The New Shares and the Warrant Shares
are expected to trade under the same ISIN code as the Existing Shares: LU0290697514. The Warrants are expected to trade under common code 084902004 and
ISIN code LU0849020044.
Investing in the Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares and trading in the Preferential Subscription
Rights involve certain risks. Before investing in the Preferential Subscription Rights, the New Shares, the Warrants or the Warrant Shares, or trading in
the Preferential Subscription Rights, investors should carefully review and consider the entire Prospectus and should give particular attention to the risk
factors set forth in the section “Risk factors” of this Prospectus.
Prospectus dated 6 November 2012
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TABLE OF CONTENTS
Page
SUMMARY ....................................................................................................................................................... 8
DEFINITIONS OF THE MAIN TERMS USED IN THE PROSPECTUS...................................................... 25
RISK FACTORS .............................................................................................................................................. 31
Risks relating to the DIS Group and the product tanker industry..................................................................... 31
Risks relating to the Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares 47
DISCLAIMERS AND NOTICES .................................................................................................................... 51
Decision to invest ............................................................................................................................................. 51
Certain restrictions on the distribution of this Prospectus ................................................................................ 52
Notice to investors in the European Economic Area ........................................................................................ 53
Notice to investors in the United States ........................................................................................................... 53
Forward-looking statements ............................................................................................................................. 54
Industry and market data .................................................................................................................................. 54
Exchange rates.................................................................................................................................................. 54
Rounding .......................................................................................................................................................... 55
1
2
General information and information concerning responsibility for the Prospectus and for
auditing the accounts ............................................................................................................................. 55
1.1
Responsibility for the content of the Prospectus.............................................................. 55
1.2
Responsibility for auditing the accounts .......................................................................... 55
1.3
Approval and notification of the Prospectus.................................................................... 56
1.4
Available information ........................................................................................................ 56
1.4.1
Prospectus .......................................................................................................... 56
1.4.2
Company documents on display....................................................................... 56
Information about the New Shares, the Warrants and the Warrant Shares .................................... 57
2.1
Type, class and dividend entitlement ................................................................................ 57
2.2
Applicable law and jurisdiction ........................................................................................ 57
2.3
Form of the New Shares, the Warrants and the Warrant Shares .................................. 57
2.4
Currency of the issue.......................................................................................................... 57
2.5
Rights attached to the New Shares, the Warrants and the Warrant Shares ................. 58
2.5.1
Rights attached to the New Shares and the Warrant Shares......................... 58
2.5.2
Rights attached to the Warrants ...................................................................... 66
2.6
Restrictions on transferring the New Shares, the Warrants and the Warrant Shares . 66
2.7
Notification of significant shareholdings .......................................................................... 67
2.7.1
A15761609/6.0/06 Nov 2012
Luxembourg significant shareholding notifications ....................................... 67
3
2.7.2
2.8
3
Italian significant shareholding notifications.................................................. 68
Taxation............................................................................................................................... 69
2.8.1
Taxation in Luxembourg .................................................................................. 69
2.8.2
Taxation in Italy................................................................................................. 73
Information on the Offering.................................................................................................................. 80
3.1
Background and reasons for the Offering........................................................................ 80
3.2
Key information ................................................................................................................. 81
3.2.1
Qualified working capital statement................................................................ 81
3.2.2
Capitalisation and indebtedness....................................................................... 81
3.3
Interest of natural and legal persons ................................................................................ 83
3.4
Decisions of the Company regarding the Offering .......................................................... 84
3.5
Terms and conditions of the Offering............................................................................... 84
3.5.1
Unconditional Offering ..................................................................................... 84
3.5.2
Terms of the Offering........................................................................................ 84
3.5.3
Amount of the Offering..................................................................................... 85
3.5.4
Issuance Price and Ratio................................................................................... 85
3.5.5
Subscription periods and procedure................................................................ 85
3.5.6
Shares held by the Company ............................................................................ 88
3.5.7
Supplement to the Prospectus .......................................................................... 88
3.5.8
Payment of funds and terms of delivery of the New Shares, the Warrants and
the Warrant Shares ............................................................................................................ 88
3.5.9
Publication of the results of the Offering ........................................................ 89
3.5.10
Expected timetable of the Offering .................................................................. 89
3.6
Terms and conditions of the Warrants ............................................................................. 91
3.7
Allotment and selling restrictions ..................................................................................... 91
3.8
3.9
3.7.1
Categories of potential investors ...................................................................... 91
3.7.2
Intentions of the Existing Shareholders........................................................... 92
Placing and underwriting of the Offering ........................................................................ 92
3.8.1
Irrevocable take up commitment of d’Amico International S.A................... 92
3.8.2
No underwriting agreement.............................................................................. 93
Admission to trading and dealing arrangements ............................................................ 93
3.9.1
Admission to trading and listing venues.......................................................... 93
3.9.2
Liquidity contract.............................................................................................. 93
3.9.3
Financial service ................................................................................................ 94
3.10
Expenses of the Offering.................................................................................................... 94
3.11
Dilution................................................................................................................................ 94
3.11.1
Shareholders’ structure before the Offering ................................................... 95
3.11.2
Scenario 1: Existing Shareholders exercise all their Preferential Subscription
Rights and exercise all their Warrants ............................................................................. 95
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4
3.11.3
Scenario 2: Existing Shareholders exercise none of their Preferential
Subscription Rights except the Controlling Shareholder ............................................... 96
4
5
3.12
Lock-up undertaking ......................................................................................................... 96
3.13
Securities trading in Italy .................................................................................................. 96
General information about the Company and its share capital......................................................... 97
4.1
General................................................................................................................................ 97
4.2
Group structure.................................................................................................................. 99
4.3
Share capital and Shares ................................................................................................. 101
4.3.1
Share capital and Shares................................................................................. 101
4.3.2
Authorised capital ........................................................................................... 101
4.3.3
Dividend policy ................................................................................................ 102
4.4
Other securities................................................................................................................. 103
4.5
Shareholders’ structure ................................................................................................... 103
4.5.1
Overview .......................................................................................................... 103
4.5.2
Controlling Shareholder d’Amico International S.A. .................................. 104
4.5.3
Voting rights..................................................................................................... 107
4.5.4
Shareholders’ agreements............................................................................... 108
4.5.5
Takeover bid legislation .................................................................................. 108
Management and corporate governance............................................................................................ 108
5.1
Corporate governance ..................................................................................................... 108
5.2
Board of Directors and executive management ..............................................................110
5.3
5.2.1
General ..............................................................................................................110
5.2.2
Composition of the Board of Directors...........................................................111
5.2.3
Executive directors ...........................................................................................118
5.2.4
Non-executive directors....................................................................................119
Senior management of the DIS Group ........................................................................... 120
5.4
Remuneration of and Shares and stock options held by directors and senior
management....................................................................................................................................... 122
Remuneration .................................................................................................. 122
5.4.2
Shares and stock options................................................................................. 125
5.4.3
Stock option plan............................................................................................. 125
5.5
Absence of disqualifications and conflicts of interests .................................................. 126
5.6
Related party transactions............................................................................................... 126
5.7
6
5.4.1
5.6.1
General ............................................................................................................. 126
5.6.2
Transactions with related parties................................................................... 127
Independent auditor......................................................................................................... 132
Information about the Company and the DIS Group....................................................................... 133
6.1
Overview ........................................................................................................................... 133
6.1.1
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History.............................................................................................................. 134
5
7
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6.1.3
Principal factors affecting the DIS Group’s operational results ................. 135
6.1.4
Spot contracts and time charters ................................................................... 135
Competitive strengths ...................................................................................................... 136
6.3
Strategy ............................................................................................................................. 137
6.4
Principal activities and markets...................................................................................... 138
6.4.1
The product tanker industry .......................................................................... 138
6.4.2
The product tanker business at the DIS Group ............................................ 147
6.4.3
The DIS Group’s fleet ..................................................................................... 151
6.4.4
Regulatory environment ................................................................................. 156
6.4.5
Recent developments....................................................................................... 163
6.4.6
Insurance.......................................................................................................... 163
6.5
Information technology and intellectual property ........................................................ 165
6.6
Competition ...................................................................................................................... 165
6.7
Material contracts ............................................................................................................ 166
6.8
Property ............................................................................................................................ 166
6.9
Legal and arbitration proceedings.................................................................................. 167
Consolidated financial information.................................................................................................... 168
Consolidated financial statements for the year ended 31 December 2011................... 169
7.1.1
Consolidated income statement...................................................................... 169
7.1.2
Consolidated statement of comprehensive income ....................................... 169
7.1.3
Consolidated statement of financial position ................................................ 170
7.1.4
Consolidated statement of cash flows ............................................................ 171
7.1.5
Consolidated statement of changes in shareholders’ equity ........................ 172
7.1.6
Notes ................................................................................................................. 172
7.2
Auditor’s report on the consolidated financial statements as at 31 December 2011 .. 205
7.3
Interim consolidated financial statements as at 30 June 2012...................................... 206
7.4
9
Recent financial results and market trends................................................... 134
6.2
7.1
8
6.1.2
7.3.1
Consolidated income statement...................................................................... 206
7.3.2
Consolidated statement of comprehensive income ....................................... 207
7.3.3
Consolidated statement of financial position ................................................ 207
7.3.4
Consolidated statement of cash flows ............................................................ 208
7.3.5
Statement of changes in consolidated shareholders’ equity ......................... 209
7.3.6
Notes ................................................................................................................. 210
Auditor’s report on the interim consolidated financial statements as at 30 June 2012
228
Recent developments and outlook ...................................................................................................... 229
8.1
Recent developments........................................................................................................ 229
8.2
Outlook.............................................................................................................................. 230
Glossary ................................................................................................................................................ 230
6
APPENDIX 1: Terms and conditions of the “D’AMICO INTERNATIONAL SHIPPING WARRANTS 2012 –
2016”...................................................................................................................................................... 234
APPENDIX 2: Press release interim management statements third quarter 2012 ......................................... 248
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7
SUMMARY
Summaries are made up of disclosure requirements known as “Elements”. These elements are numbered in
Sections A – E (A.1 – E.7).
This summary contains all the Elements required to be included in a summary for this type of securities and
issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering
sequence of the Elements.
Even though an Element may be required to be inserted in the summary because of the type of securities and
issuer, it is possible that no relevant information can be given regarding the Element. In this case a short
description of the Element is included in the summary with the mention of “not applicable”.
Section A – Introduction and warnings
A.1
Warning
This summary should be read as an introduction to the prospectus.
Any decision to invest in the Preferential Subscription Rights, New Shares,
Warrants or Warrant Shares should be based on consideration of the prospectus as
a whole by the investor.
Where a claim relating to the information contained in the prospectus is brought
before a court, the plaintiff investor might, under the national legislation of the
member states, have to bear the costs of translating the prospectus before the
legal proceedings are initiated.
Civil liability attaches only to those persons who have tabled the summary
including any translation thereof but only if the summary is misleading,
inaccurate or inconsistent when read together with the other parts of the
prospectus or it does not provide, when read together with the other parts of the
prospectus, key information in order to aid investors when considering whether to
invest in such Preferential Subscription Rights, New Shares, Warrants or Warrant
Shares.
A.2
Consent for use of Not applicable due to the absence of (consent to use the prospectus for) a retail
prospectus in retail cascade.
cascade
Section B – Issuer
B.1
Legal and
commercial name
of issuer
d’Amico International Shipping S.A. (the “Company”).
B.2
Domicile/Legal
form/ Applicable
legislation/
Country of
incorporation of
issuer

Domicile: 25 C Boulevard Royal, 11th floor, L-2449 Luxembourg, Grand
Duchy of Luxembourg.

Legal form: limited liability company (société anonyme).

Applicable legislation: Luxembourg laws.

Country of incorporation: Grand Duchy of Luxembourg.
Nature of issuer’s
current operations
and its principal
activities – Key
The Company is
owned subsidiary
with an average
compared to an
B.3
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a holding company and operates, mainly through its wholly
d’Amico Tankers Limited (Ireland), a fleet of product tankers
age of approximately 6.2 years as at 30 September 2012,
average in the product tanker industry of 8.9 years as at
8
Section A – Introduction and warnings
factors
1 September 2012 (source: Clarkson Research Services Ltd.). As at
30 September 2012, 67.4% of the DIS Group’s fleet meets certain standards set
by the International Maritime Organisation and the International Convention for
the Prevention of Pollution from Ships, allowing the DIS Group to transport a
large range of products such as palm oil, vegetable oil and other chemicals. Its
fleet is primarily engaged in the transportation of refined petroleum products,
providing worldwide shipping services to major oil companies and trading houses
such as ExxonMobil, Shell, CSSA and Glencore (the DIS Group refers to the
Company and all its direct and indirect subsidiaries).
The DIS Group controls, either through ownership or charter arrangements, a
modern fleet of 40 product tanker vessels aggregating approximately
1,900,000 dwt. The product tanker vessels of the DIS Group range from
approximately 35,000 to 51,000 dwt. Its fleet includes 19 owned and
15 chartered-in medium range (“MR”) product tankers, ranging from 46,000 to
52,000 dwt, and three owned and three chartered-in handysize product tankers,
ranging from 35,000 to 40,000 dwt.
As at 30 September 2012 the DIS Group directly employed 25 vessels: eight MR
on a fixed term contract, whilst 11 MR and six handysize vessels are currently
employed on the spot market. The DIS Group also employs a portion of its
controlled vessels through commercial arrangements.
B.4a
Significant recent
trends affecting
issuer and
industries in which
it operates
The market for shipping refined petroleum products is generally highly cyclical
and volatile and this affects the supply and demand for product tanker capacity.
During the past three years, reflecting the worldwide economic scenario, the
product tanker shipping market environment has been generally weak, resulting
in freight rates coming under pressure. The supply and demand of product tanker
capacity and as such, freight and charter rates, are significantly influenced by
global and regional economic and political conditions, changes in seaborne and
other transportation patterns, including changes in the distances over which
cargoes are transported, currency exchange rates and the number of new-building
deliveries.
B.5
Group issuer
belongs to and
issuer’s position
within the group
The Company is an indirect subsidiary of d’Amico Società di Navigazione S.p.A.
d’Amico Società di Navigazione S.p.A holds 99.99% in d’Amico
International S.A. who, in turn, holds 65.94% in the Company. The Company
itself has nine direct and indirect subsidiaries abroad.
B.6
Principal
shareholders

Shareholders
As at the date of this Prospectus, the distribution of the capital and of the voting
rights is as follows:
Before the Offering
Number of
Amount of
shares interest (EUR)*
Shareholder
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Percentage
d’Amico International S.A. ................................98,884,327
32,384,617.09
65.94
Kairos Partners SGR S.p.A. ................................ 3,343,883
1,095,121.68
2.23
d’Amico International Shipping S.A. ................................
5,090,495
1,667,137.11
3.39
9
Before the Offering
Number of
Amount of
shares interest (EUR)*
Percentage
Subtotal................................................................
107,318,705
35,146,875.89
71.56
Other Shareholders................................
42,631,202
13,961,718.66
28.44
Total................................................................ 149,949,907
49,108,594.54
100
Shareholder
* Calculated on the basis of the closing price of the Company’s shares as at 5 November 2012, i.e.
EUR 0.3275 per share.
All shareholders have the same voting rights, i.e. each Share entitles the owner
thereof to the casting of one vote except for the 5,090,495 Shares held in treasury
by the Company of which the voting rights are suspended.

Control
The Company is controlled by d’Amico International S.A. (the “Controlling
Shareholder”), which is ultimately controlled by Mr. Paolo d’Amico and
Mr. Cesare d’Amico, and currently holds 65.94% of the existing shares of the
Company.
B.7
Selected historical
key financial
information
For the financial years ending 31 December 2010 and 2011 respectively, the
DIS Group’s time charter equivalent earnings (revenue net of voyage costs) were
USD 187,000,000 and USD 199,300,000 respectively. The gross operating profit
(EBITDA) amounted to USD 30,400,000 in 2010 and USD 31,000,000 in 2011
respectively. The operating loss (EBIT) for 2010 was USD 2,000,000 versus an
operating loss of USD 6,100,000 in 2011. The net loss for 2010 was
USD 20,500,000 compared to a net loss of USD 21,000,000 in 2011. For the
financial year ending 31 December 2011, total shareholders’ equity amounted to
USD 315,481,000 (compared to USD 333,106,000 for the financial year ending
31 December 2010) for a balance sheet total of USD 670,237,000 (compared to
USD 709,518,000 for the financial year ending 31 December 2010).
For the first nine months of 2012 the DIS Group’s time charter-equivalent
earnings were USD 135,700,000 while the gross operating profit was
USD 13,800,000. The operating result was a loss of USD 100,500,000, including
the vessel impairment of USD 85,000,000 posted in the first half of the year, and
the net loss amounted to USD 107,000,000.
B.9
Profit forecast or
estimate
Not applicable: the Company has not made or issued any profit forecast or
estimate.
B.10 Qualifications in
audit report on
historical financial
information
Not applicable: Moore Stephens Audit S.à r.l., the Company’s approved audit
firm delivered an unqualified opinion on the consolidated financial statements of
the Company for the financial year ending 31 December 2011 and the interim
consolidated financial statements of the Company as at 30 June 2012.
B.11
The Company is of the opinion that, taking into account its available cash and
cash equivalents but not taking into account the proceeds of the contemplated
offering, it does not have sufficient working capital to meet its present working
capital requirements in connection with the already committed capital
expenditures for the new-building vessels together with the other financial
obligations of the DIS Group (in particular under its existing credit facilities) for
a period of at least 12 months from the date of this prospectus. When such
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Working capital
10
shortfall would occur depends on the operating cash flow that the Company can
generate in the next 12 months. However, the Company is confident that the
proceeds resulting from the subscription of the New Shares, in particular having
regard to the take up commitment of the Controlling Shareholder, will provide the
Company with sufficient working capital to meet its present requirements for a
period of at least 12 months from the date of this prospectus. The Company is of
the opinion that potential working capital issues in the next 12 months are best
addressed by the offering as contemplated in this prospectus.
Section C – Securities
C.1
Type, class and
security
identification
number of
securities offered
The offering is a rights issue addressed to the shareholders of the Company which
consists of (i) an offering by the Company with preferential subscription rights
(the “Preferential Subscription Rights”) of new shares of the Company (the
“New Shares”) with warrants issued simultaneously (the “Warrants”) to be
exercised into shares (the “Warrant Shares”) (the “Rights Offering”) and (ii) a
public auction organised by the Société de la Bourse de Luxembourg S.A. (the
“Luxembourg Stock Exchange”) for the sale of the unexercised Preferential
Subscription Rights (the “Public Auction” and together with the Rights Offering,
the “Offering”).

The Preferential Subscription Rights, entitling the holders of existing shares
of the Company (the “Existing Shares”) to subscribe for New Shares in the
Company with Warrants issued simultaneously to be exercised into Warrant
Shares are expected to trade under ISIN code LU0848998521;

The New Shares will be issued as ordinary shares, representing the capital, of
the same category as the Existing Shares and are expected to trade under the
same ISIN code as the Existing Shares: LU0290697514;

The Warrants issued simultaneously with the New Shares are expected to
trade under ISIN code LU0849020044; and

The Warrant Shares will be issued as ordinary shares, representing the
capital, of the same category as the Existing Shares and are expected to trade
under ISIN code LU0290697514.
C.2
Currency of
securities issue
Dollars of the United States of America.
C.3
Number of shares
issued/ Par value
per share

209,929,867 New Shares without par value; and

209,929,867 Warrants exercisable into 69,976,622 Warrant Shares.
Rights attached to
securities
The rights attached to the New Shares and the Warrant Shares shall be identical to
the rights and obligations attached to the Existing Shares except to the extent
otherwise provided by the articles of association of the Company and by
Luxembourg laws. These are essentially the following:
C.4
A15761609

voting rights;

dividend and profit participation rights;

rights to liquidation proceeds; and

preferential subscription rights.
11
The rights attached to the Warrants:
The warrantholders will be entitled to exercise their Warrants and subscribe to the
corresponding number of Warrant Shares at any time during the following
exercise periods (each of which an “Exercise Period” and, jointly, the “Exercise
Periods”):

a first Exercise Period comprising all the trading days of the month of
January 2014 (the “First Exercise Period”);

a second Exercise Period comprising all the trading days of the month of
January 2015 (the “Second Exercise Period”); and

a third Exercise Period comprising all the trading days of the month of
January 2016 (the “Third Exercise Period”).
In order to protect Warrantholders, the board of directors of the Company may at
any time and must, upon the occurrence of certain events, declare additional
exercise periods (the “Additional Exercise Periods”).
The board of directors of the Company may and must, upon the occurrence of
certain other events, suspend any exercise period.
During the Exercise Periods and the Additional Exercise Periods the
warrantholder will be entitled to subscribe for one (1) Warrant Share for each
three (3) Warrants exercised (the “Warrants Ratio”).
The exercise price per Warrant Share (the “Exercise Price”) will be determined
as follows:

during the First Exercise Period, the Exercise Price amounts to EUR 0.36;

during the Second Exercise Period, the Exercise Price amounts to EUR 0.40;

during the Third Exercise Period, the Exercise Price amounts to EUR 0.46.
During an Additional Exercise Period, the Exercise Price will be calculated prorata temporis.
The Company cannot and will not issue Warrant Shares at an Exercise Price
which would be below the accounting value (pair comptable) of the Shares at the
time of issuance of the Warrant Shares upon exercise of the Warrants.
Warrantholders who wish to exercise their Warrants must instruct and authorise
BNP Paribas Securities Services, Luxembourg Branch by (i) submitting the
completed and signed exercise notice to their respective depository banks (an
“Exercise Notice”) and (ii) authorising the payment of the Exercise Price to the
account notified by the depository banks during the relevant Exercise Period or
Additional Exercise Period.
Warrant Shares transferred and delivered on exercise of Warrants will be fully
paid and will generally in all respects rank pari passu with the Shares in issue on
the relevant exercise date.
Following the issuance of Warrant Shares, the Warrants that have been duly
exercised shall automatically lapse. Warrants that are not duly exercised before
31 January 2016 will automatically lapse.
Upon the occurrence of certain events, the Exercise Price and/or the Warrants
Ratio will be adjusted.
A15761609
12
C.5
Restrictions on
free transferability
of securities
Not applicable: the articles of association of the Company do not limit the free
transferability of the shares of the Company and the Warrants will be transferable
freely and separately from the New Shares.
C.6
Application for
admission to
trading on
regulated market
Application to trading of the Warrants on the STAR segment of the Mercato
Telematico Azionario (the “MTA”), the Italian automated screen-based trading
market organised and managed by Borsa Italiana S.p.A.
The Preferential Subscription Rights will be traded on the MTA. The New Shares
and Warrant Shares will be admitted to trading on the MTA.
An application was filed for the admission of the Warrants to trading on the MTA
and Borsa Italiana admitted the Warrants to trading on the MTA by decision 7582
of 30 October 2012. The first date of trading of the Warrants will be determined
by Borsa Italiana, subject to the prior verification of the sufficient circulation and
availability of the financial instruments to the persons entitled thereto.
C.7
Dividend policy
All Shares are entitled to participate equally in dividends.
The dividend policy of the Company is based on its current results and estimated
future liquidity requirements, taking into account the capital structure and the
DIS Group’s development strategy, together with the expected future market
developments.
The Company cannot assure its shareholders that dividend payments will be made
or sustained in accordance with its dividend policy or that its board of directors
will not change the Company’s current dividend policy in the future. The
Company’s ability to make future dividend payments will depend, among others,
on the financial results of its subsidiaries and their ability to distribute funds to
the Company. Their ability to do so may be limited by the legal and capital
requirements to which they are subject. See also “Section D – Risks” of the
summary.
Any dividend on the Shares will be declared and paid in U.S. Dollars.
C.22 Information about
the underlying
share
Please see sections:

Description of the Warrant Shares: see section C.4 of this summary.

Currency of the Warrant Shares: see section C.2 of this summary.

Description of the rights attached to the Warrant Shares and procedure for the
exercise of those rights:

See section C.4 of this summary; and

Each Warrant Share confers on its holder the right to participate and
vote, both personally or by proxy, at annual general meetings and
extraordinary general meetings of shareholders of the Company, as well as
other proprietary and administrative rights in accordance with applicable
Luxembourg laws and the articles of association of the Company.

Where and when the Warrant Shares will be or have been admitted to
trading:

See section C.6 of this summary; and

Pursuant to article 2.4.1 of the Borsa Italiana Rules, the Warrant Shares
will be automatically traded on the same market on which the Existing
Shares will be traded at the time of their issuance, i.e. the MTA. The Warrant
A15761609
13
Shares will be traded under the same ISIN code as the Existing Shares,
i.e. LU0290697514.

Restrictions on the free transferability of the Warrant Shares: see section C.5
of this summary.

The Warrants and the Warrant Shares will be issued by the Company.
Section D – Risks
D.1
Key risks specific
to the issuer or its
industry

Risks relating to the product tanker industry

The cyclical nature of the product tanker industry may lead to
volatility in freight and charter rates.

Fluctuations in the supply of and demand for refined petroleum
products may lead to volatility in the demand for product tanker capacity
and, consequently, in freight rates.

Vessel values may fluctuate which may result in the incurrence of a
loss upon disposal of a vessel or increase the cost of acquiring additional
vessels. Conversely, if vessel values are elevated at a time when the
DIS Group wishes to acquire additional vessels, the cost of acquisition may
increase and this could adversely affect its business, results of operations,
cash flow and financial condition.

Changes in economic and market conditions may affect the
DIS Group’s ability to charter-in new vessels and the costs associated with
the charter-in of new vessels.

Bunker fuel prices, port charges, canal passages and other voyage
expenses may significantly increase.

Operational risks inherent in the shipping industry could have a
negative impact on the DIS Group’s results of operations.

Risks relating to trading sanctions and embargoes could have a
negative impact on the DIS Group’s results of operations.

Maritime claimants could arrest the DIS Group’s vessels or
government or other authorities could detain the DIS Group’s vessels.

Governments could requisition the DIS Group’s vessels during a
period of war or emergency.

Terrorist or piracy attacks and international or local hostilities may
affect the shipping industry.

Acts of piracy on ocean-going vessels have recently increased in
frequency, which could adversely affect the DIS Group’s operations.

Risks relating to the DIS Group

This DIS Group aims to employ between 40% and 60% of its vessels
on fixed rate contracts and the remainder under spot market contracts, which
strategy carries inherent risks.

The DIS Group’s commitment to the High Pool and other commercial
arrangements relating to certain vessels in its fleet may reduce its ability to
respond to market developments and to independently adopt strategies for
these vessels and may in addition expose it to counterparty risk.
A15761609
14

The global financial crisis and the Eurozone debt crisis may have an
adverse effect on the DIS Group.

The DIS Groups depends upon a limited number of customers for a
significant part of its revenues.

In the event that any security over the DIS Group’s chartered-in
vessels is enforced, it may lose its rights and interests under the relevant
time charter contract, the ability to operate such vessels within its fleet, and
it may become liable to parties it charters its vessels to.

The DIS Group’s charterers may terminate or default on their charters
or may, at the time for renewal, not re-charter or re-charter at lower rates.

The DIS Group may not be able to re-charter chartered-in vessels or
the costs associated with chartering-in may increase.

The DIS Group may not be able to grow or effectively manage its
growth.

The DIS Group may be required to make substantial capital
expenditures in order to maintain and expand the size of its fleet and to
maintain the high quality of the vessels which it owns.

The DIS Group’s business may be affected by the performance and the
supply of various products and services by third parties.

Good health and safety practices are essential for the maintenance of
the DIS Group’s business.

The DIS Group’s inability to choose the technical managers and crew
of its chartered-in vessels may affect the employment of these vessels.

The DIS Group’s vessels may suffer damage or be involved in
accidents and it may face unexpected dry-docking and other costs.

Purchasing and managing previously owned or second hand vessels
may result in unforeseen operating costs and vessels off-hire.

Delays in deliveries or non-delivery of new-buildings or committed
long-term charter vessels could harm the DIS group’s operations.

The ageing of the DIS Group’s fleet may result in increased operating
costs in the future and an inability to employ all of its vessels profitably.

The DIS Group relies on the “d’Amico Tankers” trademark and brand
name.

The DIS Group has a strong brand and established reputation in the
product tanker market and any damage to its brand or reputation may have
an adverse effect on its business.

Labour interruptions and problems could disrupt the DIS Group’s
business.

The DIS Group may be unable to attract and retain key management
personnel and other employees.

If the DIS Group defaults on any of the loan agreements entered into
under its credit facilities, it could forfeit its rights in its vessels and their
charters.
A15761609
15

The DIS Group’s credit facilities contains various restrictive
covenants.

The Company is a holding company and it depends on the ability of its
subsidiaries to distribute funds to it in order to satisfy its financial and other
obligations and to pay dividends.

Currency exchange rate and interest rate fluctuations may adversely
affect the DIS Group’s profitability or an investor’s investment in the
Company’s securities.

The DIS Group’s insurance may not be adequate to cover its losses.

The DIS Group has entered and may enter into agreements with related
parties on terms which may be less favourable than otherwise available from
third parties.

The DIS Group’s owned vessels are registered in Liberia and any
requirement to move the registration of these vessels may increase the DIS
Group’s costs.

No assurance can be given that the Company will pay dividends.

The Company’s incorporation under the laws of Luxembourg may
limit the ability of its Shareholders to protect their interests and its ability to
return value to Shareholders.

The DIS Group is exposed to fraud risk.

The DIS Group is subject to the risk of administrative and criminal
liability of the Company.

The DIS Group’s principal trading subsidiary, d’Amico Tankers
Limited, as an Irish tax resident company, benefits from a favourable tax
regime. Should its tax residence or the tax regime applicable to d’Amico
Tankers Limited change, this could result in a significant increase in its
annual tax liabilities and could impact the DIS Group’s profitability. In
addition, under the tax provisions of certain territories with which or in
which the DIS Group conducts business, a taxable permanent establishment
or a foreign tax liability may arise.
A15761609
16
D.3
Key risks specific
to the securities

There may not be an active and liquid market for the Company’s Shares,
Preferential Subscription Rights or Warrants, which may cause such
Securities to trade at a discount and make it difficult to sell the Shares,
Preferential Subscription Rights or Warrants.

Existing shareholders (other than the Controlling Shareholder, who has given
an irrevocable take up commitment) will experience dilution as a result of the
Offering if they do not exercise their Preferential Subscription Rights in full,
which may also result in the Company losing its STAR segment status.

Future sales of the Company’s Shares, Preferential Subscription Rights or
Warrants could cause the market price for the Shares, the Preferential
Subscription Rights or the Warrants to decline.

Following the Offering, the Controlling Shareholder may increase its control
over the Company, including the outcome of shareholder votes.

The stock markets as well as the product tanker sector have been
unpredictable and volatile. The market price of the Company’s Shares and
Warrants may be similarly unpredictable and volatile.

Investors may be subject to exchange rate fluctuations.

The Warrants will give the Warrantholders no Shareholder rights prior to the
exercise of the Warrants.

Warrantholders are exposed to the risk of losing their investment in the
Warrants.

Dilution in case of future capital increases could adversely affect the price of
the Shares and could dilute the interests of Shareholders.

As a Luxembourg incorporated and registered company with an Italian
listing, the Company is subject to regulation in both Luxembourg and Italy.
Section E – Offer
E.1
Total gross
proceeds and
estimate of total
expenses of
issue/offer
If all New Shares are subscribed to, the total amount of the capital increase
together with any share premium will be USD 83,163,507.
If all the Warrants are duly exercised during the Third Exercise Period, the total
amount of the additional capital increase together with any share premium will be
USD 41,134,638.
The costs related to the Offering have been estimated at approximately
USD 658,119.
The amounts referred to above and below are based on a Euro to U.S. Dollar
exchange rate of 1.2779 as at 5 November 2012.
E.2a
A15761609
Reasons for the
offer/Use of
proceeds /
Estimated net
amount of
proceeds

Reasons for the offer/Use of proceeds
The Offering is mainly aimed at renewing the Company’s fleet through the
purchase of new product tankers, allowing the Company to be well positioned for
a market recovery benefitting, at that point, from an improved structure of charter
rates and, on the assets side, an increase in the values of the vessels.
The structure of the Offering, consisting of New Shares to be subscribed by mid
December 2012 and Warrant Shares to be subscribed by January 2016, allows the
Company to raise new financial resources in part by mid December 2012 and in
17
part in the course of a period of approximately three years (through the possible
future exercise of the Warrants) and will enable the DIS Group to manage its
immediate and future capital expenditure needs and working capital requirements
and to seize potential acquisition opportunities over a longer period of time.

Estimated net amount of proceeds
Subject to the exercise of 100% of the Preferential Subscriptions Rights, the
Company estimates the net proceeds resulting from the subscription of the New
Shares pursuant to the Offering to be approximately USD 82,505,388, after
deducting the estimated expenses of the Offering of USD 658,119. If none of the
Warrants are exercised during the exercise periods for the Warrants, the proceeds
of the Offering will be limited to the foregoing amount.
Subject to the exercise of 100% of the Preferential Subscriptions Rights and to
the subsequent exercise of 100% of the Warrants during the third exercise period
in January 2016, the Company estimates the net proceeds resulting from the
Offering to be approximately USD 123,640,026, after deducting the estimated
expenses of the Offering of USD 658,119.
E.3
Terms and
conditions of the
offer
TERMS AND CONDITIONS OF THE OFFERING

Unconditional Offering
The Offering is not subject to any conditions.

Terms of the Offering
Holders of Existing Shares on 9 November 2012 at the closing of the MTA will
be entitled to Preferential Subscription Rights.
Subject to restrictions under applicable securities laws, holders of Preferential
Subscription Rights (whether existing shareholders or holders who acquired
Preferential Subscription Rights during the Offering) can subscribe to the New
Shares with Warrants issued simultaneously in an irreducible way in the ratio of
seven (7) New Shares with seven (7) Warrants issued simultaneously for five
(5) Preferential Subscription Rights held in possession (the “Ratio”).
The Warrants will only be issued free of charge in the framework of the Offering
to subscribers of New Shares.

Issuance price and Ratio
The issuance price is EUR 0.31 per New Share (the “Issuance Price”) with one
(1) free Warrant issued simultaneously.
The holders of Preferential Subscription Rights can subscribe to the New Shares
with Warrants issued simultaneously in an irreducible way in the ratio of seven
(7) New Shares with seven (7) Warrants issued simultaneously for five
(5) Preferential Subscription Rights held in possession.
The Issuance Price represents a discount to the closing price of the Shares on
5 November 2012 of 5.3435%.

a)
Subscription periods and procedure
Rights Offering
The Preferential Subscription Rights will be tradable over the counter/off the
MTA from 12 November 2012 up to and including 11 December 2012 (the
“Rights Subscription Period”). The Preferential Subscription Rights will be
A15761609
18
tradable on the MTA from 12 November 2012 up to and including
4 December 2012 (end of trading on the MTA).
Preferential Subscription Rights can no longer be traded after 11 December 2012.
An announcement of the results of the Rights Offering (indicating the number of
Preferential Subscription Rights exercised during the Rights Subscription Period
and thus the number of New Shares with Warrants subscribed to and to be issued)
and of the Public Auction will be made by a press release, on the Company’s
Website and through the international central securities depositories on
13 December 2012 after closing of the MTA.
b) Public Auction of unexercised Preferential Subscription Rights
Preferential Subscription Rights not exercised in the Rights Subscription Period
will be sold in the Public Auction organised by the Luxembourg Stock Exchange
on 19 December 2012. At least three trading days before the Public Auction, i.e.
on 14 December 2012, the Luxembourg Stock Exchange will publish the Public
Auction (including the terms and conditions thereof) on its website pursuant to
articles 4 and 5 of Part 4 of the Rules and Regulations of the Luxembourg Stock
Exchange. The Company will publish a press release and a notice containing the
number of Preferential Subscription Rights to be sold in the Public Auction in at
least one newspaper with a national circulation in Italy.
Shareholders and investors who wish to participate in the Public Auction must
instruct a member of the Luxembourg Stock Exchange to represent them thereat.
Preferential Subscription Rights purchased at the Public Auction must be
exercised immediately and, consequently, instructions given to the member of the
Luxembourg Stock Exchange to participate in the Public Auction must include
the order to complete and sign the subscription instruction in respect of the
Preferential Subscription Rights so purchased.
An announcement of the outcome of the Public Auction will be made by the
Luxembourg Stock Exchange on its website and by the Company via press
release and through the international central securities depositories on
20 December 2012.
Investors who purchase unexercised Preferential Subscription Rights at the Public
Auction must provide for payment of the Issuance Price for the New Shares and
of the bid price for the Preferential Subscription Rights to the account notified by
the bailiff with value date 21 December 2012.
c)
Rules for subscription
The Rights Offering will be open from 12 November 2012 up to and including
11 December 2012, i.e. the Rights Subscription Period.
The shareholders may exercise their Preferential Subscription Rights by
instructing their depository banks to authorise BNP Paribas Securities Services to
transfer the New Shares with Warrants issued simultaneously to the respective
shareholder’s account following the implementation of the capital increase. The
implementation of the capital increase is expected to occur on 14 December 2012
in relation to the New Shares subscribed during the Rights Subscription Period
and on 27 December 2012 in relation to the New Shares subscribed during the
Public Auction.
Shareholders who wish to exercise their Preferential Subscription Rights are
A15761609
19
requested to instruct their depository banks to authorise BNP Paribas Securities
Services to transfer the New Shares with Warrants issued simultaneously.
The Existing Shares will be traded ex rights as from 12 November 2012. Any sale
of Shares prior to closing of the MTA on 9 November 2012 will be settled “cum
rights”, i.e. including the associated Preferential Subscription Rights. Any Shares
sold after the closing of the MTA on 9 November 2012 will be settled “ex rights”,
i.e. excluding the associated Preferential Subscription Rights.
Shareholders and other holders of Preferential Subscription Rights for New
Shares subscribed for with Warrants issued simultaneously in the Rights
Subscription Period who wish to exercise their Preferential Subscription Rights
(i) must submit the completed and signed subscription instruction, which will be
made available to the shareholders by their depository banks, to their respective
depository banks on or before 11 December 2012 and (ii) must authorise the
payment of the Issuance Price to the account notified by the depository banks
with value date on or before 13 December 2012.
Subscription instructions in relation to the New Shares subscribed for in the
Rights Subscription Period must be received by BNP Paribas Securities Services,
as subscription rights agent not later than 11 December 2012, 17:00 CET.
Shareholders should consult with their banks by which time such banks should
receive their instructions to enable the banks to transmit the instructions to BNP
Paribas Securities Services, Luxembourg Branch on time.
At the end of the Rights Subscription Period, unexercised Preferential
Subscription Rights will be blocked by the central securities depositories and
exercised Preferential Subscription Rights will be cancelled.
Prior to the beginning of the trading of the Preferential Subscription Rights,
copies of the prospectus will be available at no cost on the Company’s website
(http://investorrelations.damicointernationalshipping.com), subject to certain
conditions, and at the registered office of the Company, 25 C Boulevard Royal, L2449 Luxembourg, Grand Duchy of Luxembourg and can be obtained upon
request from the Company, on the phone number (+352) 26 26 29 29.

Payment of funds and terms of delivery of the New Shares, the Warrants
and the Warrant Shares
The Issuance Price is EUR 0.31 per New Share subscribed. The Issuance Price
for the New Shares subscribed for in the Rights Subscription Period is due and
payable with value date no later than 13 December 2012. The Issuance Price for
the New Shares subscribed for in the Public Auction is due and payable with
value date 21 December 2012.
The Warrants will be issued free of charge to the subscribers of the New Shares
and will be issued simultaneously with the New Shares. The Warrants will be
transferable freely and separately from the New Shares.
The Warrant Shares will be issued after exercise of the Warrants during the
Exercise Periods and following payment of the Exercise Price (see section C.4 of
this summary).
The New Shares and the Warrant Shares will be issued in the form of registered
Shares. A global registered certificate evidencing the entries of the New Shares
and the Warrant Shares in the register of Shareholders maintained at the
A15761609
20
registered office of the Company will be deposited with a common depositary
(BNP Paribas Securities Services) on behalf of Clearstream Luxembourg and
Euroclear.
The New Shares, the Warrants and the Warrant Shares will be held in book-entry
form and treated as dematerialised financial instruments in the centralised
management systems operated by Clearstream Luxembourg, Euroclear and
Monte Titoli and may be settled through Clearstream Luxembourg, Euroclear and
Monte Titoli.
The Shares and the relevant Warrants subscribed during the Rights Subscription
Period shall be credited to the subscribers’ depository bank accounts on the
business day immediately following the last value date for payment of the
Issuance Price for the Preferential Subscription Rights exercised during the
Rights Subscription Period and shall therefore be available on
14 December 2012. Trading of the New Shares subscribed during the Rights
Subscription Period on the MTA is expected to commence on 14 December 2012.
The Shares and the relevant Warrants subscribed during the Public Auction shall
be credited to the subscribers’ depository banks accounts on the business day
immediately following the value date for payment of the Issuance Price for the
Preferential Subscription Rights acquired at the Public Auction and exercised on
19 December 2012 and shall therefore be available on 27 December 2012.
Trading of the New Shares subscribed during the Public Auction on the MTA is
expected to commence on 27 December 2012.
Payment of the sale price of unexercised Preferential Subscription Rights sold at
the Public Auction is expected to be made on 27 December 2012. Unclaimed
payments for the sale price of unexercised Preferential Subscription Rights which
have been sold at the Public Auction will be kept, after deduction of all costs
related thereto, available to the shareholders for a period of five years at the end
of which they will definitively accrue to the Company.

Amendments to dates, times and/or periods relevant to the Offering.
The Company may amend the dates and times of the share capital increase and
periods indicated in the above summary. If the Company decides to amend such
dates, times or periods, it will inform investors by way of a press release and on
the Company’s Website. Any material alterations to this prospectus will be
published in a press release, on the Company’s Website and by way of a
supplement to this prospectus.
ALLOTMENT AND SELLING RESTRICTIONS
The Offering will only be conducted as an offer to the public in Luxembourg and
Italy.
Subject to applicable securities laws, the following categories of investors are
able to subscribe to the New Shares with Warrants issued simultaneously and the
Warrant Shares: (i) the initial holders of Preferential Subscription Rights, i.e. the
shareholders on the Record Date, not located in a jurisdiction in which such
subscription would be restricted (“Ineligible Jurisdiction”); (ii) persons located
outside Ineligible Jurisdictions, including the United States, who have acquired
Preferential Subscription Rights during the Rights Subscription Period; and
(iii) investors located outside Ineligible Jurisdictions, including the United States,
A15761609
21
who have acquired Preferential Subscription Rights at the Public Auction.
The Preferential Subscription Rights are granted to all existing shareholders and
may only be exercised by existing shareholders who can lawfully do so under any
law applicable to those existing shareholders. The New Shares and Warrants
issued simultaneously and the Warrant Shares are being offered only to holders of
Preferential Subscription Rights to whom such offer can be lawfully made under
any law applicable to those holders.
The distribution of this prospectus, the acceptance, sale, purchase or exercise of
Preferential Subscription Rights and the subscription for and acquisition of New
Shares with Warrants issued simultaneously or Warrant Shares may, under the
laws of certain countries other than Luxembourg or Italy, be governed by specific
regulations. Individuals in possession of this prospectus, or considering the
acceptance, sale, purchase or exercise of Preferential Subscription Rights, or the
subscription for, or acquisition of, New Shares, Warrants or Warrant Shares must
inquire about those regulations and about possible restrictions resulting from
them, and comply with those restrictions. Intermediaries cannot permit the
acceptance, sale or exercise of Preferential Subscription Rights or the
subscription for, or acquisition of, New Shares, Warrants or Warrant Shares, for
clients whose addresses are in a country where such restrictions apply.
This prospectus does not constitute an offer to sell or the solicitation of an offer to
buy any securities other than the Preferential Subscription Rights, the New
Shares, the Warrants and the Warrant Shares to which they relate or an offer to
sell or the solicitation of an offer to buy Preferential Subscription Rights, New
Shares, the Warrants or the Warrant Shares in any circumstances in which such
offer or solicitation is unlawful.
E.4
Interest(s) material On 30 October 2012 the Controlling Shareholder signed an irrevocable take up
to issue/offer
commitment in which it irrevocably committed to exercise all 98,884,327
Preferential Subscription Rights which it is entitled to receive under the Offering
and to subscribe for and to fully and timely pay up the corresponding number of
New Shares with Warrants issued simultaneously, at the Issuance Price and in
accordance with the Ratio.
As at the date of this prospectus, to the best of the Company’s knowledge,
Tamburi Investment Partners S.p.A., financial advisor to the Company in relation
to the Offering, holds 400,066 Existing Shares representing approximately 0.27%
of the Company’s share capital.
As at the date of this prospectus d’Amico Società di Navigazione S.p.A. holds
14,125,000 shares in Tamburi Investment Partners S.p.A., representing
approximately 10.38% of its share capital, as well as 500,000 warrants issued by
Tamburi Investment Partners S.p.A.
Furthermore, Mr. Cesare d’Amico is a member of the board of directors (vicepresident) of Tamburi Investment Partners S.p.A. and Mr. Gianni Nunziante is a
non-executive member of the board of directors of d’Amico Società di
Navigazione S.p.A. and an external consultant to Studio Legale Ughi e
Nunziante, the law firm which is advising the Company as to Italian law in
relation to the Offering.
E.5
A15761609
Person or entity

The Company will sell on the MTA the 5,090,493 Preferential Subscription
22
offering to sell the
securities / Lockup agreements
E.6
Amount and
percentage of
immediate dilution
resulting from the
offer and from
non-subscription to
the offer
Rights attached to the 5,090,495 treasury Shares held by it.

Currently there are no lock-up or standstill agreements in place.
There is no dilution for the existing shareholders as a result of the Offering as
long as they fully exercise their Preferential Subscription Rights.
The dilution caused by the Offering for the existing shareholders (in percentage
terms) who do not exercise any of their Preferential Subscription Rights is
58.33%.
The Offering would also result in a maximum amount of the USD equivalent of
EUR 65,078,259 of additional share capital (including share premium) being
issued.
The tables below provide a simulation of the dilutive effect of the Offering in
two scenarios, based on an Issuance Price of EUR 0.31 and a Ratio of seven
(7) New Shares for five (5) Preferential Subscription Rights.

Scenario 1: Existing shareholders exercise all their Preferential
Subscription Rights and exercise all their Warrants
After the Offering and
after the exercise of the
Warrants
After the Offering
Number of
shares
%
Number of
shares
%
d’Amico International S.A. ................................
237,322,382
65.94
283,468,400
65.94
Kairos Partners SGR S.p.A. ................................
8,025,315
2.23
9,585,792
2.23
d’Amico International Shipping S.A. ..............................
5,090,495
1.41
5,090,495
1.18
Subtotal................................................................
250,438,192
69.59
298,144,687
69.36
109,441,582
30.41
131,711,709
30.64
Total................................................................
359,879,774
100.00
429,856,396
100.00
Shareholder

Scenario 2: Existing shareholders exercise none of their Preferential
Subscription Rights except the Controlling Shareholder
After the Offering and
after the exercise of the
Warrants
After the Offering
Number of
shares
%
Number of
shares
%
237,322,382
82.29
307,299,004
85.75
Kairos Partners SGR S.p.A. ................................
3,343,883
1.16
3,343,883
0.93
d’Amico International Shipping S.A. ..............................
5,090,495
1.77
5,090,495
1.42
Subtotal................................................................
245,756,760
85.22
315,733,382
88.10
42,631,202
14.78
42,631,202
11.90
Total................................................................
288,387,962
100.00
358,364,584
100.00
Shareholder
E.7
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Estimated
Not applicable: No expenses will be charged to investors by the Company.
23
expenses charged
to investor by
issuer/offeror
A15761609
However, investors should inform themselves about any costs that their
depository banks might charge to them.
24
DEFINITIONS OF THE MAIN TERMS USED IN THE PROSPECTUS
Throughout the Prospectus, certain terms and expressions are used. Unless the context in which these terms
and expressions are used does not so permit, or unless these terms or expressions are defined differently, they
should be read and understood as follows:
Annual General Meeting
An annual general meeting of Shareholders of the Company.
Articles of Association
The articles of association of the Company as in effect on the
date of this Prospectus.
Audit Committee
The audit committee of the Company.
BNP Paribas Securities Services
BNP Paribas Securities Services, Luxembourg Branch, with
registered address at 33, rue de Gasperich, Howald Hesperange,
L-5826 Hesperange, Grand Duchy of Luxembourg and
registered with the Luxembourg Register of Commerce and
Companies under number B 86.862.
Board of Directors
The board of directors of the Company.
Borsa Italiana
Borsa Italiana S.p.A., the Italian stock exchange.
Borsa Italiana Code
The set of recommended corporate governance rules for listed
Italian companies first approved by the Corporate Governance
Committee of Borsa Italiana in March 2006 and last amended in
December 2011.
Borsa Italiana Rules
The rules of the market organised and managed by Borsa
Italiana, adopted by Borsa Italiana’s shareholders’ meeting of
16 February 2012
and
approved
by
CONSOB
by
resolution 18182 of 18 April 2012, as amended from time to
time, as well as the relevant implementing instructions.
Calendar
The indicative timetable for the Offering.
CET
Central European Time.
Chairman
The chairman of the board of directors of the Company.
Chief Executive Officer
The chief executive officer of the Company.
City of Luxembourg
The city of Luxembourg, Grand Duchy of Luxembourg.
Clearstream Luxembourg
Clearstream Banking, société anonyme.
Closing Date of the Offering
The day on which the issuance of the New Shares and related
Warrants resulting from subscriptions during the Public Auction
will take place. This date is expected to be 27 December 2012.
Company, Issuer or DIS
d’Amico International Shipping S.A., a société anonyme with
registered office at 25 C Boulevard Royal, 11th floor, L2449 Luxembourg, Grand Duchy of Luxembourg and registered
with the Luxembourg Register of Commerce and Companies
under number B 124.790.
A15761609
25
Controlling Shareholder
d’Amico International S.A., a société anonyme with registered
office at 25 C Boulevard Royal, 11th floor, L-2449 Luxembourg,
Grand Duchy of Luxembourg and registered with the
Luxembourg Register of Commerce and Companies under
number B 29.027.
CONSOB
The Italian Companies and Stock Exchange Commission
(Commissione Nazionale per le Società e la Borsa).
CONSOB Issuer Regulation
CONSOB regulation number 11971 of 14 May 1999, as
amended from time to time and lastly by resolution
number 18214 of 9 May 2012.
Corporate Governance Report
The report issued annually by the Company, describing the
corporate governance and ownership structure of the Company.
CSSF
The Commission de Surveillance du Secteur Financier in
Luxembourg.
d’Amico Group
d’Amico Società di Navigazione S.p.A., a company incorporated
under the laws of the Republic of Italy, and all its direct and
indirect subsidiaries.
DIS Group
The Company and all its direct and indirect subsidiaries.
EEA
The European Economic Area.
Euroclear
Euroclear Bank SA/NV, as operator of the Euroclear system.
Executive Committee
The Executive Committee of the Company.
Exercise Period
A period during which the Warrantholders will be entitled to
exercise their Warrants, subject to, and as provided by, the terms
and conditions of the Warrants as set out in Appendix 1.
Exercise Price
The price at which the Warrantholders will be entitled to
exercise their Warrants and subscribe to the Warrant Shares,
subject to, and as provided by, the terms and conditions of the
Warrants as set out in Appendix 1.
Existing Shareholders
The holders of Existing Shares on the Record Date.
Existing Shares
The 149,949,907 Shares in the Company in issue and
outstanding on the date of this Prospectus.
Extraordinary General Meeting
An extraordinary general meeting of Shareholders of the
Company.
First Exercise Period
A first Exercise Period comprising all the trading days of the
month of January 2014.
General Meeting
A general meeting of Shareholders of the Company.
General Remuneration Policy
The general remuneration policy of the Company.
A15761609
26
IFRS
The International Financial Reporting Standards pursuant to
Regulation (EC) No. 1606/2002 of the European Parliament and
of the Council of 19 July 2002 on the application of international
accounting standards.
ISIN
International Securities Identification Number.
Issuance Price
The price in Euro at which each New Share is offered, i.e.
EUR 0.31 per New Share.
Italian Consolidated Income Tax Code
Testo unico delle imposte sui redditi – DPR No. 917 of
22 December 1986, as amended.
Law of 10 August 1915 on Commercial
Companies
The Luxembourg law of 10 August 1915 on commercial
companies, as amended (loi modifiée du 10 août 1915 sur les
societés commerciales).
Luxembourg
The Grand Duchy of Luxembourg.
Luxembourg Criminal Code
The Luxembourg Code Pénal.
Luxembourg Income Tax Law
The Law of 4 December 1967 on income tax, as amended, as
well as implementation regulations and all other laws and
regulations related to income tax.
Luxembourg Official Gazette
The Mémorial C, Recueil des Sociétés et Associations in
Luxembourg.
Luxembourg Prospectus Law
The Luxembourg law of 10 July 2005 relating to prospectuses
for securities, as amended.
Luxembourg Register of Commerce
and Companies
The Registre de Commerce et des Sociétés in Luxembourg.
Luxembourg Stock Exchange
Société de la Bourse de Luxembourg S.A., the Luxembourg stock
exchange.
Luxembourg Transparency Law
The Luxembourg law of 11 January 2008 on transparency
requirements for issuers of securities, as amended.
Member of the Luxembourg Stock
Exchange
Any person who has been admitted to membership of the
Luxembourg Stock Exchange and whose membership has not
been terminated.
Monte Titoli
Monte Titoli S.p.A., the Italian central securities depository
providing centralised administration of financial instruments.
MTA
The Mercato Telematico Azionario, the Italian automated screenbased trading market organised and managed by Borsa Italiana.
New Shares
The Shares to be issued as part of the Offering.
Nomination and Remuneration
Committee
The nomination and remuneration committee of the Company.
Offering
The Rights Offering and the Public Auction on the Luxembourg
Stock Exchange.
A15761609
27
Potential Investors
Investors who fall under any of the following categories: (i) the
initial holders of Preferential Subscription Rights, i.e. the
shareholders on the Record Date, not located in a jurisdiction in
which such subscription would be restricted (“Ineligible
Jurisdiction”);
(ii) persons
located
outside
Ineligible
Jurisdictions, including the United States, who have acquired or
may consider acquiring Preferential Subscription Rights during
the Rights Subscription Period; and (iii) investors located
outside Ineligible Jurisdictions, including the United States, who
have acquired or may consider acquiring Preferential
Subscription Rights at the Public Auction.
Preferential Subscription Rights
The preferential subscription rights of the holders of Existing
Shares on the Record Date which entitle them, subject to
applicable securities laws, to subscribe to the New Shares with
Warrants issued simultaneously in accordance with the Ratio at
the Issuance Price. Five (5) Preferential Subscription Rights give
the right to subscribe to seven (7) New Shares with seven (7)
Warrants issued simultaneously within the framework of the
Offering. The Preferential Subscription Rights will be tradable
over the counter/off the MTA during the entire Rights
Subscription Period, i.e. from 12 November 2012 up to and
including 11 December 2012. The Preferential Subscription
Rights will be tradable on the MTA under ISIN code
LU0848998521 from 12 November 2012 up to and including
4 December 2012.
Prospectus
The present document, constituting a prospectus for the purposes
of article 5.3 of the Prospectus Directive and the Luxembourg
Prospectus Law, prepared specifically for the Offering and
approved by the CSSF.
Prospectus Directive
Directive 2003/71/EC of the European Parliament and of the
Council of 4 November 2003 on the prospectus to be published
when securities are offered to the public or admitted to trading
and amending Directive 2001/34/EC (and any amendments
thereto, including the 2010 PD Amending Directive) including
any relevant implementing measure in each relevant member
state.
Prospectus Regulation
Commission Regulation (EC) 809/2004 of 29 April 2004,
implementing Directive 2003/71/EC of the European Parliament
and of the Council as regards information contained in
prospectuses as well as the format, incorporation by reference
and publication of such prospectuses and dissemination of
advertisements.
A15761609
28
Public Auction
After the Rights Offering has ended, the unexercised Preferential
Subscription Rights, if any, will be sold by way of a public
auction on the Luxembourg Stock Exchange. Investors who
acquire such unexercised Preferential Subscription Rights enter
into the irrevocable commitment to exercise the Preferential
Subscription Rights and thus to subscribe to the corresponding
number of New Shares with Warrants issued simultaneously at
the Issue Price and in accordance with the Ratio. The holders of
unexercised Preferential Subscription Rights will receive the
Unexercised Rights Payment, if any. The Public Auction is
expected to take place on 19 December 2012.
Ratio
The ratio of 7 for 5, in which five (5) Preferential Subscription
Rights give the right to subscribe to seven (7) New Shares
within the framework of the Offering.
Record Date
The date and time to establish the entitlement of the Existing
Shareholders to Preferential Subscription Rights, i.e.
9 November 2012 at the closing of the MTA.
Rights Offering
The offering by the Company with Preferential Subscription
Rights of New Shares with Warrants issued simultaneously to be
exercised into Warrant Shares.
Rights Subscription Period
The period of a minimum of 30 calendar days during which the
holders of Preferential Subscription Rights can subscribe to New
Shares; the Rights Offering is expected to start on
12 November 2012 and to close on 11 December 2012 at
17:00 CET.
Regulation S
Regulation S under the Securities Act.
Second Exercise Period
A second Exercise Period comprising all the trading days of the
Securities Act
The U.S. Securities Act of 1993, as amended.
Shares
The shares that represent the capital, with voting rights and
without designation of nominal value, issued by the Company.
Shareholder
A shareholder of the Company.
Supervisory Committee
The supervisory committee of the Company.
Third Exercise Period
A third Exercise Period comprising all the trading days of the
TUF
The Italian Consolidated Financial Law approved by legislative
decree number 58 of 24 February 1998, as amended and
commonly known as TUF.
A15761609
29
2010 PD Amending Directive
Directive 2010/73/EU of the European Parliament and of the
Council of 24 November 2010 amending Directives 2003/71/EC
on the prospectus to be published when securities are offered to
the public or admitted to trading and 2004/109/EC on the
harmonisation of transparency requirements in relation to
information about issuers whose securities are admitted to
trading on a regulated market.
Unexercised Rights Payment
The net proceeds from the sale of the unexercised Preferential
Subscription Rights through the Public Auction on the
Luxembourg Stock Exchange, after deducting all expenses,
charges and all forms of expenditure which the Company has
incurred for the sale of the unexercised Preferential Subscription
Rights, divided proportionally between all holders of
Preferential Subscription Rights who have not exercised them
during the Rights Subscription Period.
Warrantholder
A holder of Warrant(s).
Warrants
The warrants, also known as the d’Amico International Shipping
Warrants 2012 – 2016, to be issued simultaneously with the New
Shares as part of the Offering, with such warrants being
transferable freely and separately from the New Shares. The
terms and conditions of the Warrants are set out in Appendix 1.
Warrants Ratio
The ratio of 1 for 3, in which three (3) Warrants give the right to
subscribe to one (1) Warrant Share, subject to, and as provided
by, the terms and conditions of the Warrants as set out in
Appendix 1.
Warrant Shares
The new Shares to be issued upon exercise of the Warrants by
the Warrantholders.
Website
The
website
of
the
(http://www.damicointernationalshipping.com).
A15761609
30
Company
RISK FACTORS
Any investment in the Preferential Subscription Rights, the New Shares, the Warrants, the Warrant Shares,
and/or any other Shares involves substantial risks. Prospective investors should carefully review and consider
the following risk factors as well as the other information in this Prospectus before deciding whether to make
an investment in the Preferential Subscription Rights, the New Shares, the Warrants and/or the Warrant
Shares. Any of these risks could have a material adverse effect on the DIS Group’s business, results of
operations, cash flow, financial condition and on the Company’s ability to pay dividends and, as a result, the
value and trading price of the DIS Group’s Shares may decline, which could, in turn, result in a loss of all or
part of any investment in the DIS Group’s Preferential Subscription Rights, New Shares, Warrants, Warrant
Shares or any other Shares.
Furthermore, the risks and uncertainties described below may not be the only ones the DIS Group faces.
Additional risks and uncertainties not presently known to the DIS Group or that it currently deems immaterial
may also impair the DIS Group’s business operations or have an adverse effect on the DIS Group’s results of
operations, cash flow, financial condition, the Company’s ability to pay dividends or the price of its securities.
The order in which the risks are presented does not necessarily reflect the likelihood of their occurrence or
the magnitude of their potential impact on the DIS Group’s business, results of operations, cash flow,
financial condition or the price of the securities issued by the Company. This Prospectus also contains
forward-looking statements that involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain factors, including the risks
described below and elsewhere in this Prospectus.
This Prospectus also contains forward-looking statements that involve risks and uncertainties. Actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this Prospectus.
An investment in the Preferential Subscription Rights, the New Shares, the Warrants and/or the Warrant
Shares is only suitable for investors who are capable of assessing the risks and merits of such an investment
and who have sufficient resources to bear any loss which might result from such an investment. Prospective
investors should carefully review the entire Prospectus and should reach their own views and decisions on the
merits and risks of investing in the Preferential Subscription Rights, the New Shares, the Warrants, the
Warrant Shares and/or any other Shares in light of their own personal circumstances. Furthermore, investors
should consult their financial, legal and tax advisors to carefully review the risks associated with an
investment in the Preferential Subscription Rights, the New Shares, the Warrants, the Warrant Shares and/or
any other Shares.
Risks relating to the DIS Group and the product tanker industry
Risks relating to the product tanker industry
The cyclical nature of the product tanker industry may lead to volatility in freight and charter rates.
The DIS Group generates the majority of its revenues from the operation of its product tanker fleet. Factors
beyond its control will have a significant impact on the freight and charter rates which can be charged for
shipping the products which its product tankers carry. Fluctuations in freight and charter rates result from
changes in the market for product tanker capacity, which, in the past, has been cyclical and volatile.
Some of the factors that influence the demand for product tanker capacity and, in turn, freight and charter
rates include levels of demand for the products which the DIS Group transports, the globalisation of
manufacturing, changes in laws and regulations affecting the product tanker industry, global and regional
A15761609
31
economic and political conditions, terrorist attacks, international and local hostilities, developments in
international trade, changes in seaborne and other transportation patterns, including changes in the distances
over which cargoes are transported, currency exchange rates, natural disasters and weather conditions.
Some of the factors that influence the supply of product tanker capacity and, in turn, freight and charter rates
include the number of new-building deliveries, the scrapping rate of older vessels, vessel casualties, the price
of steel, the number of vessels which are off-hire, the number of vessels which are out of service, changes in
environmental and other regulations which may limit the useful life of vessels, technological developments
which affect the efficiency of vessels and port or canal congestion.
Freight and charter rates may also be adversely affected by downturns in general economic and market
conditions. The DIS Group’s business success depends in part on its ability to anticipate and effectively
manage the economic and other risks inherent in international business. The DIS Group may not be able to
effectively manage these risks which could have a material adverse effect on its business, results of
operations, cash flow and financial condition.
The factors affecting the supply of and demand for product tanker capacity are outside the DIS Group’s
control and the nature, timing and degree of changes in industry conditions can be unpredictable. If the supply
of vessel capacity continues to increase and the demand for vessel capacity does not increase correspondingly,
freight rates could materially decline and this could negatively impact the DIS Group’s business, results of
operations, cash flow and financial condition. A failure to re-charter the DIS Group’s vessels on the expiration
or termination of its current charters or a failure to re-charter them at favourable charter rates may have a
similar impact.
Fluctuations in the supply of and demand for refined petroleum products may lead to volatility in the
demand for product tanker capacity and, consequently, in freight rates.
A significant proportion of the revenues from the operation of the DIS Group’s product tanker fleet is
generated from the shipping of refined petroleum products. Changes in the supply of and demand for refined
petroleum products will have an impact on the demand for product tanker capacity. The market for refined
petroleum products is affected by various factors beyond the DIS Group’s control and has, in recent years,
been cyclical and volatile.
The following factors may influence the supply of and demand for refined petroleum products and,
consequently, will influence freight rates for these products: competition from alternative sources of energy,
changes in petroleum production and refining capacity, global and regional economic and political conditions,
terrorist attacks, international and local hostilities, environmental concerns and regulations which could have
an impact on the supply and price of refined petroleum as well as the demand for the DIS Group’s vessels,
natural disasters, weather conditions and climate change.
Any decline in freight rates as a result of significant changes in the levels of the supply of and demand for
these products could negatively impact the DIS Group’s business, results of operations, cash flow and
financial condition.
Vessel values may fluctuate which may result in the incurrence of a loss upon disposal of a vessel or
increase the cost of acquiring additional vessels.
Vessel values may fluctuate due to a number of different factors, including general economic and market
conditions affecting the shipping industry, competition from other shipping companies, the types and sizes of
available vessels, the availability of other modes of transportation, increases in the supply of vessel capacity,
the cost of new-buildings, governmental or other regulations, prevailing freight rates and the need to upgrade
second hand and previously owned vessels as a result of charterer requirements, technological advances in
vessel design or equipment or otherwise. In addition, as vessels grow older, they generally decline in value.
A15761609
32
Due to the cyclical nature of the product tanker market, if for any reason the DIS Group sells any of its owned
vessels at a time when prices are depressed, it could incur a loss and its business, results of operations, cash
flow and financial condition could be adversely affected.
Conversely, if vessel values are elevated at a time when the DIS Group wishes to acquire additional
vessels, the cost of acquisition may increase and this could adversely affect its business, results of
Compliance with strict, changing and developing international and local regulatory requirements, including
environmental and safety laws and regulations and inspection and vetting procedures, may have an adverse
effect on the DIS Group’s business.
The shipping industry is affected by numerous regulations in the form of international conventions, national,
state and local laws as well as national and international regulations enforced in the jurisdictions in which the
DIS Group’s vessels operate and are registered (see section 6.4.4). In addition, these laws and regulations are
subject to continuous change, which can significantly affect the ownership and operation of the DIS Group’s
vessels.
Current regulation of vessels, particularly in the areas of safety and environmental impact, may change in the
future and require the DIS Group to incur significant capital expenditures and/or additional operating costs in
order to keep its vessels in compliance. In addition, in the event of any breach of laws or regulations, in
particular environmental laws and regulations (including as a result of environmental discharges), the
DIS Group may be subject to severe administrative and civil fines and penalties, criminal sanctions or the
suspension or termination of its operations. While the DIS Group has insurance in place to cover certain
environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or
that any claims will not have a negative impact on the DIS Group’s business, results of operations, cash flow
and financial condition.
International shipping is also subject to increasingly rigorous security and customs inspection and related
procedures in countries of origin and destination and trans-shipment points. These procedures can result in
cargo seizure, delays in the loading, offloading, trans-shipment or delivery of cargo and the levying of
customs duties, fines or other penalties against exporters or importers and, in some cases, carriers.
The DIS Group is required by various governmental and regulatory agencies to obtain certain permits,
licences and certificates in order to operate its fleet. It is also subject to stringent vetting procedures carried
out by its customers. Failure to hold valid permits, licences and certificates or to secure and maintain
sufficient vetting approvals from its customers could negatively affect the DIS Group’s ability to employ its
vessels, including as a result of its charterers cancelling or not renewing existing charters or a failure to attract
new customers. In addition, a failure to hold a necessary permit, licence, certificate or approval in respect of
one vessel could have an adverse impact on other vessels under the DIS Group’s control.
Each of these factors may adversely affect the DIS Group’s business, results of operations, cash flow and
Changes in economic and market conditions may affect the DIS Group’s ability to charter-in new
vessels and the costs associated with the charter-in of new vessels.
The shipping industry is cyclical in nature. The DIS Group’s ability to charter-in its vessels on the expiration
or termination of the current charters and the charter rates payable under any renewed or replacement charters
will depend on, among other things, economic conditions in the product tanker market at the time and
changes in the supply of and demand for product tanker capacity. In addition, increases in costs incurred by
the charterers from which the DIS Group charters-in vessels, including as a consequence of exchange rate
fluctuations and increases in crewing costs, may cause those charterers to seek corresponding increases in the
A15761609
33
rates charged to the DIS Group. Any increase in the rates payable to charter-in vessels could result in a
corresponding increase in the DIS Group’s costs. If the DIS Group cannot charter-in vessels or cannot charter
them in at favourable rates, this may have a negative impact on its business, results of operations, cash flow
and financial condition.
Bunker fuel prices, port charges, canal passages and other voyage expenses may significantly
increase.
Increases in the cost of bunker fuel, port charges, canal passages and other voyage expenses are subject to a
number of economic, natural and political factors which are beyond the DIS Group’s control. In accordance
with industry practice, the DIS Group is responsible for voyage expenses when operating its vessels on the
spot market. Accordingly, a significant increase in these expenses over an extended period could significantly
reduce its profitability which could have an adverse effect on its business, results of operations, cash flow and
Operational risks inherent in the shipping industry could have a negative impact on the DIS Group’s
results of operations.
The DIS Group’s vessels and their cargoes are at risk of being damaged, lost, arrested, confiscated or fined
due to events such as marine disasters, bad weather, human error, war, terrorism, piracy, stowaways,
contraband, smuggling and other circumstances or events. In addition, increased operational risks arise as a
consequence of the complex nature of the product tanker industry, the nature of the services required to
support the industry, including maintenance and repair services and the mechanical complexity of the product
tankers themselves. Damage and loss could arise as a consequence of a failure in the services required to
support the industry, for example due to inadequate fuel being supplied to a vessel or inadequate dredging.
Inherent risks also arise due to the nature of the products transported by the DIS Group’s vessels. Any damage
to, or accident involving, the DIS Group’s vessels while carrying these products could give rise to
environmental damage or lead to other adverse consequences. Each of these inherent risks may also result in
death or injury to persons, loss of revenues or property, higher insurance rates, damage to the DIS Group’s
customer relationships, delay or rerouting.
Some of these inherent risks could result in significant damages, such as marine disaster or environmental
accidents and any resulting legal proceedings may be complex, lengthy, costly and, if decided against the
DIS Group, any of these proceedings or other proceedings involving similar claims or claims for substantial
damages may harm its reputation and have a material adverse effect on its business, results of operations, cash
flow and financial position. In addition, the DIS Group may be required to devote substantial time to these
proceedings, time which it could otherwise devote to its business.
The DIS Group’s worldwide operations expose it to a variety of additional risks, including the risk of business
interruptions due to port and river congestions and strikes, political circumstances, hostilities, labour strikes
and boycotts, potential changes in tax rates or policies and potential government expropriation of its vessels.
In addition, inadequacies in the legal systems and law enforcement mechanisms in certain countries in which
the DIS Group operates may expose it to risk and uncertainty.
Any of these factors may have a material adverse effect on the DIS Group’s business, results of operations,
cash flow and financial condition.
Risks relating to trading sanctions and embargoes could have a negative impact on the DIS Group’s
results of operations.
In the last few years the United States, the European Union and the United Nations have increased their
imposition of various sanctions and embargoes on trading with countries such as Iran, Syria, Sudan and
others, and dealings with certain blacklisted persons entities and bodies in those countries. These sanctions
A15761609
34
and embargoes have created significant problems for vessel owners and other parties involved in maritime
trade, who are now having to take a view on whether to continue a trading relationship with the sanctioned
countries, entities and individuals. Furthermore, due diligence is required on the part of vessel owners and
other parties to ascertain the identity of all parties to a transaction, including all parties in the contractual
chain, shippers and cargo consignees, as well as the particular cargo to be loaded, and to ensure that the
performance of a voyage to a sanctioned country and/or dealings will not put them in breach of the sanctions
and consequently exposed to severe liabilities. As a result, the sanctions have considerably impacted the entire
maritime and insurance industries. Each of these factors could have a negative impact on the DIS Group’s
business, results of operations, cash flow and financial condition.
Maritime claimants could arrest the DIS Group’s vessels or government or other authorities could
detain the DIS Group’s vessels.
Crew members, suppliers of goods and services rendered to a vessel, shippers of cargo and other parties may
be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many
jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure
proceedings. Claimants may also be entitled to arrest a sister ship for a claim that arises in relation to another
vessel owned by the same legal entity. The arrest or attachment of one or more of the DIS Group’s vessels
might require significant expenditure and result in delays in vessel operations and could affect the
DIS Group’s cash flow. Government or other authorities may also detain vessels for the purposes of
investigating their activities or those of their crew members. Any vessel arrest, detention or investigation
could prevent or delay the vessel from completing a voyage and from being available for subsequent voyages
which could result in financial loss and adversely affect the DIS Group’s business, results of operations, cash
flow and financial condition.
Governments could requisition the DIS Group’s vessels during a period of war or emergency.
A government could requisition one or more of the DIS Group’s vessels for title or hire. Requisition for title
occurs when a government takes control of a vessel and becomes its owner. A government could also
requisition the DIS Group’s vessels for hire. Requisition for hire occurs when a government takes control of a
vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during
periods of war or emergency. Government requisition of one or more of the DIS Group’s vessels could have a
negative impact on the DIS Group’s business, results of operations, cash flow and financial condition.
Terrorist or piracy attacks and international or local hostilities may affect the shipping industry.
Terrorist or piracy attacks, war or international or local hostilities could adversely affect the world economy,
the supply of and demand for refined petroleum and other products and freight and charter rates in the product
tanker market. In addition, tanker facilities, shipyards, vessels, pipelines, oil fields and refining facilities could
be targets of future terrorist attacks. Any such attacks could lead to, among other things, death or injury to
persons, vessels or other property damage, increased vessel operating and insurance coverage costs and the
inability to transport refined petroleum and other products to or from certain locations. Terrorist or piracy
attacks, war or other events beyond the DIS Group’s control that have an adverse effect on the distribution,
production or transportation of refined petroleum and other products shipped by the DIS Group could entitle
its customers to terminate the DIS Group’s charter contracts, which could have an adverse effect on the
DIS Group’s business, results of operations, cash flow and financial condition.
Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely
affect the DIS Group’s operations.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as in South
East Asia, the Gulf of Aden off the coast of Somalia and the Indian Ocean. In recent years the frequency and
severity of piracy incidents has significantly increased, particularly in the Gulf of Aden and the Indian Ocean
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up to the Arabian Sea and the Gulf of Oman. The entire zone is currently considered as an extra war risk area
and has been added on the list of the Hull, War, Piracy, Terrorism and Related Perils Areas issued and
periodically reviewed by the Joint War Committee of London. Therefore, any vessels in the DIS Group
transiting throughout the Indian Ocean and Gulf of Aden high risk areas must be provided with an extra war
risk insurance, the costs of which are increasing in line with the increase of the piracy attacks. In addition,
crew costs, including costs to employ on-board security guards, could increase in such circumstances.
Moreover, as extra war risk voyages are subject to the approval of the underwriters of such insurance, it might
become even more difficult for the DIS Group to obtain such coverage if the risk of piracy and hijacking
keeps increasing. The DIS Group may therefore not be adequately insured to cover losses from these
incidents, which could have a negative impact on the DIS Group. In addition, detention hijacking as a result
of an act of piracy against the DIS Group’s vessels or an increase in cost or unavailability of insurance for its
vessels could have a negative impact on the DIS Group’s business, results of operations, cash flow and
Risks relating to the DIS Group
This DIS Group aims to employ between 40% and 60% of its vessels on fixed rate contracts and the
remainder under spot market contracts, which strategy carries inherent risks.
The DIS Group seeks to deploy its vessels both on time charters and in spot market in a manner that will
optimise its earnings. Although present time charters provide relatively steady streams of revenue, the
DIS Group’s vessels committed to time charters may not be available for spot voyages during an upturn in the
product tanker market at a time when these voyages may be more profitable. Similarly, vessels employed in
the spot market may, at certain times, be more profitably employed on time charters. If the DIS Group cannot
employ its vessels on time charters or employ them profitably in the spot market, its business, results of
operations, cash flow and financial condition may suffer.
The DIS Group’s commitment to the High Pool and other commercial arrangements relating to
certain vessels in its fleet may reduce its ability to respond to market developments and to
independently adopt strategies for these vessels and may in addition expose it to counterparty risk.
The DIS Group cedes operational control of a number of its vessels to the High Pool and other operators with
whom it has charter arrangements. This impacts on its independent ability to respond to market requirements
and to independently develop and implement its own strategy for the relevant vessels. This may result in these
vessels being employed less profitably than would otherwise be the case, which could negatively impact on
the DIS Group’s business, results of operations, cash flow and financial condition.
In addition, a failure by the parties to such pooling and other commercial arrangements to maintain their
vessels properly or to abide by the terms of such arrangements could affect the profits to be allocated under
these arrangements. In addition, any termination of, or failure to successfully renegotiate the terms of, the
contractual relationships underpinning these arrangements or a withdrawal by any of the pool, joint venture or
other partners from the arrangements could have a significant adverse affect on the DIS Group’s business,
results of operations, cash flow and financial condition.
The global financial crisis and the Eurozone debt crisis may have an adverse effect on the DIS Group.
Concerns about credit risk (including that of sovereigns) and the Eurozone crisis have recently intensified.
The large sovereign debts and/or fiscal deficits of a number of European countries and the United States have
raised concerns regarding the financial condition of financial institutions, insurers and other corporates
located in these countries, that have direct or indirect exposure to these countries and/or whose banks,
counterparties, custodians, customers, service providers, sources of funding and/or suppliers have direct or
indirect exposure to these countries. The default, or a significant decline in the credit rating, of one or more
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sovereigns or financial institutions could cause severe stress in the financial system generally and could
adversely affect the markets in which the DIS Group operates and the businesses and economic condition and
prospects of its counterparties, customers, suppliers or creditors, directly or indirectly, in ways which it is
difficult to predict.
The impact of these conditions could be detrimental to the DIS Group and could adversely affect its business,
results of operations, cash flow and financial condition, its solvency and the solvency of its counterparties,
customers and service providers, its credit rating, the Company’s Share price, the value and liquidity of the
DIS Group’s assets and liabilities, the value and liquidity of the New Shares, the Warrants and the Warrant
Shares, the ability of the Company to meet its obligations under the New Shares, the Warrants and the
Warrant Shares and/or the ability of the DIS Group to meet its obligations under its debt obligations more
generally.
Prospective investors should ensure that they have sufficient knowledge and awareness of the Eurozone crisis,
global financial crisis and the economic situation and outlook as they consider necessary to enable them to
make their own evaluation of the risks and merits of an investment in the Preferential Subscription Rights,
New Shares, Warrants and Warrant Shares. In particular, prospective investors should take into account the
considerable uncertainty as to how the Eurozone crisis, the global financial crisis and the wider economic
situation will develop over time.
The DIS Groups depends upon a limited number of customers for a significant part of its revenues.
The DIS Group has historically derived a significant part of its revenue from a small number of customers,
both directly and through its pool and other commercial management arrangements and the nature of the
industry dictates that there is a limited number of potential alternative customers. The loss of one or more of
its principal customers or any such customer undergoing insolvency proceedings, bankruptcy or experiencing
financial difficulty could therefore have a material adverse effect on the DIS Group’s business, results of
In the event that any security over the DIS Group’s chartered-in vessels is enforced, it may lose its
rights and interests under the relevant time charter contract, the ability to operate such vessels within
its fleet, and it may become liable to parties it charters its vessels to.
Owners of the vessels that the DIS Group charters-in may have entered into agreements whereby they granted
security over these vessels. In the event that a beneficiary of the relevant security enforces it, the DIS Group
might lose its interests under the relevant time charter contract, the ability to operate such vessels within its
fleet, and it may become liable to parties that it charters-out the relevant vessels to. The occurrence of any of
these circumstances may adversely affect the DIS Group’s business, financial condition and results of
operations.
The DIS Group’s charterers may terminate or default on their charters or may, at the time for
renewal, not re-charter or re-charter at lower rates.
The DIS Group’s charterers may, under the terms of the arrangements under which it charters-out vessels or
otherwise, terminate earlier than the dates indicated in this Prospectus. The terms of the DIS Group’s charters
vary as to the circumstances under which a charter may be terminated but these generally include the
requisition for hire of the relevant vessel, the failure of the relevant vessel to meet specified performance
criteria or a total or constructive total loss of the relevant vessel. In addition, the ability of each of the
DIS Group’s charterers to perform its obligations under a charter will depend on a number of factors beyond
its control. If a charterer defaults, the associated costs and delays may be considerable and may adversely
affect the DIS Group’s business, results of operations, cash flow and financial condition.
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In addition, the DIS Group cannot predict whether its charterers will, upon the expiration of their charters, recharter the relevant vessels on favourable terms, or at all. If its charterers decide not to re-charter these
vessels, the DIS Group may not be able to employ them on terms similar to those of its current charters, or at
all or otherwise profitably employ these vessels. The DIS Group’s charterers may have options to renew their
charters at rates lower than the then prevailing market charter rates. If the DIS Group receives lower charter
rates under replacement charters or is unable to re-charter or otherwise profitably employ all of the relevant
vessels, its business, results of operations, cash flow and financial condition may be adversely affected.
The DIS Group may not be able to re-charter chartered-in vessels or the costs associated with
chartering-in may increase.
The DIS Group may not to be able to re-charter its chartered-in vessels when its current charters expire or
terminate. In addition, the rates payable for chartering-in these or replacement vessels may not be the same as
those it currently pays. In the event that these rates increase or it is unable to charter-in these or replacement
vessels in the future, the DIS Group’s business, results of operations, cash flow and financial condition may
be adversely affected.
The DIS Group may not be able to grow or effectively manage its growth.
A principal focus of the DIS Group’s strategy is to grow by expanding its business, including by capitalising
on existing business relationships and developing new business relationships. Its future growth will depend on
a number of factors. These factors include its ability to maintain or develop new and existing customer
relationships, identify and consummate desirable acquisitions, joint ventures or strategic alliances, identify
and capitalise on opportunities in new markets, locate and acquire suitable vessels, integrate acquired vessels
successfully with its existing operations; successfully manage its liquidity and obtain the required financing
for its existing and new operations, secure necessary third party service providers and attract, hire and retain
qualified personnel to manage and operate its fleet. A deficiency in any of these factors could adversely affect
its ability to achieve anticipated growth in cash flow or realise other anticipated benefits. In addition,
competition from other buyers could reduce its acquisition opportunities or cause it to pay a higher price for
vessels than it might otherwise pay. The process of integrating acquired vessels into its operations may result
in unforeseen operating difficulties, may absorb significant management attention and require significant
financial resources that would otherwise be available for the on-going development and expansion of its
existing operations. Future acquisitions could result in the DIS Group incurring additional indebtedness and
liabilities that could have a material adverse effect on its profitability. The DIS Group’s failure to execute its
business strategy or to manage its growth effectively could adversely affect its business, results of operations,
cash flow and financial condition. In addition, even if it successfully implements its business strategy, it may
not improve the DIS Group’s results of operations. Furthermore, the DIS Group may decide to alter or
discontinue aspects of its business strategy and may adopt alternative or additional strategies in response to its
operating environment or competitive situation or factors or events beyond its control.
The DIS Group may be required to make substantial capital expenditures in order to maintain and
expand the size of its fleet and to maintain the high quality of the vessels which it owns.
In connection with the purchase of new vessels, the DIS Group is required to expend substantial sums in the
form of down-payments and progress payments during the construction of these vessels but it will not derive
any revenue from the vessels until after their delivery. The DIS Group typically makes instalment payments
on new-buildings during the construction period, with the final payment due upon delivery. Second hand and
previously owned vessels are generally purchased on the basis of a lump sum payment. If the DIS Group is
unable to complete payments or is otherwise unable to fulfil its obligations under any of its purchase
contracts, it may forfeit all or a portion of the down-payments and progress payments it has made under that
contract. In addition, the DIS Group may be required to make capital expenditures to maintain, over the longterm, the high quality of its owned vessels. These maintenance capital expenditures include capital
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expenditures associated with dry-docking a vessel or modifying an existing vessel. The DIS Group’s owned
vessels are dry-docked periodically for repairs and renewals and, in addition, may have to be dry-docked in
the event of accidents or other damage. The DIS Group’s maintenance capital expenditures could increase as a
result of increases in the cost of labour and materials, changes in customer requirements, increases in the size
of the DIS Group’s fleet, changes in technical developments in vessels, changes in governmental regulations
and regulatory standards relating to safety, changes in security, changes in environmental standards or
requirements and changes in competitive standards. Any requirement to increase capital expenditure could
adversely affect the DIS Group’s business, results of operations, cash flow and financial condition.
The DIS Group’s business may be affected by the performance and the supply of various products and
services by third parties.
As a shipping company, the DIS Group depends upon the continued availability and satisfactory performance
of third parties, including d’Amico Group companies and related parties, pooling partners, subcontractors,
brokers and suppliers for many aspects of its business. The DIS Group relies on third parties to supply it with
various products and services. Using third parties to manufacture, assemble and test vessels and operating
systems reduces the DIS Group’s control over quality assurance and delivery schedules and costs. If the third
parties the DIS Group works with fail to comply with the timing or quality provisions of the agreements
governing its relationships, the performance of certain of its operations could be adversely affected. Although
the DIS Group works closely with its suppliers to avoid supply-related problems, it cannot assure investors
that it will not encounter supply problems in the future. Any delays, defects or failures could materially harm
the DIS Group’s business by causing delays in the completion of voyages (if, for example, spare parts could
not be sourced) and increases in its costs. Also, if the prices for such products or services were to increase and
the DIS Group were unable to pass on such increase to its customers, its profit margins would decrease. The
ability of d’Amico Group companies and other third party service providers and pool and commercial
partners to continue providing services and supplying products for the DIS Group’s benefit will depend in part
on their own financial strength. Circumstances beyond the DIS Group’s control could impair this financial
strength. Because these providers may be privately held entities, it is unlikely that information about their
financial strength would become public prior to any default by them under the relevant agreements. As a
result, an investor in the Company’s Shares or Warrants might have little advance warning of problems even
though those problems could have a material adverse effect on the DIS Group. If the DIS Group’s commercial
relationships with its third party service providers come to an end, it may have difficulty identifying third
party service providers of equal standing. In addition, the costs of securing alternative service providers could
be high which could adversely affect its profitability. Each of these factors may impact on the DIS Group’s
Good health and safety practices are essential for the maintenance of the DIS Group’s business.
The DIS Group’s vessel crews carry out difficult and specialised tasks 24 hours a day, 365 days a year. A
major incident affecting the health and safety of crew would disrupt the DIS Group’s operations. There is a
risk of fines or litigation if a health and safety incident occurs. Furthermore, a major incident could disrupt or
delay operations and could have a negative effect on the confidence of the DIS Group’s customers and on its
The DIS Group’s inability to choose the technical managers and crew of its chartered-in vessels may
affect the employment of these vessels.
The owners of vessels chartered-in by the DIS Group determine who the technical manager of such vessels
will be. They are also directly responsible for crewing requirements. As a consequence, the DIS Group may
not have access to the same high level of technical management and crew which would be the case if it had
discretion to choose the technical manager. Certain of the DIS Group’s customers may not be willing to
charter these vessels as the vessels may not meet the customers’ specific requirements. This could adversely
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affect the DIS Group’s ability to employ these vessels profitably and therefore its business, results of
The DIS Group’s vessels may suffer damage or be involved in accidents and it may face unexpected
dry-docking and other costs.
If the DIS Group’s vessels suffer damage, they may need to be repaired at a dry-docking facility. The costs of
dry-dock repairs, which will be payable by the DIS Group in respect of its owned vessels, and the availability
of dry-docking services can be unpredictable and the costs can be substantial. The DIS Group may have to
pay dry-docking costs that its insurance does not cover in full. The loss of earnings while these vessels are
being positioned for dry-docking, repaired and repositioned, as well as the actual cost of the positioning,
repairs and repositioning would decrease its earnings. An accident involving any of the DIS Group’s vessels
could result in loss of revenue, fines or penalties, higher insurance rates and damage to its reputation. In
addition, if such an accident carries the potential risk of environmental contamination, substantial clean up
costs, penalties and fines could be incurred. Each of these factors could have a material adverse effect on the
DIS Group’s business, results of operations, cash flow and financial condition.
Purchasing and managing previously owned or second hand vessels may result in unforeseen
operating costs and vessels off-hire.
Previously owned or second hand vessels are typically acquired on an “as is” basis without the benefit of
warranty cover. Any inspections carried out prior to purchase do not normally provide the DIS Group with the
same knowledge about their condition or the cost of any required (or anticipated) repairs that it would have
had if these vessels had been built for and managed exclusively by the DIS Group. The DIS Group may, as a
consequence, be obliged to pay increased and unforeseen maintenance and repair, insurance and other
operating costs in respect of these previously owned or second hand vessels. It may also have to commit to
greater expenditure to ensure that these vessels comply with all applicable regulations and standards. In
general, the costs associated with maintaining a vessel in good operating condition increase with the age of
the vessel. Older vessels are typically less fuel efficient and more costly to maintain than more recently
constructed vessels due to improvements in engine technology.
No assurance can be given that market conditions will justify those expenditures or enable the DIS Group to
operate its tankers profitably during the remainder of their useful lives. In addition, the DIS Group may not be
able to sell these vessels profitably.
Each of these factors may negatively impact on the DIS Group’s business, results of operations, cash flow and
Delays in deliveries or non-delivery of new-buildings or committed long-term charter vessels could
harm the DIS group’s operations.
The delivery of any new-buildings or committed long-term charter vessels could be delayed, cancelled or
otherwise not completed as a result of, among other things, quality or engineering problems or delays in the
receipt of construction materials such as steel, changes in governmental regulations or maritime organisation
standards, labour disturbances or catastrophic events at a shipyard or financial crisis of a shipbuilder or
charterer, a backlog of orders at the relevant shipyards, political or economic disturbances which adversely
affect the relevant shipyards or charterers, changes the DIS Group needs to make to the vessel specifications,
the DIS Group’s inability to obtain necessary permits or approvals or to receive the required classifications for
its vessels, its inability to finance the purchase or charter of its vessels, weather interference or a catastrophic
event, such as a major earthquake or fire or any other force majeure or a shipbuilder’s or charterer’s failure to
otherwise meet the scheduled delivery dates for the vessels or failure to deliver the vessels at all.
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If the delivery of a vessel is delayed or cancelled in circumstances where the DIS Group has committed the
vessel to a charter, it may be obliged to source an alternative vessel for its customer and pay the differential
between the rate agreed with the DIS Group and the rate for the substitute vessel. The costs involved could be
significant.
In addition, in some cases, if the delivery of a vessel to the DIS Group’s customer is delayed, the customer
may not be obliged to honour the relevant time charter.
If therefore delivery of a vessel is delayed or cancelled, it could have an adverse effect on the DIS Group’s
The ageing of the DIS Group’s fleet may result in increased operating costs in the future and an
inability to employ all of its vessels profitably.
The DIS Group’s owned fleet has an average age of approximately 6.2 years (as at 30 September 2012). In
general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel.
Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed
vessels due to improvements in engine technology. Cargo insurance rates may increase with the age of a
vessel, making older vessels more costly to operate and therefore less attractive to charterers. In addition,
some of the DIS Group’s customers set their own age restrictions for vessels they will agree to charter.
Governmental regulations and safety and/or other equipment standards related to the age of vessels may also
require expenditures on alterations or new equipment for the DIS Group’s vessels and may restrict the type of
activities in which its vessels may engage. Each of these factors may negatively impact on the DIS Group’s
The DIS Group relies on the “d’Amico Tankers” trademark and brand name.
The DIS Group relies on the “d’Amico Tankers” trademark, brand name and flag logo to distinguish its
services from those of its competitors. On 2 January 2007 it entered into a licence agreement with d’Amico
Società di Navigazione S.p.A. pursuant to which it was granted a non-exclusive right to use the “d’Amico
Tankers” trademark and flag logo for a five year period with regard to the product tanker sector in which the
DIS Group currently operates (see section 5.6.2(b)). This agreement was automatically renewed in January
2012. In the event that d’Amico Società di Navigazione S.p.A. elects to terminate the licence agreement, the
DIS Group could be forced to rebrand its business and services which could result in a loss of brand
recognition and customers and could require it to devote significant resources to advertising and marketing a
new brand which could have a negative impact on its business, results of operations, cash flow and financial
condition.
The DIS Group has a strong brand and established reputation in the product tanker market and any
damage to its brand or reputation may have an adverse effect on its business.
The DIS Group believes that it has a strong brand and established reputation in the product tanker market. As
the DIS Group licenses the “d’Amico Tankers” trademark and d’Amico flag logo from d’Amico Società di
Navigazione S.p.A. and the d’Amico brand name and logo is used by a number of companies within the
d’Amico Group, the DIS Group will not have exclusive control over the use of the trademark or name. Any
adverse publicity which might arise as a consequence of a number of factors, such as accidents involving
vessels, environmental contamination or litigation (which may involve other companies in the d’Amico
Group), may have a negative impact on the DIS Group’s brand and reputation. This could result in the loss of
customers or a failure to attract new customers. It could also cause the parties with whom the DIS Group has
pool and other commercial management arrangements to terminate their relationships with it. Any of these
events could have a material adverse effect on the DIS Group’s business, results of operations, cash flow and
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Labour interruptions and problems could disrupt the DIS Group’s business.
The DIS Group’s owned vessels are manned by masters, officers and crews that are employed by d’Amico
Tankers Limited, its principal trading subsidiary. If not resolved in a timely and cost-effective manner,
industrial action or other labour unrest could prevent or hinder its operations from being carried out normally
and could have a material adverse effect on the DIS Group’s business, results of operations, cash flow and
financial condition. In addition, as the crew of its chartered-in vessels are not employed directly by a
company in the DIS Group, the management of labour issues is out of its control. Consequently, the risk of
labour difficulties, such as disciplinary problems, may be increased and this could also have a similar material
adverse effect.
The DIS Group may be unable to attract and retain key management personnel and other employees.
The DIS Group’s success depends to a significant extent on the abilities and efforts of its management team.
Its ability to retain key members of its management team and to hire new members as may be necessary is
central to its strategy. The loss of any of these individuals could have an unfavourable effect on its business.
Difficulty in hiring and retaining replacement personnel could have a similar effect. The DIS Group also
relies on the availability of qualified and technically proficient crew to staff its vessels. In recent years, the
rate of growth of vessel capacity has outstripped the rate of growth in the availability of qualified crew. If
qualified crew is not readily available, the DIS Group may not be in a position to profitably employ its vessels
through spot voyages or otherwise. In addition, the shortfall in available crew may result in crewing cost
increases. Failure to attract and retain key management personnel or qualified crew may therefore negatively
impact on the DIS Group’s business, results of operations, cash flow and financial condition.
If the DIS Group defaults on any of the loan agreements entered into under its credit facilities, it
could forfeit its rights in its vessels and their charters.
The DIS Group has mortgaged all of its owned vessels as security to the lenders under its loan agreements.
Default under any of these loan agreements, if not waived or modified, would permit the lenders to foreclose
on the mortgages over the vessels and the DIS Group could lose its rights in the vessels and their charters. In
addition, the DIS Group’s lenders are entitled to the assignment of its time charters in the event of a breach by
it of any of the main terms of the loan agreements.
The DIS Group’s credit facilities contains various restrictive covenants.
The DIS Group’s credit facilities impose certain covenants on it. Amongst other, the financial covenants
include requirements to maintain minimum levels of available cash, capital and reserves and an equity to asset
ratio of not less than 35%. These restrictions may limit the DIS Group’s ability to incur additional
indebtedness, dispose of or create liens on its assets, sell capital stock, make investments, engage in mergers
or acquisitions, make capital expenditures and sell the vessels owned by it. The DIS Group may therefore
need to seek permission from its lenders in order to engage in certain corporate actions. The DIS Group’s
lenders’ interests may be different from the DIS Group’s and it cannot guarantee that it will be able to obtain
its lenders’ permission when needed. This may prevent the DIS Group from taking actions that are in its best
interest. In addition, the DIS Group may not be able to comply with each of these covenants, including the
requirement to maintain an equity to asset ratio of not less than 35%. In order to ensure full compliance with
such covenants (see sections 7.1.6(20) and 7.3.6(17), the Company entered into a loan agreement with
d’Amico International S.A. pursuant to which d’Amico International S.A. granted the Company a loan facility
up to USD 20,000,000 with a maturity date as at 31 December 2013 (see section 5.6.2(k)). The DIS Group’s
only significant asset is its fleet. The appraised value of a vessel fluctuates depending on a variety of factors,
including the age of the vessel, prevailing charter market conditions and new and pending regulations. The
DIS Group cannot guarantee that a deterioration of its asset values will not result in defaults under its credit
facilities in the future, nor can it guarantee that it will be able to negotiate a waiver in the event of a default. A
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default under the facilities may result in all or a substantial amount of the DIS Group’s debt becoming due at a
time when it might not be able to satisfy its obligations. In addition, if there is a decline in vessel values, the
DIS Group may not be in compliance with certain provisions of its credit facilities and it may not be able to
refinance its debt or obtain additional financing. If the DIS Group is unable to pledge additional collateral, its
lenders could accelerate its debt and foreclose on its fleet.
The Company is a holding company and it depends on the ability of its subsidiaries to distribute funds
to it in order to satisfy its financial and other obligations and to pay dividends.
d’Amico International Shipping S.A. is a holding company and has no significant assets other than the equity
interests in its subsidiaries. Its subsidiaries conduct all operations relating to vessels the DIS Group owns or
charters-in and payments in respect of the employment of its vessels will be made to its subsidiaries. As a
result, the Company is wholly dependent on receiving distributions from its subsidiaries and its funding
arrangements with, and the performance of, its subsidiaries, to meet its cash obligations and pay dividends.
The ability of the Company’s subsidiaries to make these distributions could be affected by a claim or other
action by a third party, including a creditor and by applicable legal and capital requirements. If the Company
is unable to obtain funds from its subsidiaries, it may not be able to meet its financial obligations or distribute
dividends.
Currency exchange rate and interest rate fluctuations may adversely affect the DIS Group’s
profitability or an investor’s investment in the Company’s securities.
While the DIS Group generates most of its revenues and expenses in U.S. Dollars, certain of its operating
expenses are incurred in currencies other than U.S. Dollars, particularly the Euro. From time to time the DIS
Group enters into financing arrangements or material contracts that are denominated in currencies other than
U.S. Dollars. The DIS Group currently has loan agreements denominated in Japanese Yen. As a result it may
be adversely affected by fluctuations in exchange rates.
The value of an investment in the Company’s Shares or other securities may be affected by prevailing rates of
exchange between the U.S. Dollar and the Euro because the Company’s share capital, as set forth in this
Prospectus, is denominated in U.S. Dollars, while the Preferential Subscription Rights, its Shares (including
the New Shares and the Warrant Shares) and the Warrants will be traded in Euros. Changes in the Euro to U.S.
Dollar exchange rate between the date of the Prospectus and the date the Company receives and exchanges
funds from Euros to U.S. Dollars could reduce the U.S. Dollar proceeds it receives from the Offering and
result in a decline in its share capital for reasons unrelated to the performance of the DIS Group’s business. In
particular, the DIS Group may be adversely affected by exchange rate risks resulting from the fact that the
Issuance Price (for the New Shares) and the Exercise Price (for the Warrant Shares) are denominated in Euro
while the Company’s share capital is denominated in U.S. Dollars. If the Euro would depreciate in value visà-vis the U.S. Dollar between the date of this Prospectus and the date of the issuance of the New Shares
respectively of the Warrant Shares, the net proceeds of the Offering could be less than projected in
section 3.1. See also “ – Warrantholders are exposed to the risk of losing their investment in the Warrants”.
Finally, a part of the DIS Group’s financing is at variable interest rates. As a result it is subject to the effects of
interest rate fluctuations on such indebtedness. There can be no assurance that future exchange rate and
interest rate fluctuations may not have an adverse effect on the DIS Group’s results of operations.
In 2007 the DIS Group signed three interest rate swap (“IRS”) contracts, for a total notional amount of
USD 150 million for a period of five years. The purpose of these IRS contracts was to hedge the risks relating
to interest rates on the existing Crédit Agricole CIB revolving facility. In 2011 two of these contracts were
renegotiated, for a total amount of USD 50 million each, moving the termination dates respectively to
December 2014 and December 2016. At the end of 2012 one IRS contract totalling USD 50 million will
terminate. In May 2012 the DIS Group signed four new IRS contracts, for the initial notional amount of
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USD 45.5 million for a period of seven years. The purpose of these IRS contracts is to hedge the risks relating
to interest rates on the existing Crédit Agricole CIB-DNB NOR Bank ASA facility. During the first six
months of 2012 the DIS Group entered into forward currency contracts with maturity before
31 December 2012 to hedge the risk of cash deposits denominated in Euro, Japanese Yen, Singapore Dollar
and British Pounds. As of the date of this Prospectus, the DIS Group does not have any other specific hedging
arrangements in place to cover exchange rate or interest rate fluctuations and there can be no assurance that it
will enter into such arrangements in the future. When the DIS Group hedges the above risks, this may result in
it paying higher than market rates. If the DIS Group enters into hedging arrangements, no assurance can be
given that its hedging arrangements will not result in additional losses or that further shifts in exchange rates
or interest rates will not have a material effect on it. Adverse exchange and interest rate fluctuations, if not
adequately hedged, may negatively impact on the DIS Group’s business, result of operations, cash flow and
The DIS Group’s insurance may not be adequate to cover its losses.
The DIS Group may not be adequately insured to cover losses from its operational and other risks which
could have a material adverse effect on it. Certain risks, for example those associated with terrorist attacks,
cannot generally be insured against, and others, like piracy, expose ship owners to risks like kidnapping or
hostage taking which may lead to unpredictable economic losses. The DIS Group’s insurers may refuse to pay
particular claims and its insurance may be voidable by the insurers if the DIS Group takes, or fails to take,
certain actions, such as failing to maintain certification of its vessels with applicable maritime regulatory
organisations or compliance with recommended security and anti-piracy measures. In addition, in the future,
the DIS Group may be unable to procure similar adequate insurance cover on the terms and conditions equal
to those it currently has, particularly in adverse market conditions. Any significant uninsured or under-insured
loss or liability, any increase in the DIS Group’s insurance costs or any failure by its insurers to pay on claims
(due to an insolvency on their part, their financial condition or otherwise) could have a material adverse effect
on the DIS Group’s business, results of operations, cash flow and financial condition. Because the DIS Group
obtains some of its insurance through protection and indemnity associations, it may be subject to calls in
amounts based not only on its claim records but also the claim records of other members of the protection and
indemnity associations through which it receives insurance coverage. The DIS Group’s payment of these calls
could result in significant expense to it which could have a material adverse effect on its business, results of
The DIS Group has entered and may enter into agreements with related parties on terms which may
be less favourable than otherwise available from third parties.
The DIS Group has entered into a number of agreements with entities within the d’Amico Group to provide
support and services to it (see section 5.6.2). In particular, through d’Amico Società di Navigazione S.p.A.,
d’Amico Tankers Limited contracted the technical and other services management of certain vessels,
including the recruitment, training and management of crew and the maintenance and repair of the vessels.
Through d’Amico Tankers Limited the DIS Group also entered into a licence agreement with d’Amico
Società di Navigazione S.p.A. entitling it to use the “d’Amico Tankers” trademark and d’Amico flag logo,
subject to certain conditions. The DIS Group may also enter into further agreements with such related parties
in the future. Although the DIS Group believes that these transactions with related parties are on arm’s length
terms, no assurance can be given that the DIS Group would not have been able to secure more favourable
terms from third parties. In addition, no assurance can be given that conflicts of interest may not arise in the
future, including in relation to, or as a result of, new business opportunities.
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The DIS Group’s owned vessels are registered in Liberia and any requirement to move the
registration of these vessels may increase the DIS Group’s costs.
The costs associated with the registration of the DIS Group’s owned vessels in Liberia are less than may be
the case in other countries. If the DIS Group is required by law or otherwise to change the country of
registration, its costs may increase and this could adversely impact on its business, results of operations, cash
flow and financial condition.
No assurance can be given that the Company will pay dividends.
The Company will make dividend payments to its Shareholders only if its Board of Directors, acting in its
sole discretion, determines that such payments would be in its best interest and in compliance with any
relevant legal and contractual requirements. The principal business factors that the Board of Directors will
consider when determining the timing and amount of dividend payments will be the DIS Group’s earnings,
financial condition and cash requirements at the time.
The DIS Group may enter into new agreements or new legal provisions that will restrict the Company’s
ability to pay dividends. In addition, because the Company is a holding company, its ability to make dividend
payments may also depend on its subsidiaries’ ability to distribute funds to it. Their ability to distribute funds
to the Company will be affected by any legal and capital requirements to which they are subject. As a result,
no assurance can be given that dividends will be paid with any particular frequency or at all.
The Company’s incorporation under the laws of Luxembourg may limit the ability of its Shareholders
to protect their interests and its ability to return value to Shareholders.
The Company’s Shareholders may be adversely affected by the provisions of Luxembourg law which limit
shareholders’ rights to seek direct recourse to the Company’s assets. Pursuant to the Company’s Articles of
Association, Shareholders have no right to have their Shares repurchased or redeemed. Returns of capital can
be effected only by means of a share capital reduction approved by the Shareholders in an Extraordinary
General Meeting or upon a liquidation.
The DIS Group is exposed to fraud risk.
The DIS Group is exposed to fraud risk owing to the significant volume and value of transactions that are
processed. Potential fraud risks include intentional manipulation of financial statements and wilful
misrepresentation of the facts in various forms of financial reporting, intentional manipulation of various
business documents and misappropriation of tangible assets, intangible assets and proprietary business
opportunities (including by employees, customers, vendors and former employees and others outside the DIS
Group), corruption (including bribery and gratuities to companies, private individuals and public officials),
receipt of bribes, kickbacks and gratuities and aiding and abetting fraud by other parties (e.g. customers and
vendors).
The DIS Group has various mechanisms in place to minimise the occurrence of and detect such risks,
including a risk strategy policy and internal audit services that monitor and treat the financial and business
risks of fraud. Controls, procedures and an authority matrix are implemented in order to reduce and prevent
the risk of commission of different types of fraud. However, because of the inherent limitations of internal
control mechanisms, including the possibility of collusion, improper management override of controls and
resource restraints, occurrences of fraud may not be prevented or detected on a timely basis.
Each of these factors may adversely affect the DIS Group’s business, results of operations, cash flow and
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The DIS Group is subject to the risk of administrative and criminal liability of the Company.
Due to the applicability to the Company of Italian legislation on administrative liability of legal entities and of
the provisions of the Luxembourg Criminal Code, the DIS Group is exposed to potential administrative
liability in Italy and potential criminal liability in Luxembourg.
The Italian legislative decree number 231/01 of 8 June 2001 identifies specific types of crime whose
commission carried out in the interests and/or for the benefit of the Company by subjects holding a so called
“top level” role determines such a liability. All administrative wrongdoings arising from a criminal offence
are punishable with fines, disqualification/suspension (i.e. suspension or revocation of licences, permits,
authorisations, disbarment from engaging in business, disqualification from contracting with public
administrations, disqualification from advertising goods and services, disqualification from financing,
subsidies and other contributions), confiscation and publication of the judgement.
The Luxembourg Criminal Code does not make any distinction as to the types of criminal offences and the
Company could potentially be held criminally liable where a crime (crime) or a misdemeanour (délit) has
been committed in the name and in the interest of the Company by one of its legal corporate bodies or by
statutory or de facto managers/directors (dirigeants de droit ou de fait). Sanctions that could cumulatively or
alternatively be imposed on the Company include fines, special seizures of assets, exclusion from public
contracts bids processes and/or dissolution and liquidation.
A breach of legal provisions triggering the administrative or criminal liability of the Company may adversely
affect the DIS Group’s business, results of operations, cash flow and financial condition.
The DIS Group’s principal trading subsidiary, d’Amico Tankers Limited, as an Irish tax resident
company, benefits from a favourable tax regime. Should its tax residence or the tax regime applicable
to d’Amico Tankers Limited change, this could result in a significant increase in its annual tax
liabilities and could impact the DIS Group’s profitability. In addition, under the tax provisions of
certain territories with which or in which the DIS Group conducts business, a taxable permanent
establishment or a foreign tax liability may arise.
The key operating company of the DIS Group, d’Amico Tankers Limited (Ireland), as well as DM Shipping
Limited (Ireland) and Glenda International Shipping Limited (Ireland), are taxed under the Irish tonnage tax
regime in respect of all eligible activities. Under the tonnage tax regime, the tax liability is not calculated on
the basis of income and expenses as under the normal corporate taxation, but is based on the controlled fleet’s
notional shipping income, which in turn depends on the total net tonnage of the controlled fleet. The regime
includes provision whereby a proportion of capital allowances previously claimed by the company may be
subject to tax in the event that vessels are sold and not replaced within the specified time limit or the company
fails to comply with the on-going requirements to remain within the regime. If d’Amico Tankers Limited’s tax
residence were to change to a country other than Ireland it may be subject to an increased tax rate. A change
in tax residence could arise from changes to the location of its overall management and control, its board and
senior management composition and governance and other corporate matters. In addition, there is a risk that,
under the tax provisions of territories in which the vessels operate, additional permanent establishment or
branch profits tax, freight tax or other taxes may arise. Any increase in its tax liabilities would adversely
affect the DIS Group’s profitability. Currently there is no proposal that the tax residence of d’Amico Tankers
Limited would be changed to a country other than Ireland. If the residence were to change, there are certain
Irish capital gains tax exit charges which would apply, under which d’Amico Tankers Limited would be
deemed to sell (and re-acquire) its assets at market value, crystallising a tax liability on capital gains.
Currently the Irish capital gains tax rate is 22%. An exclusion may apply where at least 90% of the issued
share capital is held by a company which is not Irish tax resident and is controlled by non-Irish resident
persons who are resident in a country with which Ireland has concluded a double taxation agreement. In the
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context of a publicly traded company it is best to assume that the exit charge may arise if the residence of its
Irish resident subsidiaries moves from Ireland. In addition, the Irish government may impose a higher rate of
corporation tax or otherwise change the corporation tax regime or the tonnage tax regime. Any increase in the
tax liabilities of the DIS Group’s subsidiaries currently tax resident in Ireland will negatively impact on the
DIS Group’s profitability.
Risks relating to the Preferential Subscription Rights, the New Shares, the Warrants and the
Warrant Shares
There may not be an active and liquid market for the Company’s Shares, Preferential Subscription
Rights or Warrants, which may cause such Securities to trade at a discount and make it difficult to
sell the Shares, Preferential Subscription Rights or Warrants.
No assurance can be given that an active trading market for the Company’s Shares will develop or be
sustained after the Offering. Furthermore, no assurance can be given that the Issuance Price for the New
Shares will correspond to the price at which the Company’s Shares will trade in the public market subsequent
to the Offering or that the price of the Company’s Shares in the public market will reflect its actual financial
performance. Investors may not be able to sell their Shares at or above the Issuance Price. Additionally, a lack
of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the
Shares and limit the number of investors who are able to buy the Shares.
Furthermore, it is possible that the market for the Preferential Subscription Rights will offer limited liquidity.
No assurance can be given that an active trading market for the Preferential Subscription Rights will develop
or, if such a market develops, no assurance can be given regarding the nature of such market. The price of the
Preferential Subscription Rights will depend on a multitude of factors, including the price of the Company’s
Shares, but may also be subject to greater volatility than the Shares.
Similarly, no assurance can be given that an active trading market for the Warrants will develop or be
sustained after the Offering or that the market for the Warrants will offer sufficient liquidity. Limited liquidity
may adversely affect the market value of the Warrants. The Warrants may trade at a price that may be higher
or lower than the initial opening price of the Warrants, depending on many factors, including the market price
for the Shares.
Existing Shareholders (other than the Controlling Shareholder, who has given an irrevocable take up
commitment) will experience dilution as a result of the Offering if they do not exercise their
Preferential Subscription Rights in full, which may also result in the Company losing its STAR
segment status.
Any Preferential Subscription Rights not exercised by the last day of the Rights Subscription Period will
become null and void and lapse. To the extent that an Existing Shareholder does not exercise its Preferential
Subscription Rights, its proportionate ownership and voting interest in the Company will be reduced and the
percentage that its Existing Shares held prior to the Offering represents of the increased share capital of the
Company will be reduced accordingly. Each holder of a Preferential Subscription Right that is not exercised
by the last day of the Rights Subscription Period will be entitled to receive a proportional part of the
Unexercised Rights Payment, if any. No assurance can be given, however, that any or all Preferential
Subscription Rights will be sold during the Public Auction or that there will be any Unexercised Rights
Payment. Existing Shareholders who do not exercise or sell their Preferential Subscription Rights will be
subject to dilution as set out in section 3.11.
Moreover, in the event that Existing Shareholders (other than the Controlling Shareholder) do not exercise all
their Preferential Subscription Rights, the Controlling Shareholder is expected to increase its shareholding in
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the Company, which stands at 65.94% of the Company’s Shares on the date of this Prospectus, as a result of
the take up commitment that the Controlling Shareholder has given in relation to the Offering (see
section 3.8.1). An increase of the participation of the Controlling Shareholder as a result of the Offering may
cause the Company to fail to meet the minimum free float requirement of 20% to be eligible for the STAR
segment. Should the Controlling Shareholder not sell its Shares exceeding the 80% threshold within the
timing prescribed by the Borsa Italiana Rules, the Company may have its STAR segment status withdrawn by
Borsa Italiana, which could adversely affect the value of the Shares and the Warrants (see section 3.11.3).
Future sales of the Company’s Shares, Preferential Subscription Rights or Warrants could cause the
market price for the Shares, the Preferential Subscription Rights or the Warrants to decline.
The market price of the Company’s Shares, Warrants and Preferential Subscription Rights could decline due
to sales of a large number of Shares, Preferential Subscription Rights or Warrants in the market during or after
the Offering, including sales of Shares by the Controlling Shareholder or the perception that these sales could
occur. The Controlling Shareholder has not given any lock-up undertaking in relation to its Shares or Warrants
in the Company.
In general, any fluctuation in the price of the Shares will influence the price of the Preferential Subscription
Rights and of the Warrants.
Following the Offering, the Controlling Shareholder may increase its control over the Company,
including the outcome of shareholder votes.
In addition to the Controlling Shareholder maintaining its shareholding in the Company, which stands at
65.94% of the Company’s Shares on the date of this Prospectus, as a result of the take up commitment that the
Controlling Shareholder has given in relation to the Offering (see section 3.8.1), the shareholding percentage
of the Controlling Shareholder may further increase as a result of any purchases of Preferential Subscription
Rights that the Controlling Shareholder may additionally and voluntarily effect during the Rights Subscription
Period or at the Public Auction.
As a result of this increased Share ownership and for so long as the Controlling Shareholder owns a
significant percentage of the Company’s Shares, the Controlling Shareholder will be able to control or
influence the outcome of any Shareholder vote requiring the casting of a simple majority of votes, including
the election and removal of directors and other significant corporate transactions. It may also be able to block
certain other Shareholder votes, such as the adoption or amendment of provisions in the Company’s Articles
of Association. This concentration of ownership may have the effect of delaying, deferring or preventing a
change in control, merger, amalgamation, consolidation, takeover or other business combination. It could also
discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the
Company, which could in turn have an adverse effect on the market price of the Company’s Shares or
Warrants.
Furthermore, the Controlling Shareholder has not given any standstill undertaking in relation to its
shareholding in the Company and may increase such shareholding after the Offering. Any increase by the
Controlling Shareholder of its shareholding in the Company by acquiring additional Shares or Warrants in the
market after the Offering could further adversely affect the liquidity of the Shares and of the Warrants.
The stock markets as well as the product tanker sector have been unpredictable and volatile. The
market price of the Company’s Shares and Warrants may be similarly unpredictable and volatile.
Over the past few years, the stock markets have been subject to wide price variations which are not always an
accurate reflection of the financial performance of the companies the securities of which are traded.
Fluctuations in the stock markets, economic cycles and economic, monetary and financial factors can increase
the volatility of the Shares and the Warrants.
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Furthermore, the market price of the Company’s Shares and Warrants may be unpredictable and volatile and
may fluctuate due to factors such as the risk factors set out in “ – Risks relating to the DIS Group and the
product tanker industry”, actual or anticipated fluctuations in quarterly and annual results, mergers and
strategic alliances in the tanker industry, market conditions in the industry, changes in government regulation,
fluctuations in the DIS Group’s quarterly revenues and earnings and those of its publicly held competitors,
shortfalls in the DIS Group’s operating results from levels forecast by securities analysts, announcements
concerning the DIS Group or its competitors and the general state of the securities markets. The Issuance
Price for the New Shares or the initial opening price of the Warrants may therefore not be indicative of the
price of the Shares and the Warrants after the Offering.
Investors may be subject to exchange rate fluctuations.
The New Shares, Warrants and Warrant Shares will be denominated in U.S. Dollars and traded on Borsa
Italiana in Euro. Any dividends on the New Shares and Warrant Shares will be declared and paid in U.S.
Dollars. Fluctuations between the Euro and the U.S. Dollar will affect the Euro equivalent of the DIS Group’s
results of operations which are reported in U.S. Dollars and the Euro price of the Company’s Shares and
Warrants traded on Borsa Italiana. Consequently, any investor in the Company’s Shares or Warrants may be
affected by exchange rate fluctuations.
The Warrants will give the Warrantholders no Shareholder rights prior to the exercise of the
Warrants.
A Warrantholder - whether an investor who lawfully subscribes to New Shares with Warrants issued
simultaneously in the Offering or an investor who acquires Warrants in the secondary market after the
Offering will - in its capacity as Warrantholder, not be a Shareholder of the Company. A Warrantholder will
not have any voting rights at General Meetings of the Company nor any rights to receive dividends or other
distributions nor any other rights with respect to any Shares until such time, if any, that it exercises any
Warrant, subscribes to Warrant Shares and as such becomes a Shareholder of the Company.
Warrantholders are exposed to the risk of losing their investment in the Warrants.
A Warrantholder - whether an investor who lawfully subscribes to New Shares with Warrants issued
simultaneously in the Offering or an investor who acquires Warrants in the secondary market after the
Offering - who does not exercise its Warrants prior to the end of the Exercise Periods will lose its investment
in the Warrants. In addition, the Warrants derive their value from the market price of the Shares, such that
fluctuations in the market price of the Shares may affect the market price of the Warrants. A decline in the
market price of the Shares upon the occurrence of certain events involving the Shares or the DIS Group or
otherwise could therefore have an adverse effect on the value and market price of the Warrants, as a result of
which Warrantholders could lose all or part of their investment in the Warrants.
Moreover, in the event that the U.S. Dollar equivalent of the Exercise Price of the Warrant Shares (which is
denominated in Euro) would not at least be equal to the accounting value (pair comptable) of the Shares at the
time of issuance of the Warrant Shares upon exercise of the Warrants, the Company would not be in a position
to issue the Warrant Shares, as article 26-5 of the Law of 10 August 1915 on Commercial Companies
prohibits the issuance of new shares below the nominal value, or in the absence of a nominal value, the
accounting value of the existing shares. The accounting value of the Existing Shares (which do not have a
nominal value) is, at the date of this Prospectus, set at USD 0.10. If the Euro would significantly depreciate in
value vis-à-vis the U.S. Dollar such that the Company would legally be prevented from issuing the Warrant
Shares, the Warrants would become worthless and investors in the Warrants would lose their investment. In
addition, in such case the Company would be deprived of receiving the proceeds from the exercise of the
Warrants (see also “ – Currency exchange rate and interest rate fluctuations may adversely affect the DIS
Group’s profitability or an investor’s investment in the Company’s securities.”). However, based on the
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Exercise Price of EUR 0.36 for the First Exercise Period, of EUR 0.40 for the Second Exercise Period and of
EUR 0.46 for the Third Exercise Period and a Euro to U.S. Dollar exchange rate of 1.2779 as at
5 November 2012, the devaluation of the Euro compared to the U.S. Dollar would have to be at least 78.3%,
80.4% respectively 83% in order for such risks to materialise.
Dilution in case of future capital increases could adversely affect the price of the Shares and could
dilute the interests of Shareholders.
The Company may decide to raise capital in the future through public offerings or private placements, with or
without preferential subscription rights, of equity or equity-linked financial instruments. Furthermore,
Luxembourg law and the Articles of Association provide for preferential subscription rights to be granted to
existing Shareholders unless such rights are limited or withdrawn by resolution of the Company’s General
Meeting or, if so authorised by a resolution of such meeting, the Board of Directors. However, certain
Shareholders in jurisdictions outside of Luxembourg or Italy (including those in the United States, Australia
or Japan), depending on the securities laws applicable in those jurisdictions, may not be entitled to exercise
such preferential subscription rights unless the rights and Shares are registered or qualified for sale under the
relevant legislation or regulatory framework. As a result, certain holders of Shares outside Luxembourg or
Italy may not be able to exercise preferential subscription rights even if these are granted in the framework of
future issues of securities by the Company. If the Company raises significant amounts of capital by these or
other means, it could cause dilution for the holders of its securities.
As a Luxembourg incorporated and registered company with an Italian listing, the Company is
subject to regulation in both Luxembourg and Italy.
The Company is a Luxembourg incorporated and registered limited liability company (société anonyme) and,
as such, is subject to the requirements of the Law of 10 August 1915 on Commercial Companies and other
applicable Luxembourg legislation, such as the Luxembourg Law of 19 May 2006 transposing
Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, the
Luxembourg Prospectus Law and the Luxembourg Law of 9 May 2006 on market abuse. In addition, as the
Company’s Shares are listed on Borsa Italiana, the Company is subject to the requirements of the Borsa
Italiana Rules as well as to certain ongoing information duties established by the TUF and to certain
provisions of the CONSOB Issuer Regulation, in particular insofar as it relates to takeover bid rules which are
partially subject to Italian laws and CONSOB regulation to the extent provided for by article 4 of the
Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids (see
section 4.5.5).
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DISCLAIMERS AND NOTICES
The Offering is conducted as an offer to the public in the Grand Duchy of Luxembourg and Italy only and
outside the United States in reliance on Regulation S. The Offering and this Prospectus have not been and will
not be submitted for approval to any supervisory authority outside the Grand Duchy of Luxembourg.
Therefore, no steps may be taken that would constitute or result in an offer to the public of the Preferential
Subscription Rights, the New Shares, the Warrants or the Warrant Shares outside the Grand Duchy of
Luxembourg and Italy. The distribution of this Prospectus, the exercise of the Preferential Subscription Rights
and the Warrants and the Offering may, in certain jurisdictions, be restricted by law, and this Prospectus may
not be used for the purpose of, or in connection with, any offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or
solicitation.
Accordingly, the Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares may
not be offered or sold, directly or indirectly, and neither this Prospectus nor any other documents related to the
Offering may be distributed or published in any jurisdiction, except in circumstances that will result in
compliance with all applicable laws and regulations. Investors must inform themselves about, and observe,
any such restrictions and the Company assumes no responsibility in respect thereof.
Investors must comply with all applicable laws and regulations in force in any jurisdiction in which they
purchase, offer or sell the Preferential Subscription Rights, the New Shares, the Warrants or the Warrant
Shares or possess or distribute this Prospectus and must obtain any consent, approval or permission required
for the purchase, offer or sale of the Preferential Subscription Rights, the New Shares, the Warrants or the
Warrant Shares under the laws and regulations in force in any jurisdiction in which any purchase, offer or sale
is made. The Company is not making an offer to sell the Preferential Subscription Rights, the New Shares, the
Warrants or the Warrant Shares or soliciting an offer to purchase any of the Preferential Subscription Rights,
the New Shares, the Warrants or the Warrant Shares to any person in any jurisdiction where such an offer or
solicitation is not permitted.
Without prejudice to any of the foregoing, the Company reserves the right to reject any offer to purchase the
Preferential Subscription Rights, the New Shares, the Warrants or the Warrant Shares which the Company
believes may give rise to a breach of any laws, rules or regulations.
Decision to invest
In making an investment decision, investors must rely on their own examination of the DIS Group and the
terms of the Offering, including the merits and risks involved as described in this Prospectus. Investors should
rely only on the information contained in this Prospectus. The Company has not authorised any other person
to provide investors with different information. If anyone provides different or inconsistent information, it
should not be relied upon. The information appearing in this Prospectus should be assumed to be accurate as
of the date on the front cover of this Prospectus only. The DIS Group’s business, financial condition, results of
operations and the information set forth in this Prospectus may have changed since that date. In accordance
with Luxembourg law, if a significant new factor, material mistake or inaccuracy relating to the information
included in this Prospectus which is capable of affecting the assessment of the Preferential Subscription
Rights, the New Shares, the Warrants or the Warrant Shares and which arises or is noted between the time
when this Prospectus is approved and the Closing Date of the Offering such will be set out in a supplement to
this Prospectus in the meaning of article 13 of the Luxembourg Prospectus Law. If a supplement to the
Prospectus is published on or prior to the completion of the capital increase in the framework of the Rights
Offering, subscribers in the Rights Offering shall have the right to withdraw their subscriptions made prior to
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the publication of the supplement. If a supplement to the Prospectus is published between the Public Auction
and the Closing Date of the Offering, subscribers in the Public Auction shall have the right to withdraw their
subscriptions made prior to the publication of the supplement. Such withdrawal must be done within the time
limits set forth in the supplement (which shall not be shorter than two business days after publication of the
supplement) (see section 3.5.7). Any supplement is subject to approval by the CSSF, in the same manner as
this Prospectus, and will be made available in the same manner as the Prospectus (in accordance with the
notification procedure set forth under article 18 of the Prospectus Directive) (see section 1.4.1).
Any summary or description set forth in this Prospectus of legal provisions or contractual relationships is for
information purposes only and should not be construed as legal or tax advice as to the interpretation or
enforceability of such provisions or relationships. In general, none of the information in this Prospectus
should be considered investment, legal or tax advice. Investors should consult their own counsel, accountant
and other advisors for legal, tax, business, financial and related advice regarding purchasing the Preferential
Subscription Rights, the New Shares, the Warrants or the Warrant Shares. The Preferential Subscription
Rights, the New Shares, the Warrants and the Warrant Shares have not been recommended by any federal or
state securities commission or regulatory authority in the Grand Duchy of Luxembourg, Italy or elsewhere.
The Company does not make any representation to any offeree or purchaser regarding the legality of an
investment in the Preferential Subscription Rights, the New Shares, the Warrants or the Warrant Shares by
such offeree or purchaser under applicable investment or similar laws.
Certain restrictions on the distribution of this Prospectus
The distribution of this Prospectus and the acceptance, sale, purchase or exercise of Preferential Subscription
Rights and the subscription for and acquisition of New Shares with Warrants issued simultaneously or
Warrant Shares may be restricted by law in certain jurisdictions other than the Grand Duchy of Luxembourg
and Italy. Individuals in possession of this Prospectus, or considering the acceptance, sale, purchase or
exercise of Preferential Subscription Rights, or the subscription for, or acquisition of, New Shares, Warrants
or Warrant Shares must inquire about those regulations and about possible restrictions resulting from them,
and must comply with those restrictions. Intermediaries cannot permit the acceptance, sale or exercise of
Preferential Subscription Rights or the subscription for, or acquisition of, New Shares, Warrants or Warrant
Shares, for clients whose addresses are in a country where such restrictions apply.
The Company does not represent that this Prospectus may be lawfully distributed in jurisdictions outside the
Grand Duchy of Luxembourg and Italy or that the Preferential Subscription Rights, the New Shares, the
Warrants or the Warrant Shares may be lawfully offered in compliance with any applicable registration or
other requirements in jurisdictions outside the Grand Duchy of Luxembourg and Italy, or pursuant to any
exemption available thereunder. The Company does not assume any responsibility for such distribution or
offering. Accordingly, this Prospectus nor any advertising or other offering materials may be distributed or
published in any jurisdiction outside the Grand Duchy of Luxembourg and Italy, except in circumstances that
will result in compliance with any and all applicable laws and regulations.
This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Preferential
Subscription Rights, the New Shares, the Warrants or the Warrant Shares to any person in any jurisdiction in
which it is unlawful to make such offer or solicitation to such person. See also section 3.7. This Prospectus
may not be distributed to the public in any jurisdiction outside the Grand Duchy of Luxembourg and Italy
where a registration, qualification or other requirement exists or may exist in relation to an offer to the public
or the admission to trading on a regulated market, and may in particular not be distributed to the public in the
United States, Switzerland, Canada, Australia or Japan or the United Kingdom.
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It is the responsibility of any person not resident in the Grand Duchy of Luxembourg or Italy to ascertain that
the legislation applicable in his/her/its country of residence is complied with, and that all other formalities that
may be required are fulfilled, including the payment of all costs and levies.
Notice to investors in the European Economic Area
This Prospectus has been prepared on the basis that all offers of the Preferential Subscription Rights, the New
Shares, the Warrants and the Warrant Shares (other than the offers contemplated in the Prospectus in
Luxembourg and Italy, once the Prospectus has been approved by the competent authority in such member
state and published and passported in accordance with the Prospectus Directive as implemented in
Luxembourg and Italy) will be made pursuant to an exemption under the Prospectus Directive, as
implemented in member states of the EEA, from the requirement to produce a prospectus for offers of the
Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares. Accordingly any
person making or intending to make any offer within the EEA of the Preferential Subscription Rights, the
New Shares, the Warrants and the Warrant Shares, should only do so in circumstances in which no obligation
arises for the Company to produce a prospectus for such offer.
Notice to investors in the United States
The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares offered hereby
have not been, and will not be, registered under the Securities Act or with any securities regulatory authority
of any state or other jurisdiction of the United States. The Preferential Subscription Rights, the New Shares,
the Warrants and the Warrant Shares are being offered and sold outside of the United States in accordance
with Regulation S and may not be offered, sold, exercised, transferred or delivered, directly or indirectly, in or
into the United States, except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state and other securities laws of the United
States.
Persons that are located in the United States will not be permitted to subscribe for New Shares with Warrants
issued simultaneously pursuant to the exercise of the Preferential Subscription Rights. Subscription
instructions, application forms or other documents required in respect of the exercise of the Preferential
Subscription Rights will not be accepted by the Company from persons located in the United States and
custodians and nominees are advised not to pass on such instructions or applications or to effect any
subscriptions based on them.
The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares have not been
approved or disapproved by any U.S. federal or U.S. state securities commission or U.S. regulatory authority.
Any reproduction or distribution of this Prospectus in the United States, in whole or in part, and any
disclosure of its contents to any person in the United States is prohibited.
Any person recipient of this Prospectus who acquires New Shares with Warrants issued simultaneously or
exercises Preferential Subscription Rights will be deemed to have represented, warranted and agreed, by
accepting delivery of this Prospectus or delivery of New Shares with Warrants issued simultaneously or
Preferential Subscription Rights, that he/she/it is acquiring the New Shares with Warrants issued
simultaneously or exercising the Preferential Subscription Rights in compliance with Rule 903 of
Regulation S under the Securities Act and in “offshore transactions” as defined by Regulation S under the
Securities Act.
In addition, until the expiration of a period beginning 40 days after the commencement of the Rights
Subscription Period, an offer to sell or a sale of New Shares with Warrants issued simultaneously or
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Preferential Subscription Rights within the United States by a dealer (whether or not it is participating in this
offer) may violate the registration requirements of the Securities Act.
Forward-looking statements
This Prospectus includes forward-looking statements. These forward-looking statements involve known and
unknown risks and uncertainties, many of which are beyond the DIS Group’s control and all of which are
based on the Company’s current beliefs and expectations about future events. Forward-looking statements are
sometimes identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”,
“would”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “targets”, “plans”, “predicts”,
“continues”, “assumes”, “positioned” or “anticipates” or the negative thereof, other variations thereon or
comparable terminology. These forward-looking statements include all matters that are not historical facts.
They appear in a number of places throughout this Prospectus and include statements regarding the intentions,
beliefs or current expectations of the Company or the DIS Group concerning, amongst other things, the results
of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of the
DIS Group and the industry in which it operates. In particular, the statements under the headings “Summary”,
“Risk factors”, section 6.1 (“Overview”), section 6.2 (“Competitive strengths”), section 6.3 (“Strategy”),
section 6.4 (“Principal activities and markets”), section 7 (“Consolidated financial information”) and section 8
(“Recent developments and outlook) regarding the Company’s strategy and other future events or prospects
are forward-looking statements.
These forward-looking statements and other statements contained in this Prospectus regarding matters that are
not historical facts involve predictions and assumptions. No assurance can be given that such future results or
performance will be achieved; actual events, results, performance or achievements may differ materially as a
result of risks and uncertainties facing the DIS Group. Such risks and uncertainties could cause actual results,
performance or achievements to vary materially from the future results, performance or achievements
indicated, expressed or implied in such forward-looking statements. Such forward-looking statements
contained in this Prospectus speak only as of the date of this Prospectus. The Company expressly disclaims
any obligation or undertaking to update the forward-looking statements contained in this Prospectus to reflect
any change in its expectations or any change in events, conditions or circumstances on which such statements
are based unless required to do so by applicable law.
Industry and market data
Market information and industry statistics used throughout this Prospectus have been obtained from the
Company’s internal surveys, reports and studies, as well as market research, publicly available information
and industry publications.
Industry publications generally state that the information they contain has been obtained from sources
believed to be reliable, but that the accuracy and completeness of such information is not guaranteed.
Similarly, while the Company believes its internal surveys, estimates and market research to be reliable, it has
not independently verified this information.
Exchange rates
The DIS Group manages its business and reports its results of operations using U.S. Dollars. The U.S. Dollar
is also the reporting currency selected by the DIS Group for purposes of financial reporting in accordance
with IFRS.
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Fluctuations in the exchange rate between the Euro and the U.S. Dollar may affect the DIS Group’s business
and the price at which the Shares, Warrants and Preferential Subscription Rights, which are denominated in
U.S. Dollar, are traded. Fluctuations between the Euro and the U.S. Dollar will affect the Euro equivalent of
the DIS Group’s results of operations, which are reported in U.S. Dollar, and the Euro price of the Shares,
Warrants and Preferential Subscription Rights traded on the MTA. Such fluctuations also will affect the
amounts received by Shareholders upon conversion of cash dividends, if any, paid in U.S. Dollar with respect
to the Shares. See section 4.3.3 and “Risk factors – Investors may be subject to exchange rate fluctuations”.
Rounding
Certain numerical figures included in this Prospectus have been subject to rounding adjustments and currency
conversion adjustments. Accordingly, the sum of certain data may not be equal to the expressed total.
1
General information and information concerning responsibility for the Prospectus and for
auditing the accounts
1.1
Responsibility for the content of the Prospectus
The Company, represented by its Board of Directors, assumes responsibility for the content of this
Prospectus. The Company declares that, having taken all reasonable care to ensure that such is the
case, the information contained in this Prospectus is, to the best of its knowledge, in accordance with
the facts and contains no omission likely to affect its import.
This Prospectus is intended to provide information to Potential Investors in the context of and for the
sole purpose of the Offering with Preferential Subscription Rights of New Shares with Warrants issued
simultaneously and the admission to trading of the New Shares, Warrants and Warrant Shares and
evaluating a possible investment in the Preferential Subscription Rights, New Shares, Warrants and
Warrant Shares. It does not express any commitment or acknowledgement or waiver and does not
create any right expressed or implied to anyone other than a Potential Investor. It cannot be used
except in connection with the admission to trading of the New Shares, Warrants and Warrant Shares
and the Offering. The content of this Prospectus is not to be construed as an interpretation of the rights
and obligations of the Company, of the market practices or of contracts entered into by the Company.
1.2
Responsibility for auditing the accounts
Moore Stephens Audit S.à r.l., a company with limited liability (société à responsabilité limitée)
organised and existing under the laws of Luxembourg, with registered office at 2-4 rue du Château
d’Eau, L-3364 Leudelange, Grand Duchy of Luxembourg, and registered with the Luxembourg
Register of Commerce and Companies under number B.155.334, was appointed as approved audit firm
(cabinet de révision agréé) of the Company on 27 October 2011 for a period ending immediately after
the closing of the General Meeting to be held in 2013. Moore Stephens Audit S.à r.l. is a member of
the Luxembourg Institute of registered auditors (Institut des réviseurs d’entreprises agréés)
(membership number 125).
The consolidated financial statements of the Company for the financial year ended 31 December 2011
were prepared in accordance with IFRS and were audited by Moore Stephens Audit S.à r.l., who
delivered an unqualified opinion and has given and not withdrawn its consent to the inclusion thereof
in this Prospectus in the form and context in which such opinion is included. Reference is made to
section 7.2 for the text of this audit opinion.
The interim consolidated financial statements of the Company as at 30 June 2012 were prepared in
accordance with IFRS and were reviewed by Moore Stephens Audit S.à r.l., who delivered an
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unqualified report and has given and not withdrawn its consent to the inclusion thereof in this
Prospectus in the form and context in which such report is included. Reference is made to section 7.4
for the text of this review report.
1.3
Approval and notification of the Prospectus
On 6 November 2012 the CSSF approved this Prospectus for the purposes of the offer to the public in
Luxembourg and Italy and the admission to trading of the New Shares, Warrants and Warrant Shares
on the STAR segment of the MTA, in accordance with article 7 of the Luxembourg Prospectus Law
and at the request of the Issuer, the CSSF will provide the competent authority in Italy, i.e. CONSOB,
with a certificate of approval attesting that this Prospectus has been prepared in accordance with the
Luxembourg Prospectus Law. In accordance with article 7 of the Luxembourg Prospectus Law, the
CSSF’s approval does not imply any judgement on the economic or financial merits of the Offering,
nor on the quality or solvency of the Company.
This Prospectus has been prepared in English and its summary has been translated into Italian. The
Company is responsible for verifying the consistency between the Italian and English versions of the
summary. In connection with the offer to the public in Luxembourg and Italy, both the English and
Italian version of the summary are legally binding. However, in case of inconsistencies between the
language versions, the English version shall prevail.
This Prospectus has not been submitted for approval to any supervisory body or governmental
authority outside Luxembourg.
1.4
Available information
1.4.1
Prospectus
The Prospectus is available in English. The summary of the Prospectus is also available in
Italian. The Prospectus will be made available to Potential Investors at no cost at the registered
office of the Company, 25 C Boulevard Royal, L-2449 Luxembourg, Grand Duchy of
Luxembourg and can be obtained upon request from the Company, on the phone number (+352)
26 26 29 29.
Subject to certain conditions, this Prospectus may be accessed on the Company’s Website
(http://investorrelations.damicointernationalshipping.com) and on the website of the
Luxembourg Stock Exchange (www.bourse.lu).
Posting this Prospectus on the internet does not constitute an offer to sell or a solicitation of an
offer to buy any of the Preferential Subscription Rights, New Shares, Warrants or Warrant
Shares to any person in any jurisdiction in which it is unlawful to make such offer or
solicitation to such person. The electronic version may not be copied, made available or printed
for distribution.
Other information on the Company’s Website or any other website does not form part of the
Prospectus and is not deemed to be incorporated by reference.
1.4.2
Company documents on display
A copy of the most recently restated Articles of Association as filed with the Luxembourg
Register of Commerce and Companies and the consolidated and statutory financial statements
of the Company for the financial year ended 31 December 2011 is also available on the
Company’s
Website
(http://investorrelations.damicointernationalshipping.com/en/governance/documentisocietari/index/t2)
and
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(http://investorrelations.damicointernationalshipping.com/files//Bilanci%20e%20Relazioni/EN
G/2012/2011-AnnualReport_International-Shipping-ENG-LowRes.pdf) and at the registered
office of the Company.
2
Information about the New Shares, the Warrants and the Warrant Shares
2.1
Type, class and dividend entitlement
All New Shares and Warrant Shares will be issued as ordinary Shares representing the capital of the
same category as the Existing Shares, with voting rights and without nominal value. The Company has
no other classes of Shares outstanding.
The New Shares will, as of their issuance, rank pari passu in all respects with all Existing Shares,
including for all dividends and other distributions declared, made or paid on the Shares after the date
of issuance.
The Warrants will entitle the Warrantholders to subscribe to Warrant Shares as described in, and
subject to, the Warrants terms and conditions described in section 3.6.
When issued upon exercise of the Warrants, the Warrant Shares will rank pari passu in all respects
with the Existing Shares and the New Shares.
The New Shares and the Warrant Shares will be traded under the same ISIN code as the Existing
Shares, which have been assigned the following code: LU0290697514.
The Warrants will be assigned the following ISIN code: LU0849020044.
2.2
Applicable law and jurisdiction
The New Shares, the Warrants and the Warrant Shares will be issued in accordance with Luxembourg
laws and the Offering is governed by Luxembourg laws.
The Courts of the City of Luxembourg shall have the jurisdiction to hear all disputes in relation to the
New Shares, the Warrants and the Warrant Shares.
2.3
Form of the New Shares, the Warrants and the Warrant Shares
The New Shares, the Warrants and the Warrant Shares will be issued in registered form. A global
registered certificate evidencing the entries of the New Shares and the Warrant Shares and the Warrants
in the register of Shareholders respectively the register of Warrantholders maintained at the registered
office of the Company will be deposited with a common depositary (BNP Paribas Securities Services)
on behalf of Clearstream Luxembourg and Euroclear.
The New Shares, the Warrants and the Warrant Shares will be held in book-entry form and treated as
dematerialised financial instruments in the centralised management systems operated by Clearstream
Luxembourg, Euroclear and Monte Titoli and may be settled through Clearstream Luxembourg,
Euroclear and Monte Titoli.
The Warrants will be transferable freely and separately from the New Shares.
2.4
Currency of the issue
The New Shares, the Warrants and the Warrant Shares will be denominated in USD.
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2.5
Rights attached to the New Shares, the Warrants and the Warrant Shares
2.5.1
Rights attached to the New Shares and the Warrant Shares
The rights and obligations attached to the New Shares and the Warrant Shares shall be identical
to the rights and obligations attached to the Existing Shares.
Each Share confers on its holder the right to participate and vote, both personally or by proxy,
at Annual General Meetings and at Extraordinary General Meetings, as well as other proprietary
and administrative rights in accordance with applicable Luxembourg laws and the Articles of
Association.
The Extraordinary General Meeting cannot validly deliberate on an amendment to the Articles
of Association unless at least one half (1/2) of the capital is represented. If the said quorum is
not present, a second meeting may be convened which can validly deliberate regardless of the
proportion of the capital represented. At both General Meetings, resolutions, in order for the
proposed amendment to the Articles of Association to be adopted, must be carried by at least
two-thirds (2/3) of the votes of the Shareholders present or represented.
Ownership of a Share carries implicit acceptance of the Articles of Association and the
resolutions adopted by the General Meetings.
(a)
Voting rights
Each Share entitles the owner thereof to the casting of one vote, subject to any
limitations imposed by Luxembourg laws.
Voting rights can inter alia be suspended in relation to Shares:
(b)

which are not fully paid up, notwithstanding calls thereto until such time as those
calls which have been duly made and are payable, shall have been paid;

to which more than one person is entitled, except in the event a single
representative is appointed for the exercise of the voting right;

which are owned by the Company itself;

which are held by another company in which the Company directly or indirectly
holds a majority of the voting rights or on which the Company can directly or
indirectly exercise a dominant influence; and

where a Shareholder who acquired or disposed of Shares has not notified the
Issuer of the proportion of voting rights of the Issuer held by the Shareholder as a
result of the acquisition or disposal or as a result of events changing the
breakdown of voting rights where that proportion reached, exceeded or fell below
the thresholds of 5%, 10%, 15%, 20%, 25%, 331/3%, 50% and 662/3%; as long as
such notification has not been made, the exercise of voting rights relating to the
Shares exceeding the fraction that should have been notified is suspended.
Dividend and profit participation rights
All Shares are entitled to participate equally in dividends when, as and if declared by the
General Meeting and/or the Board of Directors out of funds legally available for such
purposes. The New Shares and the Warrant Shares will participate in the results in the
same way as the Existing Shares.
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Pursuant to the Law of 10 August 1915 on Commercial Companies and the Articles of
Association, the Shareholders can in principle decide on the distribution of profits with a
simple majority vote at the occasion of the Annual General Meeting. The Articles of
Association also authorise the Board of Directors to pay out an advance payment on
dividends to the Shareholders. The Board of Directors fixes the amount and the date of
payment of any such advance payment.
The amount of distribution to Shareholders may not exceed the amount of the profits at
the end of the last financial year plus any profits carried forward and any amounts drawn
from reserves which are available for that purpose, minus any losses carried forward and
sums to be placed in reserve in accordance with the law or the Articles of Association.
Each year at least 5% of any net profit has to be allocated to a legal reserve account.
Such contribution will cease to be compulsory when the legal reserve reaches 10% of the
subscribed capital. The remainder of the annual net profits is at the disposal of the
Annual General Meeting for distribution or allocation to a reserve account.
Dividends are payable to Shareholders holding Shares through an intermediary on the
dividend payment date declared at the General Meeting. Dividend payments are
distributed through Euroclear, Clearstream or Monte Titoli, as the case may be, on behalf
of each Shareholder by the relevant intermediary participating in the centralised
securities clearing system.
The right to payment of dividends lapse in favour of the Company five years after the
Board of Directors declared the dividend payable.
Pursuant to article 84 of the CONSOB Issuer Regulation, the Company must publish on
its Website a notice containing information relating to the date and the method of
payment of dividends. Such notice – in Italian – must be published timely in order to
allow the Shareholders to exercise their rights.
The Company must provide CONSOB with the resolutions approving the distribution of
an advance payment on dividends within 30 days of the meeting of the Board of
Directors.
(c)
Rights to liquidation proceeds
The Company can only be dissolved by a resolution passed at an Extraordinary General
Meeting subject to the quorum and majority requirements for an amendment to the
Articles of Association. The quorum is at least one half (1/2) of all the Shares issued and
outstanding. In the event the required quorum is not reached at the first Extraordinary
General Meeting, a second Extraordinary General Meeting may be convened, through a
new convening notice, at which Shareholders can validly deliberate and decide
regardless of the number of Shares present or represented. A two-thirds (2/3) majority of
the votes cast by the Shareholders present or represented is required at any such
Extraordinary General Meeting.
In the event of a loss of at least half of the subscribed capital, the Board of Directors
must convene an Extraordinary General Meeting within two months as of the date on
which the Board of Directors discovered or should have ascertained this
undercapitalisation. At this Extraordinary General Meeting, Shareholders will resolve on
the possible dissolution of the Company. The quorum is at least one half (1/2) of all the
Shares issued and outstanding. In the event the required quorum is not reached at the
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first Extraordinary General Meeting, a second Extraordinary General Meeting may be
convened, through a new convening notice, at which Shareholders can validly deliberate
and decide regardless of the number of Shares present or represented. A two-thirds (2/3)
majority of the votes cast by the Shareholders present or represented is required at any
such Extraordinary General Meeting. Where the loss equals or exceeds three quarters
(3/4) of the subscribed share capital, the same procedure must be followed, it being
understood, however, that the dissolution only requires the approval of Shareholders
representing 25% of the votes cast at the meeting. In such cases, the Company must, at
least eight days prior to the Extraordinary General Meeting, convened to deliberate and
resolve on the possible dissolution of the Company, make available to the public the
report of the Board of Directors on the financial situation of the Company at the
Company’s registered office and on its Website. This report must also be filed with
Borsa Italiana and with CONSOB. Within 30 days of the General Meeting, the Company
must provide CONSOB with a copy of the relevant minutes, drawn up in English.
If the Company is dissolved for any reason, the liquidation will be carried out by the
Board of Directors or such other person or persons (who may be physical persons or
legal entities) appointed by a General Meeting, who will determine their powers and
compensation. In the event the Company is dissolved, the net liquidation proceeds, after
payment of all debts and any charges against the Company and of the expenses of the
liquidation, are distributed to the Shareholders in conformity with and so as to achieve
on an aggregate basis the same economic result as the distribution rules set out for
dividend distributions.
(d)
Preferential subscription right
In the event of a capital increase in cash with issuance of new Shares, the existing
Shareholders have a preferential right to subscribe to the new Shares, pro rata to the part
of the share capital represented by the Shares that they already have. The Board of
Directors determines the period within which the preferential subscription rights can be
exercised. The period during which rights can be traded and exercised may not be less
than 30 days.
The start of the exercise period of the preferential subscription rights must be announced
by a notice setting out the exercise period published in the Luxembourg Official Gazette,
two Luxembourg and one Italian newspapers, as well as by way of a press release and on
the Company’s Website. When all the Shares are in registered form, the Company may
alternatively decide to notify the Shareholders by registered letter only.
The preferential subscription rights are transferable throughout the exercise period, and
no restrictions may be imposed on such transferability other than those applicable to the
Shares in respect of which the right arises. The unexercised preferential subscription
rights are, after the end of the exercise period, publicly sold by the Company in a public
auction organised by the Luxembourg Stock Exchange. The proceeds from such public
sale, after deduction of the expenses thereof, are made available to the Shareholders not
having exercised their preferential subscription rights and forfeited in favour of the
Company after a period of five years from the date of the public sale.
The Company must make available to the public, by way of a press release and on the
Company’s Website, a notice specifying the number of unexercised preferential
subscription rights to be sold by the Luxembourg Stock Exchange and the date of the
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session during which these will be offered and publicly sold. The Luxembourg Stock
Exchange will publish on its website a notice specifying the date of the public auction at
least three trading days before the public auction pursuant to article 4 of Part 4 of the
Rules and Regulations of the Luxembourg Stock Exchange. The Company will publish a
press release and a notice containing the number of preferential subscription rights to be
sold in the public auction in at least one newspaper with a national circulation in Italy.
Pursuant to article 32-3 of the Law of 10 August 1915 on Commercial Companies, the
preferential subscription rights of existing Shareholders in case of a capital increase by
means of a contribution in cash may not be restricted or withdrawn by the Articles of
Association. Nevertheless, the Articles of Association may authorise the Board of
Directors to withdraw or restrict these preferential subscription rights in relation to an
increase of capital made within the limits of the authorised capital. Such authorisation is
only valid for five years from publication of the amendment of the Articles of
Association. It may be renewed on one or more occasions by the Extraordinary General
Meeting deliberating in accordance with the requirements for amendments to the
Articles of Association, for a period which, for each renewal, may not exceed five years.
Such authorisation was given by the Extraordinary General Meeting of 2 October 2012.
In addition, an Extraordinary General Meeting called upon to resolve, at the conditions
prescribed for amendments to the Articles of Association, either upon an increase of
capital or upon the authorisation to increase the capital, may limit or withdraw
preferential subscription rights or authorise the Board of Directors to do so. Any
proposal to that effect must be specifically announced in the convening notice. Detailed
reasons therefore must be set out in a report prepared by the Board of Directors and
presented to the Extraordinary General Meeting dealing, in particular, with the proposed
issue price. This report must be made available to the public at the Company’s registered
office as well as on its Website and must be filed with Borsa Italiana and CONSOB at
least 21 days prior to the relevant General Meeting. The filing of this report must
immediately be announced by means of a notice published in at least one daily
newspaper having a national circulation in Italy.
An issuance of Shares to banks or other financial institutions with a view to their being
offered to the Shareholders of the Company in accordance with the decision relating to
the increase of the subscribed capital does not constitute an exclusion of the preferential
subscription rights.
(e)
Issuance of redeemable Shares
The issuance of redeemable Shares may be authorised provided that the redemption
thereof is subject to the following conditions:
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1.
the redemption must be authorised by the Articles of Association before the
redeemable Shares are subscribed for;
2.
the Shares must be fully paid-up;
3.
the terms and conditions for the redemption must be laid down in the Articles of
Association;
4.
redemption can only be made using sums available for distribution or the
proceeds of a new issue made with a view to carrying out such redemption;
61
5.
an amount equal to the nominal value, or, in the absence thereof, the accounting
par value, of all the Shares redeemed must be included in a reserve which cannot
be distributed to the Shareholders except in the event of a reduction of the
subscribed capital; the reserve may only be used to increase the subscribed capital
by capitalisation of reserves;
6.
the condition under 5° does not apply to a redemption using the proceeds of a
new issue made with a view to carrying out such redemption;
7.
where provision is made for the payment of a premium to Shareholders in
consequence of a redemption, the premium may be paid only from sums which
are available for distribution.
8.
notice of redemption is to be published in accordance with article 9 of the Law of
10 August 1915 on Commercial Companies.
On the date of this Prospectus, the Company has not issued any redeemable Shares.
(f)
Acquisition of own Shares
The Company may acquire its own Shares either itself or through a person acting in his
own name but on the Company’s behalf subject to the following conditions:
1.
the authorisation to acquire Shares is to be given by the General Meeting, which
determines the terms and conditions of the proposed acquisition and in particular
the maximum number of Shares to be acquired, the duration of the period for
which the authorisation is given and which may not exceed five years and, in the
case of acquisition for value, the maximum and minimum consideration;
2.
the nominal value or, in the absence thereof, the accounting par value of the
Shares acquired, including Shares previously acquired by the Company and held
by it in its portfolio as well as the Shares acquired by a person acting in its own
name but on behalf of the Company, may not exceed 10% of the subscribed
capital;
3.
the acquisitions must not have the effect of reducing the net assets below the
aggregate of the subscribed capital and the reserves which may not be distributed
under law or the Articles of Association;
4.
only fully paid-up Shares may be included in the transaction.
The Board of Directors ensures that at the time each authorised acquisition is carried out,
the conditions set out under 2°, 3°and 4°are complied with.
Where the acquisition of the Company’s own Shares is necessary in order to prevent
serious and imminent harm to the Company, the condition under 1° above does not
apply. In such a case, the next General Meeting must be informed by the Board of
Directors of the reasons for and the purpose of the acquisitions made, the number and
nominal values, or in the absence thereof, the accounting par value, of the Shares
acquired, the proportion of the subscribed capital which they represent and the
consideration paid for them.
The condition under 1 likewise does not apply in the case of Shares acquired either by
the Company itself or by a person acting in his own name but on behalf of the Company
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for the distribution thereof to the staff of the Company. The distribution of any such
Shares must take place within one year from the date of their acquisition.
None of the abovementioned conditions, except under 3, apply to the acquisition of:
(a)
Shares acquired pursuant to a decision to reduce the capital or in connection with
the issue of redeemable Shares;
(b)
Shares acquired as a result of a universal transfer of assets;
(c)
fully paid-up Shares acquired free of charge or acquired by banks and other
financial institutions pursuant to a purchase commission contract;
(d)
Shares acquired by reason of a legal obligation or a court order for the protection
of minority Shareholders, in particular, in the event of a merger, the division of
the Company, a change in the Company’s object or form, the transfer abroad of
its registered office or the introduction of restrictions on the transfer of Shares;
(e)
Shares acquired from a Shareholder in the event of failure to pay them up;
(f)
fully paid-up Shares acquired pursuant to an allotment by court order for the
payment of a debt owed to the Company by the owner of the Shares.
Shares acquired in the cases indicated under (b) to (f) must, however, be disposed of
within a maximum period of three years after their acquisition, unless the nominal value,
or, in the absence of nominal value, the accounting par value of the Shares acquired,
including Shares which the Company may have acquired through a person acting in its
own name, but on behalf of the Company, does not exceed 10% of the subscribed
capital.
If the Shares so acquired are not disposed of within the period prescribed, they must be
cancelled. The subscribed capital may be reduced by a corresponding amount. Such a
reduction is compulsory where the acquisition of Shares and their subsequent
cancellation results in the Company’s net assets having fallen below the amount of the
subscribed capital.
Any Shares acquired in contravention of the abovementioned conditions or of (a) must
be disposed of within a period of one year after the acquisition. Have they not be
disposed of within that period, they must be cancelled.
Pursuant to the Articles of Association, the Company may acquire its own Shares though
only (i) by means of a cash or exchange tender offer; (ii) on regulated markets; (iii) by
granting Shareholders, in relation to the Shares they hold, a put option to be exercised
within a period established by the competent corporate body that authorised the share
purchase programme, and the acquisition and holding of its own Shares will be in
compliance with the conditions and limits established by Luxembourg laws.
At least 21 days prior to the General Meeting convened for the approval of the purchase
and sale of own Shares, the Company must make available to the public at the
Company’s registered office and on its Website, a report prepared by the Board of
Directors, drawn up in English and in compliance with annex 3A of the CONSOB Issuer
Regulation to the extent this is permitted under the law applicable to the Company. The
Company must inform the public thereof and send a notice to CONSOB and Borsa
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Italiana announcing the publication of this document and indicating the website on
which it can be consulted.
In those cases where the acquisition by the Company of its own Shares is permitted in
accordance with the foregoing, the holding of such Shares is subject to the following
conditions: (i) among the rights attaching to the Shares, the voting rights in respect of the
Company’s own Shares are suspended; and (ii) if the said Shares are included among the
assets shown in the balance sheet, a non-distributable reserve of the same amount is to
be created among the liabilities.
Where the Company acquires or disposes of its own Shares, either itself or through a
person acting in his own name but on the Company’s behalf, it must make public the
proportion of its own Shares as soon as possible but not later than four trading days
following such acquisition or disposal where that proportion reaches, exceeds or falls
below the thresholds of 5% or 10% of the voting rights. The proportion is calculated on
the basis of the total number of Shares to which voting rights are attached.
Where the Company has acquired own Shares in accordance with the abovementioned,
the annual report of the Board of Directors must indicate: (i) the reasons for acquisitions
made during the financial year; (ii) the number and the nominal value, or in the absence
of nominal value, the accounting par value, of the Shares acquired and disposed of
during the financial year and the proportion of the subscribed capital which they
represent; (iii) in the case of acquisition or disposal for value, the consideration for the
Shares; and (iv) the number and nominal value, or, in the absence of nominal value, the
accounting par value, of all the Shares acquired and held in the Company’s portfolio as
well as the proportion of the subscribed capital which they represent.
At its Annual General Meeting on 29 March 2011, the Company resolved inter alia to
renew the authorisation to the Board of Directors to effect on one or several occasions
repurchases and disposals of own Shares on the MTA or by such other means resolved
by the Board of Directors for a period of five years as from the date of such Annual
General Meeting, for a maximum number of 14,994,991 Shares, within a price range
from EUR 0.50 per Share up to EUR 3.50 per Share. The purposes for which such
authorisation to repurchase own Shares was granted are, in accordance with a report of
the Board of Directors to the Shareholders of the Company dated 22 February 2011, the
following:
(i)
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to constitute – in conformity with the market practices accepted or to be
implemented in the future on the Italian regulated market – a treasury stock
available eventually as a means of payment, exchange, transfer, contribution,
pledge, assignment or other action of disposal within the framework of
transactions linked to the Company’s and subsidiaries’ operation and of any
projects constituting an effective opportunity of investment in line with the
strategic policy of the Company such as agreements with strategic partners,
acquisition of shareholdings or shares’ packages or other transactions of
extraordinary finance that imply the allocation or assignment of own Shares (like
merger, demerger, issuance of convertible debentures or warrant etc.) and more
widely for any purposes as may be permitted under applicable laws and
regulations in force;
64
(ii)
to put the Company in a position to be able to intervene on the market in order to
sustain the stock’s liquidity or investment policies in conformity with the market
practices accepted on the Italian regulated market by providing support for the
price of the Shares during a limited time period if they come under selling
pressure, thus alleviating sales’ pressure generated by short-term investors and
maintaining an orderly market;
(iii)
to help to stabilise the market price of the Shares, if deemed appropriate and/or
necessary, according to article 7 and following of Commission Regulation (EC)°
2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the
European Parliament and of the Council and/or any other applicable law and
provision;
(iv)
to put the Company in a position to offer own Shares for distribution to its and
subsidiaries’ directors, officers or employees whether or not pursuant to the
implementation of a stock option plan that may be approved by the Company
during the authorisation.
At the date of this Prospectus, the Company holds 5,090,495 treasury Shares.
(g)
Conversion
On the occasion of optional conversions of Shares of one class into Shares of another
class, the Company must make available to the public at the Company’s registered office
and on its Website and via the central securities depository in the manner it establishes,
at the depositories, not later than the trading day preceding the start of the conversion
period, the report of the Board of Directors supplemented by the information needed for
the conversion. The fact that the report has been deposited is announced immediately by
means of a notice published in at least one daily newspaper having a national circulation
in Italy. The depositories, via the central securities depository, communicate the requests
for conversion on a daily basis to the market management company, which makes them
public on its website on the following trading day. Within ten days of the end of the
conversion period, the Company must announce the results of the conversion by means
of a notice published in at least one daily newspaper having a national circulation in
Italy. The Company must inform the public thereof and send a notice to CONSOB and
Borsa Italiana announcing the publication of this document and indicating the website on
which it can be consulted.
On the occasion of mandatory conversions of Shares of one class into Shares of another
class, the Company must announce the date on which the conversion will take place not
later than the trading day preceding such date by means of a notice published on its
Website.
The Company must send to CONSOB:
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(a)
the report of the Board of Directors at least 30 days prior to the day set for the
General Meeting convened to approve amendments to the Articles of Association
or, if earlier, not later than the day on which the decision is taken to convene the
General Meeting;
(b)
the minutes of the resolutions passed within 30 days of the day on which the
General Meeting voted or the minutes of the resolutions within 30 days of the day
the Board of Directors passed the resolutions, as applicable;
65
2.5.2
(c)
the amended Articles of Association within 30 days of their being filed with the
Luxembourg Register of Commerce and Companies; and
(d)
the abovementioned report in connection with the conversion contemporaneously
with its dissemination to the public.
Rights attached to the Warrants
The Warrants will be issued simultaneously with the New Shares. The Warrants will be
transferable freely and separately from the New Shares. Under the Law of 10 August 1915 on
Commercial Companies, the Warrants will have no rights under Luxembourg laws other than
the rights described in Appendix 1.
2.6
Restrictions on transferring the New Shares, the Warrants and the Warrant Shares
The Shares of the Company take the form of registered Shares. All of the Shares are fully paid up and
freely transferable. The New Shares and the Warrant Shares will also be in the form of registered
Shares and will also be freely transferable.
There are no provisions limiting the free transferability of the New Shares, the Warrants and the
Warrant Shares in the Articles of Association.
With respect to the registered Shares, a shareholders’ register which may be examined by any
Shareholder will be kept at the registered office of the Company. The shareholders’ register will
contain the precise designation of each Shareholder and the indication of the number and class of
Shares held, the indication of the payments made on the Shares as well as the transfers of Shares and
the dates thereof. Ownership of the registered Shares will result from the recordings in the
shareholders’ register. Certificates reflecting the recordings in the shareholders’ register may be
delivered to the Shareholders upon request. The Company may issue multiple registered Share
certificates.
Any transfer of registered Shares will be registered in the shareholders’ register by a declaration of
transfer entered into the shareholders’ register, dated and signed by the transferor and the transferee or
by their representative(s) as well as in accordance with the rules on the transfer of claims laid down in
article 1690 of the Luxembourg civil code (code civil). Furthermore, the Company may accept and
enter into the shareholders’ register any transfer referred to in any correspondence or other document
recording the consent of the transferor and the transferee.
The Shares are in registered form. A global registered certificate evidencing the entry of the Shares in
the register of Shareholders maintained at the registered office of the Company is deposited with a
common depositary (BNP Paribas Securities Services) on behalf of Clearstream Luxembourg and
Euroclear. The Shares are held in book-entry form and treated as dematerialised financial instruments
in the centralised management systems operated by Clearstream Luxembourg, Euroclear and Monte
Titoli and may be settled through Clearstream Luxembourg, Euroclear and Monte Titoli. When issued,
the New Shares and the Warrant Shares shall be in the same form and subject to the same regime as the
Shares.
Pursuant to the agreements made between Monte Titoli, Clearstream Luxembourg and Euroclear
(i) Existing Shares and, when issued, New Shares, Warrants and/or Warrant Shares, may be transferred
through the relevant registration in the securities accounts held with the participants of Monte Titoli
without any further formalities including the entry in the Company’s shareholders’ register;
(ii) Shareholders who deposit Existing Shares, New Shares, Warrants and/or Warrant Shares with the
participants of Monte Titoli are entitled to exercise their Shareholders’ or Warrantholders’ rights
through Monte Titoli.
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The modalities for the trading of the Shares, the New Shares, the Warrants and the Warrant Shares on
the MTA are set forth by Borsa Italiana.
2.7
Notification of significant shareholdings
Shareholders of the Company are subject to disclosure and reporting obligations both in Luxembourg
and in Italy.
2.7.1
Luxembourg significant shareholding notifications
Pursuant to the Luxembourg Transparency Law, a Shareholder who acquires or disposes of
Shares in a listed company must notify the Issuer and the CSSF of the proportion of voting
rights of the Issuer held by it as a result of the acquisition or disposal where that proportion
reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 331/3%, 50% and
662/3% of the Luxembourg Transparency Law.
Shareholders must also notify the Issuer and the CSSF of the proportion of voting rights where
that proportion reaches, exceeds or falls below the thresholds of the Luxembourg Transparency
Law as a result of events changing the breakdown of voting rights, and on the basis of the
information disclosed by the Issuer.
The same notification requirements apply to a natural person or legal entity to the extent
he/she/it is entitled to acquire, to dispose of, or to exercise voting rights in any of the following
cases or a combination of them:
(a)
voting rights held by a third party with whom that person or entity has concluded an
agreement, which obliges them to adopt, by concerted exercise of the voting rights they
hold, a lasting common policy towards the management of the Issuer;
(b)
voting rights held by a third party under an agreement concluded with that person or
entity providing for the temporary transfer for consideration of the voting rights in
question;
(c)
voting rights attaching to Shares which are lodged as collateral with that person or entity,
provided the person or entity controls the voting rights and declares his/her/its intention
of exercising them;
(d)
voting rights attaching to Shares in which that person or entity has the life interest;
(e)
voting rights which are held, or may be exercised within the meaning of points (a) to (d),
by an undertaking controlled by that person or entity;
(f)
voting rights attaching to Shares deposited with that person or entity which the person or
entity can exercise at his/her/its discretion in the absence of specific instructions from
the Shareholders;
(g)
voting rights held by a third party in its own name on behalf of that person or entity;
(h)
voting rights which that person or entity may exercise as a proxy where the person or
entity can exercise the voting rights at his/her/its discretion in the absence of specific
instructions from the Shareholders.
The notification requirements also apply to a natural person or legal entity who holds, directly
or indirectly, financial instruments that result in an entitlement to acquire, on such holder’s own
initiative alone, under a formal agreement, Shares to which voting rights are attached and
already issued.
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The notification to the Issuer must be effected as soon as possible, but not later than six trading
days following a transaction or four trading days following information of an event changing
the breakdown of voting rights by the Issuer. Upon receipt of the notification, but no later than
three trading days thereafter, the Issuer must make public all the information contained in the
notification in each of the member states in which its Shares are officially listed on a stock
exchange. In particular, a company listed on the MTA must make available to Borsa Italiana the
relevant information.
As long as the notifications have not been made to the Issuer in the manner prescribed, the
exercise of voting rights relating to the Shares exceeding the fraction that should have been
notified is suspended. The suspension of the exercise of voting rights is lifted as of the moment
the Shareholder makes the notification.
Where within the 15 days preceding the date for which the General Meeting has been convened,
the Issuer receives a notification or becomes aware of the fact that a notification has to be or
should have been made in accordance with the Luxembourg Transparency Law, the Board of
Directors may postpone the General Meeting for up to four weeks.
The disclosure requirements do not apply to the acquisition or disposal of a major holding by a
professional dealer in securities insofar as the acquisition or disposal is effected in his capacity
as a professional dealer in securities and insofar as the acquisition is not used by the dealer to
intervene in the management of the Company.
Furthermore, according to article 17 of the Luxembourg Law of 9 May 2006 on market abuse,
persons discharging managerial responsibilities within an issuer that has its registered office in
Luxembourg and, as applicable, persons who have a close link with such persons have to notify
the CSSF and the Issuer of all transactions effectuated in their name and relating to shares
admitted to trading on a regulated market, derivatives or other financial instruments relating to
the Issuer’s Shares. The disclosure should be made to the CSSF within five business days
following the conclusion of each individual operation. The information must be accessible to
the public.
2.7.2
Italian significant shareholding notifications
In light of the listing of the Company’s Shares on the STAR segment of the MTA managed by
Borsa Italiana and pursuant to the provisions of article 6 of the Articles of Association of the
Issuer, natural persons or legal entities who acquire, dispose of or hold a holding in the Issuer’s
capital represented by voting Shares, without prejudice to the fulfilment of the applicable
provisions in force, must inform the Issuer, which must inform Borsa Italiana where:
(a)
the percentage of the voting rights held by that person exceeds 2%,
(b)
the percentage of the voting rights held by that person falls below 2%,
within five trading days of the date of the transaction triggering the requirement, regardless of
the date on which it is to take effect.
For the purpose of this specific provision, a person’s holding shall be deemed to include both
the Shares owned by him, even if the voting rights belong or are assigned to third parties, and
the Shares of which the voting rights belong or are assigned to him.
For the same purposes, a person’s holding will also include both the Shares owned by
nominees, trustees or subsidiary companies and the Shares of which the voting rights belong or
are assigned to such persons. Shares registered in the names of or endorsed to trustees and those
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of which the voting rights are assigned to an intermediary in connection with asset management
services are not counted by the persons controlling the trustee or the intermediary.
2.8
Taxation
2.8.1
Taxation in Luxembourg
The comments set out below are based on current Luxembourg income tax law and what is
understood to be current Luxembourg tax authorities' practice as at the date of this Prospectus,
which are subject to change, possibly with retrospective effect. They are intended as a general
guide to the Luxembourg income tax regime applicable to holding of shares only, and do not
constitute taxation or legal advice, and apply only to holders of the Shares who are resident for
tax purposes in Luxembourg, who hold the Shares as an investment and who are the absolute
beneficial owners thereof. Certain categories of holders, such as traders, broker-dealers or
Luxembourg investors benefiting from a specific tax regime may be subject to special rules and
this summary does not apply to such holders.
(a)
Tax residence of shareholders
Pursuant to article 159 of the Luxembourg Income Tax Law, a legal entity will be treated
as a Luxembourg tax resident if it has its registered office or central administration in
Luxembourg.
As a rule, a Shareholder will not become resident or be deemed to be resident in
Luxembourg by reason only of the holding of the Shares, Preferential Subscription
Rights or Warrants.
(b)
Withholding tax
Dividends
According to article 146 and 148 of the Luxembourg Income Tax Law, dividends
distributed by the Company to its Shareholders are subject to a 15% withholding tax
computed on the gross amount of the dividend distributed.
This rate may be reduced pursuant to the Luxembourg domestic tax law or double
taxation treaties concluded between Luxembourg and the country of residence of the
Shareholders.
Based on article 147 of the Luxembourg Income Tax Law, the payment of dividends by
the Company are not subject to the withholding tax in Luxembourg provided that the
recipient of such dividend is a qualifying entity under the Luxembourg participation
exemption regime. Furthermore, the dividend recipient must hold, for an interrupted
period of at least 12 months, 10% or more of the Company’s share capital or a
participation in the Company with an acquisition price of at least EUR 1,200,000.
If article 147 of the Luxembourg Income Tax Law is not applicable, it may still be
possible to reduce or eliminate the withholding tax on dividend payments based on the
provisions of certain double tax treaties concluded by Luxembourg.
For corporate Shareholders, withholding tax may be reduced or eliminated by refunding
the excess of the total amount withheld over the withholding tax actually owed under
relevant domestic tax law or double taxation treaties (provided all the relevant conditions
are fulfilled) upon the Shareholder’s application for a refund to the Luxembourg tax
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authorities. Forms for such refund request can be downloaded from the website of the
Luxembourg tax authorities (Administration des Contributions Directes).
(c)
Income tax and corporate income tax
Dividends
Dividends received from the Company by Luxembourg resident individuals are subject
to Luxembourg individual income tax, at progressive rates. Luxembourg resident
individuals receiving dividends will be exempt from tax on 50% of these dividends.
Dividends distributed by the Company to a fully taxable company resident in
Luxembourg for the purpose of the relevant provisions not benefiting from a special tax
regime or to an enterprise or part thereof which is carried on through a permanent
establishment or a permanent representative in Luxembourg, which does not fall within
the scope of the Luxembourg participation exemption regime are subject to Luxembourg
corporate income tax (including the contribution to the employment fund and the
municipal business tax). However, half of the dividends distributed by the Company are
exempt based on article 115.15a of the Luxembourg Income Tax Law.
According to the Luxembourg participation exemption regime (article 166 of the
Luxembourg Income Tax Law), dividends distributed by the Company to a qualifying
recipient entity are exempt from Luxembourg corporate income tax (including the
contribution to the employment fund and the municipal business tax) provided that, at
the date of the distribution, the corporate Shareholder holds, directly or through a tax
transparent vehicle, during an uninterrupted period of at least 12 months, a participation
of at least 10% in the capital of the Company or a participation with an acquisition price
of at least EUR 1,200,000.
The expenses directly related to the tax exempt dividend are tax deductible to the extent
they exceed the exempt dividend distributed by the Company in a given year.
Dividends received by undertakings for collective investments should be tax exempt
provided the Shares are considered as a qualifying investment for each particular type of
undertaking involved.
In case the participation exemption does not apply, for a Shareholder resident in
Luxembourg and for a non-resident shareholder that holds the Shares as part of the
assets of a permanent establishment in Luxembourg, withholding tax be credited against
the corporate income tax due by the recipient on the dividend received.
Dividends distributed to non-resident companies which do not have a permanent
establishment in Luxembourg are not taxable in Luxembourg, apart from the dividend
withholding tax, if applicable.
Capital gains
Capital gains realised upon the disposal of Shares by a Luxembourg resident individual
Shareholder are not subject to taxation in Luxembourg, unless the disposal occurs less
than six months after the acquisition of the Shares or precedes the acquisition or the
disposal occurs more than six months after the acquisition of the Shares and the
Shareholder, together with family members, has held more than 10% of the share capital
of the Company at any time during the five preceding years.
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Capital gains realised upon the disposal of the Shares by a fully taxable company
resident in Luxembourg, for the purpose of the relevant provisions not benefiting from a
special tax regime, or by an enterprise or part thereof which is carried on through a
permanent establishment or a permanent representative in Luxembourg, are fully subject
to Luxembourg corporate income tax (including the contribution to the employment
fund and the municipal business tax), except if the Luxembourg participation exemption
regime is applicable.
Based on Grand Ducal Decree dated 21 December 2001, capital gains realised upon the
disposal of the Shares by a qualifying Luxembourg tax resident entity are exempt from
Luxembourg corporate income tax (including the contribution to the employment fund
and the municipal business tax) provided that, at the date of the disposal, the corporate
Shareholder holds 10% or more of the Company’s share capital or the acquisition price
of the participation in the in the Company amounts to at least EUR 6,000,000.
The tax exempt capital gains are reduced by directly related expenses which were
deductible in previous years and directly related expenses of the current year.
Capital gains realized by undertakings for collective investments should be tax exempt
provided the Shares are considered as a qualifying investment for each particular type of
undertaking involved.
Based on article 156 (8), no Luxembourg income tax is payable as a result of a disposal
of the Shares by an individual or corporate Shareholder that is a non-resident of
Luxembourg, unless the participation held by the Shareholder represents more than 10%
of the share capital of the Company, and the relevant shareholder was a Luxembourg
resident taxpayer during more than 15 years and has become a non-resident taxpayer less
than five years prior to the sale of the Shares, or unless the participation held by the
Shareholder represents more than 10% of the share capital of the Company and the
Shares have been held less than six months at the time of the sale. These conditions
could be relaxed or even neutralized by double taxation treaties concluded between
Luxembourg and the country of residence of the Shareholder (many of the double tax
treaties signed by Luxembourg provide for exclusive right of taxation of capital gains to
the country of residence of the Shareholder).
(d)
Taxation of Preferential Subscription Rights
Collective entities
Based on the decision of the Administrative Court of Luxembourg 28919C dated
16 February 2012, the issuance of Preferential Subscription Rights should not trigger
any tax consequences in Luxembourg.
Also, according to the same decision, any capital gain realized upon the disposal of
Preferential Subscription Rights by a fully taxable company resident in Luxembourg for
the purpose of the relevant provisions without benefit from a special tax regime or by an
enterprise or part thereof which is carried on through a permanent establishment or a
permanent representative in Luxembourg should benefit from the Luxembourg
participation exemption provided that this collective entity holds Shares in the Company
and these shares benefit from the Luxembourg participation exemption.
Any income related to Preferential Subscription Rights realised by undertakings for
collective investments should be tax exempt provided the Preferential Subscription
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Rights are considered as a qualifying investment for each particular type of undertaking
involved.
Individuals
For the purpose of the present section, its is assumed that the Preferential Subscription
Rights are freely transferable and that the individuals act in the framework of their own
private wealth and not in the framework of a professional activity. Should this not be the
case, the below comments are irrelevant.
The taxation of any capital gains realised on the sale of the Preferential Subscription
Rights depends on the period of detention. The following provisions are applicable to
Luxembourg residents only.
According to article 99bis of the Luxembourg Income Tax Law, capital gains on the sale
of private assets held for six months or less (speculative gain) are taxed as ordinary
income at the normal tax rate. Speculative gains are not taxable in case the total realised
profit during the calendar year amounts to less than EUR 500.
Capital gains on the sale of private assets held for more than six months are exempt from
income tax and do not need to be reported in the individual’s personal income tax return.
Any income related to Preferential Subscription Rights, received by an employee or an
independent worker in the framework of their activity, should be taxable in their hands,
according to the rules applicable to these specific categories of income. In this regard,
the applicable tax rules should be confirmed on a case by case basis by the personal tax
adviser of the taxpayer involved.
(e)
Taxation of Warrants
Collective entities
Any capital gain realised upon disposal or cash settlement of Warrants by a fully taxable
company resident in Luxembourg for the purpose of the relevant provisions, without
benefitting from a special tax regime, or by an enterprise or part thereof which is carried
on through a permanent establishment or a permanent representative in Luxembourg, is
generally fully subject to tax in Luxembourg unless a special exemption applies. Any
income related to Warrants realised by undertakings for collective investments should be
tax exempt provided the Warrants are considered as a qualifying investment for each
particular type of undertaking involved.
Individuals
For the purpose of the present section, it is assumed that the Warrants are freely
transferable and that the individuals act in the framework of their own private wealth and
not in the framework of a professional activity. Should this not be the case, the below
comments are irrelevant.
The taxation of any capital gains realised on the sale of Warrants depends on the period
of detention. The following provisions are applicable to Luxembourg residents only.
According to article 99bis of the Luxembourg Income Tax Law, capital gains on the sale
of private assets held for six months or less (speculative gain) are taxed as ordinary
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income at the normal tax rate. Speculative gains are not taxable in case the total realised
profit during the calendar year amounts to less than EUR 500.
Capital gains on the sale of private assets held for more than six months are exempt from
income tax and do not need to be reported in the individual’s personal income tax return.
Any income related to Warrants, received by an employee or an independent worker in
the framework of their activity, should be taxable in their hands, according to the rules
applicable to these specific categories of income. In this regard, the applicable tax rules
should be confirmed on a case by case basis by the personal tax adviser of the taxpayer
involved.
(f)
Inheritance and gift tax
No inheritance tax is levied on the transfer of Shares upon the death of a Shareholder in
case the deceased was not a resident of Luxembourg for inheritance tax purposes. No
gift tax is levied in Luxembourg if the deed is not executed before a Luxembourg public
notary.
(g)
Net wealth tax
The Shares in the Company held by a fully taxable company resident in Luxembourg for
the purpose of the relevant provisions not benefiting from a special tax regime or by an
enterprise or part thereof which is carried on through a permanent establishment or a
permanent representative in Luxembourg are subject to the net wealth tax in
Luxembourg unless the owner of the Shares holds 10% or more of the Company’s share
capital or the acquisition price for the Shares in the Company amounts to at least
EUR 1,200,000.
The resident and non-resident individuals are not subject to the net wealth tax on the
Shares held in a Luxembourg entity.
(h)
Other Luxembourg taxes
There is no Luxembourg registration tax, stamp duty or any other similar tax or duty
payable in Luxembourg by the Shareholders of the Company as a consequence of the
purchase, holding or disposal of the Shares. There is no Luxembourg value added tax
payable in respect of payments in consideration for the issuance or disposal of the Shares
or in respect of payment of dividends.
2.8.2
Taxation in Italy
This is a summary of the tax treatment applicable to the purchase, holding and transfer of the
Shares as provided by current Italian tax legislation to the date of this Prospectus.
This is not a complete summary of all tax ramifications concerning the purchase, holding and
transfer of the Shares and does not cover all Italian income tax consequences for the Italian
Shareholders.
All potential Italian Shareholders are advised to consult their personal tax practitioner as
regards income tax consequences of the Share investment as well as any applicable local and
foreign taxes.
The impact of existing Italian income tax laws and tax treaties, tax laws of other jurisdictions to
which an investor may be subject and possible changes to such laws and treaties (including
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73
proposed changes yet to be adopted) will vary according to the personal profiles of each
investor.
Except as otherwise described, this summary only covers certain Italian tax consequences for
the beneficial owners of Shares who are resident in Italy for tax purposes or carry out activities
through a permanent establishment (for companies, corporate investors) or a branch or agency
(for individuals) in Italy to which such shareholding is linked.
(a)
Taxation of Italian corporate investors
Capital gains/Share buy-backs
Any capital gain realised by Italian resident corporate Shareholders and business entities
on Share sales or redemption (including foreign entity permanent establishments in Italy
to which the participation is effectively connected) is subject to Italian corporate income
tax as provided by the Italian Consolidated Income Tax Code at the rate applicable to the
investor involved (which currently is 27.5%).
However, as provided by article 87 of the Italian Consolidated Income Tax Code, capital
gains realised by Italian resident corporate entities (including foreign entity permanent
establishments in Italy to which the participation is effectively connected) on Share sales
are tax exempt for 95% of their total amount, so long as the following conditions are
satisfied:
(a)
the beneficial corporate owner has held the participated company for at least
12 months as at the Share sale date. The “last in, first out”-principle is applied;
(b)
the participated company is classified as a financial fixed asset (immobilizzazioni
finanziarie) in the first statutory financial statement closed after the purchase
date;
(c)
the participated company was not resident in a tax haven country during the last
three years; and
(d)
the participated company carried out business activities during at least three years
prior to the sale. This condition does not have to be satisfied if the participated
company is listed.
The participation exemption regime also applies to the sale of a holding company
provided that conditions c) and d) above are satisfied by the holding company’s
participated companies which represent the majority of the holding company’s net
equity.
Dividends
Dividends distributed to Italian resident corporate holders or similar business entities
(including foreign entity permanent establishments in Italy to which the participation is
effectively connected) are subject to Italian corporate income tax at the applicable rate
(no local tax is due).
However, as provided by article 89 of the Italian Consolidated Income Tax Code,
dividends distributed by foreign entities (except dividends coming from, i.e. produced
in, tax haven countries) are 95% tax exempted, provided that the dividend is nondeductible from the participated company taxable income.
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Withholding tax credit
If distributed dividends are subject to Luxembourg with-holding tax then this with-held
tax could benefit from the so-called foreign tax credit (within the restrictions provided
by article 165 of the Italian Consolidated Income Tax Code) and consequently be offset
against the Italian corporate income tax paid in Italy.
However, if the 95% tax exemption is applicable, then the with-holding tax can be offset
against the Italian tax due within the taxable income threshold (5% with-holding tax can
be requested as credit).
Hence, as provided by article 165 of the Italian Consolidated Income Tax Code, the
foreign with-holding tax could be offset within the restrictions of the corresponding
Italian tax deriving from the ratio between foreign taxable income and total income
(gross of losses carried forward).
(b)
Taxation of Italian individuals and on-business entities
Capital gains/Share buy-backs obtained by individuals not carrying out a business
activity and by resident non-business entities
The capital gain tax regime on Share sales realised by:

Italian resident individuals (for transactions not linked to business activity);

non-business resident entities which do not own the Shares or rights in the
business activity management;
depends on whether the transferred Shares can be classified as “non-qualified” or
“qualified” stakes.
Particularly, as regards listed Shares, a stake is deemed “qualified” when the Shares
represent (i) a voting right percentage exceeding 2% of total voting rights (which may be
exercised during ordinary shareholders’ meetings) or (ii) a stake in the corporate capital
representing more than 5% thereof.
In all other cases, the stake would be deemed as “non-qualified”.
Article 2.a. of the legislative decree number 461 of 21 November 1997, as amended
provides that:
(i)
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capital gains realised on sale of a “non-qualified” stake:

in the “tax return regime” capital gains are declared by the taxpayer in its
tax returns and taxed by applying a 20% substitute tax (article 5 of the
legislative decree number 461 of 21 November 1997, read in conjunction
with article 2 of legislative decree number 138/2011 of 13 August 2011).
Capital gains can be offset against the amount of capital losses arisen in
the same year. If the amount of capital losses exceeds the total amount of
capital gains of the same year, then only the exceeding amount can be
carried forward and deducted from the amount of similar gains realised in
the four years following those in which the losses were generated;

in the “administered saving regime” capital gains are directly taxed by the
brokers housing the transferable securities for their administration and
75
custody, with a 20% substitute tax at the sale time (article 6 of legislative
decree number 461 of 21 November 1997, read in conjunction with
article 2 of legislative decree number 138/2011 of 13 August 2011).
Capital gains can be offset against the amount of capital losses arisen
within the same brokerage mandate. If the amount of capital losses
exceeds the total amount of capital gains of the same year, then only the
exceeding amount can be carried forward and deducted from the amount
of similar gains realised in the four years following those in which the
losses were generated;

(ii)
in the “managed saving regime” capital gains are included in the annual
results deriving from personalised portfolio management and subject to
20% substitute tax (article 7 of legislative decree number 461 of
21 November 1997, read in conjunction with article 2 of the legislative
decree number 138/2011 of 13 August 2011). If the year net result is
negative, it will be carried forward and deducted from the net results of the
four following years.
capital gains realised on sale of a “qualified” stake:

these capital gains are considered Shareholder taxable income for 49.72%
of their total (50,28% exempt). If 49.72% of the capital gain realised by
Italian resident individuals on sale of a qualified stake not linked to a
business activity exceeds 49.72% of total capital losses suffered in the
same year, then only the exceeding amount is included in the shareholder
taxable income;

if the amount of 49.72% capital losses exceeds 49.72% of total capital
gains of the same year, then only the exceeding amount can be carried
forward and deducted from the 49.72% similar gains realised in the
four years following those in which the losses were generated;

these capital gains must be reported in the income tax return and subject to
individual progressive tax rate applicable to the Shareholder.
Capital gains/Share buy-backs obtained by individuals carrying out a business activity
Capital gains realised by individuals carrying out a business activity (to which the
participation is linked) are fully taxed as part of the business income.
Nonetheless, if the participation exemption regime’s conditions are satisfied (see also
section 2.8.2(a) – “Capital gains/Share buy-backs”), capital gains are considered taxable
income for 49.72% of the total (50,28% exempt).
Dividends received by individuals not carrying out a business activity
The tax regime applied to dividends received by resident individuals on a stake not
linked to a business activity depends on the stake percentage and especially if the stake
is considered “non-qualified” or “qualified” (see also section 2.8.2(b) – “Capital
gains/Share buy-backs obtained by individuals not carrying out a business activity and
by resident non-business entities”).
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76
As regards “non-qualified” stakes, dividends distributed by a non-resident entity (except
dividends coming from, i.e. produced in, tax haven countries) and received by resident
individuals are subject to a final 20% tax as follows:

in the “tax return regime” taxation occurs by the resident financial broker, who
undertakes the transaction; however, should the dividends not have been cashed
by resident brokers, the dividends are declared by the taxpayer in its tax returns
and taxed by applying a 20% substitute tax (article 5 of the legislative decree
number 461 of 21 November 1997, read in conjunction with article 2 of the
legislative decree number 138/2011 of 13 August 2011);

in the “administered saving regime” dividends are directly taxed by the brokers
housing the transferable securities for their administration and custody, with a
20% substitute tax at the sale time (article 6 of the legislative decree number 461
of 21 November 1997, read in conjunction with article 2 of the legislative decree
number 138/2011 of 13 August 2011); and

in the “managed saving regime” dividends are included in the annual results
deriving from personalised portfolio management and subject to 20% substitute
tax (article 7 of the legislative decree number 461 of 21 November 1997, read in
conjunction with article 2 of the legislative decree number 138/2011 of
13 August 2011);

a with-holding/substitute tax is applied on the total received net of taxes (netto
frontiera) already applied by the foreign State at the distribution time. Taxes paid
abroad on dividends from “non-qualified” stakes cannot benefit from the foreign
tax credit.
As regards “qualified” stakes, any dividends distributed by a non-resident entity and
received by resident individuals on a stake not related to a business activity, are subject
to the tax return regime and considered taxable income limited to 49.72% of the total
distributed amount (except dividends coming from, i.e. produced in, tax haven countries)
and subject to individual progressive tax rate applicable to the Shareholder.
Dividends composed by income realised by a non-resident entity up the on-going fiscal
year as at 31 December 2007 are considered taxable income limited to 40% of the total
distributed amount (except dividends coming from, i.e. produced in, tax haven
countries).
In case of distribution of dividends composed by income realised up to and after the end
of the on-going fiscal year as at 31 December 2007 the former are deemed to be
distributed first.
When dividends are cashed through a resident intermediary this broker will apply 20%
with-holding tax on 49.72% (or 40%, if applicable) of the amount received which can be
offset against total tax due by the individual. The tax is calculated net of any
taxation/with-holding which may be applied by the foreign state. Therefore, foreign
taxation may be offset against Italian taxation within the restrictions provided by
article 165 of the Italian Consolidated Income Tax Code.
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Dividends received by individuals carrying out a business activity
Dividends distributed by a non-resident entity and received by resident individuals
carrying out a business activity are subject to the tax return system and considered total
taxable business income restricted to 49.72% (or 40%, if applicable) of the total
distributed (except dividends coming from, i.e. produced in, tax haven countries)
regardless is defined as qualified or non-qualified stakes.
Dividends received by non-business entities
Dividends distributed by a non-resident entity (except dividends coming from, i.e.
produced in, tax haven countries) to non-business entities are 95% tax exempted and
subject to 27.5% Italian corporate income tax. The intermediary involved in the
transaction applies 20% with-holding tax on the taxable income (5%) of dividends
received net of any eventual tax applied by the foreign state.
(c)
Taxation of Italian investment funds (UCITS)
Starting from 1 July 2011, taxation on Italian investment funds (and similar) is applied at
the moment of cash-in by the investor and when the fund quotas/Shares are sold.
Formerly, taxation on UCITS (12.5% substitutive tax) was applied by the manager
company on the annual net fund accrued result.
Capital gains
Italian UCITS (and similar) are not subject to corporate income tax on eventual capital
gains realised. Conversely, UCITS’ Italian investors are taxed when income is
effectively cashed by them.
In particular, capital gains – calculated as the difference between redemption value,
liquidation value or sale price and subscription or purchase weighted average cost – are
subject to 20% with-holding tax at the time of redemption, liquidation or sale by the
investor.
Conversely, the portion of UCITS’ capital gain arising from Italian government bonds
(and similar) or any white-list country government bonds, is subject to 12.5% taxation.
With-holding tax applied by UCITS is the final taxation for investors not carrying out a
business activity, whilst net capital gain is included in the taxable income of investor
carrying out business activity.
Dividends
Italian UCITS (and similar) are not subject to corporate income tax on dividends
received. Dividends paid to Italian UCITS are not subject to Italian with-holding tax.
Income distributed by UCITS (i.e. income distributed to investors during UCITS
participation possession) is subject to 20% with-holding tax at the distribution time.
With-holding tax applied by UCITS is the final taxation for investors not carrying out a
business activity, whilst the with-holding constitutes an advance payment for investors
carrying out business activities.
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(d)
Property tax
From 2011 onwards, a property tax (“IVAFE”) is applicable on foreign financial assets
held abroad by individuals resident in Italy.
Foreign financial assets held abroad are subject to 0.10% taxation for 2011 and 2012 and
0.15% from 2013.
IVAFE’s taxable basis is equal to the market value of the financial assets held abroad
recorded at the end of each calendar year where these financial assets are located, also
based on documentation provided by the foreign broker, otherwise, to their nominal or
reimbursement value.
If foreign financial assets are taxed abroad, then this taxation could benefit from a
foreign tax credit and consequently offset against property tax paid in Italy.
Financial assets managed by an Italian resident finance company or Italian broker are
subject to ordinary stamp duty (imposta di bollo ordinaria) as provided by article 13,
paragraphs 2-bis and 2-ter of Tariffa – part A, attached to the presidential decree
number 642 of 26 October 1972 but not subject to property tax.
Individual resident taxpayers must indicate all financial assets held abroad and the
amount of cash, certificate and security – and/or transfer of them to and from abroad –
exceeding EUR 10,000, in their annual tax returns (using form RW).
(e)
Taxation of Preferential Subscription Rights and Warrants
Capital gains realised by individuals not carrying out a business activity
Taxation on Preferential Subscription Rights or Warrant capital gains obtained by
individuals not carrying out a business activity is the taxation applicable to Share capital
gains, also including the different taxation foreseen for “non-qualified” or “qualified”
stakes (see also section 2.8.2(b) – “Capital gains/Share buy-backs obtained by
individuals not carrying out a business activity and by resident non-business entities”).
Capital gains realised by individuals not carrying out a business activity
Taxation on Preferential Subscription Rights or Warrant capital gains realised by
individuals carrying out a business activity is that applicable to Share capital gains also
including the conditioned application of participation exemption regime (see also
section 2.8.2(b) – “Capital gains/Share buy-backs obtained by individuals carrying out a
business activity”).
Capital gains realised by corporate investors
Taxation on Preferential Subscription Rights or Warrant capital gains realised by
corporate investors (including foreign entity permanent establishments in Italy to which
the stake is effectively connected) is that as for participation exemption regime (95%
exemption) if

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conditions set forth by article 87 of the Italian Consolidated Income Tax Code are
met; and
79

Preferential Subscription Rights or Warrant are sold by the owner of the related
stake from which the option right derives (as per the Central Revenue Agency’s
interpretation in Circular Letter No. 36 dated 4 August 2004).
Otherwise, no participation exemption regime is applicable.
3
Information on the Offering
3.1
Background and reasons for the Offering
The Offering is coherent with the strategy historically pursued by the DIS Group (see section 6.3) and
represents another relevant milestone in its path of continuous growth and expansion in its traditional
markets.
The Offering is mainly aimed at renewing the Company’s fleet through the purchase of new product
tankers, allowing the Company to be well positioned for a market recovery benefitting, at that point,
from an improved structure of charter rates and, on the assets side, an increase in the values of the
vessels. The strategy of renewing the fleet already started through the order of two ECO 40
Shallowmax product tankers on 26 July 2012 and the order of two “eco design” MR new-building
product tanker vessels on 27 September 2012 (see section 6.4.3).
The structure of the Offering, consisting of New Shares to be subscribed by mid December 2012 and
Warrant Shares to be subscribed by January 2016, allows the Company to raise new financial resources
in part by mid December 2012 and in part in the course of a period of approximately three years
(through the possible future exercise of the Warrants). Consequently, the structure of the Offering will
enable the DIS Group to manage its immediate and future capital expenditure needs and working
capital requirements and to seize potential acquisition opportunities over a longer period of time.
As a result the Offering, the Offering is tailored to reflect and match the Company’s financial needs
over time and will provide concrete support in the Company’s growth and increase the Company’s
capitalisation and financial flexibility.
Subject to the exercise of 100% of the Preferential Subscriptions Rights, the Company estimates the
net proceeds resulting from the subscription of the New Shares pursuant to the Offering to be
approximately USD 82,505,388, after deducting the estimated expenses of the Offering of
USD 658,119 (see section 3.10). If none of the Warrants are exercised during the Exercise Periods, the
proceeds of the Offering will be limited to the foregoing amount.
Subject to the exercise of 100% of the Preferential Subscriptions Rights and to the subsequent exercise
of 100% of the Warrants during the Third Exercise Period, the Company estimates the net proceeds
resulting from the Offering to be approximately USD 123,640,026, after deducting the estimated
expenses of the Offering of USD 658,119 (see section 3.10).
The actual proceeds of the Offering will depend on the extent to which the Warrants are exercised and
on, if they are exercised, whether they are exercised during the First Exercise Period, Second Exercise
Period or Third Exercise Period. The actual proceeds will therefore range between the amounts set out
in the preceding paragraphs.
The projected net proceeds referred to above are based on a Euro to U.S. Dollar exchange rate of
1.2779 as at 5 November 2012. The actual U.S. Dollar proceeds that the Company will receive from
the Offering will be subject to exchange rate fluctuations between the Euro and the U.S. Dollar up to
the date the Company receives and exchanges funds from Euros to U.S. Dollars. See “Risk factors –
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80
Currency exchange rate and interest rate fluctuations may adversely affect the DIS Group’s
profitability or an investor’s investment in the Company’s securities”.
Key information
3.2
3.2.1
Qualified working capital statement
In accordance with the guidelines of the European Securities and Markets Authority imposing a
binary approach in this respect, the Company is of the opinion that, taking into account its
available cash and cash equivalents but not taking into account the proceeds of the Offering, it
does not have sufficient working capital to meet its present working capital requirements in
connection with the already committed capital expenditures for the new-building vessels
together with the other financial obligations of the DIS Group (in particular under the credit
facilities referred to in section 7.1.6(20) and section 7.3.6(17)) for a period of at least 12 months
from the date of this Prospectus. When such shortfall would occur depends on the operating
cash flow that the Company can generate in the next 12 months.
However, the Company is confident that the proceeds resulting from the subscription of the
New Shares, in particular having regard to the take up commitment of the Controlling
Shareholder (see section 3.8.1), will provide the Company with sufficient working capital to
meet its present requirements for a period of at least 12 months from the date of this Prospectus.
The Company is of the opinion that potential working capital issues in the next 12 months are
best addressed by the Offering as contemplated in this Prospectus.
3.2.2
Capitalisation and indebtedness
The following table sets out the total capitalisation and indebtedness of the Company as at
30 September 2012 on a consolidated basis.
This table should be read in conjunction with the Company’s consolidated financial statements,
including the notes thereto, included in section 7 of this Prospectus.
As of 30
September
2012
Actual
(unaudited)
(U.S. $m)
Total current debt...................................................................................................................
43.8
Guaranteed ..........................................................................................................................
-
Secured ...............................................................................................................................
21.1
Crédit Agricole Credit and Investment Bank facility
3.1
Mizuho Corporate Bank Ltd. facility
5.0
Crédit Agricole Corporate & Investment Bank & DNB NOR Bank ASA facility
3.1
Commerzbank – Crédit Suisse loan
6.6
Mitsubishi UFJ Lease
3.3
Unguaranteed/Unsecured....................................................................................................
d’Amico International S.A. loan
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22.7
20.0
81
As of 30
September
2012
Actual
(unaudited)
(U.S. $m)
Interest Rate Swap
2.7
Total non-current debt (excluding current portion of long-term debt) .............................
316.3
Guaranteed ..........................................................................................................................
-
Secured ...............................................................................................................................
311.1
Crédit Agricole Credit and Investment Bank facility
146.4
Mizuho Corporate Bank Ltd. facility
19.7
41.7
Danish Ship Finance A/S facility
11.4
Commerzbank – Crédit Suisse loan
68.5
Mitsubishi UFJ Lease
23.4
Unguaranteed/Unsecured....................................................................................................
Interest Rate Swap
5.2
5.2
Shareholders’ equity
Share capital.............................................................................................................................
150.0
Legal reserve ............................................................................................................................
3.1
Other reserves ..........................................................................................................................
55.1
Total.........................................................................................................................................
568.3
As of 30
September
2012
Actual
(unaudited)
(U.S. $m)
A. Cash.....................................................................................................................................
41.6
B. Cash equivalent (details) .....................................................................................................
-
C. Trading securities.................................................................................................................
-
D. Liquidity (A) + (B) + (C) ...................................................................................................
41.6
E. Current financial receivables ...............................................................................................
-
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82
As of 30
September
2012
Actual
(unaudited)
(U.S. $m)
F. Current bank debt .................................................................................................................
-
G. Current portion of non-current debt ....................................................................................
21.1
H. Other current financial debt.................................................................................................
24.5
I. Current financial debt (F) + (G) + (H)..............................................................................
45.6
J. Net current financial indebtedness (I) – (E) – (D) ...........................................................
4.0
K. Non-current bank loans .......................................................................................................
311.1
L. Bonds issued ........................................................................................................................
-
M. Other non current financial debt .........................................................................................
5.2
N. Non-current financial indebtedness (K) + (L) + (M) ......................................................
316.3
O. Net financial indebtedness (J) + (N).................................................................................
320.3
Reference is also made to sections 7.1.6(20) and 7.3.6(17) for a description of the existing credit
facilities.
3.3
Interest of natural and legal persons
The Controlling Shareholder, of which Mr. Paolo d’Amico and Mr. Cesare d’Amico are the beneficial
owners (see sections 4.5.2 and 5.5), has given a take up commitment in relation to the Offering in
which it irrevocably committed to exercise the number of Preferential Subscription Rights which it is
entitled to receive under the Offering and to subscribe for the corresponding number of New Shares
with Warrants issued simultaneously, at the Issuance Price and in accordance with the Ratio (see
section 3.8.1).
As at the date of this Prospectus, to the best of the Company’s knowledge, Tamburi Investment
Partners S.p.A., financial advisor to the Company in relation to the Offering, holds 400,066 Existing
Shares representing approximately 0.27% of the Company’s share capital.
As at the date of this Prospectus d’Amico Società di Navigazione S.p.A. holds 14,125,000 shares in
Tamburi Investment Partners S.p.A. representing approximately 10.38% of its share capital, as well as
500,000 warrants issued by Tamburi Investment Partners S.p.A.
Furthermore, Mr. Cesare d’Amico is a member of the board of directors (vice-president) of Tamburi
Investment Partners S.p.A. and Mr. Gianni Nunziante is a non-executive member of the board of
directors of d’Amico Società di Navigazione S.p.A. and an external consultant to Studio Legale Ughi e
Nunziante, the law firm which is advising the Company as to Italian law in relation to the Offering.
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83
3.4
Decisions of the Company regarding the Offering
The Extraordinary General Meeting held on 2 October 2012 resolved inter alia to authorise and
empower the Board of Directors within the limits of the authorised capital to: (i) realise for any reason
whatsoever including for defensive reasons any increase of the corporate capital in one or several
successive tranches, following, as the case may be, the exercise of the subscription and/or conversion
rights granted by the Board of Directors within the limits of the authorised capital under the terms and
conditions of warrants (which may be separate or attached to shares, bonds, notes or similar
instruments), convertible bonds, notes or similar instruments issued from time to time by the
Company, by the issuing of new shares, with or without share premium, against payment in cash or in
kind, by conversion of claims on the Company or in any other manner; (ii) determine the place and
date of the issue or the successive issues, the issue price, the terms and conditions of the subscription
of and paying up on the new shares; and (iii) remove or limit the preferential subscription right of the
Shareholders in case of issue against payment in cash of shares, warrants (which may be separate or
attached to shares, bonds, notes or similar instruments), convertible bonds, notes or similar
instruments. See also section 4.3.2.
Pursuant to the above authorisations, the Board of Directors at its meeting held on 30 October 2012
resolved to approve an increase of the share capital with Preferential Subscription Rights for Existing
Shareholders by an aggregate amount of up to the USD equivalent of EUR 6,507,826 (plus a share
premium of up to the USD equivalent of EUR 58,570,433) so as to bring it from its current amount of
USD 14,994,990.70 represented by 149,949,907 Existing Shares to up to the USD equivalent of
EUR 18,132,751 represented by 359,879,774 Shares by the issuance of up to 209,929,867 New Shares
with up to 209,929,867 Warrants issued simultaneously. The Board also resolved to approve an
increase of the share capital by an aggregate amount of up to the USD equivalent of EUR 32,189,246
(including share premium) by the issuance of up to 69,976,622 Warrant Shares resulting from the
exercise of the Warrants. The Board of Directors also decided that, in order to facilitate the calculation
of a more suitable Ratio, the Company would waive the creation and receipt of a limited number of
Preferential Subscription Rights, i.e. the Preferential Subscription Rights attached to two (2) treasury
Shares it owns. As a result, the Company received 5,090,493 Preferential Subscription Rights for a
total of 5,090,495 treasury Shares. The Board of Directors also determined the Issuance Price, the
effective number of New Shares to be offered, the Ratio, the number of Warrants issued
simultaneously with the New Shares, the Warrants Ratio and the Exercise Price, the Rights
Subscription Period and the Exercise Periods. The Company expects that the New Shares and the
Warrants issued simultaneously will be issued on 14 December 2012 as regards subscriptions during
the Rights Subscription Period and on 27 December 2012 as regards subscriptions during the Public
Auction (see section 3.5.10).
3.5
Terms and conditions of the Offering
3.5.1
Unconditional Offering
The Offering is not subject to any conditions.
3.5.2
Terms of the Offering
Subject to restrictions under applicable securities laws, holders of Preferential Subscription
Rights (whether Existing Shareholders or holders who acquired Preferential Subscription Rights
during the Offering) can subscribe to the New Shares with the Warrants issued simultaneously
in an irreducible way in the ratio of seven (7) New Shares with seven (7) Warrants issued
simultaneously for five (5) Preferential Subscription Rights held in possession. See also
section 3.7.
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84
The Warrants will only be issued free of charge in the framework of the Offering to subscribers
of New Shares.
3.5.3
Amount of the Offering
If all New Shares are subscribed to, the total amount of the capital increase together with any
share premium will be USD 83,163,507.
If all the Warrants are duly exercised during the Third Exercise Period, the total amount of the
additional capital increase together with any share premium will be USD 41,134,638.
The amounts referred to above are based on a Euro to U.S. Dollar exchange rate of 1.2779 as at
5 November 2012. The actual U.S. Dollar proceeds that the Company will receive from the
Offering will be subject to exchange rate fluctuations between the Euro and the U.S. Dollar up
to the date the Company receives and exchanges funds from Euros to U.S. Dollars. See “Risk
factors – Currency exchange rate and interest rate fluctuations may adversely affect the DIS
Group’s profitability or an investor’s investment in the Company’s securities”.
3.5.4
Issuance Price and Ratio
The Issuance Price is EUR 0.31 per New Share with one (1) free Warrant issued
simultaneously.
The holders of Preferential Subscription Rights can subscribe to the New Shares with Warrants
issued simultaneously in an irreducible way in the ratio of seven (7) New Shares with seven
(7) Warrants issued simultaneously for five (5) Preferential Subscription Rights held in
possession.
The Issuance Price represents a discount to the closing price of the Shares on 5 November 2012
of 5.3435%.
3.5.5
Subscription periods and procedure
(a)
Rights Offering
Subject to restrictions under applicable securities laws, the holders of Preferential
Subscription Rights will have an irreducible right to subscribe to the New Shares with
Warrants issued simultaneously in the ratio of seven (7) New Shares with seven
(7) Warrants issued simultaneously for five (5) Preferential Subscription Rights held in
possession. See also section 3.7.
The Preferential Subscription Rights will be tradable over the counter/off the MTA
during the entire Rights Subscription Period, i.e. from 12 November 2012 up to and
including 11 December 2012. The Preferential Subscription Rights will be tradable on
the MTA under ISIN code LU0848998521 from 12 November 2012 up to and including
4 December 2012. The start of the Rights Subscription Period will be announced in the
Luxembourg Official Gazette, the Luxemburger Wort, Tageblatt and Il Sole 24 Ore, as
well as by way of a press release and on the Company’s Website.
The Company will not be entitled to exercise the 5,090,493 Preferential Subscription
Rights attached to the 5,090,495 treasury Shares held by it. The Company will sell on
the MTA the 5,090,493 Preferential Subscription Rights attached to its
5,090,495 treasury Shares.
Subject to restrictions under applicable securities laws, Existing Shareholders whose
holding of Shares is held in a securities account will in principle be informed by their
A15761609
85
financial institution of the procedure that they must follow to exercise or trade their
Preferential Subscription Rights.
During the Rights Subscription Period, Existing Shareholders and other persons who
have lawfully acquired Preferential Subscription Rights who do not hold the exact
number of Preferential Subscription Rights to subscribe to a round number of New
Shares with Warrants issued simultaneously may wish to either purchase the missing
Preferential Subscription Rights (whether on the MTA or off market/over the counter) in
order to subscribe to the relevant number of New Shares or to sell their extra Preferential
Subscription Rights (whether on the MTA or off market/over the counter), or elect not to
do anything in anticipation of the receipt of the Unexercised Rights Payment (if any).
Preferential Subscription Rights can no longer be traded after 11 December 2012.
An announcement of the results of the Rights Offering (indicating the number of
Preferential Subscription Rights exercised during the Rights Subscription Period and
thus the number of New Shares with Warrants subscribed to and to be issued) will be
made by a press release, on the Company’s Website and through the international central
securities depositories on 13 December 2012 after closing of the MTA.
(b)
Public Auction of unexercised Preferential Subscription Rights
Preferential Subscription Rights not exercised in the Rights Subscription Period will be
sold in the Public Auction organised by the Luxembourg Stock Exchange on
19 December 2012. At least three trading days before the Public Auction the
Luxembourg Stock Exchange will publish the Public Auction (including the terms and
conditions thereof) on its website (www.bourse.lu) pursuant to articles 4 and 5 of Part 4
of the Rules and Regulations of the Luxembourg Stock Exchange. The Company will
publish a press release and a notice containing the number of Preferential Subscription
Rights to be sold in the Public Auction in at least one newspaper with a national
circulation in Italy. See also section 3.7.
Shareholders and investors who wish to participate in the Public Auction must instruct a
Member of the Luxembourg Stock Exchange to represent them thereat. The list of
Members of the Luxembourg Stock Exchange can be found on the website of the
Luxembourg Stock Exchange (www.bourse.lu). Preferential Subscription Rights
purchased at the Public Auction must be exercised immediately and, consequently,
instructions given to the Member of the Luxembourg Stock Exchange to participate in
the Public Auction must include the order to complete and sign the subscription
instruction in respect of the Preferential Subscription Rights so purchased. The
completed and signed subscription instructions will be submitted to the bailiff in charge
of the Public Auction who will forward them to BNP Paribas Securities Services, as
subscription rights agent duly appointed by the Company.
Investors who purchase unexercised Preferential Subscription Rights at the Public
Auction must provide for payment of the Issuance Price for the New Shares and of the
bid price for the Preferential Subscription Rights to the account notified by the bailiff
with value date 21 December 2012.
(c)
Rules for subscription
The Rights Offering will be open from 12 November 2012 up to and including
11 December 2012, i.e. the Rights Subscription Period. See also section 3.7.
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The Shareholders may exercise their Preferential Subscription Rights by instructing their
depository banks to authorise BNP Paribas Securities Services to transfer the New
Shares with Warrants issued simultaneously to the respective Shareholder’s account
following the implementation of the capital increase. The implementation of the capital
increase is expected to occur on 14 December 2012 in relation to the New Shares
subscribed during the Rights Subscription Period and on 21 December 2012 in relation
to the New Shares subscribed during the Public Auction and in each case the notarial
recording of the capital increase is expected to occur on the same day.
Shareholders who wish to exercise their Preferential Subscription Rights are requested to
instruct their depository banks to authorise BNP Paribas Securities Services to transfer
the New Shares with Warrants issued simultaneously.
Shareholders and other holders of Preferential Subscription Rights for New Shares
subscribed for with Warrants issued simultaneously in the Rights Subscription Period
who wish to exercise their Preferential Subscription Rights (i) must submit the
completed and signed subscription instruction, which will be made available to the
Shareholders by their depository banks, to their respective depository banks on or before
11 December 2012 and (ii) must authorise the payment of the Issuance Price to the
account notified by the depository banks with value date on or before
13 December 2012.
Subscription instructions in relation to the New Shares subscribed for in the Rights
Subscription Period must be received by BNP Paribas Securities Services, as
subscription rights agent not later than 11 December 2012, 17:00 CET. Shareholders
should consult with their banks by which time such banks should receive their
instructions to enable the banks to transmit the instructions to BNP Paribas Securities
Services on time.
At the end of the Rights Subscription Period, unexercised Preferential Subscription
Rights will be blocked by the central securities depositories and exercised Preferential
Subscription Rights will be cancelled.
The Company will not be entitled to exercise the 5,090,493 Preferential Subscription
Rights attached to the 5,090,495 treasury Shares held by it and will sell these
Preferential Subscription Rights during the trading of the Preferential Subscription
Rights on the MTA.
Prior to the beginning of the trading of the Preferential Subscription Rights, copies of the
Prospectus will be available at no cost at the registered office of the Company upon
request and, subject to certain restrictions, on the Company’s Website (see section 1.4.1).
Subject to certain conditions, this Prospectus may be accessed on the Company’s
Website (http://investorrelations.damicointernationalshipping.com) and on the website of
the Luxembourg Stock Exchange (www.bourse.lu).
No expenses in relation to the Offering will be charged to investors by the Company.
However, investors should inform themselves about any costs that their depository banks
might charge to them.
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3.5.6
Shares held by the Company
As at the date of this Prospectus, the Company holds 5,090,495 treasury Shares representing
3.39% of the share capital of the Company. The voting rights of such treasury Shares are
suspended during their holding by the Company.
3.5.7
Supplement to the Prospectus
The Company will update the information provided in the Prospectus by means of a supplement
hereto in the event of important new developments, material errors or inaccuracies that could
affect the assessment of the Preferential Subscription Rights, the New Shares, the Warrants or
the Warrant Shares, and which occur prior to the Closing Date of the Offering or as the case
may be, prior to the start of the trading of the New Shares on the relevant market. Any
Prospectus supplement in the meaning of article 13 of the Luxembourg Prospectus Law will be
subject to approval by the CSSF and will be made available in the same manner as the
Prospectus (in accordance with the notification procedure set forth under article 18 of the
Prospectus Directive) (see section 1.4.1).
If a supplement to the Prospectus is published on or prior to the completion of the capital
increase in the framework of the Rights Offering, subscribers in the Rights Offering shall have
the right to withdraw their subscription instructions given prior to the publication of the
supplement. If a supplement to the Prospectus is published between the Public Auction and the
Closing Date of the Offering, subscribers in the Public Auction shall have the right to withdraw
their subscriptions made prior to the publication of the supplement.
Such withdrawal must take place within the time limits set forth in the supplement (which must
not be shorter than two business days after publication of the supplement).
3.5.8
Payment of funds and terms of delivery of the New Shares, the Warrants and the Warrant
Shares
The Issuance Price is EUR 0.31 per New Share subscribed. The Issuance Price for the New
Shares subscribed for in the Rights Subscription Period is due and payable with value date no
later than 13 December 2012. The Issuance Price for the New Shares subscribed for in the
Public Auction is due and payable with value date 21 December 2012.
The Warrants will be issued free of charge to the subscribers of the New Shares and will be
issued simultaneously with the New Shares. The Warrants will be transferable freely and
separately from the New Shares.
The Warrant Shares will be issued after exercise of the Warrants during the Exercise Periods
and following payment of the Exercise Price in accordance with the terms and conditions of the
Warrants (see section 3.6).
The New Shares and the Warrant Shares will be issued in the form of registered Shares. A
global registered certificate evidencing the entries of the New Shares and the Warrant Shares in
the register of Shareholders maintained at the registered office of the Company will be
deposited with a common depositary (BNP Paribas Securities Services) on behalf of
Clearstream Luxembourg and Euroclear.
The New Shares, the Warrants and the Warrant Shares will be held in book-entry form and
treated as dematerialised financial instruments in the centralised management systems operated
by Clearstream Luxembourg, Euroclear and Monte Titoli and may be settled through
Clearstream Luxembourg, Euroclear and Monte Titoli.
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The Shares and the relevant Warrants subscribed during the Rights Subscription Period shall be
credited to the subscribers’ depository bank accounts on the business day immediately
following the last value date for payment of the Issuance Price for the Preferential Subscription
Rights exercised during the Rights Subscription Period and shall therefore be available on
14 December 2012.
The Shares and the relevant Warrants subscribed during the Public Auction shall be credited to
the subscribers’ depository banks accounts on the business day immediately following the value
date for payment of the Issuance Price for the Preferential Subscription Rights acquired at the
Public Auction and exercised on 19 December 2012 and shall therefore be available on
27 December 2012.
Unclaimed payments for the sale price of unexercised Preferential Subscription Rights which
have been sold at the Public Auction will be kept, after deduction of all costs related thereto,
available to the Shareholders for a period of five years at the end of which they will definitively
accrue to the Company.
3.5.9
Publication of the results of the Offering
The results of the Rights Offering (indicating the number of Preferential Subscription Rights
exercised during the Rights Subscription Period and thus the number of New Shares with
Warrants subscribed to and to be issued) will be announced by a press release, on the
Company’s Website and through the international central securities depositories on
13 December 2012 after closing of the MTA.
An announcement of the results of the Public Auction and the amount due to the holders of
unexercised Preferential Subscription Rights (if any) will be made by a press release and
announced on the Company’s Website and through the international central securities
depositories on 20 December 2012, as well as by the Luxembourg Stock Exchange on its
website (www.bourse.lu).
3.5.10 Expected timetable of the Offering
Record Date
T-3
Friday,
9 November
2012 (at closing
of the MTA)
T
Monday,
12 November
2012
End of trading of the Preferential Subscription Rights on
the MTA
T+22
Tuesday,
4 December
2012 (end of
trading on the
MTA)
End of trading of the Preferential Subscription Rights
over the counter/off the MTA
T+29
Tuesday,
11 December
2012
Commencement of trading of Preferential Subscription
Rights on the MTA and over the counter/off the MTA and
commencement of Rights Subscription Period
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A15761609
End of Rights Subscription Period
T+29
Tuesday,
11 December
2012 (17:00
CET)
Last value date for payment of the Issuance Price for the
Preferential Subscription Rights exercised during the
Rights Subscription Period
T+31
Thursday,
13 December
2012
Announcement by the Company via press release and
through the international central securities depositories of
(i) the results of the Rights Offering and (ii) the Public
Auction
T+31
Thursday,
13 December
2012 (after
closing of the
MTA)
Announcement of the Public Auction (including the terms
and conditions thereof) by the Luxembourg Stock
Exchange on its website
T+32
Friday,
14 December
2012
Issuance of the New Shares and related Warrants resulting
from subscriptions during the Rights Subscription Period
T+32
Friday,
14 December
2012
Delivery of the New Shares and Warrants to subscribers
who subscribed during the Rights Subscription Period
T+32
Friday,
14 December
2012
Commencement of trading on the MTA of the New
Shares subscribed during the Rights Subscription Period
T+32
Friday,
14 December
2012
Public Auction of unexercised Preferential Subscription
Rights by the Luxembourg Stock Exchange
T+37
Wednesday,
19 December
2012
Exercise of Preferential Subscription Rights acquired at
the Public Auction
T+37
Wednesday,
19 December
2012
Announcement of the outcome of the Public Auction by
the Luxembourg Stock Exchange on its website and by
the Company via press release and through the
international central securities depositories
T+38
Thursday,
20 December
2012
Value date for payment of the Issuance Price for the
Preferential Subscription Rights acquired at the Public
Auction and exercised on 19 December 2012
T+39
Friday,
21 December
2012
Issuance of the New Shares and related Warrants resulting
from subscriptions during the Public Auction
T+45
Thursday,
27 December
2012
90
Delivery of the New Shares and Warrants to subscribers
who subscribed during the Public Auction
T+45
Thursday,
27 December
2012
Commencement of trading on the MTA of the New
Shares subscribed during the Public Auction
T+45
Thursday,
27 December
2012
Payment to holders of Preferential Subscription Rights
sold at the Public Auction
T+45
Thursday,
27 December
2012
The Issuer may amend the dates and times of the share capital increase and periods indicated in
the above timetable and throughout the Prospectus. If the Issuer decides to amend such dates,
times or periods, it will inform investors by way of a press release and on the Company’s
Website. Any material alterations to this Prospectus will be published in a press release, on the
Company’s Website and by way of a supplement to this Prospectus in accordance with
section 3.5.7.
3.6
Terms and conditions of the Warrants
Reference is made to Appendix 1 which sets out the terms and conditions of the Warrants.
3.7
Allotment and selling restrictions
3.7.1
Categories of potential investors
The Offering will only be conducted as an offer to the public in Luxembourg and Italy.
The Offering is made on the basis of Preferential Subscription Rights. The Preferential
Subscription Rights are allocated to all Existing Shareholders of the Issuer.
Subject to applicable securities laws, the following categories of investors are able to subscribe
to the New Shares with Warrants issued simultaneously and the Warrant Shares: (i) the initial
holders of Preferential Subscription Rights, i.e. the shareholders on the Record Date, not located
in a jurisdiction in which such subscription would be restricted (“Ineligible Jurisdiction”);
(ii) persons located outside Ineligible Jurisdictions, including the United States, who have
acquired Preferential Subscription Rights during the Rights Subscription Period; and
(iii) investors located outside Ineligible Jurisdictions, including the United States, who have
acquired Preferential Subscription Rights at the Public Auction.
The Preferential Subscription Rights are granted to all Existing Shareholders and may only be
exercised by Existing Shareholders who can lawfully do so under any law applicable to those
Existing Shareholders. The New Shares and Warrants issued simultaneously and the Warrant
Shares are being offered only to holders of Preferential Subscription Rights to whom such offer
can be lawfully made under any law applicable to those holders. The Issuer has taken all
necessary action to ensure that the Preferential Subscription Rights, New Shares and Warrants
issued simultaneously and Warrant Shares may be lawfully exercised and offered to the public
(including Existing Shareholders and holders of Preferential Subscription Rights) in
Luxembourg and in Italy. The Issuer has not taken any action to permit any offering of
Preferential Subscription Rights, New Shares and Warrants issued simultaneously and Warrant
Shares (including an offer to the public to Existing Shareholders or holders of Preferential
Subscription Rights) in any other jurisdiction.
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91
The distribution of this Prospectus, the acceptance, sale, purchase or exercise of Preferential
Subscription Rights and the subscription for and acquisition of New Shares with Warrants
issued simultaneously or Warrant Shares may, under the laws of certain countries other than
Luxembourg or Italy, be governed by specific regulations. Individuals in possession of this
Prospectus, or considering the acceptance, sale, purchase or exercise of Preferential
Subscription Rights, or the subscription for, or acquisition of, New Shares, Warrants or Warrant
Shares must inquire about those regulations and about possible restrictions resulting from them,
and comply with those restrictions. Intermediaries cannot permit the acceptance, sale or
exercise of Preferential Subscription Rights or the subscription for, or acquisition of, New
Shares, Warrants or Warrant Shares, for clients whose addresses are in a country where such
restrictions apply.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any
securities other than the Preferential Subscription Rights, the New Shares, the Warrants and the
Warrant Shares to which they relate or an offer to sell or the solicitation of an offer to buy
Preferential Subscription Rights, New Shares, the Warrants or the Warrant Shares in any
circumstances in which such offer or solicitation is unlawful.
United States
The Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares
offered hereby have not been, and will not be, registered under the Securities Act or with any
securities regulatory authority of any state or other jurisdiction of the United States. The
Preferential Subscription Rights, the New Shares, the Warrants and the Warrant Shares are
being offered and sold outside of the United States in accordance with Regulation S and may
not be offered, sold, exercised, transferred or delivered, directly or indirectly, in or into the
United States, except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state and other securities laws of
the United States.
In addition, until the expiration of a period beginning 40 days after the commencement of the
Rights Subscription Period, an offer to sell or a sale of New Shares with Warrants issued
simultaneously or Preferential Subscription Rights within the United States by a dealer
(whether or not it is participating in this offer) may violate the registration requirements of the
Securities Act.
3.7.2
Intentions of the Existing Shareholders
Apart from the irrevocable take up commitment described in section 3.8.1, the Company does
not have any information on the intentions of the Existing Shareholders in respect of the
Offering.
3.8
Placing and underwriting of the Offering
3.8.1
Irrevocable take up commitment of d’Amico International S.A.
On 30 October 2012 the Controlling Shareholder signed an irrevocable take up commitment in
which it irrevocably committed to exercise all 98,884,327 Preferential Subscription Rights
which it is entitled to receive under the Offering and to subscribe for and to fully and timely pay
up the corresponding number of New Shares with Warrants issued simultaneously, at the
Issuance Price and in accordance with the Ratio.
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92
3.8.2
No underwriting agreement
The Company did not enter into any underwriting agreement with a bank. Reference is made,
however, to section 3.8.1 in relation to the take up commitment given by the Controlling
Shareholder.
3.9
Admission to trading and dealing arrangements
3.9.1
Admission to trading and listing venues
On the date of this Prospectus all 149,949,907 Existing Shares are admitted to listing and to
trading on the MTA, under the STAR segment, under ISIN code LU0290697514.
The Preferential Subscription Rights will be traded on the MTA, under the STAR segment,
under ISIN code LU0848998521 from 12 November 2012 to 4 December 2012 inclusive.
The Shareholders of the Company as at the Record Date (i.e. the closing of the MTA on
9 November 2012) are entitled to one Preferential Subscription Right per Existing Share they
hold at such Record Date.
The Existing Shares will therefore be traded ex rights as from 12 November 2012. Any sale of
Shares prior to closing of the MTA on 9 November 2012 will be settled “cum rights”,
i.e. including the associated Preferential Subscription Rights. Any Shares sold after the closing
of the MTA on 9 November 2012 will be settled “ex rights”, i.e. excluding the Preferential
Subscription Rights.
The New Shares and Warrant Shares will be admitted to trading on the MTA.
Pursuant to article 2.4.1 of the Borsa Italiana Rules, the New Shares will be automatically
traded on the same market on which the Existing Shares will be traded at the time of their
issuance, i.e. the MTA. The New Shares will be traded under the same ISIN code as the
Existing Shares, i.e. LU0290697514.
Trading of the New Shares on the MTA is expected to commence on 14 December 2012 as
regards the New Shares subscribed during the Rights Subscription Period and on
27 December 2012 as regards the New Shares subscribed during the Public Auction.
An application was filed for the admission of the Warrants to trading on the STAR segment of
the MTA and Borsa Italiana admitted the Warrants to trading by decision 7582 of
30 October 2012.
The first date of trading of the Warrants will be determined by Borsa Italiana with an
appropriate notice in accordance with article 2.4.4 of the Borsa Italiana Rules, subject to the
prior verification of the sufficient circulation and availability of the financial instruments to the
persons entitled thereto. The Warrants will be traded under ISIN code LU0849020044.
Pursuant to article 2.4.1 of the Borsa Italiana Rules, the Warrant Shares will be automatically
traded on the same market on which the Existing Shares will be traded at the time of their
issuance, i.e. the MTA. The Warrant Shares will be traded under the same ISIN code as the
Existing Shares, i.e. LU0290697514.
3.9.2
Liquidity contract
The Company has no liquidity contract.
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93
3.9.3
Financial service
The financial service for the Shares of the Company (including the N
New
ew Shares and the Warrant
Shares) is provided in Luxembourg and in Italy by BNP Paribas Securities Services, in each
case free of charge for the Shareholders. The costs of this financial service are borne by the
Company. If the Company alters its policy in this matter, this will be announced by way of a
press release and on the Company’s Website
Website.
3.10
Expenses of the Offering
The costs related to the Offering have been estimated at approximately USD 658,119 and include,
among other things, the fees due to the CS
CSSF
SF and Borsa Italiana, the remuneration of BNP Paribas
Securities Services, the costs of printing and of translating the summary of the Prospectus, legal and
administrative costs and publication costs.
The amounts referred to above are based on a Euro to U.S.
U Dollar exchange rate of 1.2779
2779 as at
5 November 2012.. The actual U.S. Dollar costs related to the Offering will be subject to exchange rate
fluctuations between the Euro and the U.S. Dollar up to the date the Company pays and exchanges
funds from Euros to U.S. Dollars. See ““Risk
Risk factors – Currency exchange rate and interest rate
fluctuations may adversely affect the DIS Group’s profitability or an investor’s investment in the
Company’s securities
securities”.
3.11
Dilution
Based on the Issuance Price and on the Company’s
Company’s mar
market
ket price of EUR 0.3275 as at
5 November 2012, the theoretical ex rights pric
pricee (“TERP”) will be equal to EUR 0.3173, resulting in a
theoretical dilution of the Company’s market price as a result of the Offering in an amount of
EUR 0.0102 per Share.
The TERP was calculated on the basis of the formula below:
(EUR 0.3275 market price * 149,949,907 Existing Shares) + (EUR 0.31 Issuance Price * 209,929,867
maximum New Shares)
359,879,774 (Existing Shares + maximum number of New Shares)
There is no dilution for the Existing Shareholders as a result of the Offering as long as they fully
exercise their Preferential Subscription Rights.
The dilution caused by the Offering for the Existing Shareholders (in percentage terms) who do not
exercise any of the
their
ir Preferential Subscription Rights is 58.33% and can be calculated as follows:
S = total number of Shares after the capital increase pursuant to the Offering, i.e. maximum
359,879,774
s = total number of Shares owned by the Existing Shareholder after th
thee capital increase pursuant to the
Offering
X = total number of Shares before the capital increase pursuant to the Offering, i.e. 149,949,907
x = total number of Shares owned by the Existing Shareholder before the capital increase pursuant to
the Offering
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94
The Offering would also result in a maximum amount of the USD equivalent of EUR 65,078,259 of
additional share capital (including share premium) being issued.
The tables below provide a simulation of the dilutive effect of the Offering in two scenarios, based on
an Issuance Price of EUR 0.31 and a Ratio of 7 for 5.
1
3.11.1 Shareholders’ structure before the Offering
Before the Offering
Number of
shares
Amount of
interest (EUR)*
Percentage
d’Amico International S.A.................................
98,884,327
32,384,617.09
65.94
Kairos Partners SGR S.p.A.................................
3,343,883
1,095,121.68
2.23
d’Amico International Shipping S.A.
5,090,495
1,667,137.11
3.39
Subtotal................................................................
107,318,705
35,146,875.89
71.56
Other Shareholders ................................
42,631,202
13,961,718.66
28.44
Total ................................................................
149,949,907
49,108,594.54
100
Shareholder
* Calculated on the basis of the closing price of the Company’s Shares as at 5 November 2012,
i.e EUR 0.3275 per Share.
3.11.2 Scenario 1: Existing Shareholders exercise all their Preferential Subscription Rights and
exercise all their Warrants
After the Offering and after the
exercise of the Warrants
After the Offering
Number of
shares
%
Number of
shares
%
237,322,382
65.94
283,468,400
65.94
Shareholder
Kairos Partners SGR S.p.A.
8,025,315
2.23
9,585,792
2.23
d’Amico International
Shipping S.A. ................................
5,090,495
1.41
5,090,495
1.18
250,438,192
69.59
298,144,687
69.36
109,441,582
30.41
131,711,709
30.64
Total ................................................................
359,879,774
100.00
429,856,396
100.00
Subtotal ................................
1
To the best of the Company’s knowledge, based on the latest voluntary and mandatory declarations received by the Company prior to the
date of this Prospectus (see section 4.3.1).
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3.11.3 Scenario 2: Existing Shareholders exercise none of their Preferential Subscription Rights
except the Controlling Shareholder
After the Offering and after the
exercise of the Warrants
After the Offering
Number of
shares
%
Number of
shares
%
237,322,382
82.29
307,299,004
85.75
Shareholder
Kairos Partners SGR S.p.A.
3,343,883
1.16
3,343,883
0.93
Shipping S.A. ................................
5,090,495
1.77
5,090,495
1.42
245,756,760
85.22
315,733,382
88.10
42,631,202
14.78
42,631,202
11.90
Total ................................................................
288,387,962
100.00
358,364,584
100.00
Subtotal ................................
See also the section on “Risk factors – Existing Shareholders (other than the Controlling
Shareholder, who has given an irrevocable take up commitment) will experience dilution as a
result of the Offering if they do not exercise their Preferential Subscription Rights in full, which
may also result in the Company losing its STAR segment status.”
3.12
Lock-up undertaking
Currently there are no lock-up or standstill agreements in place.
3.13
Securities trading in Italy
Equity and convertible securities in the Italian market are traded on the MTA, the Italian automated
screen-based trading market.
The MTA is organised and administered by Borsa Italiana and is subject to the supervision and control
of CONSOB, which is responsible, among other things, for regulating investment companies,
securities markets and public offerings of securities in Italy to ensure the transparency and regularity of
dealings and to protect investors.
Borsa Italiana is a joint stock corporation that is responsible for the organisation and management of
the Italian-regulated financial markets (including the MTA). Since 2 January 1998 Borsa Italiana,
which was founded in 1997, has been responsible for, inter alia:

defining and organising the functioning of the Italian-regulated financial markets;

defining the rules and procedures for admission and listing on the market for issuing companies
and brokers;

managing and overseeing the markets; and

supervising the disclosure of listed companies.
Borsa Italiana’s primary objective is to ensure the development of organised markets, maximising their
liquidity, transparency and competitiveness while at the same time pursuing high levels of efficiency
and profitability. The shareholders of Borsa Italiana are primarily issuing companies as well as
domestic and international intermediaries, including the most important Italian banks. Borsa Italiana is
a market regulatory institution with operational autonomy and flexibility.
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Pursuant to article 64, par. 1-bis of the Italian legislative decree number 58/98 of 24 February 1998,
CONSOB may prohibit the implementation of admission and exclusion decisions or order the
revocation of a decision to suspend financial instruments or intermediaries from trading within
five days of receiving the relevant notification by Borsa Italiana, if on the basis of the information,
other than information considered by Borsa Italiana during its investigation, it considers the decision to
be contrary to the aim of ensuring the transparency of the market, the orderly conduct of trading and
the protection of investors referred to in article 74, par. 1 of the Italian legislative decree number 58/98
of 24 February 1998. CONSOB may request Borsa Italiana (i) to provide all the information it
considers necessary for such purposes and (ii) to suspend financial instruments or intermediaries from
trading.
Further, according to article 113, par. 3, letters g), h), i), l, m) and n) of the TUF and the implementing
CONSOB Issuer Regulation, where a breach or a reasonable risk of breach of applicable Italian rules
and regulations on the admission to trading of securities on a regulated market exists, CONSOB is
entitled to:

suspend the trading of the listed securities up to ten consecutive working days;

forbid the trading of the relevant securities;

in the event that the relevant EU securities, issued by a EU non Italian company, are listed on a
Italian regulated market (e.g. MTA) as host member state, (i) inform the authority of the EU
state which approved the listing prospectus of the relevant securities, i.e. the home member
state, that violations of the listing rules have occurred and (ii) if further breaches have been
committed and the measures adopted by the home member state are not effective, take any
appropriate measures informing the European Commission and (iii) inform the public that the
Issuer does not comply with its obligations.
As to disclosure obligations under Italian law, the Company is subject to articles 114 and 115 of the
Italian legislative decree number 58/98 of 24 February 1998 as well as to article 113 (which entails the
application of articles 66, 67, 68 and 69), 114 and 115 of the CONSOB Issuer Regulation.
In particular, article 66 of the CONSOB Issuer Regulation provides that companies listed on Borsa
Italiana and persons controlling them must disclose the information referred to in article 114.1 of the
Italian legislative decree number 58/98 of 24 February 1998, i.e. regulated information by publishing a
notice on its website.
Such notice must also be sent to CONSOB and Borsa Italiana at the same time. Regulated information
must be disclosed during trading hours and must be sent to CONSOB and Borsa Italiana at least
15 minutes before its disclosure.
Pursuant to article 114 of the CONSOB Issuer Regulation, the Company must comply with the
CONSOB requirements regarding the information and documents to be published and the language in
which they are to be published.
4
General information about the Company and its share capital
4.1
General
The Company was incorporated on 9 February 2007 for an unlimited duration. The Company has the
form of a limited liability company (société anonyme) organised and existing under the laws of
Luxembourg.
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The Company’s registered office is located at 25 C, boulevard Royal, L-2499 Luxembourg, Grand
Duchy of Luxembourg. The Company is registered with the Luxembourg Register of Commerce and
Companies under number B-124.790. The Company can be reached by phone at the following
number (+352) 26 26 29 29.
The original Articles of Association were published in the Luxembourg Official Gazette under
number 491 on 30 March 2007. The Articles of Association were amended most recently on
2 October 2012 and the publication in respect thereof in the Luxembourg Official Gazette was effected
on 30 October 2012 under number 2660.
The purpose of this chapter is to provide a description of the DIS Group structure, the share capital,
shares and other securities of the Company, as well as the Shareholders’ structure of the Company. It is
partially based on the Articles of Association of the Company as amended by the General Meeting of
2 October 2012.
The description set out below does not purport to give an exhaustive overview of the Articles of
Association nor of all relevant provisions of Luxembourg laws. Neither should it be considered as
legal advice regarding these matters.
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4.2
Group structure
The chart below provides an overview of the Company’s subsidiaries on the date of this Prospectus.
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The chart below provides an overview of the d’Amico Group which the Company belongs to on the
date of this Prospectus.
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4.3
Share capital and Shares
4.3.1
Share capital and Shares
On the date of this Prospectus, the Company’s issued share capital amounts to
USD 14,994,990.70 and is represented by 149,949,907 Shares without nominal value. The
Company has no other classes of Shares.
All of the issued and outstanding Shares were validly issued and are fully paid up. All Shares
issued and outstanding are governed by Luxembourg laws.
All Shareholders have the same voting rights,
rights i.e. each
ach Share entitles the owner thereof to the
casting of one vote except for the 5,090,4
5,090,495 Shares held in treasury by the Company of which
the voting rights are suspended.
As at the date of this Prospectus, the Company holds 5,090,495 of its own Shares, representing
3.39%
% of the Company’s outstanding share capital (see section 4.5.1).
To the best of the Company’s knowledge, based on the latest voluntary and mandatory
declarations received by the Company prior to the date of this Prospectus, the following
followin
Shareholders hold more than 2%
2% of the Company’s issued share capital:
4.3.2

d’Amico International S.A.: 65.94%

d’Amico International Shipping S.A.: 3.39%
3.39

Others: 28.44%

Kairos Partners SGR S.p.A.: 2.23
2.23%.
Authorised capital
The Articles of Association permit the Board of Directors to issue new Shares within the limits
of the authorised share capital of the Company (USD 50,000,000) in one or several successive
tranches, for any reason whatsoever, including for defensive reasons, any increase of the share
capita
capitall in one or several successive tranches, following, as the case may be, the exercise of any
subscription and/or conversion rights granted by the Board of Directors within the limits of the
authorised capital under the terms and conditions of warrants (which
(which may be separate or
attached to shares, bonds, notes or similar instruments), convertible bonds, notes or similar
instruments issued from time to time by the Company. The new Shares may be issued with or
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without share premium, against payment in cash or in kind, by conversion of claims on the
Company or in any other manner.
The Board of Directors is authorised to determine the place and the date of the issue or the
successive issues, the issue price, the terms and conditions of the subscription to and the paying
up of the new Shares.
The Board of Directors is authorised to cancel or limit preferential subscription rights of the
Shareholders in case of the issue of Shares against payment in cash.
This authorisation is valid for a period of five years from the date of publication of an extract of
the minutes of the General Meeting resolving to authorise the Board of Directors to increase the
Company’s share capital in the Luxembourg Official Gazette. The publication of the extract of
the minutes of the General Meeting held on 2 October 2012 in the Luxembourg Official Gazette
was effected on 30 October 2012 under number 2660. The authorisation can be renewed by a
resolution of the General Meeting adopted in compliance with the quorum and majority rules
set by the Articles of Association or, as the case may be, by Luxembourg laws for any
amendment of the Articles of Association.
The authorised share capital of the Company thus amounts to USD 50,000,000 represented by
500,000,000 Shares without nominal value.
4.3.3
Dividend policy
Subject to applicable law, all Shares are entitled to participate equally in dividends when, as and
if declared by the General Meeting and/or the Board of Directors out of funds legally available
for such purposes.
In accordance with Luxembourg law, the Company must allocate at least 5% of any net profit to
a legal reserve account. Such contribution ceases to be compulsory when this legal reserve
reaches 10% of the Company’s subscribed capital. The legal reserve of the Company amounted
to USD 3,108,296 as at 31 December 2011.
The remainder of any net profit is at the disposal of the General Meeting for distribution or
allocation appropriated e.g. to a reserve or to a provision, to carry it forward or to distribute it,
as the case may be, together with profits carried forward, distributable reserves or share
premiums to the Shareholders.
Subject to the conditions provided for by Luxembourg laws, the Articles of Association also
authorise the Board of Directors to pay out an advance payment on dividends to the
Shareholders. The Board of Directors must determine the amount and the date of payment of
any such advance payment.
The amount of a distribution to Shareholders may not exceed the amount of the profits at the
end of the last financial year plus any profits carried forward and any amounts drawn from
reserves which are available for that purpose, minus any losses carried forward and sums to be
placed in reserves in accordance with the law or the Articles of Association.
Luxembourg laws provide that claims for dividends lapse in favour of the Company five years
after the date on which such dividends were declared.
The dividend policy of the Company is based on its current results and estimated future
liquidity requirements, taking into account the capital structure and the DIS Group’s
development strategy, together with the expected future market developments.
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The Company paid the following dividends to the Shareholders: (i) in May 2008, for an
aggregate amount of USD 35,000,000 representing a gross dividend of USD 0.2334 per issued
and outstanding Share on the net profit realised during the financial year ending on
31 December 2007; and (ii) in April 2009, for an aggregate amount of USD 19,992,908
representing a gross dividend of USD 0.1333 per issued and outstanding Share on the net profit
realised during the financial year ending on 31 December 2008.
The Company cannot assure its Shareholders that dividend payments will be made or sustained
in accordance with its dividend policy or that its Board of Directors will not change the
Company’s current dividend policy in the future. The Company’s ability to make future
dividend payments will depend, among others, on the financial results of its subsidiaries and
their ability to distribute funds to the Company. Their ability to do so may be limited by the
legal and capital requirements to which they are subject. See also the section on “Risk factors –
The Company is a holding company and it depends on the ability of its subsidiaries to distribute
funds to it in order to satisfy its financial and other obligations and to pay dividends” and “Risk
factors – No assurance can be given that the Company will pay dividends”.
Any dividend on the Shares will be declared and paid in U.S. Dollars. If a Shareholder’s
reference currency is a currency other than the U.S. Dollar, it may be adversely affected by any
reduction in the value of the U.S. Dollar relative to its reference currency. See also the section
on “Risk factors – Investors may be subject to exchange rate fluctuations”.
Dividends are payable to Shareholders holding Shares through an intermediary on the dividend
payment date declared at the General Meeting. Dividend payments are distributed through
Euroclear, Clearstream or Monte Titoli, as the case may be, on behalf of each Shareholder by
the relevant intermediary participating in the centralised securities clearing system.
4.4
Other securities
Other than is contemplated in the Offering, the Company has not issued other securities than the
Shares, and in particular has not issued convertible securities, exchangeable securities, or securities
with warrants.
4.5
Shareholders’ structure
4.5.1
Overview
On 29 March 2011 the General Meeting renewed the authorisation to the Board of Directors to
effect on one or several occasions, in accordance with applicable laws and regulations,
repurchases and disposals of its own Shares on the regulated market on which the Company is
admitted for trading or by such other means resolved by the Board of Directors, during a period
of five years from the date of this General Meeting, for a maximum number of
14,994,991 Shares (representing 10% of the share capital together with the Shares already
repurchased and held in treasury by the Company under the buy-back programs launched in
2007 and 2008 respectively, being 4,390,495 Shares, corresponding to 2.93% of the Share
capital), within a price range from EUR 0.50 per Share up to EUR 3.50 per Share.
On 5 July 2011 the Board of Directors resolved to launch the buy-back program approved on
29 March 2011 by the General Meeting. Between 6 July 2011 and 14 October 2011 the
Company repurchased on the MTA 700,000 Shares, representing 0.46682% of the outstanding
share capital of the Company, at the average price of EUR 0.69 per Share for a total
consideration of EUR 483,253.
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As at the date of this Prospectus, the Company holds 5,090,495 treasury Shares, corresponding
to 3.39% of the share capital, which were acquired in 2007, in 2008 and in the second half of
2011, following the approval of a buy-back program.
4.5.2
Controlling Shareholder d’Amico International S.A.
To the best of the Company’s knowledge, based on the latest voluntary and mandatory
declarations received by the Company prior to the date of this Prospectus, d’Amico
International S.A. holds 98,884,327 Existing Shares, representing 65.94% of the Company’s
share capital.
The Controlling Shareholder of the Company, d’Amico International S.A., is a limited liability
company (société anonyme) incorporated on 17 October 1988 and governed by Luxembourg
laws, having its registered office at 25 C Boulevard Royal, L-2449 Luxembourg, Grand Duchy
of Luxembourg and registered with the Luxembourg Register of Commerce and Companies
under number B-29027.
d’Amico International S.A. is ultimately controlled by Mr. Paolo d’Amico and Mr. Cesare
d’Amico, entrepreneurs belonging to a family which has been operating in the shipping industry
for over 70 years. Mr. Paolo d’Amico holds 5,000,000 voting shares constituting 50% of the
share capital of d’Amico Società di Navigazione S.p.A. and Mr. Cesare d’Amico holds
1,793,350 voting shares and, through controlling shareholdings in Fi.Pa. Finanziara di
Participazione S.p.A., a company owned by Mr. Cesare d’Amico, Mrs. Maria Cristina d’Amico
and Mrs. Giovanna d’Amico (his sisters), Mr. Cesare d’Amico indirectly holds a further number
of 3,206,350 voting shares, constituting 17.93% and 32.07%, respectively, of the share capital
of d’Amico Società di Navigazione S.p.A. d’Amico Società di Navigazione S.p.A. holds
99.99% of the share capital of d’Amico International S.A. As a result, Mr. Paolo d’Amico and
Mr. Cesare d’Amico indirectly beneficially own 100% of the Controlling Shareholder’s shares.
Several measures are in place to ensure that control by d’Amico International S.A. over
d’Amico International Shipping S.A. is not abused:
(a)
Independent directors
The Company’s Board of Directors is composed of an adequate number of independent
directors, essential to protect the Shareholders' interests, particularly minority ones' and
third parties' interests, assuring that potential conflicts between the Company's interests
and those of the Controlling Shareholder are assessed impartially. The contribution of
independent directors is also fundamental to the composition and functioning of
advisory committees (Audit Committee and Nomination & Remuneration Committee)
entrusted to do a preliminary examination and formulate proposals regarding risks.
These committees represent, indeed, one of the most effective means for fighting
eventual conflicts of interest. Moreover, independent directors contribute specific
professional expertise to Board of Directors’ meetings and help it to adopt resolutions
that are consistent with Company's interest. At the date of the Prospectus, the Board of
Directors consists of eight directors and, according to the declarations made by the
parties concerned, four of them qualify as independent namely, Mr. Massimo
Castrogiovanni, Mr. Heinz Peter Barandun, Mr. John Joseph Danilovich and Mr. Stas
Andrzej Jozwiak. On the basis of the information provided by the directors concerned
and what’s in the Company’s possession, the Board of Directors duly verified at the time
of the appointment of the self-declared independent directors that each of them
continued satisfying the independence requirements set forth in the article 3.C.1. and
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3.C.2. of the Borsa Italiana Corporate Governance Code. The results of the assessment
process were disclosed to the market through a press release according to the provisions
of the Italian laws and regulations. This kind of assessment is then annually done with
the approval of the Corporate Governance Report and, as a consequence, it can be
affirmed that no existing relation involving both the independent directors is such as to
jeopardize their autonomy of judgement. The number of independent directors was
considered sufficient so as to ensure that their opinion had a significant impact on the
decision-making process of the Board of Directors in the best interest of the generality of
Shareholders. Moreover, since the president of the Company, Mr. Paolo d’Amico, is an
executive director as well as one of the ultimate controlling shareholders, the Company
decided to designate and appoint Mr. Stas Andrzej Jozwiak as lead independent director
in charge with the function to coordinate the activity and the requests of the nonexecutive directors with special regards to those independent directors. Indeed this
position is intended to provide a point of reference and coordination for the needs and
inputs of the independent directors. The lead independent director may call special
meetings of the independent directors in order to discuss issues related to the working of
the Board of Directors or to the management of the business.
(b)
Corporate procedures and rules
The Company has put in place some procedures and rules in order to better address the
abuse of control risk which are described below:
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Processing of corporate information: In compliance with applicable
Luxembourg and especially Italian laws and regulations and following to the
reception of Directive 2003/6/EC of the European Parliament and of the Council
of 28 January 2003 on insider dealing and market manipulation, the Company set
up an insider register of persons working for it or one of its subsidiaries, under an
employment contract or otherwise, who, by reason of their job, professional
activity or offices discharged on behalf of the Company, have regularly or
occasionally access to insider information serving to monitor access to and
circulation of insider and confidential information prior to their disclosure to the
public and to ensure compliance with statutory and regulatory confidentiality
requirements both for the Company itself and on behalf of all its subsidiaries. The
insider register is finalised to prevent any misuses of inside information and to
avoid market abuse situation considering that transparent relations with the
market and the provision of accurate, clear and complete information are
standards for the conduct of the members of the governing bodies, the
management and all the employees of the Company and its subsidiaries. The
insider register is kept on behalf of the Company and its subsidiaries by a person
duly charged and an insider register regulation, governing the keeping of the
register and the internal handling and public disclosure of the inside information
within the Company and its participated subsidiaries with special reference to
those price sensitive information was set up.

Internal dealing: In order to fully comply with the applicable Luxembourg and
Italian laws and with the regulations and practice governing in securities' trading
of public companies, the Company approved its internal dealing code setting out
rules that the Company itself and certain "key persons" are to comply with when
dealing in Company's Shares so as to assure the transparency of transactions
105
involving those Shares or financial instruments linked thereto carried out directly
or through a nominee by relevant persons or persons closely associated with
relevant persons. The internal dealing code is finalised to protect directors,
officers and employees of the Company and its subsidiaries from the serious
liabilities and penalties that could arise from any breaches of the applicable laws
and to prevent the appearance of improper conduct on the part of anyone
employed by or associated with the Company and its subsidiaries. According to
the applicable laws, the internal dealing code imposes disclosure obligations on
so-called “people discharging managerial responsibilities within the Issuer” for
the insider-dealing transactions involving Shares of the Company or financial
instruments linked thereto. Furthermore, the internal dealing code provisions
impose some additional restrictions to certain identified people because of their
position or their actual or potential access to information judged material. As
such, those people are regularly informed about the dealing and non-dealing
periods.
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The General Remuneration Policy and its guidelines: Such policy addresses all
forms of compensation, including in particular the fixed remuneration and
performance-related remuneration schemes. Proposals related to performancerelated remuneration schemes are accompanied with recommendations on the
related objectives and evaluation criteria, with a view to properly aligning the pay
of executive or managing directors with the long-term interests of the
Shareholders and the objectives set by the Board of Directors for the Company.

Rules governing major transactions and significant transactions with related
parties: The Company approved and adopted a set of internal rules in order to
ensure the transparency and the substantial and procedural fairness of those
transactions carried out by the Company, directly or through its subsidiaries, and
with a major impact on the Company’s activity, financial statements, economic
and financial figures in view of their nature and strategic importance or size with
particular reference to those significant transactions carried out by the Company
or its subsidiaries with related parties including intra-group transactions. The
decisional process of all the other major transactions and significant transactions
with related parties remain of exclusive competence, in terms of previous
approval and/or evaluation, of the Board of Directors upon prior advice to be
given by the Audit Committee. The rules also require the directors to provide the
Board of Directors, reasonably in advance, with a summary analysis of all the
relevant aspects concerning the major transaction and the significant transactions
with related parties submitted to their attention as well as with information about
the nature of the relationship, the manner of carrying out the transaction, the
economic and other conditions, the evaluation procedures used, the rationale for
the transaction, the Company’s interest in its implementation and the associated
risks the strategic consistency, economic feasibility, and expected return for the
Company.

The model of organisation, management and control: The Company adopted,
pursuant to the Italian legislative decree number 231 of 8 June 2001, a
compliance program that aims to develop an organic and structured system of
procedures, rules and controls to be implemented both preventively (“ex ante”)
106
and subsequently (“ex post”), in order to reduce and prevent in a material way the
risk of commission of the different types of crimes in particular, through the
identification and relative drafting of a procedure for each of the sensitive
activities identified as the activities most at risk of crime identified under the
Italian Criminal Code. Moreover the Company entrusted a Supervisory
Committee provided with autonomous powers of initiative and control and with
the responsibility for supervising the functioning and the observance of the
Model as well as for its updating. The Company also approved and adopted a
Code of Conduct which contains the business ethics fundamental principles to
which the Company conforms and which directors, statutory auditors, employees,
consultants, partners and in general all those who act in the Company's name and
on its behalf are required to comply with.
(c)
The internal control system
The Company is following the necessary steps in order to maintain an efficient and
adequate system of internal control by means of reviewing the existing and, where
necessary, establishing a new set of rules, processes and organisational structures in
order to monitor the efficiency of the Company’s operations, the reliability of the
financial information, the compliance with laws and regulations for the safeguard of the
Company’s assets. The Board of Directors is the body responsible for the internal control
system. Part of the system are the following functions and bodies: the Audit Committee,
the internal control officer, the internal audit manager and the director in charge of the
supervision of the system.
(d)
The external control
The operations of the Company and its financial situation, including, more in particular,
its books and accounts, are reviewed by an external independent auditor being Moore
Stephens S.à r.l.
To the Company’s knowledge, there are no arrangements in place the operation of which may at
a subsequent date result in a change in control over the Company or of d’Amico
International S.A. See also the section on “Risk factors – Following the Offering, the
Controlling Shareholder may increase its control over the Company, including the outcome of
shareholder votes”.
For a description of the ownership interests of the Company’s directors and members of senior
management in the Company, see section 5.4.
4.5.3
Voting rights
Each Share entitles the owner thereof to the casting of one vote, subject to any limitations
imposed by Luxembourg laws.
The voting rights can inter alia be suspended in relation to Shares:
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which are not fully-paid, notwithstanding calls thereto, until such time as those calls
which have been duly made and are payable, shall have been paid;

to which more than one person is entitled, except in the event a single representative is
appointed for the exercise of the voting right;

which are owned by the Company itself;
107
4.5.4

which are held by another company in which the Company directly or indirectly holds a
majority of the voting rights or on which the Company can directly or indirectly exercise
a dominant influence; and

where a Shareholder who acquired or disposed of Shares has not notified the Issuer of
the proportion of voting rights of the Issuer held by the Shareholder as a result of the
acquisition or disposal or as a result of events changing the breakdown of voting rights
where that proportion reached, exceeded or fell below the thresholds of 5%, 10%, 15%,
20%, 25%, 331/3%, 50% and 662/3% as long as such notification has not been made, the
exercise of voting rights relating to the Shares exceeding the fraction that should have
been notified is suspended.
Shareholders’ agreements
The Company has not been notified of nor is it aware of any agreement governing the terms and
conditions of the shareholding in the Company. The Company has not entered into any
shareholders’ agreement with respect to its shareholding in its subsidiaries.
4.5.5
Takeover bid legislation
Pursuant to article 100-ter of the TUF and to the Luxembourg law of 19 May 2006 transposing
Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on
takeover bids, CONSOB is the competent regulator to supervise a takeover bid on the Company
and Italian law is the governing law as to (i) the price of the bid; (ii) the procedure of the bid
and, in particular, the information on the offeror’s decision to make a bid; (iii) the content of the
offer document and (iv) the disclosure of the bid. Pursuant to the Luxembourg law of
19 May 2006 transposing Directive 2004/25/EC of the European Parliament and of the Council
of 21 April 2004 on takeover bids and the CSSF Circular 06/258, the CSSF is competent and
Luxembourg law is the governing law in the context of a takeover bid as to (i) the information
to be provided to the employees of the Company; (ii) any company law matters, in particular
the percentage of voting rights which confers control and any derogation from the obligation to
launch a bid; as well as (iii) the conditions under which the Board of Directors may undertake
any action which might result in the frustration of the bid.
The Company is also subject to the Luxembourg law of 21 July 2012 on the squeeze-out and
sell-out of securities of companies admitted or having been admitted to trading on a regulated
market or which have been subject to a public offer and the CSSF Circular 12/545 if any
individual or legal entity, acting alone or in concert with another, becomes the owner directly or
indirectly of a number of Shares representing at least 95% of the voting share capital and 95%
of the voting rights of the Company.
5
Management and corporate governance
5.1
Corporate governance
The Company’s corporate governance system is currently under review and will be updated by the end
of 2012 in order to comply, to the extent necessary, with the new corporate governance
recommendations of the Borsa Italiana Code of December 2011.
The Company is organised in compliance with applicable Luxembourg laws and regulations on
companies and, following a decision of the Board of Directors taken on 23 February 2007, adopts the
Borsa Italiana Code in terms of corporate governance recommendations. As the Company’s Shares are
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108
not listed on the Luxembourg Stock Exchange, the Company is not obliged to comply with the
corporate governance principles of the Luxembourg Stock Exchange.
In accordance with article 123-bis of the Italian legislative decree number 58/98 of 24 February 1998,
the Company provides complete disclosure on its corporate governance system in line with the
recommendations of the Borsa Italiana Code, in its Corporate Governance Report. This report is
published on the Company’s Website and is filed with Borsa Italiana, the CSSF and the Luxembourg
Stock Exchange in its capacity as official appointed mechanism for central storage of regulated
information. The report is also made available at the Company’s registered office. The Corporate
Governance Report for the financial year ending on 31 December 2011 was issued by the Company on
23 February 2012.
If with regard to specific issues the Company’s corporate governance structure would not comply with
these recommendations and practices adopted on a voluntary basis, the Corporate Governance Report
will outline the specific reasons for the Company’s failure to comply.
The Company is further subject to the disclosure obligations related to corporate actions and periodic
information established by the Luxembourg Transparency Law and, where applicable due to its listing
on the MTA, also to those established by Italians laws and regulations.
The Company is managed by a Board of Directors which is vested with broad powers to perform all
acts necessary or useful for accomplishing the Company’s object, with the ultimate purpose of creating
value for the Shareholders, providing strategic guidance for the Company and control of operations,
with powers to direct the business as a whole and intervening in a series of decisions necessary to
promote the Company’s purpose and the transparency of operational decisions within the Company
and in relation to the market. All powers not expressly reserved by the Articles of Association or by
law to the General Meeting are within the competence of the Board of Directors.
The Board of Directors may delegate the daily management of the Company and the power to
represent the Company within such daily management to one or more persons or committees of its
choice specifying the limits to such delegated powers and the manner of exercising them. The Board of
Directors may also delegate other special powers or proxies or entrust permanent or temporary
functions to persons or committees of its choice.
The Board of Directors set up the following committees:
A15761609

The Executive Committee (see section 5.2.3(c));

The Nomination and Remuneration Committee, which is composed of four non-executive
directors, three of them being independent directors, having adequate experience in accounting
and finance. The Nomination and Remuneration Committee has the powers to, among others,
submit proposals to the Board of Directors regarding the establishment of a general policy for
the remuneration of certain directors and key management personnel, evaluate the adequacy
and consistency of the remuneration policy and to monitor it, make proposals to the Board of
Directors with respect to any incentive plans or other remuneration schemes and propose
suitable candidates to become independent directors or members of the Supervisory Committee
of the Company. On 5 May 2011 the Board of Directors reappointed Mr. Stas Andrzej Jozwiak
(chairman), Mr. Massimo Castrogiovanni, Mr. John Joseph Danilovich and Mr. Gianni Battista
Nunziante as members of the Nomination and Remuneration Committee;

The Audit Committee, which is composed of four non-executive directors, three of them being
independent directors, having adequate experience in accounting and finance. The Audit
109
Committee assists the Board of Directors in discharging its own duties by providing it with
assistance, advice and proposals on, among others, matters related to the accounting principles,
the accounting audit process, and in particular to the internal control system, the internal control
officer and the auditors of the Company, as well as on matters related to major transactions and
significant transactions with related parties. On 5 May 2011 the Board of Directors reappointed
Mr. Massimo Castrogiovanni (chairman), Mr. Stas Andrzej Jozwiak, Mr. Peter Heinz Barandun
and Mr. Gianni Battista Nunziante as members of the Audit Committee; and

The Supervisory Committee, set up upon proposal of the Nomination and Remuneration
Committee, for the purpose of supervising, with autonomous powers of initiative and control,
the functioning and the observance of the model of organisation, management and control
implemented by the Company to comply with the provisions of the Italian legislative decree
No. 231/01. The Supervisory Committee consists of three members appointed after due
evaluation and consideration of the following requirements of the Italian legislative decree
No. 231/01 for such function: autonomous initiative capacity, independence, professionalism,
continuity of action, absence of any conflict of interest and honourableness. On 5 May 2011 the
Board of Directors resolved to confirm the establishment of the Supervisory Committee
renewing the appointment of two of the members whose term had expired and appointing a new
external member. The Supervisory Committee consists of Mr. Maurizio Bergamaschi
(chairman), Ms. Anna Alberti and Mr. Francesco Rotundo.
The Company is bound towards third parties by the single signature of the Chairman or the joint
signature of any two directors. The Company is further bound towards third parties by the joint
signatures or single signature of any persons to whom the daily management of the Company has been
delegated, within such daily management, or by the joint signatures or single signature of any person
to whom special signatory power has been delegated by the Board of Directors, within the limits of
such special power.
5.2
Board of Directors and executive management
5.2.1
General
In accordance with the Articles of Association, the Board of Directors is composed of no less
than three members. The Annual General Meeting held on 31 March 2009 fixed the number of
members of the Board of Directors at eight.
All the appointed directors are aware of the duties and responsibilities relating to their office
and, thanks in part to the periodic reports issued by the delegated persons and bodies at the
occasion of the approval of the quarterly and annual accounts, have sufficient knowledge of
reality and business dynamics so as to carry out their role effectively. Moreover, the directors
are regularly kept informed of any changes in the relevant regulatory framework as applicable
from time to time to the Company.
In compliance with the Borsa Italiana Code recommendations, the Board of Directors, in its
meeting held on 6 May 2008, having taken into consideration the purpose and dimension of the
Company and the d’Amico Group as well as the participation of the directors of the Company
in several committees established within its members, resolved that each director, so as to be
able to effectively perform his duties, may hold no more than 15 offices on the boards of
directors and/or on the boards of auditors of other companies either listed on regulated markets
(including foreign markets) or financial companies, banks, insurance companies and/or
companies of a considerably large size. To this end, the Board of Directors further resolved to
disregard, in the count of the total number of offices, all the companies which are members of
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110
the d’Amico Group and to consider as one all the offices held at companies belonging to the
same group (other than the d’Amico Group).
5.2.2
Composition of the Board of Directors
On the date of this Prospectus the Board of Directors is composed as follows:
Date of birth
Date of first
appointment
Expiry of
current
appointment
Paolo d’Amico ................................
Chairman
29 October 1954
23 February 2007
2014
Shipping S.A.
25 C Boulevard Royal,
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Marco Fiori................................Chief
Executive
Officer
24 March 1956
9 February 2007
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Cesare d’Amico................................
Director
6 March 1957
23 February 2007
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Stas Andrzej Jozwiak ................................
Director
12 December
1938
23 February 2007
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Massimo Castrogiovanni................................
Director
2 August 1939
23 February 2007
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Gianni Battista Nunziante ................................
Director
25 April 1930
23 February 2007
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Heinz Peter Barandun ................................
Director
31 March 2009
2014
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Name
Position
Business address
Executive directors
Non-executive directors
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111
Name
Position
John Joseph Danilovich ................................
Director
Date of birth
Date of first
appointment
Expiry of
current
appointment
25 June 1950
31 March 2009
2014
Business address
Shipping S.A.
11th floor
L-2449 Luxembourg
Grand Duchy of
Luxembourg
Paolo d’Amico graduated in 1978 in Economics and Finance from Rome University (La
Sapienza). He joined d’Amico Società di Navigazione S.p.A. in 1971 and was appointed as a
director of that company, with particular focus on the product tanker aspects of the business, in
1981. He has also been a director of the Company’s Controlling Shareholder, i.e. d’Amico
International S.A. since 1998. In 2002 he was appointed as chairman of the board of directors
of d’Amico Società di Navigazione S.p.A. He has been a director of the Company’s operative,
wholly owned subsidiary, d’Amico Tankers Limited since 2006. Currently, he is chairman of
the board of directors of d’Amico International Shipping S.A. as well as a director of a number
of other companies of the d’Amico Group. He is also involved in a number of companies that
are not part of the d’Amico Group, including as president of the Italian Shipowners Association
(Confitarma), director of Sator S.p.A., member of the council of the International Association
of the Independent Tankers Owners (Intertanko) and of the main organisation representing
Italian manufacturing and services companies (Confindustria).
Marco Fiori joined COGEMA S.A.M. in 1996 as managing director and has since held many
other executive positions in d’Amico Group companies. Prior to joining the d’Amico Group,
Mr. Fiori was employed in the New York branch of Banca Nazionale dell’Agricoltura. He was
initially responsible for the loan portfolio and business development of Fortune 100 companies
based on the U.S. West Coast and later for overseeing and managing the entire U.S. business
development market. From 1990 to 1994 he held the position of head of credit and in 1994 was
promoted to the position of senior vice-president and deputy general manager of the New York
branch with direct responsibilities for business development, treasury and trading. Mr. Fiori
obtained a Bachelor of Science in Economics and Finance from Rome University (La Sapienza)
in 1979 and a Master in Business Administration from the American University in
Washington DC in 1984. He currently lives in Monte Carlo in Monaco.
Cesare d’Amico graduated in 1982 in Economics from Rome University (La Sapienza). He
joined d’Amico Società di Navigazione S.p.A. in 1976 in the technical department. In 1977 he
moved to the liner department and he became general manager of the liner services in 1978. In
1982 he was nominated chief executive officer of d’Amico Società di Navigazione S.p.A. In
1993 he launched the d’Amico Group’s bulk activity. In 1997 he played a prominent role in the
privatisation of Italia di Navigazione S.p.A., a public company, where he then was nominated
chief executive officer, a role which he maintained until the company was sold to CP Ships
Canada in 2002. Since 1997 he has played a prominent role in the development of the activities
of d’Amico Dry Limited, thus contributing to the development of its fleet. He currently is a
member of the board of directors of d’Amico Dry Limited as well as a director of a number of
other companies of the d’Amico Group. He is also involved in a number of companies that are
not part of the d’Amico Group, including as director of Tamburi Investment Partners S.p.A.,
Prysmian S.p.A., the Standard Steamship Owners’ Protection and Indemnity Association
(Bermuda) Limited.
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112
Stas Andrzej Jozwiak joined the Company in 2007 as lead independent director. After a five
year commission with the Royal Air Force, he was trained as a shipbroker at Eggar
Forrester Ltd. in London where he became a director in 1975. He gained practical port
experience working with Associated Steamships in Fremantile, Western Australia. He further
qualified as a Fellow of the Institute of Chartered Shipbrokers in 1970. He also became a
director of sale and purchase at J.E.Hyde in London in 1980. In 1983 he was appointed to that
same position at Maton Grant and Sutcliffe. He founded S.A.Jozwiak (Shipbrokers) Ltd. in
1987 specialising in the sale and purchase of tonnage and the contracting of new-buildings. He
was educated at the Oratory School in Berkshire and at the London School of Foreign Trade
where he specialised in the economics of sea transport. He currently lives in Oxfordshire in the
United Kingdom.
Massimo Castrogiovanni joined the Company in 2007 as independent director. Prior to joining
Mr. Castrogiovanni was vice president and head of the shipping department at Ebifbanca S.p.A.
where he was responsible for the shipping finance activity for new oil tankers, dry bulk, ro-pax,
chemicals and product carriers. In 2004 he became shipping finance consultant of that same
institution. In 1965 Mr. Castrogiovanni graduated in Naval Architecture in Naples and in 1972
he obtained a Master in Nuclear Engineering in Pisa. He currently lives in Rome in Italy and
acts as a shipping finance consultant for Meliorbanca S.p.A. in Italy.
Gianni Battista Nunziante joined the Company in 2007 as director. Mr. Nunziante qualified as
a lawyer in 1954 and is entitled to practice law in Italy before the high courts since 1971.
Mr. Nunziante was a foreign associate at the New York office of Cleary Gottlieb Steen &
Hamilton. He founded the law firm Ughi e Nunziante in 1967. At present Mr. Nunziante holds,
among others, a position as chairman of the board of statutory auditors of Moody’s Italia S.r.l.
Mr. Nunziante graduated in Law from the University of Naples in 1952 and from Columbia
University School of Law in 1962. He has written several articles and contributions on
corporate law. He currently lives in Rome in Italy
Heinz P. Barandun joined the Company in 2009 as an independent director. Between 1958 and
1968, he worked at UBS Lugano, Den Danske Landmandsbank in Copenhagen and Nestlé in
Vevey. In 1968 he started working for Citibank N.A. in Geneva, later in Piraeus and Zurich
where, between 1978 and 1983, he was responsible for Citibank’s ship lending activity in
continental Europe (except for Greece and Northern Europe). He was head of the division
corporate banking in Switzerland and one of the 300 senior credit officers (being the highest
credit approval authority for Citicorp/Citibank worldwide) until 1984 when he left Citibank to
start his own company. That same year, he joined the board of directors of Citibank in
Switzerland, a position which he held until 2008. He currently holds several positions as
member of the board of directors of non-listed Swiss companies.
John Joseph Danilovich joined the Company in 2009 as an independent director. He is an
experienced businessman and private investor with a strong background in foreign affairs who
has been active in the international maritime industry for several decades and served as a
director of companies in the shipping and investment fields. He continued his distinguished
career of more than forty years in both the public and private sectors, serving as the U.S.
ambassador to Costa Rica (2001-2004) and to Brazil (2004-2005). More recently, from 2005
until 2009, he was the chief executive officer of the Millennium Challenge Corporation. He also
served as a director of the Panama Canal Commission (1991-1996) and was the chairman of the
Transition Committee during the handover of the canal from the United States to Panama. He
sits on the Council of the Harvard School of Public Health and is a member of the Council on
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113
Foreign Relations and of Chatham House. Furthermore, he is part of the board of Trilantic
Capital Partners and of Pelham Bell Pottinger and, before that, a trustee of the Stanford
University Trust, the American Museum in Britain and of the U.S.-U.K. Fulbright Commission.
He obtained a Bachelor in Political Science from Stanford University and a Master in
International Relations from the University of Southern California.
Except as set forth below, no director has been a member of the administrative, management or
supervisory bodies or partner of any company or partnership (other than companies in the
DIS Group) in the past five years:
Director
Current
directorships/partnerships
Former
Paolo d’Amico

d’Amico Società di
Navigazione S.p.A. (ultimate
parent company of the
d’Amico Group) – member
of the board of directors.

COGEMA S.A.M.
(d’Amico Group) –
member of the board of
directors.

d’Amico Shipping
Italia S.p.A. (d’Amico
Group) – general manager.

Secontip S.p.A. (merged
in Tamburi Investment
Partners S.p.A.) –
directors.

Compagnia Generale
Telemar S.p.A. (d’Amico
Group) – member of the
board of directors.

Shipowners’ Mutual
Strike Reinsurance
Association
(Bermuda) Limited –
directors.

Milano Finanziaria
Immobiliare S.p.A. – member

Fondo Nazionale Marittimi –
directors.

d’Amico International S.A.
(d’Amico Group) – member

Sator S.p.A. – member of the
board of directors.

Civita Servizi S.r.l. – member

COGEMA S.A.M. (d’Amico
board of directors.

d’Amico Finance S.A.
(liquidated) (d’Amico
board of directors.
Marco Fiori
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114
Director
Cesare d’Amico
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Current
Former

COMARFIN S.A.M.

d’Amico
Finance Limited
directors.

Hanford Investment Inc.

Paul Maritime Co.
Limited (liquidated)
directors.

St Andrew Estates Limited

d’Amico Shipping
UK Limited (d’Amico
board of directors.


Sealog Steamship
Agency S.r.l. – member

d’Amico Shipping
Italia S.p.A. (d’Amico
Group) – general manager.

Anglo Canadian
Shipping Ltd (formerly
137 Seabright
Holding Limited)
directors.

Prysmian S.p.A. – member of
the board of directors.

Industria e Commercio
Minerali I.CO.MI. S.r.l.
– member of the board
of directors.

COGEMA S.A.M. (d’Amico
board of directors.

Marexport Global
Forwarding S.r.l.
(formerly Casa di
Spedizione
Marexport S.r.l.) –
directors.

MIDA Maritime
Company Limited (d’Amico
board of directors.

Editoriale del
Mezzogiorno S.r.l. –
directors.
115
Director
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Current

Saemar S.A. (d’Amico
board of directors.

d’Amico Dry Limited

ACGI Shipping Inc.
(formerly Anglo Canadian
Shipping Company Limited)

Clubtre S.r.l. – member of the
board of directors.

Ishima Pte Limited (d’Amico
board of directors.

Compagnia Generale
Telemar S.p.A. (d’Amico
board of directors.

d’Amico International S.A.

Standard Steamship Owners’
Protection and Indemnity
Association
(Bermuda) Limited – member

Milano Finanziaria
Immobiliare S.p.A. – member

Tamburi Investment
Partners S.p.A. – member of

Società Laziale Investimenti
e Partecipazioni S.r.l. –
directors.

Casle S.r.l. – member of the
board of directors.
116
Former
Director
Gianni Nunziante
Heinz Peter
Barandun
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Current

Fi.Pa. Finanziaria di
Partecipazione S.p.A. –
directors.

Marina Cala Galera Circolo
Nautico S.p.A. – member of


Castello di Spaltenna S.r.l. –
directors.

Villa Vignamaggio S.r.l. –
directors.

Feudi di Terra d’Otranto S.r.l.
– member of the board of
directors.

Società Laziale Investimenti
e Partecipazioni S.r.l. –
directors.

Former

EEMS S.p.A. – member
Gryphon Hidden Values
VIII Limited (Citibank hedge
fund) – member of the board
of directors.

Citibank
(Switzerland) A.G. –
directors.

Gryphon Hidden
Values IX Limited (Citibank
hedge fund) – member of the
board of directors.

Gryphon Hidden
Values VI Limited
(Citibank hedge fund) –
directors.

Swissana
Clinic A.G.
–
directors.

Gryphon Hidden
Values VII Limited
(Citibank hedge fund) –
directors.
117
Director
John Joseph
Danilovich
5.2.3
Current

Stiftung Patientenkompetenz
(Trust company) – member of

Fincor
Capital S.A.
–
directors.

Fincor Finance S.A. (Fincor
group) – member of the board
of directors.

Fincor Holding A.G. (Fincor
of directors.

HPB Editeur A.G. (Fincor
of directors.

Laredo Holding A.G. (Fincor
of directors.

Gryphon Hidden Values VIII
LP Limited (Citibank hedge
fund) – member of the
supervisory board.
Former

None.
The Millenium
Challenge Corporation –
directors.
Executive directors
The three executive directors of the Company are Mr. Paolo d’Amico (Chairman), Mr. Marco
Fiori (Chief Executive Officer) and Mr. Cesare d’Amico.
(a)
Chairman of the Board of Directors
The Board of Directors meeting held on 5 May 2011 resolved to confirm the
appointment of Mr. Paolo d’Amico as Chairman, without specific delegation of powers.
The Chairman may call the Board of Directors and presides at all meetings of the Board
of Directors.
As member of the Company’s Executive Committee, the Chairman plays a specific role
in the definition of the business strategies and is systematically involved in the day-today management of the Company.
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118
(b)
The Board of Directors meeting held on 5 May 2011 resolved to confirm the
appointment of Mr. Marco Fiori as Chief Executive Officer in charge of the Company’s
daily management and representation. Mr. Marco Fiori has the power to individually
bind the Company, in the context of the day-to-day management, for an amount of up to
USD 5,000,000.
(c)
Executive Committee
The Board of Directors meeting held on 5 May 2011 resolved to confirm the setting up
of the Executive Committee.
The Board of Directors delegated the following special powers to the Executive
Committee:

to determine the organisational structure of the Company;

to review, analyse and evaluate the strategic, industrial and financial plan of the
Company and of its subsidiaries together with the relevant budget, business plan
and any other document, paper, plan and proposal concerning the Company and
its subsidiaries as well as any update of the abovementioned documents;

to grant voting instructions to representatives of the Company in the corporate
bodies of the Company’s subsidiaries;

to designate the members of the Board of Directors and/or of the Executive
Committee and the members of the control bodies of the Company’s subsidiaries;

to employ, dismiss, transfer and to grant powers to the employees with
managerial responsibilities of the Company and to give any relevant instructions
in that respect to its subsidiaries; and

to review, analyse and evaluate, in the light of the strategic, industrial and
financial plan of the Company and of its subsidiaries, all of the contracts, deeds,
acts and documents concerning new-building, purchase, sale, long-term
chartering-in and long-term chartering-out of vessels.
The Executive Committee consists of the three executive directors of the Company,
which are Mr. Paolo d’Amico (Chairman), Mr. Marco Fiori (Chief Executive Officer)
and Mr. Cesare d’Amico.
5.2.4
Non-executive directors
The non-executive directors bring their specific expertise to Board of Directors’ discussions and
contribute to the taking of decisions that are consistent with the Shareholders’ interests. The
number and standing of the non-executive directors is such that their views carry significant
weight in taking Board of Directors’ decisions.
The five non-executive directors are Mr. Massimo Castrogiovanni, Mr. Stas Andrzej Jozwiak,
Mr. Heinz Peter Barandun, Mr. John Joseph Danilovich and Mr. Giovanni Battista Nunziante.
(a)
Independent directors
According to the Borsa Italiana Code provisions, an adequate number of non-executive
directors must be independent in that sense that they do not maintain, directly or
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119
indirectly or on behalf of third parties, nor have recently maintained, any business
relationships with the Company or persons linked to the Company, of such a significance
as to influence their autonomous judgement.
The independent directors are appointed as members of the Board of Directors
essentially to protect the Shareholders’ interests, particularly minority ones, and third
parties’ interests, assuring that potential conflicts between the Company’s interests and
those of the controlling Shareholder are assessed impartially. The contribution of
independent directors is also fundamental to the composition and functioning of
advisory committees entrusted to do a preliminary examination and formulate proposals
regarding risks. These committees represent one of the most effective means for fighting
eventual conflicts of interests. In addition, independent directors contribute specific
professional expertise to the Board of Directors and help it to adopt resolutions that are
consistent with the Company’s interest.
The Board of Directors assesses the directors’ independence after their appointment and
subsequently on a yearly basis in accordance with the independence requirements set
forth in articles 3.C.1. and 3.C.2. of the Borsa Italiana Code.
The four independent directors are Mr. Massimo Castrogiovanni, Mr. Heinz Peter
Barandun, Mr. John Joseph Danilovich and Mr. Stas Andrzej Jozwiak.
(b)
Lead independent director
In accordance with the Borsa Italiana Code, the Board of Directors must designate an
independent director as lead independent director (i) in the event that the Chairman of
the Board of Directors is the Chief Executive Officer of the Company and (ii) in the
event that the office of Chairman is held by the person controlling the Issuer.
Since the Chairman is an executive director as well as one of the ultimate controlling
Shareholders, the Board of Directors, in its meeting of 5 May 2011, designated and
appointed Mr. Stas Andrzej Jozwiak as lead independent director in charge of
coordinating the activity and the requests of the non-executive directors with special
regards to those independent directors.
The lead independent director represents a point of reference and coordination for the
requests and contributions of non-executive directors and cooperates with the Chairman
in order to guarantee that the directors receive timely and complete information.
5.3
Senior management of the DIS Group
Members of the senior management of the Company’s subsidiaries are integral to the management of
the Company. With the exception of Mr. Paolo d’Amico and Mr. Marco Fiori, members of the Board
of Directors of the Company are not members of the senior management of the Company’s
subsidiaries. As a result, of the members of the Board of Directors of the Company, only Mr. Paolo
d’Amico and Mr. Marco Fiori are active in the day-to-day management of the Company’s subsidiaries.
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The following individuals are members of the senior management of the Company and its subsidiaries:
Name
Principal activity
Business address
Giovanni Barberis
Chief Financial Officer
Shipping S.A.
25 C Boulevard Royal, 11th floor
L-2449 Luxembourg
Grand Duchy of Luxembourg
Flemming Carlsen
Chief Operating Officer
d’Amico Tankers UK Limited
2 Queen Anne’s Gate Buildings
Dartmouth Street
London SW 1H 9BP
United Kingdom
Marie Anne Fiorelli
Head of Operations
d’Amico Tankers Monaco SAM
20 bd de Suisse
98000 Monaco
Monaco
John Dolan
Fleet Manager
d’Amico Tankers Limited
The Anchorage
17-19 Sir John Rogerson’s Quay
Dublin 2
Ireland
Giovanni Barberis, joined d’Amico Società di Navigazione S.p.A. as chief financial officer of the
d’Amico Group in September 2012 and as interim chief financial officer of d’Amico International
Shipping S.A. in October 2012. Prior to joining the d’Amico Group and after graduating from Rome
University (La Sapienza) with a degree in Economy and Commerce, Mr. Barberis started his
professional career within the treasurer department of the chemical branch of the Exxon Group. In
January 1990, he joined Eridania Z.N. S.p.A. (Gruppo Ferruzzi) where he was initially appointed as
international audit manager agro-industry and where he eventually assumed the position of financial
manager for Italy. In 1993, Mr. Barberis was appointed as international auditing manager of
Simint S.p.A., the listed company of Giorgio Armani S.p.A., where he, soon after, also assumed the
position of chief financial officer, in addition to other important responsibilities within the company. In
1995, Mr. Barberis was appointed to the position of chief financial officer and member of the board of
directors of Gruppo Cremonini, an Italian food’s listed company. In 2003, he joined Gruppo Arena,
another Italian food’s listed company, as chief executive officer. In 2005, he joined Hera S.p.A. and
moved to Acea S.p.A. in 2009 – both Italian multi-utilities’ companies listed on the Milan Stock
Exchange within which he acted as chief financial officer. He has published numerous articles and has
participated in various financial and academic conference panels in which he addresses the subject of
financial economy.
Flemming Carlsen joined the DIS Group in 2011, acting as the chief operating officer of the DIS
Group’s tanker operations. Before joining the DIS Group, Mr. Carlsen had started his career in the
Maersk/A.P. Moller group in chartering activities, with experiences in its offices in New York, Oslo
and Copenhagen. After a Master in Business Administration from Cranfield University (England) in
2001, he moved to Neptune Orient Lines (London) acting as head of regional (Europe) operations and
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in 2003 he joined UPT United Product Tankers (Hamburg, Germany) as managing director.
Mr. Carlsen obtained a Diploma in Management at Niels Brock Copenhagen Business College in 1999.
He currently lives in London, in the United Kingdom.
Marie Anne Fiorelli has been with the d’Amico Group since 1988. She was employed in the liner
department of d’Amico Società di Navigazione S.p.A. in Rome until 1995 when she moved to the
tanker department as an assistant in tanker chartering and operations management. Between 1996 and
2000 Mrs. Fiorelli was employed by COGEMA S.A.M. in the tanker department and supervised the
chartering of tonnage on the spot market. In 2000 she had the responsibility for operations
management for dry cargo and tankers. Mrs. Fiorelli graduated from the Sorbonne University in Paris
with a degree in Foreign Languages and Economics in 1988. She lives in Beausoleil in France.
John Dolan joined d’Amico Tankers Limited in 2008. He started his professional experience in BP
Tanker (1977) as a deck cadet and resigned from the company in 1989, having reached the position of
superintendent. Returning to university, he graduated in 1991 from Plymouth Polytechnic with a
Diploma in Management Studies and a Master in International Shipping. He has since acquired a
further 21 years’ ship management experience in senior technical, marine, operations and commercial
roles, including four years with the London Shipping Consultancy (1998-2002). From 2002-2008 he
was general manager/director of Paccship (U.K.) and responsible for the safe, efficient and costeffective management of a 15-vessel fleet. He currently lives in Dublin in Ireland.
Except as set forth below, no member of the senior management has been a member of the
administrative, management or supervisory bodies or partner of any company or partnership (other
than companies in the DIS Group) in the past five years:
Member of senior
management
Current
Former
Giovanni Barberis


Acea Electrabel
Energia S.p.A;

Acea Electrabel
Produzione S.p.A.; and

Cremonini S.p.A.

UPT United Product
Tankers GmbH & Co KG,
Hamburg; and

UPT United Product tankers
(Americas) LLC, Delaware.
Flemming Carlsen
5.4

None.
None.
Marie Anne Fiorelli

None.

None.
John Dolan

d’Amico Dry Limited
(Ireland).

None.
Remuneration of and Shares and stock options held by directors and senior management
5.4.1
Remuneration
(a)
General Remuneration Policy
The Company is subject to and voluntarily applies, to the extent possible, the corporate
governance criteria and principles stated by the Borsa Italiana Code (see section 5.1),
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among which the new principles on remuneration. In accordance with the Borsa Italiana
Code, the Company sets a General Remuneration Policy and annually defines the
guidelines for the relevant year on remuneration of executive directors, other directors
covering particular offices and key management personnel. The Company’s nonexecutive and independent directors are not included in the scope of the General
Remuneration Policy and its guidelines as regards the variable component of the
remuneration, since remuneration of non-executive and independent directors is not
linked to the economic results achieved by the Company and non-executive and
independent directors are not beneficiaries of share-based compensation plans (unless it
is so decided by the Annual General Meeting which must also explain the relevant
reasons).
The position adopted by the Company in its General Remuneration Policy is that
remuneration of executive directors, other directors covering particular offices and key
management personnel is defined in a way to align their interests with pursuing the
priority objective of the creation of value for the Shareholders in a medium-long-term
timeframe.
The General Remuneration Policy is approved by the Board of Directors, upon proposal
submitted by the Nomination and Remuneration Committee, with the involvement of all
the relevant internal corporate functions, and is submitted to the Annual General
Meeting for acknowledgment. The vote of the General Meeting on the General
Remuneration Policy is non-binding.
Information regarding the General Remuneration Policy and practices and detailed
information regarding the remuneration of executive directors, other directors who cover
particular offices and key management personnel is provided in the report of the Board
of Directors on remuneration and in the Corporate Governance Report (see section 5.1).
Both reports are drafted by the Board of Directors and published on the Company’s
Website. These reports are submitted to the Annual General Meeting for
acknowledgment.
The General Remuneration Policy is aimed at consolidating a sustainable (in the
medium- and long-term) compensation package, strengthening its link to the
achievement of economic results.
In these regards, the Company adopts a fully flexible policy on variable remuneration.
Having a fully-flexible policy on variable remuneration implies not only that variable
remuneration should decrease as a result of negative performance but also that it can go
down to zero in some cases. For its practical implementation, it also implies that the
fixed remuneration should be a sufficiently high proportion of total remuneration, to
remunerate the professional services rendered in line with the level of expertise, skill
required and the relevant business sector and region and to allow the operation of a fully
flexible variable remuneration policy, including the possibility to pay no variable
remuneration.
Meeting a fully flexible variable General Remuneration Policy implies as a prerequisite
the accomplishment of several mechanisms, including:

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remuneration; and
123

proper performance measurement and associated risk adjustment.
On the first point, fixed and variable components of total remuneration are appropriately
balanced in order to provide an incentive to pursue the goals and interests of the
Company, Shareholders and stakeholders, and in order to avoid the inducement to
assume inappropriate risks; the higher the possible variable remuneration compared to
the fixed remuneration, the stronger the incentive will be to deliver the needed
performance, and the bigger the associated risks may become.
The Company sets its ratio between fixed and variable remuneration considering that the
appropriate balance depends on:

the quality of performance measurement;

the length of the deferral and retention period;

the legal structure of the Company and scope of its activities; and

business types and which risks are involved.
The ratio between fixed and variable remuneration is settled at the moment of initial
performance measurement; the variable part of remuneration falls in the range of a
minimum of 30% and a maximum of 50% of the singularly allotted fixed remuneration.
In case the person is entitled to the variable remuneration, the payment of a significant
part of such remuneration is delayed by a minimum of six and a maximum of 12 months.
Share-based remuneration currently is not included in the General Remuneration Policy
and is not part of the remuneration of executive directors, other directors covering
particular offices and key management personnel.
Pursuant to the above stated principles, total compensation is composed of two different
parts: (i) a base fee, namely a fixed amount identified, and (ii) an individual and variable
bonus to be allotted depending on the Company’s performance, set as a share of the
individually allotted base fee.
As far as the individual bonus is concerned, the Board of Directors provides for an
“ability to pay” condition defined in terms of Company EBITDA result, as recorded in
the consolidated financial statements approved by the Company’s Annual General
Meeting.
The payment of the variable part of remuneration is delayed by 12 months.
The key management personnel (which consists of top managers with strategic
responsibility within the DIS Group) is involved in the Company’s managerial incentive
system and includes:

Chief Operating Officer;

Chief Financial Officer;

Head of Operations; and

Fleet Manager.
The key management personnel remuneration (compensation package) consists of a
fixed component (base salary) and a variable component (bonus) subject to the
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achievement of the target thresholds. The target thresholds are related to the EBITDA as
recorded in the consolidated financial statements approved by the Company’s Annual
General Meeting.
The payment of a significant part of the individual bonus is delayed by a minimum of six
and a maximum of 12 months.
For the financial year ending 31 December 2011, Mr. Marco Fiori’s total cash
compensation consisted of a gross salary of EUR 1,188,000 (including the discretionary
bonus paid by the Company).
The total compensation of the senior management of the DIS Group (consisting of the
four members of the key management personnel) for the financial year ending
31 December 2011 was EUR 1,259,327.91. In addition, each member of the senior
management of the DIS Group is entitled to payment of a discretionary bonus.
(b)
Remuneration of all directors
All members of the Board of Directors receive remuneration for their services as
members of the Board of Directors and are reimbursed for their expenses. The General
Meeting determines the aggregate amount for remuneration of all the directors, including
those vested with particular functions. This amount is subsequently allocated among the
members of the Board of Directors following a decision of the Board of Directors,
having regard in particular to the directors vested with particular functions. The Annual
General Meeting held on 4 April 2012 set the aggregate amount of the fees (tantièmes)
to be paid to all directors for the financial year ending 31 December 2012 at
EUR 725,000.
5.4.2
Shares and stock options
As at the date of this Prospectus, the following directors and members of the senior
management hold the following number of Shares in the Company:
Name
Number of shares
Paolo d’Amico
Remarks
49,442,163
Marco Fiori
35,000
Cesare d’Amico
34,856,132
Flemming Carlsen
24,350
Indirect ownership through
controlled subsidiaries.
Directly.
Indirect ownership through
controlled subsidiaries.
Directly.
None of the directors or members of the senior management have stock options and, to the
Company’s knowledge, none of the independent or non-executive directors have Shares in the
Company.
5.4.3
Stock option plan
The Company has not implemented any employee share schemes since the stock option plan
expired on 31 July 2010 and there are no stock options outstanding.
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5.5
Absence of disqualifications and conflicts of interests
No member of the Board of Directors or of the senior management of the DIS Group has:

been convicted in relation to fraudulent offences during at least the previous five years;

acting in the capacity of a member of an administrative, management or supervisory body or as
a member of the senior management been involved in any bankruptcies, receiverships or
liquidations during at least the previous five years; or

been officially publicly incriminated and/or sanctioned by statutory or regulatory authorities
(including designated professional bodies) nor disqualified by a court from acting as a member
of the administrative, management or supervisory bodies of an issuer or from acting in the
management or conduct of the affairs of any issuer during at least the previous five years.
None of the members of the Board of Directors or of the senior management of the DIS Group is
related to one another by blood or marriage, except for Mr. Paolo d’Amico and Mr. Cesare d’Amico,
members of the Company’s Board of Directors, who are cousins and descendants of the founders of
the d’Amico Group.
None of the directors or members of the senior management believes to be in a situation of a conflict
of interests (or to have a potential conflict of interests) between any duties to the Company and his or
her private interests and/or other duties, except that Mr. Paolo d’Amico and Mr. Cesare d’Amico, as a
result of their indirect ownership of a significant percentage of the Shares in the Company through
d’Amico International S.A. (the Controlling Shareholder), might potentially have a conflict of interests
between their duties to the Company and their interests as ultimate beneficiaries of the Company.
See also the section on “Risk factors – Following the Offering, the Controlling Shareholder may
increase its control over the Company, including the outcome of shareholder votes” and section 4.5.2.
In addition, none of the foregoing persons are involved or have been involved in any transactions with
the Company or any member of the DIS Group, except that some of the Company’s directors,
members of senior management or agents have acted as representatives of certain related parties in
connection with transactions summarised in section 5.6.
5.6
Related party transactions
5.6.1
General
The Company’s Controlling Shareholder is d’Amico International S.A. (see section 4.5.2), of
which the ultimate parent is Società di Navigazione S.p.A. As a result, the Company also
belongs to the d’Amico Group. As such, the Company and its subsidiaries have entered in the
past, and expect to enter in the future, into several transactions with related parties including
d’Amico International S.A., its parent Società di Navigazione S.p.A., entities controlled by
d’Amico International S.A. or its parent and other entities of the d’Amico Group.
In compliance with article 9 of the Borsa Italiana Code, the Board of Directors, upon previous
recommendation of the Audit Committee, approved and adopted in its meeting held on
7 February 2008 a set of internal rules in order to ensure the transparency and the substantial
and procedural fairness of those transactions carried out by the Company or its subsidiaries, in
particular those significant transactions with related parties. On 18 February 2009 the Board of
Directors, upon previous recommendation of the Audit Committee, approved an amended
version of these rules. According to such rules, the decisional process of all the major
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transactions and significant transactions with related parties is to be approved by the Board of
Directors upon prior advice to be given by the Audit Committee.
5.6.2
Transactions with related parties
The Company believes that prior and existing transactions and arrangements to which the
Company or its subsidiaries are a party entered into with related parties were negotiated on an
arm’s length basis on market terms and conditions. However, there can be no assurance that
better terms could not have been obtained from third parties. See also the section on “Risk
factors – The DIS Group has entered and may enter into agreements with related parties on
terms which may be less favourable than otherwise available from third parties”. The Company
expects that any arrangements entered into in the future with related parties including d’Amico
International S.A., its parent Società di Navigazione S.p.A., entities controlled by d’Amico
International S.A. or its parent and other entities of the d’Amico Group will be entered into on
an arm’s length basis.
Transactions and outstanding balances between the Company and its related parties as at
31 December 2011 and 30 June 2012 are disclosed in sections 7.1.6(27) and 7.3.6(23).
The following is a summary of the material terms of the significant agreements, arrangements
and transactions in place, as at the date of this Prospectus, among the Company and its
subsidiaries on the one hand and related parties including d’Amico International S.A., its parent
Società di Navigazione S.p.A., entities controlled by d’Amico International S.A. or its parent
and other entities of the d’Amico Group on the other hand.
(a)
Ship management
Pursuant to a ship management contract dated 2 January 2007, as automatically renewed,
d’Amico Società di Navigazione S.p.A. provides to d’Amico Tankers Limited (Ireland) a
variety of management services in favour of the owned tankers fleet and bare-boat
chartered vessels. Technical, crew management, accounting, insurance, vessel sale and
purchase assistance, SQE and planned maintenance system are the main services
provided pursuant to this agreement.
An annual management fee of USD 200,000 per owned and/or bareboat chartered-in
vessel is payable in monthly instalments. Should the vessel be chartered and/or operated
an annual fee of USD 20,000 is to be paid on a pro-rata basis for the provided service
pursuant to the terms of the agreement.
On 1 January 2011 Glenda International Shipping Limited (Ireland) and Ishima
Pte Limited (Singapore) entered into an agreement for the provision of technical
management, bunkering, insurance, sale and purchase and other services. Under the
agreement Glenda International Shipping Limited undertook to pay an annual fee of
USD 132,000 per vessel.
On 1 January 2011 Glenda International Shipping Limited (Ireland) and Sirius Ship
Management S.r.l. (Italy) entered into an agreement for the provision of crew services.
Under the agreement, Glenda International Shipping Limited undertook to pay a
monthly fee of USD 2,500 per vessel.
Respectively on 31 July 2009 and 30 October 2009 DM Shipping Limited (Ireland),
being the registered owner of the MR High Strength and High Efficiency vessels, and
d’Amico Tankers Limited entered into two separate agreements for the provision of
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several vessel management services with a respective annual fee of USD 168,000 per
vessel. Ishima Pte Limited is the ultimate technical manager of those vessels pursuant to
the terms of two management agreements dated 31 July 2009 and 31 October 2009, as
amended, entered into with d’Amico Tankers Limited with an annual management fee of
USD 123,600 per vessel.
(b)
Intellectual property/trademark licence agreement
On 2 January 2007 d’Amico Tankers Limited entered into a licence agreement with
d’Amico Società di Navigazione S.p.A. pursuant to which it was granted a nonexclusive right to use the “d’Amico Tankers” trademark and a flag logo to the product
tanker sector. A fee of EUR 200,000 per annum is payable by d’Amico Tankers Limited
under this agreement. The agreement will automatically renew for a further five year
period at the end of the current term unless otherwise terminated.
(c)
Bunker fuel
During 2011 d’Amico international Shipping operating companies continued purchasing
bunker fuel from Rudder S.A.M., a Monaco based bunker trading company which is
85% owned by d’Amico International S.A. While no written contract was entered into in
respect of the provision of bunker fuel, the Company believes that all such transactions
were conducted on arm’s length terms. In 2011 d’Amico Tankers Limited paid
USD 76,800,000 to Rudder S.A.M.
(d)
Vessel communication services
Pursuant to individual agreements entered into in respect of each owned vessel and
bareboat chartered vessel, Compagnia Generale Telemar S.p.A., an Italian company
which is 58.02% owned by d’Amico Società di Navigazione S.p.A., provides radio and
satellite communication services and management. In 2011 d’Amico Tankers Limited
paid USD 1,900,000 to Compagnia General Telemar S.p.A. for the services received.
(e)
Information system management agreement
The Company entered into an Information System Management Agreement with
d’Amico Società di Navigazione S.p.A. on 2 January 2008, having as object the
technical management of various software tools and services, client/workstation
software, server software and web servers located throughout the Company. The service
is charged at an annual fee of EUR 410,000 invoiced in quarterly arrears.
(f)
Legal services agreement
Consulting services and assistance pertaining to various requirements resulting from the
listing of the Company’s shares as may be imposed by Italian laws and Borsa Italiana are
provided by d’Amico Società di Navigazione S.p.A. through two service contracts
entered into on 1 January 2010 respectively with d’Amico Tankers Limited and the
Company for an annual fee of EUR 80,000 and EUR 40,000 invoiced in quarterly
arrears.
(g)
Investor relations services agreement
On 1 January 2012 the Company and d’Amico Società di Navigazione S.p.A. entered
into a service agreement pursuant to which d’Amico Società di Navigazione S.p.A.
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provides investor relation assistance and services. Under this agreement, the Company
undertook to pay an annual fee amounting to EUR 107,000.
(h)
Human resources management services agreement
d’Amico Società di Navigazione S.p.A. provides various human resources’ services and
activities to the DIS Group, including but not limited to coordination of the human
resources’ policies including the coordination, consulting and supporting of the
recruitment of key personnel, its compensation, career planning, contractual situation,
etc. The services are provided through two service contracts entered into on
1 January 2010 respectively with d’Amico Tankers Limited and the Company, for an
annual fee respectively of EUR 25,000 and EUR 10,000.
(i)
Internal audit services agreement
d’Amico Società di Navigazione S.p.A. also provides consulting and assistance in
relation to auditing pursuant to an agreement dated 1 January 2010.
These services are provided through two service contracts entered into on
1 January 2010 respectively with d’Amico Tankers Limited and the Company for an
annual fee respectively of EUR 80,000 and EUR 20,000 invoiced in quarterly arrears.
(j)
Master agreement for financial and guarantees assistance
A Master Agreement for financial guarantees and assistance was entered into on
3 January 2011 between d’Amico International S.A. and the various legal entities
belonging to the d’Amico Group (including the Company and its subsidiaries). d’Amico
International S.A. can provide, inter alia, financial assistance and support services as
credit facilities, guarantees, patronage or comfort letters in accordance with the
companies’ financial and day-by-day business needs if and when required in writing by
any requesting party.
Remuneration for the services provided in the form of intercompany loan accounts upon
express written request amounts to one month BBA EURIBOR plus a spread of 1% or
BBA LIBOR plus a spread of 1% for financial assistance in respect of Euro currency or
U.S. Dollars and Singaporean Dollars respectively. In the event that a guarantee is
requested, d’Amico International S.A. receives a yearly fee of 0.025% of the guaranteed
loan amount outstanding, or 0.125% in case of revolving credit facilities. Patronage or
comfort letters are remunerated by an invoiced lump sum fee of USD 2,500.
(k)
Subordinated loan
On 27 September 2012, concurrent with d’Amico Tankers Limited entering into
contracts for the construction of two additional new product/chemical tankers vessels
with Hyundai Mipo Dockyard Co. Ltd. (see section 6.4.3), the Company entered into a
loan agreement with d’Amico International S.A. pursuant to which d’Amico
International S.A. granted the Company a loan facility up to USD 20,000,000 with a
maturity date as at 31 December 2013. The loan is based on terms and conditions in line
with current financial market conditions for similar transactions. The loan was granted to
support the DIS Group in its new-building orders and can be used for general corporate
purposes and future potential vessel purchases. In addition, the loan allows the DIS
Group to be fully compliant with the financial covenants in its existing credit facilities
(see sections 7.1.6(20) and 7.3.6(17)).
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(l)
Real estate
Reference is made to section 6.8 for related party transactions in respect of the real estate
that entities of the DIS Group sub-lease from entities in the d’Amico Group.
Related party transactions and outstanding balances between the Company and its
subsidiaries (intra-group related party transactions) are disclosed in the 2011 financial
statements set out in sections 7.1.6(27) and 7.3.6(23).
The effects of related party transactions on the DIS Group’s consolidated income
statement for the first nine months of 2012 are the following:
Total
Of which related parties
241,126
-
(105,398)
(71,324)
Time charter hire costs................................
(69,102)
-
Other direct operating costs ................................
(42,308)
(7,805)
General and administrative
costs................................................................
(12,031)
(851)
1,491
220
(6,038)
14
(USD thousand)
Revenue ................................................................
Voyage costs................................
Other operating income ................................
Net financial income (charges) .............................
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The effects of related party transactions on the DIS Group’s consolidated statement of
financial position as at 30 September 2012 are the following:
Total
Of which related parties
613,425
-
Inventories ................................
19,198
-
Receivables and other current
assets................................................................
41,727
284
Cash and cash equivalents ................................
41,572
-
311,091
-
5,178
-
Banks and other lenders................................
21,078
-
Amount due to parent
company ...............................................................
20,000
-
Payables and other current
liabilities ...............................................................
43,198
12,021
Other current financial
liabilities ...............................................................
4,567
14
133
-
(USD thousand)
ASSETS ...............................................................
Non-current assets ................................
Tangible assets................................
Current assets ................................
................................................................
LIABILITIES ................................
Non-current liabilities ................................
Other non-current financial
liabilities ...............................................................
Current liabilities................................
Current tax payable................................
The effects, by legal entity, of related party transactions on the DIS Group’s consolidated
income statement for the first nine months of 2012 are the following:
d’Amico
International
Shipping SA
(consolidated)
Rudder
SAM
d’Amico
Società di
Nav. SpA
Cogema
SAM
Ishima Pte
Ltd
d’Amico
Shipping
UK
d’Amico
Shipping
Italia S.p.A.
d’Amico
International S.A.
Compagnia
Generale
Telemar
SpA
(USD thousand)
Voyage costs
(105,398)
of which:
Bunker................................
(71,324)
(71,324)
-
-
-
-
-
-
Management
agreements ................................
(2,961)
-
(2,961)
-
-
-
-
-
Technical
expenses................................
(4,844)
-
-
(8)
(3,859)
-
-
(977)
Other direct
operating costs
(42,308)
of which:
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d’Amico
International
Shipping SA
(consolidated)
Rudder
SAM
d’Amico
Società di
Nav. SpA
Cogema
SAM
Ishima Pte
Ltd
d’Amico
Shipping
UK
d’Amico
Shipping
Italia S.p.A.
d’Amico
International S.A.
Compagnia
Generale
Telemar
SpA
-
-
(USD thousand)
General and
administrative
costs
(12,031)
of which:
Services
agreement................................
(911)
Other
operating
income
-
(851)
-
-
(60)
1,491
of which:
Broker
commission ................................
220
Net financial
income
(charges)
220
(6,038)
of which:
Interest on loan
(14)
Total ................................
(14)
(71,324)
(3,812)
(8)
(3,859)
(60)
220
(14)
(977)
The effects, by legal entity, of related party transactions on the DIS Group’s consolidated
statement of financial position as at 30 September 2012 are the following:
d’Amico
International
Shipping
SA
(consolidated)
Cogema
SAM
d’Amico
International S.A.
Rudder
SAM
d’Amico
Shipping
UK
d’Amico
Società di
Nav. SpA
Ishima
Pte. Ltd
d’Amico
Shipping
Italia S.p.A.
d’Amico Dry
Ltd.
Compagnia
Generale
Telemar SpA
(USD thousand)
Receivables and
other current
assets
41,727
of which related
party................................
Payables and
other current
liabilities
284
-
-
4
-
-
40
237
-
-
-
(10,184)
-
(991)
(63)
-
-
(783)
-
(14)
-
-
-
-
-
-
-
3
(14)
(10,184)
4
(991)
(63)
40
237
(783)
(43,198)
of which related
party................................(12,021)
Other current
financial
liabilities
(4,567)
of which related
party................................
(14)
Total................................
5.7
3
Independent auditor
Pursuant to Luxembourg laws and article 17 of the Articles of Association, the operations of the
Company and its financial situation, including, more in particular, its books and accounts, must be
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reviewed by one or more independent auditor(s) (réviseur(s) d’entreprises agréé(s)) or independent
audit firm (cabinet de révision agréé).
The independent auditor(s) or independent audit firm are appointed by the General Meeting for a
period determined by the General Meeting, and they hold office until their successors are elected. They
are re-eligible and they may only be removed for cause by a resolution adopted by the General
Meeting.
The Extraordinary General Meeting held on 27 October 2011 appointed Moore Stephens Audit S.à r.l.,
having its registered office at 2-4 rue du Château d’Eau, L-3364 Leudelange, Grand Duchy of
Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under
number B.155.334, as approved audit firm (cabinet de révision agréé) in charge of auditing both the
statutory and consolidated accounts of the Company for a period ending at the Annual General
Meeting to be held in 2013.
The consolidated and statutory annual accounts of the Company being duly audited by the appointed
external independent auditor (réviseur d’entreprises) pursuant to Luxembourg laws, the Company is
no longer required to appoint a statutory auditor (commissaire).
6
Information about the Company and the DIS Group
6.1
Overview
d’Amico International Shipping S.A. is an international marine transportation company, part of the
d’Amico Group whose origins can be traced back to 1936. The Company operates, mainly through its
wholly owned subsidiary d’Amico Tankers Limited (Ireland), a fleet with an average age of
approximately 6.2 years as at 30 September 2012, compared to an average in the product tanker
industry of 8.9 years as at 1 September 2012 (source: Clarkson). All the DIS Group’s vessels are in
compliance with IMO regulations, including MARPOL, with the requirements of oil majors and
energy-related companies and other relevant international standards. Based on IMO/MARPOL rules,
cargoes such as palm oil, vegetable oil and other chemicals can only be transported by vessels that
meet certain standards (“IMO Classed”). As at 30 September 2012, 67.4% of the DIS Group’s fleet
was IMO Classed, allowing it to transport a large range of products.
The DIS Group controls, either through ownership or charter arrangements, a modern fleet of 40
product tanker vessels aggregating approximately 1,900,000 metric tonne. The product tanker vessels
of the DIS Group range from approximately 35,000 to 51,000 dwt. Its fleet includes 19 owned and
15 chartered-in medium range (“MR”) product tankers, ranging from 46,000 to 52,000 dwt, and three
owned and three chartered-in handysize product tankers, ranging from 35,000 to 40,000 dwt.
Its fleet is primarily engaged in the transportation of refined petroleum products, providing worldwide
shipping services to major oil companies and trading houses such as ExxonMobil, Shell, CSSA and
Glencore.
All of the DIS Group’s vessels are built in accordance with international industry standards and are in
compliance with IMO and MARPOL regulations as well as with other international standards. In
addition, its vessels comply with the stringent requirements of major oil and energy-related companies
such as ExxonMobil, Shell, Total, Glencore, Petrobras and BP.
The DIS Group believes that it benefits from a strong brand name and an established reputation in the
international market due to its long operating history. In addition, it benefits from the expertise of the
d’Amico Group, which provides, through d’Amico Società di Navigazione S.p.A., technical
management services, as well as all safety, quality and technical products and services to its owned
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vessels, including crewing and insurance arrangements. The DIS Group has a presence in
Luxembourg, Dublin (Ireland), London (U.K.), Monte Carlo (Monaco) and Singapore.
6.1.1
History
d’Amico Tankers Limited, the DIS Group’s principal operating company and one of the
Company’s main operating subsidiaries, was incorporated in Ireland in 2001 to manage the
DIS Group’s tanker business. However, the origins of the DIS Group’s business can be traced
back to 1936, when the d’Amico family founded a shipping company in Salerno, Italy. In 1952
d’Amico Società di Navigazione S.p.A., the holding company of the d’Amico Group, was
established in Rome.
The DIS Group acquired its first tanker vessel in 1952. Between 1958 and the early 1960s it
opened regular liner services between the Mediterranean and the U.S. West Coast as well as
between the Mediterranean and Central and South America. During the 1960s the DIS Group
expanded its tanker business to include chemical and product tankers. Throughout the following
decades, it continued to develop and expand its product tanker business. In 1987 it ordered its
first two MR new-buildings and in 1997 it ordered three additional MR new-buildings. In 2000
the DIS Group formulated a plan to further expand its product tanker fleet, focusing on MR and
handysize product tankers. In order to expand its worldwide operations, the DIS Group entered
into strategic alliances and established High Pool Tankers Limited, a MR pool. During this
period it also developed and increased its commercial and marketing potential by opening new
offices in Singapore in 2001, in London in 2002 and in Stamford in 2012.
6.1.2
Recent financial results and market trends
For the financial years ending 31 December 2010 and 2011 respectively, the DIS Group’s time
charter equivalent earnings (revenue net of voyage costs) were USD 187,000,000 and
USD 199,300,000 respectively. The gross operating profit (EBITDA) amounted to
USD 30,400,000 in 2010 and USD 31,000,000 in 2011 respectively. The operating loss (EBIT)
for 2010 was USD 2,000,000 versus an operating loss of USD 6,100,000 in 2011. The net loss
for 2010 was USD 20,500,000 compared to a net loss of USD 21,000,000 in 2011. For the
financial year ending 31 December 2011, total shareholders’ equity amounted to
USD 315,481,000 (compared to USD 333,106,000 for the financial year ending
31 December 2010) for a balance sheet total of USD 670,237,000 (compared to
USD 709,518,000 for the financial year ending 31 December 2010). For the first nine months of
2012 the DIS Group’s time charter-equivalent earnings were USD 135,700,000 while the gross
operating profit was USD 13,800,000. The operating result was a loss of USD 100,500,000,
including the vessel impairment of USD 85,000,000 posted in the first half of the year, and the
net loss amounted to USD 107,000,000.
The market for shipping refined petroleum products is generally highly cyclical and volatile and
this affects the supply and demand for product tanker capacity. During the past three years,
reflecting the worldwide economic scenario, the product tanker shipping market environment
has been generally weak, resulting in freight rates coming under pressure. The supply and
demand of product tanker capacity and as such, freight and charter rates, are significantly
influenced by global and regional economic and political conditions, changes in seaborne and
other transportation patterns, including changes in the distances over which cargoes are
transported, currency exchange rates and the number of new-building deliveries. For further
discussion of certain factors that affect the supply and demand for product tankers, see the
section on “Risk factors – Fluctuations in the supply of and demand for refined petroleum
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products may lead to volatility in the demand for product tanker capacity and, consequently, in
freight rates”.
6.1.3
Principal factors affecting the DIS Group’s operational results
The DIS Group’s operational results have been, and will continue to be, affected by a number of
events and actions. However, there are some specific items that the DIS Group believes have
impacted its operational results and expects to also (materially) influence its future results.
Some of these factors are discussed below. Reference is also made to the section on “Risk
factors – Operational risks inherent in the shipping industry could have a negative impact on
the DIS Group’s results of operations”.
6.1.4
Spot contracts and time charters
The DIS Group’s revenue is mainly generated from the employment, either directly or through
its partnerships, of the vessels of its fleet under spot contracts and time charters for the marine
transportation of refined petroleum products. The rates applicable under these contracts are
determined by various market factors, including the supply and demand for the products it
transports, the number of vessels available in the market, the cost of bunker fuel and other
voyage and operating costs and the distance that cargoes are transported. In particular, time
charter rates generally reflect the prevailing spot market rates and expectations of future market
rates at the time of entry into the relevant agreement. Vessels operating under fixed rate
contracts, including time charters, usually provide more steady and predictable cash flows than
vessels operating in the spot market. In particular, time charter contracts may be negotiated for
relatively long periods, ranging from six months up to a significant number of years. Spot
contracts offer the opportunity to maximise the DIS Group’s revenue during periods of
increasing market rates, although they may yield lower profit margins than time charters during
periods of decreasing rates. In deciding how to employ the its vessels in the market, a number
of factors mainly relating to the DIS Group’s expectations of future market rates are considered.
The DIS Group aims to employ between 40% and 60% of its vessels under fixed rate contracts
and the remainder under spot market contracts. This mix will vary according to prevailing
market trends and, as the DIS Group expects that spot rates will increase, it will try to take
advantage of such increase by employing vessels in the spot market instead of entering into
fixed rate contracts, which may bind it to rates that are lower than those which could be earned
in the spot market. The DIS Group will try to lock in longer fixed rate contracts when long-term
rates are attractive or when it expects that spot rates will decrease so as to secure stable income
under long-term charter arrangements. It constantly evaluates its position compared to its
expectations of the market trend in order to take advantage of the opportunities that arise. The
DIS Group believes that a mix of these three employment possibilities will always be the
appropriate strategy, providing some stability to revenues, while enabling it to benefit from
expanding markets. When the DIS Group time charters-out its vessels, it does not incur any
voyage costs. However, when it employs its vessels in the spot market, voyage costs may
represent a significant percentage of its operating expenses. Voyage costs are generally reflected
in the rates the DIS Group charges to its customers and therefore an increased exposure to the
spot market of its fleet will likely result in increased voyage costs and a proportionate increase
in its revenue. For this reason, reference is often made to the DIS Group’s time charter
equivalent earnings as a key indicator of its performance in the market. (See also section 6.4.1 –
“Charter market”).
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6.2
Competitive strengths
The DIS Group believes that it has a number of competitive strengths in the shipping industry,
including:
Proven ability to acquire and employ product tankers. Within a period of almost ten years from the
financial year ending 31 December 2002 until 30 September 2012, the DIS Group expanded its fleet,
from 7.4 to 40 vessels. It believes that the growth of its fleet during this relatively short period of time
demonstrates the DIS Group’s ability to identify, acquire and employ product tankers and that such
ability is a key advantage in this industry.
Modern, high quality fleet. The DIS Group operates a young fleet of high quality tankers with an
average age of approximately 6.2 years as at 30 September 2012. In comparison, according to
Clarkson, average vessel age in the product tanker industry amounts to 8.9 years as at
1 September 2012. The DIS Group’s fleet is comprised exclusively of double-hulled vessels. In
addition, all vessels of its fleet are built in accordance with international industry standards, including
IMO and MARPOL regulations. With approximately 67.4% of the vessels of its fleet being
IMO Classed, the DIS Group believes that it has the competitive advantage of being able to penetrate
new markets of products that can only be transported by IMO Classed vessels, such as palm and
vegetable oils. The DIS Group also passed the qualification and screening processes and now qualifies
to provide long-term charters to ExxonMobil, Total, BP and Shell. It strives to maintain the quality of
its fleet through scheduled maintenance programmes and by mandating exacting standards on owned
vessels and, as to its chartered-in vessels, by chartering-in from owners who meet such high quality
standards. The DIS Group believes that operating a fleet comprised of young and well-maintained
vessels will enable it to secure profitable employment for its fleet with reputable charterers.
A flexible and diversified business model which benefits from the expertise of the DIS Group’s
organisation. In order to maximise the utilisation of its fleet and earning opportunities, the DIS Group
operates in the spot and charter market. It believes that its organisation provides broad access to global
business opportunities and allows it to operate on a global basis, as well as to meet the needs of its
clients across different product lines.
International company with worldwide presence in key maritime centres. The DIS Group operates
from its own offices in, among others, Dublin, London, Stamford and Singapore. These offices are
located in what the DIS Group believes to be the key maritime centres around the world. Each of the
offices provides the DIS Group’s customers with access to the full range of services, promoting its
business in the relevant geographic area. The DIS Group believes that its international presence allows
it to meet the needs of its international clients in different geographical areas, while the offices also
strengthen the recognition of the DIS Group’s brand name worldwide. In addition, given the opening
hours of offices located in different time zones, the DIS Group is able to continuously monitor its
operations and to assist its customers 24 hours per day.
A large fleet deployed globally to service the DIS Group’s clients’ international requirements. The
DIS Group believes that operating a large fleet enhances the generation of earnings and operating
efficiencies. A large fleet strengthens its ability to advantageously position vessels and improves the
fleet’s availability and scheduling flexibility. The DIS Group believes this strength provides a
competitive advantage in securing spot voyages. In particular, the scale of its operations provides it
with the flexibility necessary to enable it to capitalise on favourable spot market conditions in order to
maximise earnings and negotiate favourable contracts with suppliers.
Leverage the DIS Group’s relationship with the d’Amico Group. The DIS Group believes that it has an
established reputation in the international market due to the successful operating history of the
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d’Amico Group. In addition, it benefits from the d’Amico Group’s economies of scale, expertise, high
quality standards and technical services. d’Amico Società di Navigazione S.p.A., a member of the
d’Amico Group, procures high quality technical management services for the DIS Group’s owned
vessels. The DIS Group believes that the international presence of the d’Amico Group further fosters
the DIS Group’s business and allows it to consolidate its reputation worldwide.
Established reputation and strong industry relationships. The DIS Group believes that it benefits from
a strong brand name and has an established reputation in the shipping industry for providing efficient,
safe and reliable services and that such a reputation is important in maintaining its long-term
relationships with its partners and existing customers and developing relationships with new
customers. It believes that its partners and customers appreciate the transparency and accountability
which have characterised the d’Amico brand name and the way in which its business has been
operated by the DIS Group from its early stages onwards. The DIS Group believes that this
accountability and transparency together with its high quality services are interwoven with its
operations and are key to the DIS Group’s success.
Proven management team. The DIS Group’s management team consists of experienced executives
who have demonstrated their abilities in managing the commercial and financial areas of its business.
See section 5.
6.3
Strategy
The DIS Group’s current strategy is designed to consolidate and expand the business in the MR and
handysize product tanker markets, while creating value for the Company’s Shareholders through
profitable growth. The DIS Group seeks to achieve this objective by leveraging its competitive
strengths and by implementing the following strategies:
Develop new business. The DIS Group established a strong reputation in the shipping market for
providing efficient, safe and reliable service. It intends to focus on its reputation by maintaining and
developing its relation with major international charterers. The DIS Group also intends to build on its
customer relations and its network of business connections to increase its market share and worldwide
footprint.
Confirm and further expand in alternative markets. The DIS Group has a long history of working with
a variety of commodities and dealing with regulatory changes. It is already a key market leader for
cargoes such as palm oil, vegetable oil and other chemicals, which can only be transported by vessels
that are IMO Classed. With approximately 67.4% of the vessels of its fleet being IMO Classed, the
DIS Group believes to be well-positioned to further expand its presence in these markets.
Continue to operate a high-quality fleet. The ability to maximise vessel utilisation and earnings
depends in part upon the quality of the fleet. The DIS Group intends to continue to maintain the high
quality of the owned vessels by continuing the stringent maintenance and inspection programmes
currently employed. With regard to chartered-in vessels the DIS Group endeavours to charter-in from
owners who maintain equally high standards. It is the DIS Group’s intention to maintain the operating
and safety standards of internationally recognised classification societies as well as of the most
demanding customers.
Expand the fleet through well-timed transactions. The DIS Group actively monitors the market in
order to take advantage of opportunities to expand its fleet. Such opportunities include purchasing
second hand vessels directly and/or chartering-in vessels with or without purchase options. In addition,
it plans to expand its fleet through well-timed orders for new-buildings. In accordance with this
expansion strategy, the DIS Group secured contracts to increase the fleet by ordering two handysize
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and two MR new-buildings. All of these vessels are due for delivery between the end of 2013 and early
2014.
6.4
Principal activities and markets
6.4.1
The product tanker industry
Oil demand
For a number of decades, oil has been one of the world’s most important energy sources. In
2005 the consumption of oil accounted for approximately 36% of world energy consumption.
Oil demand has grown from 75,400,000 barrels per day in 1997 to an expected
90,500,000 barrels per day in 2011. This has primarily been the result of global economic
growth. Some of the fastest demand growth in recent years has been recorded in China, India
and emerging economies. However, the economic downturn sharply reduced the demand for oil
and refined petroleum products, which in turn affected tanker demand. Long-term forecast of
growth in oil demand has returned. Global consumption growth decelerated in 2011, as did total
energy consumption for all regions. Oil remains the world’s leading fuel, at 33.1% of global
energy consumption. As illustrated by the chart below, global growth in consumption of oil
product has grown but a little under 20% since 1997 to 2011.
Million barrels
per day
Global Oil Product Demand
1997-2011
95
90
85
80
75
70
65
60
Source: IEA.
The chart below illustrates the growth in oil demand in recent years and the seasonality of
changes.
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Million barrels
per day
Quarterly Demand
2007-2011
90
89
88
87
86
85
84
83
82
81
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11
Source: IEA.
The world product tanker fleet is mainly comprised of MR/handy and long range vessels that
generally carry small quantities (10,000 to 75,000 metric tonnes) of refined petroleum products
over short-, medium-, or long haul distances.
Medium range (handy) product tankers 25,000-55,000 deadweight
Product tankers mostly have cargo handling systems that are designed to transport multiple
grades of refined products simultaneously and have coated (e.g. epoxy) cargo tanks which assist
in tank cleaning between voyages involving different cargoes and protect the steel from
corrosive cargoes.
A proportion of the MR delivered after 2000 were elected to be built in accordance with
IMO II/III classification. This involves meeting a range of building and class requirements. The
vessels with this classification have the flexibility of not only carrying refined products but also
a range of chemical, vegetable oil and palm oil cargoes. This affords them not to be restricted to
one market and gives them the flexibility to maximise employment (67.4% of the DIS Group’s
product tanker fleet is IMO II/III Classed). The majority of refined petroleum products
transported at sea is carried in MR and handy vessels. Usually their smaller size permits the
greatest flexibility in trade routes and access to ports which may have restrictions on vessel
drafts, vessel displacement and vessel length-overall and manoeuvrability. The most common
cargo size for refined petroleum products is 30,000 to 40,000 tonnes. Some product tankers are
designed with relatively high cubic capacities in order to efficiently transport cargoes with
relatively low specific gravities. Unlike the transportation of large volumes of crude oil, which
is typically transported from a few centres of oil production to many regions of consumption,
the transportation of refined petroleum products involves multiple areas of production and
consumption.
Owners of product tankers seek to utilise trade patterns to optimise the revenue and profitgenerating potential of their product tanker fleets by maximising vessel employment and
minimising waiting time and ballast days. Global oil trade in 2011 grew by 2%, or
1,100,000 barrels per day. At 54,600,000 barrels per day, trade accounted for 62% of global
consumption, up from 58% a decade ago (source: BP Statistical Review of World Energy
2012). China accounted for roughly two-thirds of the growth in trade in 2011, with net imports
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(6,000,000 barrels per day) rising by 13
13%. U.S. net imports were 29
29% below their 2005 peak.
Middle East countries accounted for 81
81% of the growth in exports in 2011. While crude oil
accounted for 70
70%
% of global trade in 2011, refined products accounted for two-thirds
two thirds of the
growth in global trade in 2011 (source: BP Statistical Review of World Energy 2012).
2012).
The chart below illustrates the evolution of products trade growth and seaborne products trade
between 2004 and 2011.
Source: Icap Research, BP Statistical Review of World Energy 2012.
Global demand for product tankers is determined primarily by the volume of refined petroleum
products requiring transportation and the distances over which these products have to be
transported. Th
These
ese factors are influenced by:

international economic activity;

geographic changes in oil production and consumption patterns;

the long-term
term impact of oil prices on the location and volume of oil production;

inventory policies of the major oil companies and other major oil trading companies; and

areas of refinery shortfall and surplus.
Trading in refined products is also influenced by the availability of transportation alternatives
(such as pipelines or rail) and the output of refineries. Seaborne trading patterns are also
periodically influenced by geopolitical or climatic events that divert tankers from normal
trading patterns and by inter-regional
inter regional oil supply and demand imbalances. Economic slowdown
may slow or reverse growth in product tanker demand. Lo
Long-term
term environmental concerns
and/or high oil prices may also reduce demand.
The following table details the growth of global products consumption between 2000 and 2011
by type of product.
Source: BP Statistical Review of World Energy 2012.
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The seaborne movement of refined petroleum products between regions addresses demand and
supply imbalances for such products caused by the lack of resources or refining capacity in
consuming countries. An additional “arbitrage” trade also occurs, taking advantage
advant
of
differences in price between refining centres. Additionally, demand may also be fuelled by
refineries in certain regions being generally locked into a specific product yield, meaning that
insufficient quantities of some products are produced in that region.
Source: Icap Research.
Global refinery capacity
During the last decade there has been a geographical shift in refinery capacity. Any new
capacity has and will be developed within non-OECD
non OECD and emerging economies, which equates
in about 27
27% growth since 2000 (source: IEA).
IEA . This growth has been predominantly outside the
OECD and now accounts for over half the world’s refinery capacity. Refining capacity of about
700,000 barrels per day in OECD is earmarked to be removed in 2012 and in the current
climate
imate 4,200,000 barrels per day of current refining capacity have been identified as possibly
closing from 2012 to 2016. This equates to roughly 4.5%
4.5% of global refining capacity. In 2012
will see net additions of over 1,000,000 barrels per day of refining capacity, with a further
1,300,000 barrels in 2013, which will exceed demand growth and potentially make more
products available for export, which should boost product tanker demand (source: IEA).
IEA
The chart below illustrates the evolution of refinery capac
capacity
ity in OECD and non-OECD
non
economies between 2000 and 2011.
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Thousand barrels
per day
Refinery capacity
2000-2011
50000
40000
30000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
OECD
Non-OECD
Source: BP Statistical review of World Energy 2012.
The table below sets out the breakdown of refinery capacity between various economies
between 2000 and 2011.
Source: BP Statistical review of World Energy 2012.
Upgrading and desulphurisation additions are a combined 2,600,000 barrels per day and
2,800,000 barrels per day in 2012 and 2013 (expected) respectively. The new capacity and
upgrades are predominantly within non-OECD countries. These new more efficient refinery
projects situated in the emerging economies should be very well placed to meet demand as and
when it increases.
Total net additional refinery capacity that could come on line is close to 8,000,000 barrels per
day by 2016, predominately in the Asia Pacific region and the Middle East.
The charts below illustrate expected refinery capacity additions up to 2016.
thousand barrels
per day
2000
New Refinery capacity additions
2012-2016
0
2012
-2000
2013
OECD North America
FSU
Other Asia
Africa
2014
2015
OECD Europe
Non-OECD Europe
Latin America
2016
OECD Pacific
China
Middle East
Source: IEA.
From 2001 to 2011 seaborne transportation of refined petroleum products has grown on average
4.5% per year. This is measured in tonne miles, i.e. the distance that products have to be carried.
As the product tanker industry has evolved to meet product demand between regions so the
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distances have increased. Traditionally, crude oil was transported to consuming regions and
refined locally. However, in recent years refineries have been built in developing nations where
their capacity is higher than domestic demand which has, therefore, resulted in more products
available for export to consuming regions. The fundamental shift of crude runs from the
Western to the Eastern hemisphere should structurally support product tanker utilisation and
positive tonne-mile growth.
14
12
10
8
6
4
2
0
-2
-4
Tonne mile growth
MR net fleet growth
Source: Banchero Costa, ICAP, d’Amico.
The demand for petroleum products is forever evolving which has a direct impact on the
demand for product tankers. The United States was a net importer of petroleum products.
However, product exports are now surging and gasoline imports are on a sharp decline. As
illustrated by the chart below, U.S. exports now exceed 2,000,000 barrels per day making the
country a net exporter of petroleum products. The new export destinations are in Mexico, South
America and the African sub-continent, with these new trade routes absorbing additional
vessels, thereby positively affecting the supply of tonnage.
US Imports / Exports of Petroleum Products
4000
3000
2000
1000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ytd
U.S. Exports of Finished Petroleum Products (Thousand Barrels per
Day)
U.S. Imports of Total Petroleum Products (Thousand Barrels per Day)
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US Petroleum products export (million b/d)
3.5
3
2.5
2
1.5
1
0.5
0
Jan
Feb Mar Apr May Jun
2008
2009
Jul
2010
Aug Sep
2011
Oct Nov Dec
2012
Source: EIA.
Product tanker supply
The supply of tankers is a function of the size of the existing fleet, the rate of deliveries of newbuildings and, to a lesser extent, casualties, the number of combination carriers carrying oil, the
number used as storage vessels and also, to a lesser extent, the amount of tonnage in lay-up.
Other factors can influence available supply, including delays caused by congestion at ports and
in shipping channels and extreme weather.
The medium range (25,000-55,000 deadweight) products experienced a large renewal
programme in the last few years. The fleet in this segment grew from a total of 1,492 vessels in
2007 to about 1,823 in 2011 according to Clarkson.
The IMO/MARPOL regulations for the phase out of single-hull tankers had a positive effect on
the supply of tankers including those in the MR segment. This requires the phasing out of all
single-hull tankers between 2010 and 2015 depending on the age of the tanker. As of
1 January 2012 there were still 100 ships in the product tanker fleet that still have to be phased
out. This is effectively reducing the net growth for MR tankers, for example 95 vessels were
delivered in 2011 and 50 removed whereas 168 were delivered in 2008 and only 33 removed.
The forward growth is infinitely more manageable than in the record delivery years 2007, 2008
and 2009.
Scrapping is and has been a relevant function of tanker supply. At any point in time, the level of
scrapping activity is a function primarily of environmental regulations, the age profile of the
fleet as well as scrapping prices in relation to current and prospective charter market conditions.
Operating, repair and survey costs, steel prices and the changing regulatory environment also
exert an influence on scrapping levels.
The chart below illustrates the historical and projected development of the MR fleet.
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This image cannot currently be displayed.
Source: ICAP, SSY, Gibson, Clarkson, d’Amico.
Charter market
The charter market is highly competitive. Competition is based primarily on the offered charter
rate, the location and technical specification of the vessel and the reputation of the vessel and its
manager. The two most common types of employment structures for a tanker are:

Spot market: The vessel earns income for each individual voyage and the owner pays for
bunkers and port charges. Earnings are dependent on prevailing market conditions,
which can be highly volatile. Idle time between voyages is possible depending on the
availability of cargo and the position of the vessel.

Time charter: Time charter is a contract for the hire of a vessel for a period of time,
typically for one up to three years and occasionally longer, with the vessel’s owner being
responsible for providing the crew and paying operating costs, while the charterer is
responsible for fuel and other voyage related costs. A time charter is comparable to an
operating lease. Some time charters also have profit sharing arrangements, the details of
which vary from charter to charter.
The below graph shows the evolution of spot market rates and time charter rates for
MR tankers.
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This image cannot currently be displayed.
Source: Clarkson (September 2012).
Asset values
There is a relationship between changes in asset values and the tanker charter market. A
reduction in charter rates caused by a decrease in demand for and/or an increase in the supply of
tanker vessels would reduce vessel prices, although there can be a lag in vessel prices. Newbuilding prices increased significantly between 2003 and 2006, primarily as a result of
significantly increased tanker demand for new tonnage in response to increased demand for oil,
higher charter rates, regulations requiring the phase-out of single-hull tankers, constrained
shipyard capacity and rising steel prices (which contributed to a strong increase in shipyard
costs). In addition, as a result of strong demand for other types of vessels, shipyard capacity,
especially for large vessels, has been booked several years in advance, further contributing to
the increased prices of new-buildings.
Recent developments in the new-building and second hand prices of standard product tankers
are shown below.
60
50
mill $
40
30
20
10
0
2001
2002
2003
2004
MR Newbuilding Prices
Source: Clarkson, ICAP, d’Amico.
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2005
2006
2007
2008
2009
2010
2011
MR 5 Year Old Secondhand Prices
2012
ytd
6.4.2
The product tanker business at the DIS Group
Based on IMO/MARPOL rules, cargoes such as palm oil, vegetable oil and other chemicals can
only be transported by vessels that meet certain standards. As at 30 September 2012 67.4% of
the DIS Group’s fleet was IMO Classed, allowing it to transport a large range of products.
Unlike the transportation of large volumes of crude oil, which is typically transported from a
few centres of oil production to many regions of consumption, the transportation of refined
petroleum products involves multiple areas of production and consumption. As a result, the
DIS Group seeks to utilise trade patterns to optimise the revenue and profit-generating potential
of its product tanker fleet by maximising vessel employment and minimising waiting time and
ballast days (when the vessel is repositioning for new cargoes).
Product dislocation is a factor influencing the product tanker trade. One of the prime petroleum
product routes is the unleaded gasoline trade from Europe to the United States. For many years
the United States was a net importer of this product. Product tankers, typically of MR size,
would transport gasoline from Europe to the United States Eastern seaboard and ballast back.
However, in recent years, Europe has become a net importer of diesel. By combining these two
trades, the DIS Group is able to achieve a better utilisation rate for its product tankers.
This trade pattern allows the DIS Group to maximise employment days and laden/ballast ratio
as outlined in example one.
The ability to trade between petroleum products and IMO products also allows the DIS Group
to maximise its vessels’ employment days as shown in example two.
Example one: Loading Amsterdam for discharge in New York and ballasting back. The result
50/50% is a utilisation rate.
Miles
Amsterdam ................................
L
2.00
0
New York ................................
D
2.00
3,336
Amsterdam ................................
B
3,336
4.00
Total................................
Laden................................
Port ................................
Ballast................................
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Port
10.3
4.0
10.3
147
Ballast
Laden
Total
2.00
10.3
10.3
10.3
12.3
10.3
10.3
24.6
Loading Amsterdam for discharge in New York followed by ballasting to Houston to load diesel
for discharge in Europe. The result is a 79/21% utilisation rate.
Port
Amsterdam ................................
L
2.00
New York ................................
D
2.00
3,336
Houston ................................
L
2.00
1,898
Rouen ................................
D
2.00
4,886
Waiting Days ................................ X
2.00
Extra streaming
(estimate) ................................
2.00
X
10.00
Total................................
Laden................................
26.38
Ballast................................
6.86
Port ................................
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Miles
10.00
148
Ballast
Laden
0.00
Total
2.00
10.3
5.86
12.3
7.86
15.08
17.08
2.00
6.86
26.38
43.24
Example two: The ability to trade in all petroleum products and a range of IMO III products can
optimise vessels’ trading potential and maximise earnings. A first step, for example, would be to
load gasoil from northern Europe to Argentina. This would be followed by a second step, which
would be to load vegetable oil (IMO III) in Argentina and Brazil to be discharged in China. This
would in turn give the ship the cargo history allowing it to load palm oil from South-East Asia
to be discharged in Northern Europe.
Port
Miles
Amsterdam ................................
B
0.00
Vestspils ................................
L
2.00
920
Buenos Aires ................................ D
2.00
7,208
Laden
Total
0.00
Tank cleaning ................................ X
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Ballast
2.72
4.72
21.30
4.00
23.30
4.00
San Lorenzo (ARG ................................
L
4.00
185
Paranagua
L
4.00
1,052
3.11
7.11
Shanghai ................................
D
5.00
11,028
32.59
37.59
Tianjin ................................
D
5.00
693
2.05
7.05
Iligan................................
L
4.00
2,086
149
0.55
6.16
4.55
10.16
Port
Miles
Ballast
Laden
Total
Belawan ................................
L
4.00
1,684
4.98
8.98
Suez Canal................................
C
2.00
4,577
13.53
15.53
Rotterdam ................................
D
6.00
9.69
15.69
Tank cleaning ................................ X
4.00
4.00
Waiting days
(estimate) ................................
6.00
6.00
Extra steaming
(estimate) ................................
15.00
15.00
Total days ................................
38.00
Laden................................
87.25
Port ................................
38.00
Ballast/Cleaning................................
38.43
Laden................................
70%
Ballast................................
30%
38.43
87.25
163.68
This trading pattern results in the vessel being employed in carrying or working cargo for over
70% over the three voyages.
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150
In the first half of 2012 the DIS Group’s owned fleet achieved a 67.5%/32.5% laden/ballast
ratio.
6.4.3
The DIS Group’s fleet
The following tables set forth information about the DIS Group’s fleet as at 30 September 2012,
which consists of 40 vessels:
MR fleet
Name of vessel
Tonnage
(Dwt)
Year built
Builder, country
IMO Classed
Owned
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High Tide ................................
51,768
2012
Hyundai Mipo, South Korea
IMO II/III
High Seas ................................
51,678
2012
IMO II/III
GLENDA Melissa*................................
47,203
2011
IMO II/III
GLENDA Meryl* ................................
47,251
2011
IMO II/III
GLENDA Melody*................................
47,238
2011
IMO II/III
GLENDA Melanie* ................................
47,162
2010
IMO II/III
GLENDA
Meredith*................................
46,147
2010
IMO II/III
High Strength** ................................
46,800
2009
Nakai Zosen, Japan
-
GLENDA Megan* ................................
47,147
2009
IMO II/III
High Efficiency** ................................
46,547
2009
Nakai Zosen, Japan
-
High Venture................................
51,087
2006
STX, South Korea
IMO II/III
High Prosperity ................................
48,711
2006
Imabari, Japan
-
High Presence ................................
48,700
2005
Imabari, Japan
-
High Priority ................................
46,847
2005
Nakai Zosen, Japan
-
High Progress................................
51,303
2005
STX, South Korea
IMO II/III
High Performance ................................
51,303
2005
STX, South Korea
IMO II/III
High Valor ................................
46,975
2005
STX, South Korea
IMO II/III
High Courage ................................
46,975
2005
STX, South Korea
IMO II/III
151
MR fleet
Name of vessel
Tonnage
(Dwt)
Year built
Builder, country
IMO Classed
Owned
High Endurance ................................
46,992
2004
STX, South Korea
IMO II/III
High Endeavour ................................
46,992
2004
STX, South Korea
IMO II/III
High Challenge ................................
46,475
1999
STX, South Korea
IMO II/III
High Spirit................................
46,473
1999
STX, South Korea
IMO II/III
High Wind................................
46,471
1999
STX, South Korea
IMO II/III
Notes:
*
Vessels owned by GLENDA International Shipping Limited, in which the DIS Group has a 50%
interest.
**
Vessels owned by DM Shipping Limited, in which the DIS Group has a 51% interest, and time
chartered to d’Amico Tankers Limited.
MR fleet
Name of vessel
Tonnage
(Dwt)
Year built
Builder, country
IMO Classed
Time chartered with purchase option
High Enterprise ................................
45,800
2009
Shin Kurushima, Japan
-
High Pearl ................................
48,023
2009
Imabari, Japan
-
Time chartered without purchase option
High Force ................................
53,603
2009
-
Eastern Force ................................
48,056
2009
Imabari, Japan
-
High Saturn ................................
51,149
2008
STX, South Korea
IMO II/III
High Mars ................................
51,149
2008
STX, South Korea
IMO II/III
High Mercury................................
51,149
2008
STX, South Korea
IMO II/III
High Jupiter................................
51,149
2008
STX, South Korea
IMO II/III
Torm Hellerup................................
45,990
2008
-
Freja Hafnia ................................
53,700
2006
-
High Glow................................
46,846
2006
Nakai Zosen, Japan
-
High Energy................................
46,874
2004
Nakai Zosen, Japan
-
High Power ................................
46,874
2004
Nakai Zosen, Japan
-
High Nefeli ................................
45,976
2003
STX, South Korea
IMO II/III
High Strength** ................................
46,800
2009
Nakai Zosen, Japan
-
High Efficiency** ................................
46,547
2009
Nakai Zosen, Japan
-
Notes:
**
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Vessels owned by DM Shipping, in which the DIS Group has a 51% interest, and time chartered to
152
d’Amico Tankers Limited for 49%.
Handysize fleet
Name of vessel
Tonnage
(Dwt)
Year built
Builder, country
IMO Classed
Owned
Cielo di Salerno................................
36,032
2002
STX, South Korea
IMO II/III
Cielo di Parigi ................................
36,032
2001
STX, South Korea
IMO II/III
Cielo di Londra ................................
35,985
2001
STX, South Korea
IMO II/III
Time chartered with purchase option
Malbec ................................38,499
2008
Guangzhou, China
IMO II/III
Marvel................................38,435
2008
Guangzhou, China
IMO II/III
Time chartered without purchase option
Cielo di
Guangzhou(1) ................................
38,877
2006
Guangzhou, China
IMO II
Note:
(1)
Bare boat charter contract.
Vessel name
MR/Handysize
Earliest redelivery
Latest redelivery
including optional
period
Time chartered-in
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High Glow ................................
MR
July 2013
July 2015
High Power ................................
MR
September 2013
-
High Nefeli ................................
MR
March 2013
-
High Energy................................
MR
June 2013
June 2015
High Enterprise................................
MR
March 2017
March 2019
High Pearl ................................
MR
August 2018
August 2020
High Saturn................................
MR
April 2015
April 2018
High Mars ................................
MR
April 2015
April 2018
High Mercury................................
MR
July 2015
July 2018
High Jupiter ................................
MR
October 2015
October 2018
High Force ................................
MR
September 2016
September 2018
Marvel................................ Handysize
July 2014
-
Malbec ................................Handysize
January 2014
-
153
Earliest redelivery
Latest redelivery
including optional
period
Freja Hafnia ................................
MR
January 2013
-
Eastern Force ................................
MR
April 2013
April 2014
Torm Hellerup................................
MR
May 2013
May 2014
High Efficiency................................
MR
July 2019
-
High Strength................................
MR
October 2019
-
Cielo di Guanghzou ................................
Handysize
January 2018
-
Earliest redelivery
Latest redelivery
including optional
period
Vessel name
Vessel name
MR/Handysize
MR/Handysize
Time chartered-out
High Seas ................................
MR/Direct
December 2012
-
High Courage................................
MR/Direct
June 2013
June 2014
High Valor................................
MR/Direct
February 2013
February 2014
High Endeavour ................................
MR/Direct
April 2013
April 2014
High Endurance ................................
MR/Direct
October 2013
-
High Challenge ................................
MR/Direct
November 2015
-
High Spirit ................................
MR/Direct
January 2016
-
High Venture ................................
MR/Direct
November 2013
-
High Power ................................
MR/High Pool
October 2013
-
High Energy................................
MR/High Pool
May 2013
-
High Priority ................................
MR/High Poolt
January 2014
-
Fleet employment and partnership
DIS Group’s
number of
vessels
Total
number of
vessels
within pool
Direct employment ...............................................................................................
25.0
High Pool Tankers Limited ................................................................
9.0
13.0
GLENDA International Management Limited................................
6.0
9.0
Total ................................................................................................
40.0
As at 30 September 2012 the DIS Group directly employed 25 vessels: 8 MR on a fixed term
contract, whilst 11 MR and six handysize vessels are currently employed on the spot market.
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The DIS Group also employs a portion of its controlled vessels through the following
commercial arrangements:
High Pool Tankers Limited – a pool with Nissho Shipping Co. Limited (Japan) and Mitsubishi
Corporation which operated 13 MR product tankers as at 30 September 2012. The DIS Group,
through d’Amico Tankers Limited, is exclusively responsible for this pool’s commercial
management, in particular chartering, vessel operations and administration.
GLENDA International Management Limited – a pool with Glencore/ST Shipping to trade
vessels under a single brand name, “GLENDA”. This pool operated nine MR product tankers as
at 30 September 2012, six of which are owned by Glenda International Shipping Limited, a
50/50 joint venture company with the Glencore group. This company owns six MR vessels,
delivered between August 2009 and February 2011.
The DIS Group also established another joint venture agreement, DM Shipping Limited, with
the Mitsubishi group. This company owns two MR vessels, delivered in 2009.
Fleet new-building programme – Order of two ECO 40 Shallowmax product tankers
On 26 July 2012 d’Amico Tankers Limited, a fully owned operating subsidiary of d’Amico
International Shipping S.A., entered into contracts for the construction of two new
product/chemical tanker vessels (hulls 2385 and 2386 - 40,000 dwt handysize) with Hyundai
Mipo Dockyard Co. Ltd. (Korea), expected to be delivered early 2014, for a consideration of
USD 30,650,000 each and with an option for two additional vessels, under same terms and
conditions, to be exercised by the end of 2012. These two new-buildings, in addition to being
double-hulled and being IMO Classed vessels, belong to a new generation of vessels with lower
consumption levels of fuel. The design of these vessels is the latest HMD concept of low fuel
consumption/high efficiency and cubic/shallow-draft combination denominated “HMD ECO 40
ShallowMax”. The vessels are designed to be able to save between five to six tonnes of fuel per
day, compared to previous types, allowing a lower operating cost, at the same speed of
14 knots, between USD 2,000 to USD 4,000 per day. Another financial advantage of these ships
can be found in the fact that they are in compliance with the most recent regulatory
requirements and therefore will not require any modifications in order to be operated. On older
tonnage, these improvements have been calculated as impacting on daily cost for at least
USD 700. These vessels are more flexible to operate since they have a draught of nine and a
half metres instead of over ten metres for older design vessels. Moreover, d’Amico
Tankers Limited signed time charter agreements with one of the main oil majors for these
two vessels for a period of five years. These time charter contracts increase the DIS Group’s
coverage (revenue generated by fixed contracts) and are fixed at levels which will generate a
profit.
Fleet new-building programme – Order of two “eco design” MR new-building product
tanker vessels
On 27 September 2012 d’Amico Tankers Limited entered into contracts for the construction of
two additional new product/chemical tanker vessels (hulls 2407 and 2408 - 50,000 dwt medium
range) with Hyundai Mipo Dockyard Co. Ltd. (Korea), expected to be delivered early 2014, for
a consideration of USD 33 million each. These two new-buildings are the latest IMO II MR
design with the highest fuel efficiency. The design is the utmost HMD concept of hull shape
and propulsion efficiency leading to a fuel saving of 6 to 7 tonnes of fuel per day compared to
the average consumption of the world’s existing MR fleet. The vessels will have an attained
Energy Design Index (EEDI) falling well within the IMO phase-in 3 requirement due for
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155
vessels to be built after 1 January 2025, being 31.5% lower than the current IMO reference line.
In order to fully support the DIS Group in this new investment project, the Controlling
Shareholders d’Amico International S.A. granted a subordinated loan of USD 20 million (see
section 5.6.2(k)).
6.4.4
Regulatory environment
Government regulation significantly affects the ownership and operation of the DIS Group’s
vessels. The DIS Group is subject to international conventions, national, state and local laws
and regulations in force in the countries in which its vessels may operate or are registered. The
DIS Group cannot predict the ultimate cost of complying with these requirements, or the impact
of these requirements on the resale value or useful lives of its vessels.
A variety of government and private entities subject the DIS Group’s vessels to both scheduled
and unscheduled inspections. These entities include local port authorities (e.g. local coast guard,
port state control, harbour master or equivalent), classification societies, flag state
administrations (country of registry), charterers and terminal operators. Certain of these entities
require the DIS Group to obtain permits, licences and certificates for the operation of its
vessels. Although the DIS Group believes that it is substantially in compliance with applicable
environmental and regulatory laws and has all permits, licences and certificates necessary for
the conduct of its operations, future non-compliance or failure to maintain necessary permits or
approvals could require it to incur substantial costs or temporarily suspend operation of one or
more of its vessels.
The DIS Group believes that the heightened level of environmental and quality concerns among
insurance underwriters, regulators and charterers is leading to enhanced inspection and safety
requirements on all vessels. Increasing environmental concerns have created a demand for
vessels that conform to stricter environmental standards. The DIS Group is required to maintain
operating standards for all of its vessels that emphasise operational safety, quality maintenance,
continuous training of its officers and crews and compliance with all laws that apply where the
vessels are registered and where they trade as well as with international regulations. The
DIS Group believes that the operation of its vessels is in substantial compliance with applicable
environmental laws and regulations as at the date of this Prospectus. The following represents a
general, non-exhaustive overview of the international legal framework in which the DIS Group
operates.
Environmental initiatives - Convention on Civil Liability for Oil Pollution Damage
The European Union is considering amending legislation which will affect the operation of
vessels and the liability of their owners for oil pollution. It is difficult to predict what
legislation, if any, may be promulgated by the European Union or any other country or
authority in this respect.
Many countries have ratified the liability scheme adopted by the International Maritime
Organisation and set out in the International Convention on Civil Liability for Oil Pollution
Damage of 1969, as amended (the “ICCLOPD”), and the Convention for the Establishment of
an International Fund for Oil Pollution of 1971, as amended (the “1971 Fund Convention”).
The 1971 Fund Convention was replaced by the 1992 Fund Convention on 24 May 2002.
Pursuant to the 1992 Fund Convention, as was the case with the 1971 Fund Convention, oil
receivers in countries that are party to the 1992 Fund Convention are liable for the payment of
supplementary compensation. Pursuant to these conventions, a vessel’s registered owner is
strictly liable for pollution damage caused in the territorial waters of a contracting state due to
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156
the discharge of persistent oil, subject to certain absolute defences. Many of the countries that
have ratified these conventions and the 1992 Protocol to the ICCLOPD have increased the
applicable liability limits. In October 2000 additional amendments were adopted which entered
into force on 1 November 2003 and further increased these liability limits. The liability limits in
the countries that have ratified these changes are tied to a specific unit of account, i.e. Special
Drawing Rights (“SDR”), which varies according to a basket of currencies. On
1 November 2012 SDR 1 equalled USD 1.53561. The right to limit liability was forfeited under
the 1992 Fund Convention in case the spill is caused by the owner’s intentional or reckless
conduct. Vessels trading to contracting states must provide evidence of insurance covering the
limited liability of the owner. In jurisdictions where the ICCLOPD has not been adopted,
various comparable legislative schemes are common law governed, and liability is imposed
either on the basis of fault or in a manner similar to the ICCLOPD.
In May 2003 the IMO also adopted a Protocol to the 1992 Fund Convention (the
“Supplementary Protocol”). The Supplementary Protocol provides for the establishment of a
fund to supplement the compensation available under the 1992 Fund Convention and, as is the
case with the 1992 Fund Convention, is funded by oil receivers. Ratification of the
Supplementary Protocol is optional and open to all states that are party to the 1992 Fund
Convention. The total amount of compensation payable for any one incident will be limited to a
combined total of SDR 750,000,000 (USD 1,154,167,500 as at 1 November 2012) including the
amount of compensation paid under the existing ICCLOPD/Fund Conventions of
SDR 203,000,000. The Supplementary Protocol entered into force on 3 March 2005.
To ease the burden on oil receivers pursuant to the Supplementary Protocol, voluntary
agreements have been reached among tanker owners who are indemnified in any event as
members of the International Group of Protection & Indemnity Clubs. The DIS Group is a
member of one of the P&I clubs which itself is member of the International Group of P&I
Clubs. For tankers up to 29,548 gross tonnes, under the Small Tanker Oil Pollution
Indemnification Agreement of 2006 (“STOPIA”), the liability assumed under these voluntary
agreements intends to substitute the limit pursuant to the ICCLOPD and is effectively
voluntarily increased to SDR 20,000,000. STOPIA operates by indemnifying the 1992 Fund for
the difference between a tanker’s limit of liability under ICCLOPD and SDR 20,000,000.
Under the Tanker Oil Pollution Indemnification Agreement of 2006 (“TOPIA”) ship owners of
larger tankers indemnify the Supplementary Fund for 50% of the compensation it pays under
the Supplementary Protocol for pollution damage caused by tankers in those states that are
member of the Supplementary Protocol. This compensation scheme is established by a legally
binding agreement between the owners of tankers which are insured against oil pollution risks
by P&I clubs within the International Group. In all but a relatively small number of cases, ships
of this description will automatically be entered into STOPIA and TOPIA as a condition of the
club cover.
The International Convention on Liability and Compensation for Damage in connection with
the Carriage of Hazardous and Noxious substances by Sea (“HNS Convention”) was adopted
by the IMO in 1996. It aims to ensure adequate, prompt and effective compensation for damage
that may result from shipping accidents involving hazardous and noxious substances. The
applicable liability regime mirrors the one contained in the ICCLOPD. As at the date of this
Prospectus the HNS Convention has not entered into force as the relevant conditions are not yet
fulfilled. A Protocol to the HNS Convention designed to address the practical problems
preventing its ratification was adopted at a second international conference held in April 2010.
However, the HNS Convention still has not yet entered into force.
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Bunkers convention of 2001
The International Convention on Civil Liability for Bunker Oil Pollution Damage of 2001
which entered into force on 21 November 2008 seeks to ensure that adequate compensation is
promptly available to persons who are required to clean up or who suffer damage as a result of
spills of ships’ bunker oil, which would not otherwise be compensated under the ICCLOPD.
Although strict liability under this convention extends beyond the registered owner to the
bareboat charterer, manager and operator of the ship, the convention only requires the registered
owner of ships greater than 1,000 gross tonnes to maintain insurance or any other financial
security. The level of coverage must be equal to the limits of liability under the applicable
national or international limitation regime, but may in no case exceed the amount calculated in
accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as
amended.
Prevention of pollution from ships – MARPOL
The IMO negotiated the International Convention for the Prevention of Pollution from Ships
that imposes liability for oil pollution of the marine environment (the “MARPOL 73/78”).
Annexes I to V of this convention concern pollution of the sea by oil, noxious and/or harmful
substances, sewage and garbage from ships. In September 1997 the IMO adopted Annex VI to
address air pollution by ships. Annex VI was ratified in May 2004 and entered into force in
May 2005. Annex VI sets a global cap on the sulphur content of fuel oil to limit sulphur oxide
emissions from ship exhausts, stipulates an upper limit to nitrogen oxide emissions from
engines and prohibits deliberate emissions of ozone depleting substances such as
chlorofluorocarbons. Annex VI also provides for the establishment of special sulphur emission
control areas (“SECAs”) with more stringent controls requirements on sulphur emissions. The
IMO further adopted various amendments to Annexes I and II in October 2004 which entered
into force on 1 January 2007. These revisions affect vessels and their carriage of so-called
noxious liquid substances carried in bulk. Since 2007 MARPOL’s field of application has
expanded considerably.
The U.S. Oil Pollution Act of 1990
The U.S. Oil Pollution Act of 1990 (the “OPA”) established an extensive regulatory and
liability regime for the protection of the environment from oil spills and clean-up of the
environment in case of such spills. The OPA affects all owners and operators whose vessels
trade in the United States, its territories and possessions or whose vessels operate in United
States waters which includes the United States’ territorial sea and its 200 nautical mile
exclusive economic zone.
Pursuant to the OPA, vessel owners, operators and bareboat charterers are considered to be the
“responsible parties” and are jointly, severally and strictly liable (unless the spill results solely
from the act or omission of a third party, an act of God or an act of war) for all containment and
clean-up costs and other damages arising from discharges or threatened discharges of oil from
their vessels. The OPA defines these other damages broadly to include:
A15761609

natural resources damage and the costs of assessment thereof;

real and personal property damage;

net loss of taxes, royalties, rents, fees and other lost earnings;

lost profits or impairment of earning capacity due to property or natural resources
damage; and
158

net cost of public services necessitated by a spill response, such as protection from fire,
safety or health hazards and loss of use of natural resources.
The OPA limits the liability of these responsible parties to USD 1,200 per gross tonne. This
limit applies to tank vessels and does not apply if an incident was caused by violation of
applicable United States federal safety, construction or operating regulations or by a responsible
party’s gross negligence or wilful misconduct, or if the responsible party fails or refuses to
report the incident or to cooperate and assist in connection with oil removal activities. A tank
vessel under the OPA is one constructed or adapted to carry, or that carries oil or hazardous
material in bulk as cargo or cargo residue.
The OPA requires owners and operators of vessels to establish and maintain with the U.S. coast
guard evidence of financial responsibility sufficient to meet their potential liabilities under the
OPA. In December 1994 the U.S. coast guard implemented regulations requiring evidence of
financial responsibility in the amount of USD 1,500 per gross tonne which includes the OPA
limitation on liability of USD 1,200 per gross tonne and the U.S. Comprehensive
Environmental Response, Compensation and Liability Act liability limit of USD 300 per gross
tonne. Pursuant to these regulations, vessel owners and operators may demonstrate their
financial responsibility by showing proof of insurance, surety bond, self insurance or guaranty.
Pursuant to the OPA, an owner or operator of a fleet of vessels is only required to demonstrate
evidence of financial responsibility in an amount sufficient to cover the vessel of the fleet
having the greatest maximum liability under the OPA.
The U.S. coast guard’s regulations concerning certificates of financial responsibility provide, in
accordance with the OPA, that claimants may bring suit directly against the insurer or guarantor
that furnishes certificates of financial responsibility. In the event that such insurer or guarantor
is sued directly, it is prohibited from asserting any contractual defence that it may have had
against the responsible party and is limited to asserting those defences available to the
responsible party and the defence that the incident was caused by the wilful misconduct of the
responsible party. Certain organisations which had typically provided certificates of financial
responsibility pursuant to pre-OPA laws, including the major protection and indemnity
organisations, have declined to furnish evidence of insurance for vessel owners and operators if
they are subject to direct actions or are required to waive insurance policy defences.
The U.S. coast guard’s financial responsibility regulations may also be satisfied by evidence of
surety bond, guaranty or by self-insurance. Pursuant to the self-insurance provisions, the ship
owner or operator must have a net worth and working capital measured in assets located in the
United States against liabilities located anywhere in the world that exceed the applicable
amount of financial responsibility.
The OPA specifically permits individual states to impose their own liability regimes with regard
to oil pollution incidents occurring within their boundaries, and some states have enacted
legislation providing for unlimited liability for oil spills. In some cases, states that have enacted
such legislation, have not yet issued implementing regulations defining vessels owners’
responsibilities under these laws.
EU Directive on low sulphur fuel oil
As part of its reaction to carbon emissions, the European Union adopted a directive which
entered into force on 1 January 2010 and obliges its member states to take steps to ensure that
ships berthed or anchored in ports within the European Community only consume low sulphur
fuels. At this stage, it is difficult to assess to what extent the directive is enforced and what
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159
penalties are imposed for non-compliance. However, this is another example of the expanding
regulatory environment in relation to environmental initiatives that ship owners are facing. It
may well be that other areas of the world follow suit.
Vessel security regulations
Since the terrorist attacks of 11 September 2001 there have been a variety of initiatives intended
to enhance vessel security. On 25 November 2002 the Maritime Transportation Security Act of
2002 (the “MTSA”) entered into force in the United States. To implement certain parts of the
MTSA the U.S. coast guard issued, in July 2003, regulations requiring the implementation of
certain security requirements aboard vessels operating in waters subject to the jurisdiction of
the United States. Similarly, in December 2002, amendments to the IMO’s International
Convention for the Safety of Life at Sea (the “SOLAS”) added a new chapter to the convention
dealing specifically with maritime security. This new chapter entered into force in July 2004
and imposed various detailed security obligations on vessels and port authorities, most of which
are contained in the newly created IMO’s International Ship and Port Facilities Security Code
(the “ISPS Code”). Among the various requirements are:

on-board installation of automatic information systems to enhance vessel to vessel and
vessel to shore communications;

on-board installation of ship security alert systems;

the development of vessel security plans; and

compliance with flag state security certification requirements.
The U.S. coast guard regulations, intended to align with international maritime security
standards, exempt non-U.S. vessels from MTSA vessel security measures provided such vessels
have on-board a valid International Ship Security Certificate that attests to the vessel’s
compliance with SOLAS security requirements and the ISPS Code.
In full compliance with the IMO’s ISPS Code and its comprehensive provisions, d’Amico
Società di Navigazione S.p.A., (the ship manager) for and on behalf of d’Amico
Tankers Limited has adopted and put into effect on each vessel a “ship security plan”. This ship
security plan includes both the mandatory and the recommended provisions of the ISPS Code.
International safety management code
The operation of the DIS Group’s vessels is also affected by the requirements set forth in the
IMO’s Management Code for the Safe Operation of Ships and Pollution Prevention (the “ISM
Code”).
The ISM Code requires ship owners or the entity which assumes the responsibility for the
operation of a ship such as the manager or bareboat charterer to develop, implement and
maintain a “safety management system”, which includes the following functional requirements:
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
a safety and environmental-protection policy;

instructions and procedures to ensure safe operation of ships and protection of the
environment in compliance with relevant international and flag state legislation;

defined levels of authority and lines of communication between, and amongst, shore and
shipboard personnel;
160

procedures for reporting accidents and non-conformities;

procedures to prepare for and respond to emergency situations; and

procedures for internal audits and management reviews.
Failure to comply with the ISM Code may subject the ship owner or the person responsible for
the operation of a vessel to increased liability, may prejudice insurance coverage for the
affected vessels and may result in detention or denial of access to ports.
Inspection by classification societies
Every seagoing vessel must be “classed” by a classification society. The classification society
certifies that the vessel is “in class”, signifying that the vessel has been built and maintained in
accordance with the rules of the classification society. In most cases, the classification society is
authorised by the flag state to certify that the vessel also complies with applicable rules and
regulations of the vessel’s country of registry and the international conventions to which that
country is a party. In addition, where surveys are required by international conventions and
corresponding laws and ordinances of a flag state, the classification society may undertake them
on application or by official order, acting on behalf of the authorities concerned.
The classification society also undertakes on request other surveys and checks that are required
by regulations and requirements of the flag state such as SOLAS. These surveys are subject to
agreements made in each individual case and/or to the regulations of the country concerned.
For an overview of the classification societies of the vessels of the DIS Group’s fleet, see
section 6.4.3.
For maintenance of the class, regular and extraordinary surveys of hull, machinery, including
the electrical plant, and any special equipment classed are required to be performed as follows:
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
Annual surveys. For seagoing vessels, annual surveys are conducted for the hull and the
machinery, including the electrical plant and where applicable for special equipment
classed, at intervals of 12 months from the date of commencement of the class period
indicated in the certificate.

Intermediate surveys. Extended annual surveys are referred to as intermediate surveys
and are typically conducted two and a half years after commissioning and after each
class renewal. Intermediate surveys may be carried out on the occasion of the second or
third annual survey.

Class renewal surveys. Class renewal surveys, also known as special surveys, are carried
out for the ship’s hull, machinery, including the electrical plant and for any special
equipment classed, at the intervals indicated by the character of classification for the
hull. At the special survey, the vessel is thoroughly examined, including ultrasonic
gauging, in order to determine the thickness of the steel structures. Should the thickness
be found to be less than the class requirements, the classification society would require
steel renewals. Substantial amounts of money may have to be spent for steel renewals to
pass a special survey if the vessel experiences excessive wear and tear. In lieu of the
special survey every five years, a ship owner has the option of arranging with the
classification society for the vessel’s hull or machinery to be on a continuous survey
cycle, in which every part of the vessel would be surveyed within a five year cycle. At
the owner’s application, the surveys required for class renewal may be split according to
161
an agreed schedule to extend over the entire period of the class. This process is referred
to as continuous class renewal.
All areas subject to survey as defined by the classification society are required to be surveyed at
least once per class period, unless shorter intervals between surveys are prescribed elsewhere.
The period between two subsequent surveys of each area must not exceed five years.
A vessel’s underwater parts are required to be inspected every 24 to 36 months by the
classification society. Dry docking of vessels is required at intervals not exceeding 60 months.
If any defects are found, the classification surveyor will issue a condition of class that must be
rectified by the ship owner prior to the date stated in such condition.
Most insurance underwriters make it a condition for insurance coverage that a vessel be
certified as “in class” by a classification society that is a member of the International
Association of Classification Societies.
Competition law
Historically the international maritime transport sector has been subject to various block
exemptions which allowed categories of shipping companies to fix rates and capacity jointly. In
2006, however, the European Council revoked certain of these exemptions bringing liner
conferences, tramp and cabotage shipping fully within the scope of EU competition law from
2008 onwards. While this does not directly affect the DIS Group’s pooling arrangements, it is
an indication of heightened scrutiny of commercial practices in the maritime sector. The
DIS Group cannot at present estimate the extent to which it may have to change its current
practices of operating its vessels in pools and managing the pools in light of competition law
requirements. The European Commission introduced further guidelines in 2008 on the
application of competition law to the maritime sector.
Permits and regulatory approvals
The DIS Group is required by various governmental and quasi-governmental agencies to obtain
certain permits, licences and certificates for its vessels. The kinds of permits, licenses and
certificates required depend upon several factors, including the commodity transported, the
waters in which the vessel operates, the nationality of the vessel’s crew and the age of the
vessel. The DIS Group has been able to obtain all permits, licenses and certificates currently
required to permit its vessels to operate. Additional laws and regulations, environmental or
otherwise, may be adopted which could limit the DIS Group’s ability to do business or increase
the cost of doing business.
Port state control (“PSC”)
PSC is the inspection of foreign ships in national ports to verify that the condition of the ship
and its equipment comply with the requirements of international regulations and that it is
manned and operated in compliance with these rules. Primary responsibility for ship standards
rests with the flag state, but the IMO has encouraged PSC organisations to form regional groups
to coordinate those inspections to help ensure that inspections are conducted and at the same
time avoid unnecessary inspections within and between regions. A number of regional
memoranda of understanding (“MOU”) have been signed, for example the Paris MOU covers
Europe and the North Atlantic and the Tokyo MOU covers Asia and the Pacific. Noncompliance can lead to the vessel’s detention in the port in question.
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Sanctions
In addition, the United Nations, the United States of America and the European Union have
imposed sanctions which are subject to continual change on a monthly and sometimes weekly
basis against various individuals, companies, organisations and cargoes where trade with certain
countries such as Syria and Iran is concerned. Breach of these sanctions may lead to significant
fines, delays for vessels and potential imprisonment for persons involved such that for each
journey the DIS Group undertakes due diligence as to the trades that its vessels are involved in.
6.4.5
Recent developments
Reference is made to Section 6.4.3 – “Fleet new-building programme – Order of two ECO 40
Shallowmax product tankers”, Section 6.4.3 – “Fleet new-building programme – Order of two
“eco design” MR new-building product tanker vessels”, Section 8.1 and Appendix 2.
The results for the third quarter of 2012 can be found in Appendix 2.
6.4.6
Insurance
The operation of any ocean-going vessel represents a potential risk of major marine losses and
liabilities, death or injury of persons as well as property damage, cargo damage or loss,
collision, mechanical failures, human error, war, terrorism, piracy, business interruptions due to
political unrest, hostilities, labour strikes, boycotts and other circumstances or events. In
addition, there is always an inherent possibility of marine disaster, including pollution and other
environmental mishaps, and the liabilities arising from owning and operating vessels in
international trade.
The DIS Group’s fleet is duly insured through primary brokers, protection and indemnity
(“P&I”) associations, member of the International Group of P&I Clubs, top marine underwriters
and insurance companies against the majority of accident-related risks that might occur in the
course of its business operations, including but not limited to:
(1)
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(1)
protection and indemnity risks, including pollution risks;
(2)
freight, demurrage and defence risks;
(3)
hull and machinery risks;
(4)
increased value risks;
(5)
war risks, including piracy;
(6)
kidnap & ransom risks;
(7)
strike and delay risks;
(8)
loss of hire risks; and
(9)
kidnap and ransom loss of hire risks.
The protection and indemnity insurance is provided by mutual protection and indemnity
associations, so-called P&I clubs, which insure the DIS Group’s third party liabilities in
connection with its shipping activities. This includes third-party liabilities and other
related expenses resulting from the injury or death of crew members, passengers and
other third parties, the loss or damage to cargo, claims arising from collisions with other
vessels, damage to other third-party property, pollution arising from oil or other
substances and towing as well as other related costs, including wreck removal. The
163
DIS Group’s current protection and indemnity insurance coverage for pollution is
USD 1,000,000,000 per vessel per incident.
(2)
The freight, demurrage and defence insurance provides coverage for legal costs and
legal assistance in relation to a wide range of claims, disputes and proceedings involving
the vessel in respect of freight, deadfreight, hire, demurrage or despatch arising under
any shipping contract.
(3)
The hull and machinery insurance is a vessel’s basic insurance against damage in
accordance with the provisions of the “Institute Time Clauses – Hulls (01/10/83)”. The
vessel, including its machinery and equipment, is insured for its full value, whereby the
insurance compensates for the total loss or the constructive total loss of the vessel,
salvage, partial damages to vessel, its machinery and equipment, the vessel’s
contribution to general average, etc.
(4)
The increased value insurance covers the amount insured in excess of the vessel’s sum
insured, which is calculated to cover additional costs and expenses (including lost freight
earnings) associated with the total loss of a ship.
With the hull and machinery and increased value insurance the DIS Group’s fleet is
covered against total loss and constructive total loss situations for up to an average of
110% to 130% of the market value of the vessels, as well as against damage with
deductibles per vessel per event within a range of USD 135,000 to USD 150,000.
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(5)
The war risks insurance covers loss or damage to the vessel caused by war, civil war,
revolution, rebellion, insurrection and other perils as set forth in the “Institute War and
Strikes Clauses Hulls – Time (01/10/83)” amended to include violent theft by persons
from outside the vessel, piracy and barratry of master, officers or crew.
(6)
The marine kidnap and ransom insurance indemnifies the ship owner for the
consequential losses which arise as a direct result of a demand for a ransom payment
that follows illegal threats or actions taken by an aggressor such as pirates in the Indian
Ocean and Gulf of Aden.
(7)
The strike and delay insurance protects the owners against the losses suffered in respect
of the delay caused by strikes and delays occurred on board of the vessel (Class III) or
ashore (Class I&II). Class III cover is ship owners’ cover by definition and it is arranged
for owned or business to business chartered vessels only; Class I&II can also be
arranged for chartered vessels on the basis of the vessel employment.
(8)
The loss of hire insurance is designed to protect a ship owner for the potential loss of
earnings of a vessel (either freight or charter hire) resulting from a casualty at sea. Loss
of hire insurance is usually stipulated to cover losses in the event of a peril insured under
the vessel’s hull and machinery policy.
(9)
The traditional loss of hire insurance only covers physical damage to the insured ship,
usually caused by an insured hull or hull war peril. Specific “non-damage” loss of hire
cover needs to be purchased to cover the vessel’s loss of earnings, in case of seizure by
pirates, suffered by the ship owners or the charterers depending upon who carries the
risk as determined by the charter party conditions. The kidnap and ransom loss of hire
insurance has been taken out in order to protect the DIS Group’s interests both in its
quality as ship owner and charterer.
164
The DIS Group believes that its current insurance coverage is adequate to protect it
against the majority of the accident-related risks involved in the conduct of its business
and that it maintains an appropriate level of protection and indemnity coverage against
pollution liability and environmental damage.
However, there can be no assurance that the range of risks the DIS Group is exposed to
is adequately insured against, that any particular claim will be paid or that in the future
the DIS Group will be able to procure similar adequate insurance coverage at the terms
and conditions equal to those it currently has. More stringent environmental liability
regulations have resulted in increased exposures and insurance costs and may in certain
circumstances be difficult to insure or become uninsurable. The DIS Group’s goal is to
maintain an adequate insurance coverage required by its marine operations and to
actively monitor any regulations and threats that may require the DIS Group to revise its
coverage.
6.5
Information technology and intellectual property
The DIS Group has a modern information technology infrastructure connecting and integrating all of
its information management applications both onshore and on-board its own vessels. It obtains the
applications that it uses from well-known industry participants, such as Microsoft, Computer
Associates and IBM, and from suppliers specialised in providing applications for the shipping industry,
such as ShipNet and Dualog. The DIS Group’s portfolio covers various applications used for financial
and operational management.
The information technology for the DIS Group’s fleet management is provided by d’Amico Società di
Navigazione S.p.A. which supports, through its services, all of the DIS Group’s fleet management
activities, including purchasing, technical and SQE functions as well as its commercial, financial,
operational and invoicing functions.
d’Amico Società di Navigazione S.p.A. provides such services to the DIS Group under a general
service agreement. See also section 5.6.2.
On 2 January 2007 d’Amico Tankers Limited entered into a licence agreement with d’Amico Società
di Navigazione S.p.A. pursuant to which the latter granted the former a non-exclusive right to use both
the “d’Amico Tankers” trademark and the d’Amico flag logo for a period of five years. In
January 2012 this agreement was automatically renewed for an additional five year period and the
annual licence fee of EUR 200,000 (payable on a quarterly basis) was confirmed. The said licence
agreement will remain in force unless otherwise terminated.
6.6
Competition
The economic performance of the DIS Group’s business fluctuates in line with the main patterns of
trade of petroleum products, chemicals and similar products cargoes and varies according to changes in
supply of these cargoes. Both the MR and handysize product tanker markets are competitive and based
primarily on supply of cargoes and vessels. The DIS Group competes in the spot market on the basis of
price, vessel location, size, age and condition of the vessel, as well as on its reputation.
Its main competitors in both the MR and handysize product tanker markets are Torm, Norient
(Norden), ST Shipping, Handytankers (A.P. Moller), Scorpio, Mitsui OSK and OSG.
The table below lists the largest owners of MR/handysize tankers:
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165
Top fifteen major owners by number
MR (25,000-55,000 dwt)
Major group
Number
Million dwt
1
Torm, Dampskibss ...............................................................................
48
2.19
2
A.P. Moller...........................................................................................
47
1.76
3
Interorient Nav. Co. .............................................................................
42
1.62
4
China Shipping Group ................................................................
38
1.62
5
Mitsui O.S.K. Lines.............................................................................
38
1.68
6
SCF Group...........................................................................................
37
1.70
7
Sinotrans & CSC .................................................................................
33
1.45
8
Diamond S Shpg..................................................................................
30
1.45
9
Nippon Yusen Kaisha...........................................................................
23
1.07
10
d’Amico International Shipping ..........................................................
22
1.03
11
Formosa Plastics Co. ...........................................................................
20
0.94
12
Ocean Tankers Pte ...............................................................................
20
0.94
13
Capital Maritime..................................................................................
19
0.85
14
Montanari Group .................................................................................
19
0.77
15
Latvian Shpg........................................................................................
19
0.89
Other .....................................................................................................................1,367
58.50
Total......................................................................................................................1,823
78.48
% of fleet owned by top 15 ................................................................
25%
25%
Source: Clarkson, September 2012.
6.7
Material contracts
Other than as set out in section 7.1.6 (20) and section 7.3.6 (17), the DIS Group has not entered into
material contracts outside the ordinary course of business.
6.8
Property
The DIS Group subleases offices in real property located in Luxembourg, Dublin, Monaco, London
and Singapore of approximately 1,000 square meters. The DIS Group does not own any real estate.
The Company signed a renewable commercial lease agreement with d’Amico International S.A., its
majority shareholder, for a period of three years which commenced on 2 December 2010. The total
floor area of the building located in Luxembourg and subject to this lease amounts to approximately
50 square meters with a rent of EUR 2,230 per month.
d’Amico Tankers Limited rents approximately 398 square meters of the office building located at its
registered office at the Anchorage, 17-19 Sir John Rogerson’s Quay, Dublin 2, from d’Amico
Dry Limited. d’Amico Dry Limited enjoys a leasehold interest in this building pursuant to a lease
concluded for a duration of 20 years ending on 7 May 2028. This lease includes a “break option”
which can be exercised on 7 May 2018. The lease is guaranteed by d’Amico International S.A. The
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166
total floor area of the building subject to this lease amounts to approximately 663 square meters. The
other Irish companies of the DIS Group will relocate to this building and its address will serve as their
registered office. Rent of EUR 230,590 per annum is payable by d’Amico Tankers Limited pursuant to
this sublease.
d’Amico Tankers Monaco S.A.M. signed a lease agreement with St. Andrews Estates Limited, a
company of the d’Amico Group, for the second floor of the office building located in Monaco for a
period of three years, which commenced on 1 January 2007 and is tacitly renewable. The total floor
area of the building subject to this lease amounts to approximately 544 square meters. Rent of
EUR 310,000, excluding taxes and a service charge of approximately EUR 13,000 per annum, is
payable pursuant to this lease agreement.
d’Amico Tankers UK Limited signed a lease agreement with Windsor Life Assurance
Company Limited in relation to the office located at Queen Anne’s Gate Building, 2 Dartmouth Street,
London, SW1H 9BP. The contract runs from 29 September 2009 to 28 September 2014. The total floor
area of the building subject to this lease amounts to approximately 195 square meters. Rent of
GBP 97,650 per annum is payable pursuant to this lease. In addition, service charges of approximately
GBP 25,588 are payable. At the same time, d’Amico Tankers UK Limited sublets part of this office
building (approximately 12.5%) to d’Amico Shipping UK Limited, a company of the d’Amico Group,
for a rent of GBP 12,200 (plus service charges) per annum.
d’Amico Tankers Singapore Pte. Ltd. sublets part of the office building located at 6 Battery Road, #3402, Singapore, 049909 Singapore and currently occupied by d’Amico Shipping Singapore Pte. Ltd., a
company of the d’Amico Group, for a period of three years ending 30 April 2015. This functions as its
registered office. The total floor area of the building subject to this sublease amounts to approximately
182 square meters. Rent of SGD 279,792 per annum is payable pursuant to this sublease.
6.9
Legal and arbitration proceedings
From time to time the DIS Group is involved in various legal proceedings. A summary of the pending
and threatened legal proceedings in which the DIS Group is currently or could be involved and for
which the claim exceeds USD 500,000 is set out below.
In connection with the performance of a voyage from Zanzibar to Mombasa in April 2011
(voy. 201005) on the High Saturn which was chartered by Glenda International Management Limited
received a jet A1 cargo contamination claim from its subcharterers in the amount of USD 2,385,151.
The DIS Group rejected the claim against Glenda International Management Limited in first instance
on the basis that it was most likely time barred. At the same time, Glenda International
Management Limited had a demurrage claim against these subcharterers in the amount of
USD 856,817 and an interim port expenses claim in the amount of USD 658,068. Both claims were
rejected by the subcharterers on the basis that they had arisen as a result of the cargo contamination
which the subcharterers attributed to the vessel. The DIS Group has now appointed London lawyers
who have initiated arbitration proceedings against the subcharterers to recover the DIS Group’s
monies.
In January 2012 charterers of the vessel Glenda Meredith filed a claim against Glenda International
Shipping Limited in connection with the shipments of various palm oil products from Indonesia
because the cargo had arrived at the discharge port in a damaged condition. The charterers alleged that
the cargo damage was due to overheating of the cargo as a result of the vessel’s failure to comply with
the Federation of Oils, Seeds and Fats Associations’ heating instructions. They calculated their losses
to amount to approximately USD 595,061. The DIS Group rejected the claim in the first instance and
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167
has not heard from the charterers since. The DIS Group’s exposure should be limited to legal costs
which are covered by its protection and indemnity insurance.
Voyage Charterers filed a claim against d’Amico Tankers Limited for an alleged faulty description of
the Cielo di Guangzhou mooring equipment in the amount of USD 500,000. They claim that the
alleged faulty description of the vessel resulted in the discharge of the cargo in June 2011 at a
discharge port different from the one originally envisaged and in a subsequent transshipment of that
cargo to the original discharge port. The DIS Group rejected the claim in first instance and passed the
handling of this matter on to its London lawyers. The DIS Group also appointed an independent expert
to advise it on the technical evidence. The charterers have wrongfully withheld monies in the amount
of their alleged damages from freight otherwise payable to the DIS Group. The costs in respect of this
claim fall within the DIS Group’s defence insurance cover.
Cargo interests filed a claim against d’Amico Tankers Limited for contamination of jet fuel cargo
which was ascertained on the vessel High Peace upon the discharge of its cargo at Port Hedland in
May 2011. The jet cargo was off spec on flash point as a result of which it was rejected by the cargo
receivers. The cargo was subsequently shipped back to the load port in Singapore and the DIS Group
received a claim for the losses resulting thereof in an amount of USD 730,000. The DIS Group passed
the claim onto the main owners. Arbitration proceedings have been initiated between the various
parties of the contractual chain concerned. However, there has been no progress in these arbitration
proceedings in the past few years and the DIS Group believes that Cargo interests are discussing this
matter directly with the main owners.
Apart from these disputes, the DIS Group has not been involved in any governmental, legal or
arbitration proceedings (including any such proceedings which are pending or threatened of which the
DIS Group is aware) during the 12 months preceding the date of this Prospectus which may have or
have had in the recent past significant effects on the financial position or profitability of the
DIS Group. From time to time, the DIS Group may be subject to legal proceedings and claims in its
ordinary course of business, mainly personal injury and property casualty claims. The DIS Group
expects these claims to be covered by insurance, subject to applicable deductibles. Such claims, even if
lacking in merit, could however result in the expenditure of significant financial and managerial
resources.
7
Consolidated financial information
The consolidated financial statements of the Company for the financial year ended 31 December 2011 set out
in section 7.1 were prepared in accordance with IFRS and were audited by Moore Stephens Audit S.à r.l., who
delivered an unqualified opinion and has given and not withdrawn its consent to the inclusion thereof in
section 7.2 in the form and context in which such opinion is included.
The interim consolidated financial statements of the Company as at 30 June 2012 set out in section 7.3 were
prepared in accordance with IFRS and were reviewed by Moore Stephens Audit S.à r.l., who delivered an
unqualified report and has given and not withdrawn its consent to the inclusion thereof in section 7.4 in the
form and context in which such report is included.
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168
7.1
Consolidated financial statements for the year ended 31 December 2011
7.1.1
Consolidated income statement
Note
2011
2010
U.S.$ Thousand
Revenue ................................................................
(4)
291,721
305,592
Voyage costs ................................................................ (5)
(104,716)
(106,249)
Time charter equivalent earnings................................(6)
187,005
199,343
Time charter hire costs..............................................................
(7)
(89,761)
(102,314)
(8)
(53,403)
(53,367)
General and administrative costs ................................ (9)
(19,330)
(18,778)
Other operating income ............................................................
(10)
3,205
5,557
Result from disposal of vessels................................
3,286
–
31,002
30,441
(37,050)
(32,467)
(6,048)
(2,026)
(14,329)
(19,018)
(20,377)
(21,044)
(11)
Gross operating profit ............................................................
Depreciation................................................................
Operating profit/(loss) ............................................................
Net financial income (charges) ................................
(12)
Profit/(loss) before tax ............................................................
Income taxes ................................................................(13)
Net profit/(loss)................................................................
(636)
(21,013)
513
(20,531)
The net loss is entirely attributable to the equity holders of the Company
Earnings per share(1) ...............................................................
7.1.2
(0.140)
(0.137)
2011
2010
Consolidated statement of comprehensive income
Note
U.S.$ Thousand
Profit/(loss) for the period.........................................................
Cash flow hedges................................................................
(21,013)
4,136
(20,531)
437
Total comprehensive result for the period ............................
(16,877)
(20,094)
Earnings/(loss) per share(1) ........................................................
(0.113)
(0.134)
The total comprehensive income is entirely attributable to the equity holders of the Company
Note:
(1)
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There are no dilutive instruments, thus no diluted earnings per share has been presented. The
figures are presented in U.S.$.
169
7.1.3
Consolidated statement of financial position
Note
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
ASSETS
Non-current assets
Tangible assets ................................................................
(14)
547,634
544,283
Total non-current assets ................................
547,634
544,283
Inventories ................................................................
(15)
17,522
21,172
Receivables and other current assets................................
(16)
39,617
67,547
Current financial assets................................(17)
14,396
8,250
Cash and cash equivalents ................................
(18)
51,068
68,266
Total current assets ................................
122,603
165,235
Total assets................................................................
670,237
709,518
Share capital................................................................
149,950
149,950
Retained earnings................................
118,433
139,446
47,098
43,710
315,481
333,106
(20)
282,492
284,658
Total non-current liabilities................................
282,492
284,658
(20)
14,864
11,065
Payables and other current liabilities ................................
(21)
49,678
68,855
7,673
11,754
49
80
72,264
91,754
670,237
709,518
Current assets
SHAREHOLDERS’ EQUITY AND LIABILITIES
Other reserves ................................................................
(19)
Total shareholders’ equity ................................
Non-current liabilities
Current liabilities
Other current financial liabilities ................................
(22)
Current taxes payable................................ (23)
Total current liabilities ................................
Total shareholders’ equity and
liabilities................................................................
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7.1.4
Consolidated statement of cash flows
2011
2010
(U.S.$ Thousand)
Profit / (loss) for the period
(21,013)
(20,531)
Depreciation and amortisation ..............................................................................
37,050
32,467
Current and deferred income tax ...........................................................................
636
Financial charges................................................................................................
(513)
10,878
11,195
Fair value gains on foreign currency retranslation ................................................
2,865
7,823
Profit on disposal of vessels ..................................................................................
(3,286)
–
Other non-cash items.............................................................................................
641
29
Cash flow from operating activities before changes in working capital .........
27,771
30,470
Movement in inventories.......................................................................................
3,650
(6,054)
Movement in amounts receivable .........................................................................
27,930
(28,817)
Movement in amounts payable .............................................................................
(19,177)
18,684
Taxes paid .............................................................................................................
(656)
(1,077)
Interest paid...........................................................................................................
(10,526)
(10,775)
Net cash flow from operating activities .............................................................
28,992
2,431
Acquisition of fixed assets ....................................................................................
(64,700)
(56,583)
27,395
2,521
(37,305)
(54,062)
Disposal/cancellation of fixed assets ................................................................
Net cash flow from investing activities ..............................................................
Other changes in shareholders’ equity................................................................
Treasury shares................................................................................................
Movement in other financial receivable ...............................................................
Movement in other financial payable................................................................
Movement in other financial assets ................................................................
–
(300)
(676)
–
(20)
56,332
–
(12,324)
(6,600)
(8,250)
Bank loan repayments ...........................................................................................
(54,875)
(48,480)
Bank loan draw-downs..........................................................................................
53,173
40,570
Net cash flow from financing activities..............................................................
(8,998)
27,548
Change in cash balance.......................................................................................
(17,311)
(24,083)
Net increase/ (decrease) in cash and cash equivalents................................
(17,311)
(24,083)
Cash and cash equivalents at the beginning of the year ................................
68,266
92,243
Exchange gain (loss) on cash and cash equivalents ..............................................
113
106
Cash and cash equivalents at the end of the year .............................................
51,068
68,266
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7.1.5
Consolidated statement of changes in shareholders’ equity
Share
Capital
Retained
Earnings
Other Reserves
Other
Total
Cash-Flow
Hedge
U.S.$ Thousand
Balance as at 1 January
149,950
2011................................................................
139,446
55,463
(11,753)
333,106
Other changes (consolidation
reserve) ...............................................................
–
–
(72)
–
(72)
Treasury shares................................
–
(676)
–
(676)
4,136
(16,877)
(7,617)
315,481
–
Total comprehensive income ..............................
–
(21,013)
Balance as at 31 December
149,950
2011................................................................
118,433
Share
Capital
Retained
Earnings
–
54,715
Other Reserves
Other
Total
Cash-Flow
Hedge
U.S.$ Thousand
Balance as at 1 January
149,950
2010................................................................
Other changes ................................
7.1.6
–
155,589
4,388
–
(20,531)
Balance as at 31 December
149,950
2010................................................................
139,446
60,150
(4,687)
–
55,463
(12,190)
353,499
–
(299)
437
(20,094)
(11,753)
333,106
Notes
The financial statements have been prepared in accordance with provisions of Art. 3 of the Luxembourg
Law dated 11 January 2008, which transposed Directive 2004/109/EC of the European Parliament and of
Council of 15 December 2004 in the harmonization of transparency requirements in relation to
information about issuers whose securities are admitted to trading on a regulated market.
The d’Amico International Shipping Group has adopted International Financial Reporting Standards
(IFRS – International Financial Reporting Standards and IAS – International Accounting Standards) as
issued by the ‘IASB’ (International Accounting Standards Board) and adopted by the European Union.
The designation ‘IFRS’ also includes all ‘IAS’, as well as all interpretations of the International
Financial Reporting Interpretations Committee ‘IFRIC’, formerly the Standing Interpretations
Committee SIC as adopted by the European Union.
The d’Amico International Shipping Group has adequate resources to continue in operational existence
for the foreseeable future; accordingly, the financial statements have been prepared on a going concern
basis.
The financial statements are expressed in U.S. Dollars, being the functional currency of the Company
and its principal subsidiaries.
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(1)
Accounting Policies
The principal accounting policies, which have been consistently applied, are set out below.
Basis of Consolidation
The financial statements present the consolidated results of the parent company, d’Amico International
Shipping S.A., and its subsidiaries for the year ended 31 December 2011.
Subsidiaries
Subsidiaries are enterprises controlled by the Group, as defined in IAS 27 – Consolidated and Separate
Financial Statements. Control exists when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
The assets and liabilities of the parent and subsidiary companies are consolidated on a line-by-line basis
and the carrying value of the investments held by the parent company and other consolidated
subsidiaries is eliminated against shareholders’ equity. Intra-group balances and transactions, and gains
arising from intra-group transactions, are eliminated in preparing the consolidated financial statements,
as well as unrealised gains and losses from intra-group operations. Non-controlling interests and net
profit attributable to minorities, if any, are listed separately from the Group’s equity, on the basis of the
percentage of net Group assets they possess.
Jointly Controlled Entities
Jointly controlled entities are enterprises over whose activities the Group has joint control, as defined in
IAS 31 – Interests in Joint Ventures. The consolidated financial statements include the assets and
liabilities, revenue and costs of jointly controlled on a proportional basis, based on the Group’s share.
Foreign currencies
Most of the Group’s revenues and costs are denominated in U.S. dollars, which is the functional
currency of the Company. Transactions during the year in currencies other than U.S. dollars have been
translated at the appropriate rate ruling at the time of the transactions. Assets and liabilities denominated
in currencies other than the U.S. dollar have been translated into U.S. dollars at the rate ruling at the
financial position date. All exchange differences have been accounted for in the income statement.
In the consolidated financial statements, the income statements of subsidiaries, which do not report in
U.S. Dollars, are translated at the average exchange rate for the period, whereas statement of financial
position items are translated at the exchange rates at the financial position date. Exchange differences
arising on the translation of financial statements into U.S. Dollars are recognised directly in the
statement of comprehensive income.
Revenue recognition
All freight revenues from vessels are recognised on a percentage of completion bases. The discharge to
discharge basis is used in determining percentage of completion for all spot voyages and voyages
servicing contracts of affreightment (COAs). Under this method, the freight revenue is recognised over
the period from the departure of a vessel from its original discharge port to departure from the next
discharge port. The departure date is defined as the date of the most recent discharge, and the voyage
ends at the date of the next discharge (“discharge to discharge”).
For voyages in progress at the end of a reporting period the Group recognises a percentage of the
estimated revenue for the voyage equal to the percentage of the estimated duration of the voyage
completed at the financial position date. The estimate of revenue is based on the expected duration and
destination of the voyage. Revenues from time charter contracts are recognised at pro-rata tempora basis
over the rental periods of such charters, as service is performed.
Participation in Pools
d’Amico International Shipping generates a significant portion of its revenue through pools. The total
pool revenue is generated from vessels contributed to pools in which the Group participates, deriving
from spot voyages, COAs and time charter contracts.
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The pool companies are considered as jointly controlled operations and the Group’s share of the income
statement and statement of financial position in the respective pools is accounted for by recognising the
related interests share, based on participation in the pool. The Group’s share of the revenues in the pools
is dependent on the number of days the Group’s vessels have been available for the pools in relation to
the total available pool earning days during the period, as adjusted by share of pool points, where
applicable. The pool legal entities that are fully controlled are consolidated on a line by line basis.
Demurrage revenues
Freight contracts contain conditions regarding the amount of time available for loading and discharging
of the vessel. Demurrage revenues, recognised upon delivery of service in accordance with the terms and
conditions of the charter parties, represent the compensation estimated for the additional time incurred
for discharging a vessel. Revenue received from demurrage is recognised at the completion of the
voyage. These revenues are accounted for net of any provision made in respect of demurrage claims
where full recovery is not anticipated.
Voyage costs and other direct operating costs
Voyage costs (Port expenses, bunker fuel consumption and commissions) are incurred in connection
with the employment of the fleet on the spot market and under COAs (contracts of affreightment).
Voyage expenses are recognised as incurred.
Time Charter hire rates paid for chartering in vessels are charged to the income statement on an accruals
basis. Vessel operating costs such as crew, repairs, spares, stores, insurance, commercial fees and
technical fees are charged to the income statement as incurred. The cost of lubricants is based on the
consumption in the period.
General and administrative costs
Administrative expenses, which comprise administrative staff costs, management costs, office expenses
and other expenses relating to administration, are expensed as incurred.
Financial income and charges
Financial income and charges include interest, realised and unrealised exchange rate differences relating
to transactions in currencies other than the functional currency, and other financial income and charges,
including value adjustments of certain financial instruments not accounted for as hedging instruments.
Interest is recognised in accordance with the accrual basis of accounting using the effective interest
method.
Taxation
The current taxation of the holding company d’Amico International Shipping SA and certain subsidiaries
(service companies) is based on taxable income for the year using local tax rates that have been enacted
at the financial position date. Taxable profit differs from profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are not subject to tax or are not deductible.
The key operating company of the Group, d’Amico Tankers Limited (Ireland) as well as DM Shipping
Limited (Ireland) and Glenda International Shipping (Ireland) are taxed under the Irish Tonnage Tax
regime in respect of all eligible activities.
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Under the tonnage tax regime, the tax liability is not calculated on the basis of income and expenses as
under the normal corporate taxation, but is based on the controlled fleet’s notional shipping income,
which in turn depends on the total net tonnage of the controlled fleet. The tonnage tax charge is included
within the income tax charge in the Consolidated Income Statement. For all of the Irish activities, which
fall outside tonnage tax, income tax expense represents the tax charge based on the result for the year
adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates enacted or
substantially enacted at the financial position date. Certain minor activities will not fall within the
tonnage tax regime and are subject to standard rates of local corporation tax (currently 12.5% on trading
income, and 25% on passive income, with non-tonnage tax capital gains being taxable at the rate of
22%). These activities will also give rise to deferred tax assets and liabilities. Items of other
comprehensive income are taxed depending on the tax regime they fall within; as far as cash-flow hedge
in 2011, it is falling within the provisions of the Tonnage Tax.
Deferred tax, if any, represents tax the group is expecting to pay or recover on differences between the
carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding
tax bases used in the calculation of taxable profit. It is accounted for using the financial position liability
method. Liabilities relating to deferred tax are generally recognised for all taxable temporary differences.
Assets relating to deferred tax are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. The carrying amounts of
deferred tax assets are reviewed at each financial position date and reduced in the event that it is not
considered probable that sufficient taxable profits will be available to allow all or part of the assets to be
recovered. Deferred tax is calculated at the applicable tax rates during the period when liability is settled
or the asset realised. It is charged or credited in the income statement, unless it relates to items charged
or credited directly to other comprehensive income, in which case the deferred tax is also accounted for
in other comprehensive income.
Fixed assets (Fleet)
Vessels
The owned vessels are shown in the statement of financial position at cost less accumulated depreciation
and any impairment loss. Cost includes the acquisition cost of the vessels as well as other costs which
are directly attributable to the acquisition or construction of the vessel, including interest expenses
incurred during the period of construction based on the loans obtained for the vessels.
Depreciation is calculated on a straight-line basis to the estimated residual value over the estimated
useful life of the major components of the vessels. The new vessels contracted by the group are
estimated to have a useful economic life normally of 20 years, depending on the specifications and
expected kind of employment. Residual value is estimated as the lightweight tonnage of each vessel
multiplied by the current market scrap value per ton, which is reassessed every year. The vessel tank
coatings are depreciated over ten years and the dry dock element is depreciated over the period to the
expected next dry dock. The remaining useful economic life is estimated at the date of acquisition or
delivery from the shipyard and is periodically reassessed.
Vessels in the course of construction (new buildings) are shown at cost less any identified impairment
losses. Costs relating to new buildings include instalment payments made to date, and other vessel costs
incurred during the construction period including capitalised interest. Depreciation commences upon
vessel delivery.
The gains or losses incurred on the disposal of vessels are recognised when the significant risks and
rewards of ownership of the vessel have been transferred to the buyer, and these are measured as the sale
price net of costs relating to the disposal and the carrying amount of the vessel.
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Dry-docking costs
To comply with industry certification or governmental requirements, the vessels are required to undergo
planned major inspections or classification (dry-docking) for major repairs and maintenance, which
cannot be carried out while the vessels are operating. The vessels’ dry-dock takes place approximately
every 30 months, depending on the nature of work and external requirements. The costs of dry-docking,
which may include some related costs, are capitalised and depreciated on a straight-line basis over the
period to the next dry-docking. If the next dry-docking of a vessel is performed in less than 30 months
from the last dry-docking date, the balance on the original dry-dock is written off.
For new buildings and other vessels acquired, the initial dry-docking asset is segregated and capitalised
separately. The cost of such assets is estimated based on the expected costs related to the first drydocking.
Impairment of assets
The values of the vessels are periodically reviewed considering market conditions. The carrying amount
of the vessels is tested for impairment whenever events or changes in circumstance indicate that the
carrying amount may not be recoverable. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment. Recoverable amount is normally
defined as the higher of an asset’s fair value less costs to sell and its value in use, that is, the net present
value of the cash flow from its remaining useful life. In assessing value in use the estimated future cash
flow from its remaining useful life are discounted to their present value. Write down is made for any
impairment of vessels. An impairment loss recognised in prior years is reversed if the current estimated
value in use is higher than at the time the impairment loss was recognised.
Management judgment is critical in assessing whether events have occurred that may impact the carrying
value of the Group’s vessels and in developing estimates of the future cash flow, future charter rates,
ship-operating expenses, and the estimated remaining useful lives and residual values of those vessels.
These estimates are based on historical trends as well as future expectations.
Operating leases (Charter Agreements)
The charter-in and charter-out agreements relating to the vessels, where substantially all the risks and
rewards of ownership are not transferred to the lessee, are treated as operating leases, and lease payments
and income are recognised to the income statement on a straight-line basis over the lease term. The
obligation for the remaining lease period relating to the charter-in contracts is disclosed as a commitment
in the notes to the financial statements.
Inventories
Inventories relate to Intermediate Fuel Oil (IFO), Marine Diesel Oil (MDO) and Luboil on board vessels.
IFO and MDO inventories of fuel and luboils on board the vessels are shown at cost calculated using the
first in first out method.
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Financial instruments
Financial instruments, i.e. contracts giving rise to financial assets and financial liabilities or equity
instruments of another entity, as defined in IAS 32 (Financial Instruments: Presentation), are recognised
at their fair value when the Group becomes party to the contractual provisions of the instrument (trade
date). Liabilities are classified in accordance with the substance of the contractual arrangement from
which they arise and the relevant definitions of a financial liability. For contracts negotiated at market
price, the fair value of the instrument is equivalent to the purchase cost (nominal value of the
transaction). The external costs and income from transactions directly attributable to the negotiation,
such as intermediation costs, are included during initial recognition of the instrument, unless measured at
fair value. The measurement of financial assets is performed, depending on the characteristics of the
instrument, at fair value or on the basis of amortised cost. Financial liabilities are measured on the basis
of amortised cost. The measurement at fair value is applied only to any financial liabilities held for
trading and to the derivative financial instruments. The ‘fair value’ is the amount for which an asset
could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction. The measurement on the basis of amortised cost involves the recognition of the asset or
liability at the value initially measured, deducting any redemption of equity, increased or decreased by
overall depreciation, applying the effective interest method, on any difference between the initial value
and that at maturity. These amounts shall in any case be adjusted following a decrease of value or an
irrecoverable condition. The effective interest rate is the rate that reduces at source the future contractual
cash flows to the net amount of the financial asset or liability. The calculation also includes the external
expenses and income directly assigned during initial recognition of the financial instrument.
The accounting policies adopted for specific assets and liabilities are disclosed below.
Trade and other receivables
Receivables arising from outstanding freight are initially measured at their nominal value (representative
of the ‘fair value’ of the transaction) and are subsequently measured at amortised cost, net of writedowns for impairment and allowance for credit losses. Impairment is recognised in the income statement
when there is objective evidence that the asset is impaired. Such write-downs are calculated as the
difference between the carrying amount and the present value of estimated future cash flows, discounted
at the asset original effective interest rate. Particularly with regard to short-term trade receivables,
considering the short period of time, the measurement at amortised cost is equivalent to the nominal
value, less write-downs for impairment.
Allowances for credit losses are made when management considers the full recovery of a receivable to
be in doubt. If management considers the amounts non-recoverable then they are written off to the
income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in-hand, current accounts and deposits held on demand with
banks, and other short-term highly-liquid investments readily convertible to a known amount of cash
within six months from inception and are subject to an insignificant risk of changes in value. Cash and
cash equivalents are measured at fair value, corresponding to their nominal value, or at cost plus interest
charges, if any.
Banks and other lenders
Interest-bearing bank loans relating to the financing of the vessels and overdrafts are recorded on the
basis of the amounts received net of transaction costs and are subsequently measured at amortised cost,
using the effective interest rate method, with the difference between the loan proceeds and the nominal
value being recognised in the income statement over the term of the loan.
Trade and other payables
Trade and other payables are measured at amortised cost which, considering the characteristics and
maturity of such payables, is generally equivalent to the nominal value.
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Derivative instruments
Derivative financial instruments are primarily used to hedge the exposure to interest rate risks (interest
rate swap) and currency fluctuations. Forward currency contracts used to partially hedge exposure on the
vessel purchase options (denominated in Japanese yen), in accordance with IAS 39 (derivative financial
instruments) qualify for hedge accounting only when at the inception of the hedge there is formal
designation and documentation of the hedging relationship, the hedge is expected to be highly effective,
its effectiveness can be reliably measured and it is highly effective throughout the financial reporting
periods for which the hedge is designated. All derivative financial instruments are measured in
accordance with IAS 39 at fair value. They are initially recognised at cost and subsequently stated at fair
value as other receivables or other liabilities respectively. When derivative financial instruments qualify
for hedge accounting, the following accounting treatment applies:
Cash flow hedge – These are derivatives to hedge exposure to fluctuations in future cash flows arising in
particular from risks relating to changing interest rates on loans or currency risks relating to Yen loans
and commitments. Changes in the fair value of the ‘effective’ portion of the hedge are recognised to
other comprehensive income while the ineffective portion is recognised in the income statement. Hedge
effectiveness, i.e. its ability to adequately offset fluctuations caused by the hedged risk, is periodically
tested, in particular analysing correlation between the ‘fair value’ or the cash flows of the hedged item
and those of the hedging instrument.
Fair value hedge – Hedging instruments fall within this classification when used to hedge changes in the
fair value of an asset or liability that are attributable to a specific risk. Changes of value related both to
the hedged item, in relation to changes caused by the underlying risk, and to the hedging instrument are
recognised to the income statement. Any difference, representing the partial ineffectiveness of the hedge,
therefore corresponds to the net financial effect.
With regard to financial instruments that do not qualify for hedge accounting, changes arising from the
fair value assessment of the derivative are recognised in the income statement.
Provisions for risks and charges
Provisions for risks and charges are recognised when the Group has a present obligation as a result of a
past event and it is likely that the Group will be required to settle that obligation. Provisions are
measured at the Directors’ best estimate of the expenditure required to settle the obligation at the
financial position date and are discounted to present values where the effect is material.
Treasury shares
Treasury shares, following the buy-back program, are recognised at cost and are presented as a
deduction from equity (under separate item of equity). The original cost of treasury shares and the
proceeds of any subsequent sale are presented as movements in equity.
Dividends
Dividends payable are reported as a movement in equity in the period in which they are approved by
shareholders’ meeting.
Critical accounting judgments and key estimates
The preparation of the financial statements requires Directors to make accounting estimates and in some
cases assumptions in the application of accounting principles. The Directors’ decisions are based on
historical experience as well as on expectations associated with the realisation of future events,
considered reasonable under the circumstances. Critical accounting estimates and judgments are
exercised in all areas of the business. The key areas where this applies are listed in the following
paragraphs.
Vessel carrying values. The carrying value of vessels may significantly differ from their market value.
It is affected by the Management’s assessment of the remaining useful lives of the vessels, their residual
value and indicators of impairment. If the carrying value of vessels exceeds the recoverable amount then
an impairment charge is recognised.
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Tax liabilities. The tax liabilities are calculated based on our tax situation as affected by the regulatory
frameworks of the jurisdiction in which we operate. The liability for tax may be affected by changes in
the treatment or assessment of trading income, freight tax, tonnage tax and value added tax.
Segment information
d’Amico International Shipping only operates in one business segment: Product Tankers. With reference
to geographical area, the Group only has one geographical segment, considering the global market as a
whole, and the fact that individual vessels deployment is not limited to a specific area of the world. As a
result, no geographical segment information is necessary.
New accounting principles
Accounting principles adopted from 1st of January 2011
There are no new International Financial Reporting Standards or IFRICs applicable with respect to those
applied for 31 December 2010 year end.
Accounting principles, amendments and interpretations not yet effective
At the financial position date the following significant Standards and Interpretations, which are
applicable to the company, were in issue but not yet effective:
IFRS 7 “Disclosures – Transfers of Financial Assets” is concerned with increased disclosure
requirements for transactions involving transfers of financial assets. These amendments are intended to
provide greater transparency around risk exposures when a financial asset is transferred but the
transferor retains some level of continuing exposure in the asset. The amendments also require
disclosures where transfers of financial assets are not evenly distributed throughout the period.
IFRS 9 “Financial Instruments” is concerned with the classification and measurement of financial assets
when determining whether financial assets should be recorded at amortised cost or at fair value, and the
associated accounting treatment of embedded derivatives within financial assets. The standard is
applicable for accounting periods beginning on or after 1 January 2015 but early adoption is allowed.
IFRS 13 “Fair Value Measurement” provides guidance on how to measure fair value when it is required
or permitted by other IFRS’s and contains extensive disclosure requirements to enable users of financial
statements to assess the methods used by entities when developing fair value measurements and the
effects of such measurements on financial results. The standard is applicable for accounting periods
beginning on or after January 1, 2013 but early adoption is allowed.
The directors do not anticipate that the adoption of Standards and Interpretations in issue but not yet
effective will have a material impact on the financial statements.
(2)
Risk Management
The d’Amico International Shipping SA (DIS or the Group) activities expose it to a variety of financial
risks and the risk management is part of the d’Amico International Shipping strategy. The shipping
industry is highly sensitive to market fluctuations, which can determine significant fluctuations in freight
rates and tonnage prices. The overall risk management aim is to reduce the DIS’s earnings exposure to
cyclical fluctuations.
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Market risk
DIS and its subsidiaries are exposed to market risk principally in respect of vessels trading on the spot
market earning market rates. In particular, when chartering-in vessels hire rates may be too high to turn
out profitable and, conversely, when chartering-out vessels the hire rates may be too low to ensure an
adequate return. The following risk management strategies are applied: (i)The Group aims to have a
fixed contract coverage between 40-60%, thus ensuring the exposure to the spot market does not exceed
60%, depending on the market conditions, the trend of rates and expectations; (ii) The vessel trade
partially in Pools to reduce the impact of specific risk affecting an individual vessel; (iii) The vessel
trade on a worldwide basis to reduce the effect of different market conditions and rates of different
routes between the Eastern and Western hemisphere; (iv) The Group directly or via its pools enters into
contracts of affreightment (COA) at fixed rates, which involve the shipment of an agreed number of
future cargoes at fixed rates. DIS/DTL do not normally use derivative financial instruments to manage
their exposure to vessel spot market rates.
Technical and Operational risks
The Group is exposed to operating costs risk arising from the variable costs of vessel operations. The
key areas of operating cost risk are Crew Costs, Bunkers, Dry dock and repair costs and Insurance. The
Risk management includes the following strategies: (i) The crew policy is coordinated through the
support of d’Amico Group, to have synergies and economies of scale, making reference to the d’Amico
expertise in crewing (training school, company specialised in this kind of service), looking on the
opportunities available in different area to keep the high crew quality, but controlling the costs; the
Safety & Quality Department (SQE), whose focus is to ensure that the vessels and its staff comply fully
with external requirements such as regulatory requirements and certifications, etc; (ii) Bunker prices DTL review their exposure to the cost of bunkers on fixed rate contracts of affreightment. Where
appropriate, management use fuel oil swap contracts to hedge the future movements in bunker prices;
(iii) Dry dock contracts – The technical management, which also includes dry-dock, is also coordinated
through the support of d’Amico Group, allowing economies of scale when dry docks have to be arranged
and related level of cost/quality have to be measured. Similarly happens for repair costs. The policy to
keep a young fleet also helps to minimise the risk; (iv) Fleet insurance - Various casualties, accidents
and other incidents may occur in the course of the vessels operation, which may result in financial losses
taking also into consideration the number of national and international rules, regulations and
conventions. In order to reduce or eliminate any financial loss and/or other liability that it might incur in
such a situation, the fleet is insured against various types of risk. The total insurance program provides a
large cover of risk in relation to the operation of vessels and transportation of cargos, including personal
injury, environmental damage and pollution, third-party casualty and liability, hull and engine damage,
total loss and war; (v) Piracy risks – As a result of the increase in the number of armed attacks in water
off the coast of Somalia, particularly in the Gulf of Aden it has been established a double set of
countermeasures in order to: (a) Minimise the risk during the transit in the Aden area and make the
navigation safer; (b) Check the suitability of the insurance structure currently in force as to ensure that
the events arising out from the particular situation are duly covered. Some precautions to be applied by
the vessels as well as some external contacts/assistance to be managed from the office have been
implemented. A detailed analysis of the situation has allowed DIS/DTL, together with the d’Amico
Group, to prepare guidelines to be followed by any vessel while in the risk zone. Moreover, in order to
get as much information as possible and be kept updated on the issue, the monitoring of the websites
dedicated to the piracy problem is done. On the potential insurance issue, DIS/DTL ascertained that the
main risks inherent to piracy, are included into its covers, as follows: (a) Loss of or damage to the vessel
due to piracy attacks – This risk is covered under the Hull & Machinery policy, according to what
provided at clause 6.5 “Perils” of the Institute Time Clauses Hulls, 1/10/83, where piracy is one of the
named perils; (b) Ransom – Ransom payments tend to be treated as sue and labour expenses when only
Hull Insurers are involved or as a general average, thus involving also cargo interests, when vessels are
laden; (c) Loss of hire - Piracy is included among the covered risks, irrespective of whether the vessel
has suffered damage or not due to the pirates’ attack; (d) Third parties liabilities – Our P&I cover
protects from unjustified third-party claims and indemnifies legitimate claims.
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Foreign exchange risk
The Group is exposed to currency risk in respect of transactions denominated in currencies other than
U.S. Dollars – being the company functional currency - principally Euros and Yen. In particular, DIS
(through its operating subsidiary d’Amico Tankers Ltd – Ireland) has JPY denominated borrowings, for
vessels under construction to be paid in JPY and a number of vessel purchase options denominated in
Yen that are potentially exercisable over the next few years. The following risk management strategies
are applied: (i) Policy to hedge the JPY loan exposure, depending on the foreign exchange market
conditions and expectations; (ii) Based on the due dates relating to the instalments for the vessels under
constructions to be paid in JPY and if current exchange rates are considered favourable, then a forward
currency contract may be used to hedge the expected JPY price for the period to the expected due date;
(iii) When the exercise of a purchase option is considered to be likely (based on the remaining time to
exercise and the exercise price) and if current exchange rates are considered favourable then a forward
currency contract is used to hedge the expected Yen price for the period to the expected delivery date;
(iv) Where possible the group transacts in US Dollars; (v) In the case that dividends are declared and
paid in Euro, the amount payable is hedged by the holding of a specific Euro balance.
Interest rates
The Group is exposed to interest rate risk arising from the fact that the credit facilities and bank deposit
earn interest at a variable rate. The risk management strategies provide that: (i) A portion of the
DIS/DTL facilities is fixed using Interest rate swap (IRS) agreements. The agreements are classified as a
hedge for accounting purposes (IAS39) and the effective portion of the gain or loss on the hedging
instrument will be recognised under comprehensive income. Management consider that by fixing a
proportion of the loan interest this will improve the visibility of future interest costs, at a level
considered appropriate for the business and allowing DIS/DTL to reduce the risk of significant
fluctuations in interest rates. To comply with the on-going requirements of hedge accounting the
effectiveness of the hedge is reviewed and confirmed on a quarterly basis; (ii) Management continuously
review interest rates available in the market to ensure the facilities are competitive.
Liquidity risk
The Group is exposed to liquidity risk from the possible mismatch between cash requirements,
principally for vessel purchase and credit facility repayments and group cash flows. To minimise this
risk, DIS Group maintains adequate facilities and standby credit lines to meet forecast expenditure.
Management regularly reviews group facilities and cash requirements.
Credit risk
The Group is exposed to credit risk resulting from the possible non-performance of any of its
counterparties, primarily customers, agents and joint venture partners. To minimise the risk DIS/DTL
have the following risk management strategies: (i) The customer’s portfolio is essentially made up of a
large base of oil majors, chemical multinational companies, with lower risk. The outstanding receivables
are reviewed on a timely basis. The recovery of demurrage claims and charter expenses is followed by a
dedicated team. Historically DIS has not experienced significant losses on trade receivables; (ii)
Suppliers: as far as services received are concerned (e.g. crew availability/management, technical
services) and bunker, the payments are scheduled to minimise credit risk. For yards delivering the ships
under construction, advance payments are covered by appropriate bank guarantee for the success of the
deal; (iii) Relationships with agents are managed through an in-house team with significant experience.
Commencing in 2007, the Group also refers, for the payments to be made to the port agents, to DA
Desk, a professional and external organisation specialised in managing the tasks; (iv) Pool partners: for
High Pool and Glenda Pool, responsibility for management of credit risks remains with the Group; (v)
Banks: the policy of the Company is to have relationships only with large banks with strong credit
ratings, specialised in shipping and with first class reputation; (vi) Group reviews total exposure under
agreements.
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181
Fraud risk
The Group is exposed to fraud risk resulting from the significant volume and value of transactions
processed. To minimise the risk the DIS/DTL have the following risk management strategies: (i) Limits
of powers and authority set for all individuals (e.g. power of attorneys restricted in object, limit amount
for transactions); (ii) Controls over bank signatories (e.g. four eyes principle for specific transactions);
(iii) Controls over tendering process; (iv) The Internal Audit function is operating, together with the
Audit Committee; (v) The Company, due to Stock market in Star segment rules of Borsa Italiana, on 3rd
May 2007, had to apply the Italian D.Lgs. 8 June 2001, n.231, which has introduced the administrative
liability of the company and of other bodies for specific types of Crime committed by its directors or
employees. Legislative Decree 231/2001 provides that companies are liable for those crimes committed
in the interests or for the benefit of the same by subjects holding a so called “top level” role. The Decree
provides for the implementation of a compliance program that aims to develop an organic and structured
system of procedures, rules and controls to be implemented both preventively (ex-ante) and subsequently
(ex post), in order to reduce and prevent in a material way the risk of commission of the different types
of Crimes. DIS, on 12 March 2008, has formally adopted this Model of Organisation and now is
implementing specific operating procedures in order to prevent the commission of crime.
(3)
Capital Disclosure
The d’Amico International Shipping Group (‘DIS’) objectives in managing capital are:
●
To safeguard the Group’s ability to continue as a going concern, so it can continue to provide
returns for shareholders and benefits for other stakeholders, and
●
To provide an adequate return to shareholders by operating the vessel in the spot/time charter
contracts market balancing the level of the commercial risk.
The capital of the Group was established at the beginning of 2007 as part of the IPO process, taking into
consideration the risks affecting d’Amico International Shipping and the industry where the Group
operates.
In addition to the equity, the Group capital structure includes various bank facilities and credit lines (cfr.
Note 20).
The capital structure, other than the Equity principally consists of the banks facilities in place at
d’Amico Tankers Limited, GLENDA International Shipping Limited and DM Shipping Limited levels.
The capital structure is reviewed during the year and – if needed - adjusted depending on the Group
capital requirements, changes in the general economic conditions and industry risk characteristics. The
Group monitors its capital on the basis of the ‘assets cover ratio’ being the drawdown amounts on its
facilities over the fair market value of the vessels owned.
(4)
Revenue
2011
2010
U.S.$ Thousand
Revenue ................................................................................................291,721
305,592
Revenue represents vessel income comprising time charter hire, freight, demurrage and income from
participation in vessel pools. Only one customer is generating more than 10% of the Group revenues,
reaching U.S.$63.2 million in 2011; in 2010 the same customer totalled U.S.$52.5 million.
A15761609
182
(5)
Voyage Costs
2011
2010
U.S.$ Thousand
Bunkers (fuel) ................................................................................................
76,788
Commissions payable ................................................................
69,408
4,981
5,329
Port charges................................................................................................
20,288
24,595
Other ................................................................................................
2,659
6,917
Total................................................................................................
104,716
106,249
Voyage costs are operating costs resulting from the employment, direct or through our partnerships, of
the vessels of the fleet, in voyages undertaken in the spot market and under Contracts of Affreightment.
Time charter contracts are net of voyage costs.
(6)
Time Charter Equivalent Earnings
2011
2010
U.S.$ Thousand
Time charter equivalent earnings ................................................................
187,005
199,343
Time charter equivalent earnings represent revenue less voyage costs. In 2011 about 48.1% of the Time
Charter Equivalent earnings came from fixed contracts longer than 12 months (46% in 2010).
(7)
Time Charter Hire Costs
2011
2010
U.S.$ Thousand
Time charter costs ................................................................
89,761
Time charter hire costs represent the cost of chartering-in vessels from third parties.
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183
102,314
(8)
Other Direct Operating Costs
2011
2010
U.S.$ Thousand
Crew costs................................................................................................
26,388
23,736
Technical expenses................................................................
14,184
14,008
2,746
2,439
Technical and quality management ................................................................
4,101
3,783
Other direct operating costs ................................................................
5,984
9,401
53,403
53,367
Luboil................................................................................................
Total................................................................................................
Other direct operating costs include charter-in expenses, crew costs, technical expenses, technical and
quality management fees, and sundry expenses originating from the operation of the vessel, including
insurance costs.
Personnel
As at 31 December 2011, d’Amico International Shipping SA and its subsidiaries employed 471
seagoing personnel and 45.5 onshore personnel. The average number of employees was of 502 (2010:
410). Onshore personnel costs are included under general and administrative costs. The Group has no
relevant liabilities with regard to pensions and other post-retirement benefits.
(9)
General and Administrative Costs
2011
2010
U.S.$ Thousand
Personnel................................................................................................11,636
Other general and administrative costs ................................
Total................................................................................................
11,140
7,694
7,638
19,330
18,778
Personnel costs relate to on-shore personnel salaries. Personnel costs also comprises the amount of
U.S.$1.4 million (2010: U.S.$1.7 million) relating to directors fees and an amount of U.S.$2.0 million
for senior managers including the CEO and other managers with strategic responsibilities.
The other general and administrative costs comprise consultancy, office rental fees, and other sundry
expenses originating from the operation of the Group companies. They include infra-group management
fees on brand and trademark, IT, Legal and Internal Audit services for U.S.$1.2 million.
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184
(10) Other Operating Income
2011
2010
U.S.$ Thousand
Other operating income................................................................
3,205
5,557
Other operating income represents chartering commissions earned for services provided by Group
personnel to non-related external clients.
(11) Result from Disposal of Vessels
2011
2010
U.S.$ Thousand
Profit on disposal of vessel ................................................................
3,286
–
2011
2010
The profit concerns the sale of High Century, sold in October.
(12) Net Financial Income (Charges)
U.S.$ Thousand
Loans and receivables:
Interest Income – Banks................................................................
372
677
Realised on financial activities................................................................ 524
–
At fair value through income statement:
Forward contracts................................................................................................
50
21
Other financial income................................................................
–
1,247
Total financial income................................................................
946
1,945
Financial liabilities measured at amortised cost:
Interest expense................................................................................................
(11,468)
(10,520)
At fair value through income statement:
A15761609
Other financial charges ................................................................
(3,807)
(10,433)
Total financial charges ................................................................
(15,275)
(20,963)
Net financial charges................................................................
(14,329)
(19,018)
185
Financial income comprises interest income on bank accounts and realised profits on financial activity
(portfolio investment and forward currency contracts). No foreign exchange gain was realised in
commercial transactions and balances in currencies different from U.S.$(2010: U.S.$1.2 million).
Financial charges comprise interest expense on bank loans and expenses relating to swap arrangements
amounting to U.S.$11.5 million (2010: U.S.$11.2 million) and fees paid to banks relating to bank loans.
Other financial charges of U.S.$3.7 million (2010: U.S.$10.4 million) include all foreign exchange
differences, of which U.S.$2.9 million arising from the conversion into US Dollar of the Japanese Yen
denominated loans.
(13) Income Taxes
2011
2010
U.S.$ Thousand
Current income taxes ................................................................
(636)
513
Deferred taxes ................................................................................................–
–
Other taxes ................................................................................................
–
Total................................................................................................
–
(636)
513
Effective from 1 January 2007, d’Amico Tankers Limited qualified to be taxed under the Tonnage Tax
regime in Ireland; DM Shipping Limited obtained the ruling commencing 1 January 2009 and Glenda
International Shipping in 2010.
The tax liability under the tonnage tax regime is based on the controlled fleet’s notional shipping
income, which in turn depends on the total net tonnage of the controlled fleet. The 2011 tonnage tax
provision for d’Amico Tankers Limited, DM Shipping and Glenda International Shipping amounted to
U.S.$0.2 million. The income tax charges relate to activities, which are not eligible for tonnage tax and
are taxed at 25%.
The holding company, d’Amico International Shipping SA had, at the end of 2011, accumulated tax
losses to be carried forward of approximately Euro 30.5 million (U.S.$39.4 million). The Luxembourg
corporate income theoretical tax rate is of 30%. No deferred tax asset has been accounted for as the
Company has no trading activity. The holding company is subject to the Luxembourg Net Wealth Tax
regime; for 2011 the calculated net assets did not generated a tax charge.
(14) Tangible Assets
Fleet
Dry-dock
Other assets
Total
U.S.$ Thousand
Cost
At 1 January 2011 ................................692,996
A15761609
12,122
2,537
707,655
Additions................................
59,783
4,889
28
64,700
Disposal ................................
(24,000)
(7,212)
(32)
(31,244)
(2)
(2)
Exchange Differences ................................ –
–
At 31 December 2011 ................................
728,779
9,799
186
2,531
741,109
Fleet
Dry-dock
Other assets
Total
U.S.$ Thousand
Depreciation
At 1 January 2011 ................................155,849
6,315
1,208
163,372
Charge for the period ................................
32,069
4,703
278
37,050
(6,490)
(32)
(6,944)
(3)
(3)
Disposal ................................
(422)
–
At 31 December 2011 ................................
187,496
4,528
1,451
193,475
5,271
1,080
547,634
Net book value
At 31 December 2011 ................................
541,283
The table below shows, for comparison purposes, the changes in the fixed assets in 2010.
Fleet
Dry-dock
Other assets
Total
U.S.$ Thousand
Cost
At 1 January 2010 ................................643,899
11,640
2,336
657,875
204
82,117
Additions................................
77,185
4,728
Disposal ................................
(28,088)
(4,246)
(5)
(32,339)
–
2
2
At 31 December 2010 ................................
692,996
12,122
2,537
707,655
At 1 January 2010 ................................128,189
6,116
853
135,158
Charge for the period ................................
27,660
4,444
363
32,467
Depreciation
Disposal ................................
–
(4,245)
(6)
(4,251)
(2)
(2)
–
At 31 December 2010 ................................
155,849
6,315
1,208
163,372
5,807
1,329
544,283
Net book value
At 31 December 2010 ................................
537,147
Tangible fixed assets are comprised of the following:
Fleet
Fleet includes the purchase costs for owned vessels, and payments to yards for vessels under
construction. Additions in 2011 relate to the instalments paid on new-buildings and to the purchase of
the M/T High Century, then sold during the month of October; capitalised instalments at Group level for
2011 is U.S.$35.7 million (2010: U.S.$56.6 million) and capitalised interest is U.S.$0.1 million (2010:
U.S.$1.0 million). The carrying value of the vessels under construction is of U.S.$45.3 million (2010:
U.S.$93.3 million). Mortgages are secured on all the vessels owned by the Group - for further details see
note 20.
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187
The carrying amount of the vessels has been reviewed to ensure they are not impaired. The recoverable
amount is defined as the higher of an asset’s fair value less costs to sell and its value in use, represented
by the net present value of the cash flow from its remaining useful life. In the assessment, the estimated
future cash flows from its remaining useful life are discounted to their present value.
For impairment test purposes, the management estimates take into consideration the market information
available, including reported sales of similar vessels, as well as future expectations, and have been based
on the following key assumptions: (i) Earnings: under contracts recently concluded and the estimate of
future rates; (ii) Useful economic life of 20 years; (iii) Estimated economic value at end of life based on
current rates (iv) Costs reflect the current d’Amico structure; (v) The figures have been discounted based
at a rate of 6.0%, which represents the current and expected profile of the company’s required weighted
average cost of capital based on the current cost of financing and required of return on equity. No
impairment loss was recognised as the values in use are significantly higher than the carrying amount of
the vessels. Management note that the calculations are particularly sensitive to changes in the key
assumptions of future hire rates and discount rate. The total market value of the Group fleet, according to
a valuation report provided by a primary shipping broker at the end of December 2011, is of U.S.$486.8
million.
Dry-dock
Dry-docks include expenditure for the fleet’s dry docking programme and disposal of amortised dry
docks; a total of eight vessels dry-docked in the year.
Other assets
Other assets mainly include fixtures, fittings, office equipment.
(15) Inventories
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Inventories ................................................................
17,522
21,172
Inventories represent stocks of Intermediate Fuel Oil (IFO), Marine Diesel Oil (MDO) and luboils on
board vessels.
(16) Receivables and other Current Assets
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Trade receivables ................................................................
A15761609
23,208
40,983
Other debtors................................................................
279
5,214
Prepayments and accrued income ................................
16,130
21,350
39,617
Total................................................................................................
67,547
188
Receivables, as at 31 December 2011, include trade receivables amounting to U.S.$23.2 million, net of
the write down provision of U.S.$0.8 million. Other current assets principally consist of prepayments
and accrued income amounting to U.S.$16.1 million. Trade receivables do not contain significant
balances past due by more than 90 days.
(17) Current Financial Assets
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Current financial assets ................................................................
14,396
8,250
The amount of U.S.$14.4 million represents the fair value of the amounts invested during the year in
highly rated bonds acquired. The fixed income securities are listed on recognised stock exchanges, are
redeemable within three to five years and have an effective yield of 3.55%.
(18) Cash and Cash Equivalents
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Cash and cash equivalents................................
51,068
68,266
Cash and cash equivalents is mostly represented by short term deposits and includes approximately
U.S.$5.8 million of cash held by Pool companies (High Pool Tankers Ltd and Glenda International
Management Ltd) which were distributed to other pool participants in January 2012. The balance include
also U.S.$2.5 million secured in connection with the Mizuho facility, U.S.$10.0 million on deposit with
ABN Amro/Mees Pierson and U.S.$10.0 million on deposit with Crédit Agricole CIB.
(19) Shareholders’ Equity
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Share capital................................................................
149,950
149,950
Retained earnings................................................................
118,433
139,446
47,098
43,710
315,481
Total................................................................................................
333,106
Other reserves ................................................................
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189
Share capital
The authorised capital of the Company amounts to U.S.$200,000,000 represented by 200,000,000.00
shares without nominal value. All shares pertain to the category of ordinary shares. The subscribed and
fully paid-up capital of U.S.$149,949,907.00 (corresponding to €114,465,577.86 at the current exchange
rate) is represented by 149,949,907 shares without nominal value. The shares have equal voting and
dividends rights, rank equally with regard to the Company’s residual assets and in general have those
rights and obligations provided by the Company’s Articles of Association and by the applicable
Luxembourg laws.
Retained earnings
The item includes previous year and current net result, and deductions for dividends distributed.
Other reserves
The other reserves include the following items:
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Share premium reserve................................................................
71,389
Treasury shares ................................................................
Fair value reserve................................................................
Other ................................................................
71,389
(16,356)
(15,680)
(7,617)
(11,754)
(318)
(245)
47,098
Total................................................................................................
43,710
Share premium reserve
The share premium reserve arose as a result of the Group’s IPO and related increase of share capital,
which occurred at the beginning of May 2007. Certain costs and charges connected with the share capital
increase and the listing process (mainly bank commissions and related advisory fees and charges) have
been offset at that time.
Treasury shares
Treasury shares at the end of 2011 consist of 5,090,495 ordinary shares (2010: 4,390,495) for an amount
of U.S.$16.4 million (2010: U.S.$15.7 million), corresponding to 3.39% of the outstanding share capital
at the financial position date (2010: 2.93%). These shares were acquired in 2007 and 2008 and during
the second half of 2011, following the approval of the Buy-back program.
Fair value reserve
The fair value reserve arose as a result of the valuation of the Interest Rate Swap agreements connected
to the Crédit Agricole facility to their fair value of U.S.$7.6 million (liability). Details of the fair value of
the derivative financial instruments are set out in note 24.
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190
(20) Banks and other Lenders
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Banks and other lenders ................................................................
282,492
284,658
Current liabilities
Banks and other lenders ................................................................
14,864
11,065
297,356
Total................................................................................................
295,723
The balance comprises the following debts:
As at
31 December 2011
Non-current
Current
As at
31 December 2010
Total
Non-current
Current
Total
U.S.$ Thousand
Crédit Agricole................................
149,460
–
149,460
149,258
–
149,258
Mizuho ................................
23,407
4,967
28,374
26,858
4,730
31,588
Crédit Agricole
– DNB ................................
10,565
–
10,565
–
–
–
CommerzbankCrédit Suisse................................
73,382
6,578
79,960
80,926
3,174
84,100
Mitsubishi UFJ
Lease ................................25,678
3,319
28,997
27,616
3,161
30,777
282,492
14,864
297,356
284,658
11,065
295,723
Current debt refers to amounts payable within one year; the balance repayable in 2013 is approximately
equivalent to this amount.
Crédit Agricole Corporate & Investment Bank (former Calyon) facility
The debt due to banks and other lenders as at 31 December 2011 relates, for an outstanding amount of
U.S.$150.5 million (U.S.$149.5 million net of the unamortised portion of the arrangement fees paid at
draw-down, amounting to U.S.$1.0 million), to the originally U.S.$350.0 million revolving loan facility
(of which U.S.$181.7 million is available for draw-down as at 31 December 2011) negotiated by
d’Amico Tanker Limited with Crédit Agricole CIB and other banks (Intesa Sanpaolo S.p.A., Fortis
Bank, Nederland, N.V., The Governor and the Company of the Bank of Ireland, Norddeutsche
Landesbank Girozentrale, and Scotiabank Ireland Limited).
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191
The key terms and conditions of the facility are the following: the principal amount available through the
ten year facility period at any given time is reduced by U.S.$15.5 million every six months down to a
final reduction of U.S.$40.0 million at maturity (2017). The ratio between the amount outstanding at any
given time and the fair market value of the thirteen vessels (the ‘asset cover ratio’) owned by d’Amico
Tankers Limited (the ‘borrower’), which are currently subject to mortgages pursuant to the facility, must
not be higher than 66.6%.
Interest is payable at a rate of LIBOR plus 0.65%, if the asset cover ratio of d’Amico Tankers Limited
and its consolidated subsidiaries is below 50%, and LIBOR plus 0.95%, if such ratio is equal to or higher
than 50%. In addition, the maximum amount that the borrower can draw-down also depends on its
EBITDA to financial costs ratio. The following standard covenants are also in place: (i) cash available,
including undrawn credit lines of more than 12 months, must be at least U.S.$40.0 million (ii) net worth,
which is defined as book equity plus subordinated shareholder loans, as recorded in the statement of
financial position, must not be less than U.S.$100.0 million and (iii) equity to asset ratio must not be
lower than 35.0%.
The facility is secured through a guarantee by the parent Company, d’Amico International Shipping SA,
and provides mortgages on thirteen of the Company’s owned vessels.
The outstanding loan facility has been shown entirely under long-term debt, since no amortisation of the
drawn-down amount is required and future facility reductions will not reduce availability over the next
twelve months, below indebtedness outstanding as at 31 December 2011.
Mizuho facility
The balance of JPY 2.26 billion relates to the loan facility arranged by the Mizuho Corporate Bank Ltd.,
and syndicated by a pool of Japanese primary banks and leading financial institutions. The Loan Facility
purpose is to finance the acquisition of Japanese product tanker vessels for which d’Amico Tankers
Limited has purchase options and/or the acquisition of other product tanker vessels.
At 31 December 2011 the facility has been draw down for an original amount of JPY 5.0 billion and the
outstanding debt is of JPY 2.26 billion. The contract, over a period of ten years, provides the repayment
of quarterly instalments and an interest cost corresponding to the three month London Interbank Offer
Rate (LIBOR) for Japanese Yen, plus a margin of between 100 and 125 basis points depending on the
financed vessels’ advance ratio.
Similarly to the Crédit Agricole CIB facility, the key terms and conditions of the Mizuho loan provide
that the ratio between the amount outstanding at any given time and the fair market value of vessels (the
‘advance ratio’) owned by d’Amico Tankers Limited, which are subject to mortgages pursuant to the
facility (currently two vessels), must not be higher than 66.6%.
As per Crédit Agricole CIB facility, the maximum amount that d’Amico Tankers Limited can borrow
also depends on the EBITDA to financial costs ratio. Other covenants are the same as provided by the
Crédit Agricole CIB facility. As at 31 December 2011 the Company’s ratio are in compliance with the
facilities’ provisions.
The facility is secured through a guarantee by the parent Company, d’Amico International Shipping
S.A., and provides mortgages on two of the Group’s owned vessels.
The debt due to banks and other lenders as at 31 December 2011 relates, for an outstanding amount of
U.S.$10.5 million, to the U.S.$48.0 million loan facility negotiated by d’Amico Tankers Limited with
Crédit Agricole CIB and DNB NOR Bank ASA (shared pari passu between both entities) signed on the
26 July 2011 to finance two new vessels under construction in Hyundai Mipo Dockyard CO. Ltd Hull2307 (High Seas) and Hull 2308 (High Tide) expected to be delivered respectively by the end of March
and April 2012.
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192
The principal amount available through the seven year facility period will be repaid with 28 consecutive
quarterly instalments, down to a balloon of U.S.$12.8 million per vessel. The ratio between the amount
outstanding at any given time and the fair market value of the two vessels (the ‘asset cover ratio’) owned
by d’Amico Tankers Limited (the ‘borrower’), which are currently subject to mortgages pursuant to the
facility, must not be higher than 65%. Interest is payable at a rate of LIBOR plus 2.10%.
The loan also provide certain usual covenants: (i) cash available, including undrawn credit lines of more
than 12 months, must be at least U.S.$40.0 million (ii) net worth, which is defined as book equity plus
subordinated shareholder loans, as recorded in the statement of financial position, must not be less than
U.S.$100.0 million and (iii) equity to asset ratio must not be lower than 35.0%.
The facility is secured through a guarantee by the parent Company, d’Amico International Shipping SA,
and provides mortgages on the two Company’s owned financed vessels.
Glenda International Shipping Limited / Commerzbank – Crédit Suisse loan
A consolidated amount of U.S.$79.9 million refers to the facility granted by Commerzbank AG Global
Shipping and Crédit Suisse to Glenda International Shipping Ltd for the construction of six newbuildings 47.000 dwt MR Product Tankers (Hyundai Mipo Dockyard Co. Ltd – Korea).
This agreement involves single-vessel loans with a ten-year maturity from vessel delivery, for a total
initial amount of up to U.S.$195.0 million (67% of the contract price to be paid for the vessels) and an
interest cost referenced to the US dollar LIBOR plus a spread varying from 90 to 110 basis points,
depending on the financed vessels’ loan-to-value ratio. Collateral mainly refers to first-priority
mortgages on the vessels. The agreements also provide a covenant relating to the financed vessels’
aggregate loan-to-value- ratio, which should at all times be at least 130%.
DM Shipping Limited – Mitsubishi UFJ Lease
The balance relates to the debt due to Mitsubishi UFJ arising from the loan granted for the acquisition of
the two vessels delivered in 2009. The agreement provides for a loan of JPY 2.8 billion per vessel, to be
repaid in 10 years, through monthly instalments. The interest rates on the loans are fixed for the two
vessels between 2.955% and 2.995%.
The facility is secured through mortgage on the vessels. There are no further relevant covenants on the
loan.
(21) Payables and other Current Liabilities
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Trade payables ................................................................
38,336
52,828
Other creditors ................................................................
8,559
5,648
Accruals & deferred income ................................
2,783
10,379
49,678
Total................................................................................................
68,855
Payables and other current liabilities as at 31 December 2011, include mainly trade payables, of which
an amount of U.S.$9.0 million refers to the related party, Rudder SAM (bunker).
A15761609
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(22) Other Current Financial Liabilities
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
56
–
Fair value of derivative instruments................................
7,617
11,754
7,673
11,754
The balance at the end of 2011 principally represents the fair value of the Interest Rate Swap derivatives
hedging instruments. The derivatives instruments fair values are shown in note 24.
(23) Current Tax Liabilities
As at
31 December 2011
As at
31 December 2010
U.S.$ Thousand
Current tax liabilities................................................................
49
80
The balance at the end of 2011 reflects the income taxes and tonnage taxes payable at year end by the
subsidiaries.
(24) Derivative Instruments
As at 31 December 2011 the following derivative instruments were in place:
Fair value at
31 December 2011
Income statement
financial
income/(charges)
Equity
hedging
reserves
U.S.$ Thousand
Hedge accounting
Interest rate swaps................................
Forward currency contracts................................
Total ................................................................
A15761609
194
(7,617)
50
(7,567)
–
50
50
(7,617)
–
(7,617)
Fair value at
31 December
2010
Income statement
financial
income/(charges)
Equity
hedging
reserves
U.S.$ Thousand
Hedge accounting
Interest rate swaps................................
(11,754)
Forward currency contracts................................
–
(497)
(497)
Total................................................................ (12,251)
(497)
(11,754)
–
(11,754)
The negative outstanding derivative instruments fair value at the end of the year is shown under Other
Current financial liabilities.
Interest rate swaps
In 2007, d’Amico Tankers Ltd (IRL) signed three interest swap contracts (IRS), for a total notional
amount of U.S.$150.0 million for a period of 5 years. The IRS contracts purpose is to hedge the risks
relating to interest rates on the existing Crédit Agricole CIB revolving facility. In 2011, d’Amico
Tankers renegotiated two of these IRS contracts for a total amount of U.S.$50.0 million each, moving
the termination dates respectively to December 2014 and December 2016. At the end of 2012 one IRS
contract totalling 50.0 million will terminate.
The IRS contracts are considered level 2 instruments in that their fair value measurement is derived from
inputs other than quoted prices that are observable.
Forward currency contracts
During the year d’Amico Tankers Limited entered into one forward currency contract of which the next
maturity is 17 January 2012, to hedge the risk of cash deposits denominated in Euro. It is considered as a
level 2 instrument in that his fair value measurement is derived from inputs other than quoted prices.
(25) Information On Financial Risk
As disclosed in the note 2, ‘Risk Management’ d’Amico International Shipping Group is exposed to
some financial risk connected with its operation. This section provides qualitative and quantitative
disclosure on the effect that those risks may have on the Group.
Market risk
Market price risk is the risk that the value of financial instruments will fluctuate as a result of changes in
market prices.
The Group’s investment portfolio, as described in note 17, is susceptible to market price risk arising
from uncertainties about future prices. An increase in market prices of 5% at 31 December 2011 would
have decreased the loss of the Group by U.S.$0.5 million and increased the net assets by the same
amount. A decrease of 5% would have had an equal and opposite impact.
Foreign exchange risk
The Group is exposed to currency risk in respect of transactions denominated in currencies other than
U.S. Dollars – being the group’s functional currency -, principally Euros and Yen.
A15761609
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The Group monitors its exposure to currency risk on a regular basis. Management does not consider the
Group has significant exposure to foreign exchange risk from operational activities side, as principally
the entire Group’s revenues and most part of the operating costs are denominated in United States
Dollars. As a result of the ‘Mizuho facility’ signed on 30 September 2008 (denominated in Japanese Yen
and for an amount up to JPY 10 billion), the Group has also a risk connected to the JPY exchange rate
fluctuations exposure. This risk, assuming no hedge instruments in place, is affecting the financial
charges, considering the debt profile and repayment term (1/52 on a quarterly basis).
Excluding the JPY debt exposure, the foreign exchange risk is relating to cash flows not denominated in
U.S. Dollars, primarily administrative expenses and operating costs denominated in Euros. For 2011,
these payments amounted to U.S.$43.0 million, representing the 15.4% of total operational,
administrative, financial and fiscal expenses, of which 73.9% related to Euro transactions. Other
significant currencies included Singapore dollars (10.91%) and British Pounds (16.37%). A 10%
fluctuation, in the U.S. Dollar exchange rate against all other currencies would have resulted in a
variation of U.S.$4.3 million in the loss of the Group for the year (U.S.$3.1 million in 2010). At 31
December 2011, had the Japanese Yen strengthened/weakened against the US Dollar by 5%, with all
other variables held constant, net assets and the result for the year would have respectively increased by
U.S.$2.6 million or decreased by U.S.$2.9 million.
Interest rate risk
The Group is exposed to interest rate risk arising from the fact that the credit facilities and bank deposits
earn interest at a variable rate and the interest rate swap contracts are valued using the expected future
rates.
As disclosed in note 20, the Group bank loans outstanding at 31 December of U.S.$149.5 million carry
variable interest rates. In order to manage this risk, the Company uses interest rate derivative financial
instruments, interest rate swap contracts, to mitigate the effects of the potential variability of interest
rates. The contracts were signed in connection with the Crédit Agricole Corporate & Investment Bank,
for a notional debt amount of U.S.$150.0 million, fixing the rate for three tranches of U.S.$50.0 million
for periods terminating as described in Note 24. U.S.$30.0 million Mitsubishi UFJ Lease carries a fixed
interest rate, as outlined in note 20.
With all other variables remaining constant, an increase in the level of interest rates of 100 basis points
would have given rise to the increase in the net financial charges by U.S.$1.2 million (U.S.$0.6 million
in 2010) while a reduction in interest rates of 100 basis points would have decrease the net financial
charges by U.S.$2.3M (U.S.$0.6 million in 2010). At 31 December 2011, had interest rates been 1%
higher/lower, with all other variables held constant, then the valuation of the swaps would have
increased the net assets by approximately U.S.$4.8 million or decreased them by U.S.$4.4 million. There
would be no impact on the income statement as the interest rate swaps are designated cash flow hedges.
Credit risk
The Group is exposed to credit risk resulting from the possible non-performance of any of its
counterparties, primarily customers.
At the end of the reporting period 72% of the total trade receivables were due from the Group’s ten
largest customers (2010: 79%). Considering the customers, the risk essentially relates to demurrage
receivable and to some charter expenses, which are analysed and written down, if necessary, on an
individual basis. The total specific allowance for credit losses at 31 December 2011 amounted to
U.S.$0.8 million (2010: U.S.$1.0 million). The top 10 customers represented approximately 55% of the
revenue of the Company during the year.
The Group has significant cash deposits with Calyon Bank, which has a rating of A stable (S&P), and
ABN-AMRO Mees Pierson, which has a rating of A+ negative (S&P). Investments are in highly rated
corporate bonds for which the credit ratings are monitored on a regular basis.
Liquidity risk
The Group is exposed to liquidity risk from the possible mismatch between cash requirements,
principally for vessel purchase and credit facility repayments and Group cash flows.
A15761609
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Details of the maturity of the Group financial assets and receivables are included in note 16 and 17. Note
20 include details of the repayment schedules of the bank loans, while commitments are set out in note
29. The Management believes that the funds and the significant credit lines currently available and the
cash to be generated by the operating activities, will allow the Group to satisfy its requirements from its
investing activities and its working capital needs and to fulfil the obligations to repay the debts at their
natural due date.
Fair value Risk
Management considers the fair value of financial assets and liabilities approximate to their carrying
amounts at the financial position date except for the loan facility with Mitsubishi UFJ. The loan is
reflected at amortised cost, a fair value measurement would give rise in an increase in the carrying value.
(26) Classification of Financial Instruments
Loans and
receivables
Derivatives
used for
hedging
Nonfinancial
assets
Total
2011
U.S.$ Thousand
Assets
Tangible assets ................................................................
–
–
547,634
547,634
Inventories ................................................................
–
–
17,522
17,522
Receivables and other current assets................................
39,487
–
–
39,487
Current financial assets ................................
14,376
–
–
14,376
51,068
–
–
51,068
297,356
–
–
297,356
Payables and other current liabilities ................................
49,678
–
–
49,678
Liabilities
Banks and other lenders ................................
Other financial current liabilities ................................
56
7,617
–
7,673
Current taxes payable ................................
49
–
–
49
Loans and
receivables
Derivatives
used for
hedging
Nonfinancial
assets
Total
2010
U.S.$ Thousand
Assets
Tangible assets .............................................
–
–
544,283
544,283
Inventories ....................................................
–
–
21,172
21,172
Receivables and other current assets............
67,547
–
–
67,547
8,250
–
–
8,250
Cash and cash equivalents............................
68,266
–
–
68,266
Banks and other lenders ...............................
295,723
–
–
295,723
Payables and other current liabilities ...........
68,855
–
–
68,855
Liabilities
A15761609
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Derivatives
used for
hedging
Loans and
receivables
Nonfinancial
assets
Total
2010
U.S.$ Thousand
Other financial current liabilities .................
–
11,754
–
11,754
80
–
–
80
(27) Related Party Transactions
Details of the maturity of the Group financial assets and receivables are included in note 16 and 17. Note
20 include details of the repayment schedules of the bank loans, while commitments are set out in note
29. The Management believes that the funds and the significant credit lines currently available and the
cash to be generated by the operating activities, will allow the Group to satisfy its requirements from its
investing activities and its working capital needs and to fulfil the obligations to repay the debts at their
natural due date.
During 2011, d’Amico International Shipping had transactions with related parties, including its ultimate
Italian parent company, d’Amico Società di Navigazione S.p.A (DSN) and certain of DSN’s subsidiaries
(d’Amico Group). These transactions have been carried out on the basis of arrangements negotiated on
an arm’s length basis on market terms and conditions. The immediate parent company of the group is
d’Amico International S.A. a company incorporated in Luxembourg.
These transactions include a management service agreement (for technical, crewing and IT services)
with d’Amico Group companies, and a brand fee with d’Amico Società di Navigazione S.p.A., for a total
cost amounting to U.S.$3.8 million. The related party transactions also include purchase of Intermediate
Fuel Oil and Marine Diesel Oil, from Rudder SAM, a d’Amico Group controlled company, amounting to
U.S.$76.8 million, included in the bunker cost of the year.
Related party transactions and outstanding balances between d’Amico International Shipping S.A. and
its subsidiaries (intra-group related party transactions) are disclosed in the statutory financial statements.
The effects of related party transactions on the Group’s consolidated income statements for 2011 and
2010 are the following:
2011
Total
2010
Of which
related parties
Total
Of which
related parties
305,592
–
U.S.$ Thousand
Revenue ................................................................
291,721
Voyage costs................................................................
(104,716)
–
(76,788)
(106,249)
(68,976)
Time charter hire costs ................................
(89,761)
(498)
(102,314)
(9,345)
(53,403)
(5,559)
(53,367)
(4,950)
General and administrative costs ................................(19,330)
(1,309)
(18,778)
(1,184)
Other operating income................................
3,205
–
5,557
–
Results from disposal of vessels ................................ 3,286
–
–
–
Net financial income (charges) ................................ (14,329)
–
(19,018)
–
The effects of related party transactions on the Group’s consolidated statement of financial position as at
31 December 2011 and 31 December 2010 are the following:
A15761609
198
As at 31 December 2011
AS at 31 December 2010
Total
Of which
related parties
–
544,183
–
Inventories ................................................................ 17,522
–
21,172
–
Receivables and other current assets...............................
39,617
317
67,547
–
Total
Of which
related parties
U.S.$ Thousand
ASSETS
Non-current assets
Tangible assets ................................................................
547,634
Current assets
14,396
–
8,250
–
51,068
–
68,226
–
282,492
–
284,658
–
14,864
–
11,065
–
Payables and other current liabilities ..............................
49,678
4,105
68,855
3,876
Other financial current liabilities ................................ 7,673
–
11,754
–
–
80
–
LIABILITIES
Current liabilities
49
The effects, by legal entity, of related party transactions on the Group’s consolidated Income Statement
for the 2011 are the following:
d’Amico
International
Shipping SA
Ishima Pte.
Ltd.
d’Amico
Società di
Nav. SpA
d’Amico
Ireland
Ltd
Compagnia
Generale
Telemar
SpA
–
–
–
–
–
–
–
–
–
–
–
–
–
–
d’Amico
Shipping
Italia SpA
Rudder
SAM
(consolidated)
U.S.$ Thousand
Voyage costs ..............................
(104,716)
–
(76,788)
–
–
of which
Bunker ................................
Time charter in costs................
(76,788)
(89,761)
of which
Vessel charter agreement ........
(498)
–
–
(498)
Other direct operating
costs.........................................
(53,403)
–
–
–
Management agreements ........
(3,652)
(48)
–
–
Technical expenses .................
(1,907)
–
–
–
–
–
(19,330)
–
–
–
–
–
of which
General and
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199
(3,604)
–
–
(1,907)
–
d’Amico
International
Shipping SA
Ishima Pte.
Ltd.
Rudder
SAM
d’Amico
Shipping
Italia SpA
–
–
–
d’Amico
Società di
Nav. SpA
d’Amico
Ireland
Ltd
Compagnia
Generale
Telemar
SpA
administrative costs ..............
of which
Services agreement .................
(1,309)
(48)
Total ...........................................
(76,788)
(498)
(1,215)
(94)
(4,819)
(94)
–
(1,907)
The table below shows the effects, by legal entity, of related party transactions on the Group’s
consolidated income statement for the year 2010:
d’Amico
International
Shipping SA
Cogema
SAM
d’Amico
Società di
Nav. SpA
d’Amico
Ireland
Ltd
Compagnia
Generale
Telemar
SpA
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
d’Amico
Shipping
Italia SpA
Rudder
SAM
(consolidated)
U.S.$ Thousand
(106,249)
–
Bunker ................................
(68,976)
–
Time charter in costs................
(102,314)
–
–
Vessel charter agreement ........
(9,345)
–
–
Other direct operating
costs.........................................
(53,367)
–
–
–
Management agreements ........
(3,522)
–
–
–
Technical expenses .................
(1,428)
–
–
–
General and
administrative costs ..............
(18,778)
–
–
–
–
–
Voyage costs ..............................
–
of which
(68,976)
of which
(9,345)
of which
(3,522)
–
–
(1,428)
–
–
(975)
(26)
–
(4,497)
(26)
of which
Services agreement .................
(1,184)
(183)
(183)
Total ...........................................
(68,976)
(9,345)
(1,428)
The effect, by legal entity, of related party transactions on the Group’s consolidated Statement of
Financial Position as at 31 December 2011 are as follows:
d’Amico
International
Shipping SA
Rudder
SAM
Cogema
SAM
d’Amico
Dry
d’Amico
Shipping
Italia SpA
(consolidated)
U.S.$ Thousands
Receivables and other current
A15761609
39,617
200
d’Amico
Società di
Navigaz
SpA
Ishima
Pte. Ltd.
d’Amico
Finance
Ltd
Compagnia
Generale
Telemar
d’Amico
Dry
d’Amico
Shipping
Italia SpA
d’Amico
Società di
Navigaz
SpA
Ishima
Pte. Ltd.
d’Amico
Finance
Ltd
Compagnia
Generale
Telemar
–
–
30
–
270
17
–
(2,977)
(6)
(2)
–
(96)
(230)
–
(794)
(2,977)
(6)
(2)
30
(96)
40
17
(794)
d’Amico
International
Shipping SA
Rudder
SAM
Cogema
SAM
317
–
assets ......................................
Of which related party...........
liabilities ................................
(49,678)
Of which related party...........
(4,105)
Total ..........................................
The effect, by legal entity, of related party transactions on the Group’s combined Statement of Financial
Position as at 31 December 2010 were the following:
d’Amico
International
Shipping SA
Rudder
SAM
d’Amico
Shipping
Italia SpA
d’Amico
Società di
Navigaz
SpA
d’Amico
Ireland
Ltd
d’Amico
Dry Ltd
Compagnia
Generale
Telemar
–
–
–
–
Cogema
SAM
(consolidated)
U.S.$ Thousands
Receivables and other current assets..............
Of which related party................................
Payables and other current liabilities
Of which related party................................
Total ...............................................................
67,547
–
–
–
–
(68,855)
(3,876)
(3,198)
(94)
(356)
(14)
(10)
(41)
(163)
(3,198)
(94)
(356)
(14)
(10)
(41)
(163)
(28) Commitments and Contingencies
Capital commitments
As at 31 December 2011, the Group’s capital commitments amounted to U.S.$37.4 million, of which
payments over the next 12 months amounted to U.S.$37.4 million.
As at
31 December 2011
As at
31 December 2010
U.S.$ Million
Within one year ................................................................
37.4
52.0
Between 1-3 years................................................................
–
18.7
Between 3-5 years................................................................
–
–
More than 5 years................................................................
–
–
37.4
70.7
Capital commitments relate to the payments for two Hyundai-Mipo dockyard 46,000 dwt
Product/chemical tanker vessels, whose delivery is expect in March / April 2012.
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201
Operating leases – chartered-in vessels
As at 31 December 2011, the Group’s minimum operating lease rental commitments amounted to
U.S.$293.3 million, of which payments over the next 12 months amounted to U.S.$85.4 million.
As at
31 December 2011
As at
31 December 2010
U.S.$ Million
Within one year ................................................................
85.4
92.8
Between 1-3 years................................................................
119.3
147.7
Between 3-5 years................................................................
60.1
86.8
More than 5 years................................................................
28.7
52.3
293.5
379.6
The amounts include 49% of the commitment between DM Shipping Limited (in which DIS has 51% of
interests) and d’Amico Tankers Limited for the two DM vessels.
As at 31 December 2011, DIS operated 16 vessel equivalents on time charter-in contracts as lessee.
These had an average remaining contract period of 3.4 years at that time (4.9 years including optional
periods). Some of the charter-in contracts include options to purchase vessels in the future.
Operating leases – other
Other operating leases primarily consist of contracts regarding office space. The minimum lease
payments under these contracts are as follows:
As at
31 December 2011
As at
31 December 2010
U.S.$ Million
Within one year ................................................................
0.6
0.8
Between 1-3 years................................................................
0.3
0.8
Between 3-5 years................................................................
–
0.1
More than 5 years................................................................
–
–
0.9
1.7
Ongoing disputes
The Group is currently involved in a number of on-going commercial disputes concerning both our
owned and chartered vessels. They relate mainly to cargo contamination claims and in collision disputes.
The disputes are mostly covered by the Group P&I Club insurance and no significant financial exposure
is expected to arise.
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202
Tonnage tax deferred taxation
International Shipping in 2010. The regime includes provision whereby a proportion of capital
allowances previously claimed by the company may be subject to tax in the event that vessels are sold
and not replaced within the specified time limit or the Company fails to comply with the on-going
requirements to remain within the regime.
No provision has been made for deferred taxation as no liability is reasonably expected to arise.
(29) d’Amico International Shipping Group’s Companies
The table below shows the complete list of Group companies, and for each of these companies d’Amico
International Shipping’s percentage ownership, its method of consolidation, registered office, share
capital and currency.
Name
Registered Office
Share Capital
Currency
d’Amico International Shipping S.A. ......................Luxembourg
Interest %
Consolidation
Method
149,949,907
USD
Dublin/Ireland
100,001
EUR
100.0%
Integral
High Pool Tankers Limited ................................ Dublin/Ireland
2
EUR
100.0%
Integral
Glenda International Management Ltd ....................
Dublin/Ireland
2
EUR
100.0%
Integral
Glenda International Shipping Ltd...........................
Dublin/Ireland
202
USD
50.0%
Proportional
DM Shipping Ltd .....................................................
Dublin/Ireland
100,000
USD
51.0%
Proportional
VPC Logistics Ltd .................................................... London/UK
50,000
GBP
100.0%
Integral
Monaco
150,000
EUR
100.0%
Integral
London/UK
50,000
USD
100.0%
Integral
Monaco
50,000
USD
100.0%
Integral
d’Amico Tankers Limited ................................
d’Amico Tankers Monaco SAM..............................
d’Amico Tankers UK Ltd ................................
d’Amico Tankers Singapore Pte Ltd........................
The consolidation area in 2011 does not differ with respect to the 2010 consolidated accounts. VPC
Logistics is going to be liquidated.
Interest in Jointly Controlled Entities
The jointly controlled entities have been proportionately consolidated in the consolidated financial
statements based on the following amounts expressed in U.S.$ thousands:
Revenue
Net Result
Total Assets
Net Equity
30,156
1,087
302,102
129,576
(6,582)
88,529
(23,128)
7,567
(7,568)
299,169
128,474
DM Shipping Ltd ................................ 5,888
(7,189)
94,191
(16,535)
Year ended 31
December 2011
Glenda International
Shipping Ltd ................................
DM Shipping Ltd ................................ 11,549
Year ended 31
December 2010
Shipping Ltd ................................
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203
(30) Subsequent Events
Controlled Fleet
The profile of d’Amico International Shipping’s vessels on the water is summarised as follows.
As at 23 February 2012
MR
Handysize
Total
MR
Handysize
Total
Owned ............................................................
16.0
3.0
19.0
16.0
3.0
19.0
Time chartered................................................
13.0
3.0
16.0
14.0
3.0
17.0
Chartered through pools................................
0.0
0.0
0.0
0.0
0.0
0.0
Total...............................................................
29.0
6.0
35.0
30.0
6.0
36.0
A15761609
204
7.2
Auditor’s report on the consolidated financial statements as at 31 December 2011
To the Shareholders of
25 C Boulevard Royal, Luxembourg
Leudelange, 2 March 2012
Report of the Réviseur d’Entreprises Agréé
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of d’Amico International
Shipping S.A., which comprise the consolidated statement of financial position as at 31 December
2011 and the consolidated statement of comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flow for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Responsibility of the Board of Directors’ for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards as adopted by the
European Union, and for such internal control as the Board of Directors determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Responsibility of the réviseur d’entreprises agréé
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing as adopted for
Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the réviseur d’entreprises
agréé’s judgement, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the réviseur
d’entreprises agréé considers internal control relevant to the entity’s preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the
overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
A15761609
205
In our opinion, the consolidated financial statements give a true and fair view of the financial position
of d’Amico International Shipping S.A. as of 31 December 2011 and its financial performance and its
cash flows for the year then ended in accordance with International Financial Reporting Standards as
adopted by the European Union.
Report on other legal and regulatory requirements
The management report, which is the responsibility of the Board of Directors, is consistent with the
consolidated financial statements. The Corporate Governance Statement, as published on the
Company’s website www.damicointernationalshipping.com, as of the date of this report is the
responsibility of the Board of Directors. This statement is consistent, at the date of this report, with the
consolidated financial statements and includes the information required by the law with respect to the
Corporate Governance Statement.
MOORE STEPHENS Audit S.A.R.L.
Horst SCHNEIDER
Réviseur d’Entreprises Agréé
7.3
Interim consolidated financial statements as at 30 June 2012
7.3.1
Consolidated income statement
Notes
Q2 2012
Q2 2011
H1 2012
H1 2011
(U.S.$ Thousand)
Revenue ..............................................................
(2)
79,899
74,509
157,610
142,589
Voyage costs.......................................................
(3)
(35,406)
(26,182)
(68,650)
(46,380)
(4)
Time charter equivalent earnings....................
44,493
48,327
88,960
96,209
(5)
(23,284)
(23,104)
(45,717)
(47,550)
(6)
(14,118)
(13,209)
(27,105)
(26,650)
General and administrative costs ........................
(7)
(4,076)
(4,532)
(7,948)
(9,997)
Other operating income ................................ (8)
407
823
1 003
1 873
3,422
8,305
9,193
13,885
Depreciation and impairment..............................
(95,358)
(9,252)
(104,325)
(17,910)
Operating profit/(loss) ................................
(91,936)
(947)
(95,132)
(4,025)
(3,723)
(4,378)
(1,840)
(5,916)
(95,659)
(5,325)
(96,972)
(9,941)
(117)
(140)
(263)
(282)
(95,776)
(5,465)
(97,235)
(10,223)
(0.0364)
(0.6485)
(0.0682)
Gross operating profit ................................
Net financial income (charges) ...........................
(9)
Profit/(loss) before tax ................................
Income taxes .......................................................
(10)
Net profit / (loss)................................
The net profit is attributable to the equity holders of the Company
(0.6387)
Earnings/(loss) per share in U.S.$....................
A15761609
206
7.3.2
Consolidated statement of comprehensive income
Q2 2012
Q2 2011
H1 2012
H1 2011
(U.S.$ Thousand)
Profit/(loss) for the period ................................ (95,776)
Cash flow hedges................................
(5,465)
(358)
778
Total comprehensive income for
the period ............................................................
(96,134)
Earnings/comprehensive income
per share in U.S.$ ................................
7.3.3
(0.6411)
(97,235)
39
(10,223)
2,168
(4,687)
(97,196)
(8,055)
(0.0313)
(0.6482)
(0.0537)
Consolidated statement of financial position
Notes
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
ASSETS
Non-current assets
Tangible assets ................................................................
(11)
513,726
547,634
Total non-current assets..........................................................
513,726
547,634
(12)
19,525
17,522
Receivables and other current assets................................ (13)
47,034
39,617
Current financial assets .............................................................
(14)
2,348
14,396
Cash and cash equivalents.........................................................
(15)
40,191
51,068
Total current assets ................................................................
109,098
122,603
Total assets ................................................................
622,824
670,237
149,950
149,950
Retained earnings................................................................
21,198
118,433
Other reserves ................................................................
47,054
47,098
218,202
315,481
317,248
282,492
Current assets
Inventories................................................................
SHAREHOLDERS’ EQUITY AND
LIABILITIES
Share capital................................................................
(16)
Total shareholders’ equity ......................................................
Banks and other lenders ............................................................
(17)
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207
As at
30 June
2012
Notes
As at
31 December
2011
(U.S.$ Thousand)
Other non-current financial liabilities ................................ (20)
5,526
4,035
Total non-current liabilities....................................................
322,774
286,527
17,733
14,864
(18)
8,000
-
Payables and other current liabilities ................................ (19)
52,592
49,678
(20)
3,489
3,638
Current taxes payable................................................................
(21)
34
49
Total current liabilities............................................................
81,848
68,229
Total shareholders’ equity and liabilities...............................
622,824
670,237
H1 2012
H1 2011
Current liabilities
Banks and other lenders ............................................................
(17)
Amount due to parent company ................................
Other current financial liabilities................................
7.3.4
Consolidated statement of cash flows
Q2 2012
Q2 2011
(U.S.$ Thousand)
(5,465)
(97,235)
(10,223)
9,252
104,325
17,910
117
140
263
282
Financial charges ................................
2,130
2,827
3,983
5,517
Fair value gains on foreign
currency retranslation ................................
1,667
1,601
(1,507)
527
Loss for the period................................
(95,776)
Depreciation, amortisation and
write-down ...........................................................95,358
Current and deferred income tax ..........................
Other non-cash items................................
Cash flow from operating
activities before changes in
working capital ................................
Movement in inventories ................................
A15761609
(74)
3,422
(1,092)
(38)
8,317
757
(636)
(128)
9,193
13,885
(2,003)
(1,585)
Movement in amounts receivable .........................(3,921)
(8,496)
(7,417)
1,403
Movement in amounts payable............................. 6,059
3,326
2,914
9,999
Taxes paid ............................................................ (288)
(239)
(342)
(292)
Interest paid ..........................................................(1,600)
(2,190)
(2,312)
(4,987)
Net cash flow from operating
activities............................................................... 2,580
1,475
Acquisition of fixed assets................................ (37,580)
(4,055)
(70,376)
(20,565)
Net cash flow from investing
activities...............................................................
(37,580)
(4,055)
(70,376)
(20,565)
208
33
18,423
Q2 2012
Q2 2011
H1 2012
H1 2011
(U.S.$ Thousand)
Other changes in shareholders’
equity................................................................
(42)
251
(42)
Movement in other financial assets ...................... 6,960
(4,929)
12,758
Movement in other financial
payable ................................................................ 8,000
(780)
8,000
Bank loan repayments ................................
(4,434)
Bank loan draw-downs ................................
19,976
(3,546)
(6,600)
1
(8,118)
(7,137)
47,088
2,438
(9,004)
59,686
(11,026)
-
Net cash flow from financing
activities...............................................................30,460
272
Net increase/(decrease) in cash
and cash equivalents................................
(4,540)
(11,584)
(10,657)
(13,168)
Cash and cash equivalents at the
beginning of the period................................
44,749
66,778
51,068
68,266
Exchange gain (loss) on cash and
cash equivalents................................
(18)
Cash and cash equivalents at the
end of the period ................................
7.3.5
(424)
40,191
(220)
54,770
(328)
40,191
54,770
Statement of changes in consolidated shareholders’ equity
Share
capital
Retained
earnings
Other Reserves
Other
Total
Cash-Flow
hedge
(U.S.$ Thousand)
149,950
Balance as at 1 January 2012 ...........................
Other changes (consolidation reserve)
-
-
118,433
(97,235)
Balance as at 30 June 2012 ...............................
149,950
21,198
Share
capital
Retained
earnings
54,715
(7,617)
(83)
54,632
-
(83)
39
(97,196)
(7,578)
Other Reserves
Other
315,481
218,202
Total
Cash-Flow
hedge
(U.S.$ Thousand)
149,950
Other changes .....................................................
-
-
Balance as at 30 June 2011 ...............................
149,950
A15761609
209
139,446
55,464
-
57
-
-
2,168
(10,223)
129,223
55,521
(11,754)
(9,586)
333,106
57
(8,055)
325,108
7.3.6
Notes
Note:
The financial statements have been prepared in accordance with provisions of Art. 4 of the Luxembourg
Law dated 11 January 2008, which transposed Directive 2004/109/EC of the European Parliament and of
Council of 15 December 2004 in the harmonization of transparency requirements in relation to
information about issuers whose securities are admitted to trading on a regulated market.
The d’Amico International Shipping Group has adopted International Financial Reporting Standards
(IFRS – International Financial Reporting Standards and IAS – International Accounting Standards) as
issued by the ‘IASB’ (International Accounting Standards Board) and adopted by the European Union.
The designation ‘IFRS’ also includes all ‘IAS’, as well as all interpretations of the International
Financial Reporting Interpretations Committee ‘IFRIC’, formerly the Standing Interpretations
Committee SIC as adopted by the European Union. This interim financial information was prepared in
compliance with IAS 34.
The d’Amico International Shipping Group has adequate resources to continue in operational existence
for the foreseeable future; accordingly, the financial statements have been prepared on a going concern
basis.
The financial statements are expressed in U.S. Dollars, being the functional currency of the Company
and its principal subsidiaries.
(1)
Accounting Policies
The financial statements present the results of the parent company, d’Amico International Shipping SA,
and its subsidiaries for the period ended 30 June 2012. The accounting policies used in the presentation
of the interim report on the same as those adopted in the 2011 annual report.
Shipping SA, and its subsidiaries for the period ended 30 June 2012.
Critical Accounting Judgments and Key Estimates
The preparation of the financial statements requires Management to make accounting estimates and in
some cases assumptions in the application of accounting principles. The Directors’ decisions are based
on historical experience as well as on expectations associated with the realization of future events,
considered reasonable under the circumstances. Critical accounting estimates and judgments are
exercised in all areas of the business.
Segment Information
d’Amico International Shipping only operates in one business segment: Product Tankers. With reference
to geographical area, the Group only has one geographical segment, considering the global market as a
whole, and the fact that individual vessels deployment is not limited to a specific area of the world. As a
result, no geographical segment information disclosures are necessary.
Accounting principles
There are no new International Financial Reporting Standards or IFRICs applicable to this quarterly
financial report with respect to those applied for 31 December 2011 year end.
(2)
Revenue
Q2 12
Q2 11
H1 12
H1 11
157 610
142 589
(U.S.$ Thousand)
Revenue ................................
A15761609
79 899
210
74 509
Revenue represents vessel income comprising time charter hire, freight, demurrage and income from
participation in vessel pools.
(3)
Voyage costs
Q2 12
Q2 11
H1 12
H1 11
(U.S.$ Thousand)
Bunkers (fuel) ................................
(27,432)
(19,088)
(52,557)
(33,807)
Commissions................................
(1,444)
(1,450)
(3,138)
(2,822)
Port charges................................
(6,071)
(5,332)
(11,876)
(9,032)
Other ................................................................
(459)
(312)
(1 079)
(719)
(35,406)
Total ................................................................
(26,182)
(68,650)
(46,380)
Voyage costs are operating costs resulting from the employment, direct or through its partnerships of the
DIS fleet, in voyages undertaken in the spot market and under Contracts of Affreightment. Time charter
contracts are net of voyage costs.
(4)
Time charter equivalent earnings
Q2 12
Q2 11
H1 12
H1 11
88,960
96,209
(U.S.$ Thousand)
Time charter equivalent
earnings................................
44,493
48,327
Time charter equivalent earnings represent revenue less voyage costs. In the first half of 2012 about 37.6
per cent. of the Time Charter Equivalent earnings came from fixed contracts (contracts longer than 12
months) (HY1 2011: 48.2 per cent.).
(5)
Time charter hire costs
Q2 12
Q2 11
H1 12
H1 11
(45,717)
(47,550)
(U.S.$ Thousand)
(23,284)
(23,104)
Time charter hire costs represent the cost of chartering-in vessels from third parties.
A15761609
211
(6)
Other direct operating costs
Q2 12
Q2 11
H1 12
H1 11
(U.S.$ Thousand)
Crew costs................................
(7,080)
(6,445)
(13,603)
(12,705)
Technical expenses ................................ (3,470)
(3,346)
(7,186)
(6,857)
Luboil................................................................
(838)
(564)
(1,505)
(1,379)
Technical and quality
management ................................
(1,200)
(945)
(2,225)
(1,862)
Other costs ................................
(1,530)
(1,909)
(2,586)
(3,847)
(14,118)
Total ................................................................
(13,209)
(27,105)
(26,650)
Other direct operating costs include crew costs, technical expenses, lubricating oils, technical and quality
management fees and sundry expenses originating from the operation of the vessel, including insurance
costs.
Personnel
As at 30 June 2012 d’Amico International Shipping SA and its subsidiaries had 591.5 employees, of
which 548 seagoing personnel and 43.5 on-shore. Onshore personnel costs are included under general
and administrative costs. The Group has no liabilities with regard to pensions and other post-retirement
benefits.
(7)
General and administrative costs
Q2 12
Q2 11
H1 12
H1 11
(U.S.$ Thousand)
Personnel................................
(2,579)
(2,788)
(4,761)
(6,064)
Other general and
administrative costs................................ (1,497)
(1,744)
(3,187)
(3,933)
(4,076)
Total ................................................................
(4,532)
(7,948)
(9,997)
Personnel costs relate to on-shore personnel salaries.
The other general and administrative costs comprise consultancy, office rental fees, and other sundry
expenses originating from the operation of d’Amico International Shipping Group companies. They
include intra-group management fees on brand and trademark, IT, Legal and Internal Audit services for
U.S.$ 0.6 million.
A15761609
212
(8)
Other operating income
Q2 12
Q2 11
H1 12
H1 11
1 003
1,873
(U.S.$ Thousand)
Other operating income................................407
823
Other operating income represents chartering commissions earned for services provided by group
personnel to third parties customers.
(9)
Net financial income (charges)
Q2 12
Q2 11
H1 12
H1 11
(U.S.$ Thousand)
Income
Loans and receivables:
Interest Income – Banks................................ 15
89
102
199
Realised on financial
activities ................................
1,409
28
2,790
219
Gains on derivative
instruments................................
—
—
—
24
Exchange differences ................................
—
—
1 164
—
Current financial assets ................................ —
—
554
30
Total Financial Income ................................
1,424
117
4,610
472
At fair value through
income statement:
Available for sale
financial assets................................
Charges
Financial liabilities
measured at amortised
cost:
Interest expense................................
(2,517)
(3,068)
(4,733)
(5,575)
At fair value through
income statement:
Derivative instruments ................................(654)
Exchange differences ................................(1,807)
Financial fees ................................
—
(1,093)
(1,379)
—
—
(281)
(143)
(294)
(338)
(532)
Current financial assets ................................ (26)
(40)
—
—
Total financial charges ................................
(5,147)
(4,495)
Available for sale
financial assets................................
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213
(6,450)
(6,388)
Q2 12
Q2 11
H1 12
H1 11
(1,840)
(5,916)
(U.S.$ Thousand)
Net Financial Charges................................
(3,723)
(4,378)
The details of financial income and charges have been expanded to allow the readers of the financial
statements focus on the details.
The exchange differences are mainly composed of the amounts relating to the conversion into U.S.$ of
the loans denominated in Japanese Yen.
(10) Income taxes
Q2 12
Q2 11
H1 12
H1 11
(U.S.$ Thousand)
Current income taxes ................................ (117)
(140)
(263)
(282)
International Shipping in 2010.
The tax liability under the tonnage tax regime is based on the controlled fleet’s notional shipping income,
which in turn depends on the total net tonnage of the controlled fleet. The 2012 tonnage tax provision for
d’Amico Tankers Limited, DM Shipping and Glenda International Shipping amounted to U.S.$0.1
million. The income tax charges relate to activities, which are not eligible for tonnage tax and are taxed at
25 per cent.
(11) Tangible assets
Fleet
Dry-dock
Other assets
Total
(U.S.$ Thousand)
Cost
At 1 January 2012 ................................ 728,779
9,799
2,531
741,109
Additions................................
63,940
6,430
6
70,376
Disposal ................................
—
—
—
—
Exchange Differences ................................
—
—
30
30
792,719
16,229
2,567
811,515
At 1 January 2012 ................................ 187,496
4,528
1,451
193,475
Charge for the period ................................17,319
1,922
84
19,325
85,000
—
—
85,000
Disposal ................................
—
—
—
—
—
—
(11)
(11)
At 30 June 2012 ................................
Depreciation and
impairment
Impairment................................
A15761609
214
Fleet
Dry-dock
Other assets
Total
(U.S.$ Thousand)
At 30 June 2012 ................................
289,815
6,450
1,524
297,789
502,904
9,779
1,043
513,726
Net book value
At 30 June 2012 ................................
The table below shows, for comparison purposes, the changes in the fixed assets in the first half of 2011.
Fleet
Dry-dock
Other assets
Total
(U.S.$ Thousand)
Cost
At 1 January 2011 ................................ 692,996
12,122
2,537
707,655
17 113
3 390
62
20 565
Impairment/write-down ................................ —
—
—
—
Disposal ................................
—
—
—
—
—
—
19
19
710,109
15,512
2,618
728,239
At 1 January 2011 ................................ 155,849
6,315
1,208
163,372
Charge for the period ................................15,453
2,349
108
17,910
Additions................................
At 30 June 2011 ................................
Depreciation
Disposal ................................
—
—
—
—
—
—
46
46
171,302
8,664
1,362
181,328
538,807
6,848
1,256
546,911
At 30 June 2011 ................................
Net book value
At 30 June 2011 ................................
Tangible fixed assets are comprised of the following:
Fleet
Fleet includes the purchase costs for owned vessels, and payments to yards for vessels under
construction. Additions in 2012 relate to the instalments paid on new-buildings – in particular, M/T High
Seas and M/T High Tide delivered to d’Amico Tankers – and to the purchase of the M/T High
Prosperity.Ccapitalized instalments at Group level for HY1 2012 amount to U.S.$ 63.9 million (HY1
2011: U.S.$ 17.1 million) and capitalized interest is U.S.$ 0.1 million (HY1 2011: U.S.$ 0.1 million).
All vessels under construction were delivered in the period (2011: U.S.$ 45.3 million). Mortgages are
secured on all the vessels owned by the Group – for further details see note 17.
The carrying amount of the vessels has been reviewed to ensure they are not impaired. The recoverable
amount is defined as the higher of an asset’s fair value less costs to sell and its value in use, represented
by the net present value of the cash flow from its remaining useful life. In the assessment, the estimated
future cash flows from its remaining useful life are discounted to their present value.
A15761609
215
For impairment test purposes, the management estimates take into consideration the market information
available, including reported sales of similar vessels, as well as future expectations, and have been based
on the following key assumptions: (i) Earnings: under contracts concluded and the estimate of future
rates; (ii) Useful economic life of 20 years; (iii) Estimated economic value at end of life based on current
rates (iv) Costs reflect the current d’Amico structure; (v) The figures have been discounted based at a
rate of 6.5 per cent., which represents the current and expected profile of the company’s required
weighted average cost of capital based on the current cost of financing and required of return on equity.
Compared to the impairment test carried out for the 2011 financial statements purposes, the freight rate
scenario have been updated, together with the increase from 6.0 per cent. to 6.5 per cent. of the discount
factor. Management note that the calculations are particularly sensitive to changes in the key
assumptions of future hire rates and discount rate
Based on the assessment of the recoverable amount and considering that the future value in use
calculations no longer support the written down value of the vessels, the Management of the Group has
taken the decision that there was now the need to impair the net book value of the fleet by the amount of
U.S.$ 85.0 million. Management reached the decision considering that in the first six month of 2012, the
brokers desk top valuations declined by a further 15 per cent. compared to the previous year end, the
largest decrease since 2008/2009 and the expectation in the market as to the timing of an improvement in
product tanker freight rates was moved back from 2012 to 2015. In addition Management consider that
the availability of new fuel efficient product tanker designs will impact the results of existing vessels
The total market value of the Group fleet, according to a valuation report provided by a primary shipping
broker at the end of June 2012, is of U.S.$ 460.2 million. After impairment, the carrying amount of the
fleet is U.S.$ 42.7 million above the desk top broker valuation.
Dry-dock
Dry-docks include expenditure for the fleet’s dry docking programme; a total of 5 vessels dry-docked in
the period.
Other assets
Other assets mainly include fixtures, fittings, office equipment.
(12) Inventories
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Inventories ................................................................................................
19,525
17,522
Inventories represent stocks of Intermediate Fuel Oil (IFO), Marine Diesel Oil (MDO) and Luboil on
board vessels.
A15761609
216
(13) Receivables and other current assets
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Trade receivables ................................................................................................
31,707
23,208
Other debtors ................................................................................................428
279
Prepayments and accrued income................................................................
14,899
16,130
47,034
39,617
Total ................................................................................................
Receivables, as at 30 June 2012, include trade receivables amounting to U.S.$ 31.7 million, net of the
allowance for credit losses of U.S.$ 1.2 million. Other current assets mainly consist of prepayments and
accrued income amounting to U.S.$ 14.9 million.
(14) Current financial assets
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Current financial assets................................................................
2,348
14,396
The amount of U.S.$ 2.3 million mainly represents the fair value of the amounts invested in highly rated
bonds. The fixed income securities are listed on recognised stock exchanges, are redeemable in a period
from three to five years, with effective yields in the region of 1.4 per cent.
(15) Cash and cash equivalents
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Cash and cash equivalents ................................................................
40,191
51,068
Cash and cash equivalents is mainly represented by short-term deposits and includes approximately
U.S.$ 3.4 million of cash held by Pool companies (High Pool Tankers Ltd and Glenda International
Management Ltd) which is distributed to other pool participants in July. The balance includes U.S.$ 2.4
million secured in connection with the Mizuho facility.
A15761609
217
(16) Shareholders’ equity
Changes in first half 2012 Shareholders’ equity items are detailed in the relevant statement.
Share capital
At 30 June 2012 the share capital of d’Amico International Shipping amounted to U.S.$ 149,950 thousand,
corresponding to 149, 949, 907 ordinary shares with no nominal value.
Retained earnings
The item includes previous year and current net results and deductions for dividends distributed.
Other reserves
The other reserves include the following items:
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Share premium reserve ................................................................
71,389
71,389
Treasury shares ................................................................................................
(16,356)
(16,356)
Fair value reserve................................................................................................
(7,578)
(7,617)
Other ................................................................................................
Total ................................................................................................
(401)
(318)
47,054
47,098
Share premium reserve
The share premium reserve arose as a result of the Group’s IPO and related increase of share capital,
which occurred at the beginning of May 2007.
Treasury shares
Treasury shares at June 30, 2012 consist of 5,090,495 ordinary shares (YE 2011: 5,090,495) for an amount
of U.S.$ 16.4 million (2011: U.S.$ 16.4 million), corresponding to 3.39 per cent. of the outstanding share
capital at the financial position date (YE 2011: 3.39 per cent.). These shares were acquired in 2007 and
2008 and during the second half of 2011, following the approval of the Buy-back program.
Fair value reserve
The fair value reserve arose as a result of the valuation of the Interest Rate Swap agreements connected to
the Crédit Agricole facility to their fair value of U.S.$ 7.6 million (liability). Details of the fair value of the
derivative financial instruments are set out in note 22.
(17) Banks and other lenders
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
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218
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Banks and other lenders................................................................
317,248
282,492
17,733
14,864
334,981
297,356
Current liabilities
Banks and other lenders................................................................
Total ................................................................................................
As at 30 June 2012
Noncurrent
Current
Total
Noncurrent
Current
Total
(U.S.$ Thousand)
Crédit Agricole ................................
149,551
-
149,551
149,460
—
149,460
Mizuho ................................
20,414
4,836
25,250
23,407
4,967
28,374
Crédit Agricole –
DNB ................................
42,453
3,087
45,540
10,565
—
10,565
Commerzbank-Crédit
Suisse................................
70,093
6,578
76,671
73,382
6,578
79,960
3,232
26,618
25,678
3,319
28,997
—
11,351
—
—
—
17,733
334,981
282,492
14,864
297,356
Mitsubishi UFJ Lease ................................
23,386
Danish Ship Finance ................................
11,351
Total................................
317,248
CréditAgricole Credit and Investment Bank (former Calyon) facility
The outstanding amount as at 30 June 2012 of U.S.$ 149.5 million (less the unamortized portion of the
arrangement fees paid at draw-down, amounting to U.S.$ 0.5 million), relates to the originally U.S.$ 350.0
million revolving loan facility negotiated by d’Amico Tankers Limited (Ireland) with Crédit Agricole and
other banks (IntesaSanpaoloS.p.A., Fortis Bank Nederland N.V., The Governor and the Company of the
Bank of Ireland, Norddeutsche Landesbank Girozentrale and Scotiabank Ireland Limited).
The facility interest cost is payable at a US dollar LIBOR plus a spread varying from 65 to 95 basis points,
depending on the financed vessels’ value-to-loan ratio. Collateral mainly refers to first-priority mortgages
on thirteen owned vessels. The agreements also provide that the ratio between the amount outstanding at
any given time and the fair market value of the thirteen vessels (the ‘asset cover ratio’) owned by d’Amico
Tankers Limited (the ‘borrower’), which are currently subject to mortgages pursuant to the facility, must
not be higher than 66.6 per cent.
Mizuho facility
The outstanding amount at 30 June 2012 of U.S.$ 25.3 million relates to the loan facility arranged by the
Mizuho Corporate Bank Ltd., and syndicated by a pool of Japanese primary banks and leading financial
institutions. The Loan Facility purpose is to finance the acquisition of Japanese product tanker vessels for
which d’Amico Tankers Limited has purchase options and/or the acquisition of other product tanker
vessels.
The contract, over a period of ten years, provides the repayment of quarterly instalments and an interest
cost corresponding to the three month London Interbank Offer Rate (LIBOR) for Japanese Yen, plus a
margin of between 100 and 125 basis points depending on the financed vessels’ advance ratio.
A15761609
219
Similarly to the Crédit Agricole CIB facility, the key terms and conditions of the Mizuho loan provide that
the ratio between the amount outstanding at any given time and the fair market value of vessels (the
‘advance ratio’) owned by d’Amico Tankers Limited, which are subject to mortgages pursuant to the
facility (currently two vessels), must not be higher than 66.6 per cent. The facility is secured also through
a guarantee by the parent Company, d’Amico International Shipping S.A.
The balance at 30 June 2012 for an outstanding amount of U.S.$ 45.5 million, relates to the originally
U.S.$ 48.0 million loan facility negotiated by d’Amico Tankers Limited with Crédit Agricole CIB and
DNB NOR Bank ASA signed on the 26 July 2011 to finance two new vessels to be constructed by
Hyundai Mipo Dockyard CO. Ltd, the M/T High Seas and M/T High Tide which were delivered
respectively at the end of March and April 2012.
The principal amount available through the seven year facility period will be repaid with 28 consecutive
quarterly instalments, down to a balloon of U.S.$ 12.8 million per vessel. The ratio between the amount
outstanding at any given time and the fair market value of the two vessels (the ‘asset cover ratio’) owned
by d’Amico Tankers Limited (the ‘borrower’), which are currently subject to mortgages pursuant to the
facility, must not be higher than 65 per cent. Interest is payable at a rate of LIBOR plus 2.10 per cent. The
facility is secured by a guarantee from the parent Company, d’Amico International Shipping SA.
Danish Ship Finance A/S facility
The outstanding amount at 30 June 2012 of U.S.$ 11.4 million (less the unamortized portion of the
arrangement fees paid at draw-down, amounting to U.S.$ 0.2 million) relates to the facility granted by
Danish Ship Finance A/S to d’Amico Tankers Limited to finance the purchase of M/T High Prosperity in
May 2012.
The principal amount will be repaid in one instalment at maturity, 18 months from drawdown. The ratio
between the fair market value of the vessel and the amount outstanding at any given time (the ‘Security
Maintenance Cover Ratio’) must not be lower than 175 per cent. Interest is payable at a rate of USD
LIBOR plus 2.0 per cent.
The facility is secured by a guarantee from the parent Company, d’Amico International Shipping SA, and
provides mortgages on the Company’s owned financed vessel.
Glenda International Shipping Limited / Commerzbank – Crédit Suisse loan
The outstanding amount at June 30, 2012 of U.S.$ 76.7 million relates to the facility granted by
Commerzbank AG Global Shipping and Crédit Suisse to Glenda International Shipping Ltd for the
construction of six new-buildings 47.000 dwt MR Product Tankers (Hyundai Mipo Dockyard Co. Ltd –
Korea).
This agreement involves single-vessel loans with a ten-year maturity from vessel delivery, for a total
initial amount of up to U.S.$ 195.0 million (67 per cent. of the contract price to be paid for the vessels).
Interest is payable at U.S. dollar LIBOR plus a spread varying from 90 to 110 basis points, depending on
the financed vessels’ loan-to-value ratio. Collateral mainly refers to first-priority mortgages on the vessels.
The agreements also provide a covenant relating to the financed vessels’ aggregate loan-to-value ratio,
which should at all times be at least 130 per cent. Based on the loan outstanding and the broker’s valuation
obtained at the end of June, the loan to value ratio was 121 per cent., slightly lower than required by the
covenant. The banks agreed to accept corporate guarantees from the shareholders to ensure continuing
compliance with the covenant and negotiations were in progress at the date of the report as to the amount
of guarantee to be provided.
DM Shipping Limited – Mitsubishi UFJ Lease
The outstanding amount at June 30, 2012 of U.S.$ 26.6 million relates the balance relates to the debt due
to Mitsubishi UFJ arising from the loan granted for the acquisition of the two vessels delivered in 2009.
The agreement provides for a loan of JPY 2.8 billion per vessel, to be repaid in 10 years, through monthly
instalments. The interest rates on the loans are fixed for the two vessels between 2.955 per cent. and 2.995
per cent.
A15761609
220
The facility is secured through mortgages on the vessels. There are no other relevant covenants on the
loan.
(18) Amounts due to parent company
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
d’Amico International................................................................
8,000
—
As at
30 June
2012
As at
31 December
2011
The balance represents short-term financing granted by the parent company.
(19) Payables and other current liabilities
(U.S.$ Thousand)
Trade payables ................................................................................................
38,820
38,336
Other creditors ................................................................................................
11,245
8,559
Accruals & deferred income ................................................................
2,527
2,783
52,592
49,678
Total ................................................................................................
Payables and other current liabilities as at 30 June 2012, mainly include trade payables, of which an
amount of U.S.$ 11.0 million relates to the related party, Rudder SAM (bunkers).
(20) Other financial liabilities
As at 30 June 2012
Noncurrent
Current
Total
Noncurrent
Current
Total
(U.S.$ Thousand)
Other financial
liabilities ................................
A15761609
—
58
58
—
56
56
Fair value of
derivative instruments................................
5,526
3,431
8,957
4,035
3,582
7,617
Total Other financial
liabilities ................................ 5,526
3,489
9,015
4,035
3,638
7,673
221
The fair value of derivative instruments relate to Interest Rate Swap and forward foreign exchange
derivatives hedging instruments. The comparative at 31 December 2011 has been amended to reflect the
reclassification between non-current and current to reflect the treatment for the current period. The
derivative instrument fair values are shown in note 22.
(21) Current tax liabilities
As at
30 June
2012
As at
31 December
2011
(U.S.$ Thousand)
Current tax liabilities ................................................................
34
49
The balance at 30 June 2012 mainly reflects the income taxes and tonnage taxes payable by the
subsidiaries.
(22) Derivative instruments
As at 30 June 2012 the following derivative instruments were in place:
Fair value
at 30 June
2012
Income
statement
financial
income/
(charges)
Equity
hedging
reserves
(U.S.$ Thousand)
Hedge accounting ................................................................
Interest rate swaps................................................................
(7,578)
—
Forward currency contracts ................................
(1,379)
(1,379)
Total ................................................................
(8,957)
(1,379)
Fair value at
31 December
2011
Income
statement
financial
income/
(charges)
(7,578)
—
(7,578)
Equity
hedging
reserves
(U.S.$ Thousand)
Hedge accounting ................................................................
A15761609
Interest rate swaps................................................................
(7,617)
—
Forward currency contracts ................................
50
222
50
(7,617)
—
Fair value at
31 December
2011
Income
statement
financial
income/
(charges)
Equity
hedging
reserves
(U.S.$ Thousand)
Total ................................................................
(7,567)
50
(7,617)
The negative outstanding derivative instruments fair value at the end of the period is shown under Other
Current financial liabilities.
Interest rate swaps
In 2007, d’Amico Tankers Ltd signed three interest swap contracts (IRS), for a total notional amount of
U.S.$ 150.0 million for a period of 5 years. The IRS contracts purpose is to hedge the risks relating to
interest rates on the existing Crédit Agricole CIB revolving facility. In 2011, d’Amico Tankers
renegotiated two of these IRS contracts for a total amount of U.S.$50.0 million each, moving the
termination dates respectively to December 2014 and December 2016. At the end of 2012 one IRS
contract totalling U.S.$50.0 million will terminate.
In May 2012, d’Amico Tankers Ltd signed four new interest swap contracts (IRS), for the initial notional
amount of U.S.$ 45.5 million for a period of 7 years. The IRS contracts purpose is to hedge the risks
relating to interest rates on the existing Crédit Agricole CIB- DNB NOR Bank ASA facility.
The IRS contracts are considered level 2 instruments in that their fair value measurement is derived from
inputs other than quoted prices that are observable.
Forward currency contracts
During the first six months of 2012 d’Amico Tankers Limited entered into forward currency contracts
with maturity before 31 December 2012 to hedge the risk of cash deposits denominated in Euro, Japanese
Yen, Singapore Dollar and British pounds. is the contracts are considered as a level 2 instruments in that
his fair value measurement is derived from inputs other than quoted prices.
The realised gains amount to U.S.$ 2.4 million gain and unrealised losses amount to U.S.$ 1.4 million.
(23) Related party transactions
During 2012, d’Amico International Shipping had transactions with related parties, including its ultimate
Italian parent company, d’Amico Società di Navigazione S.p.A (DSN) and certain of DSN’s subsidiaries
(d’Amico Group). These transactions have been carried out on the basis of arrangements negotiated on an
arm’s length basis on market terms and conditions. The immediate parent company of the Group is
d’Amico International S.A. a company incorporated in Luxembourg.
These transactions include a management service agreement (for technical, crewing and IT services) with
U.S.$ 1.7 million. The related party transactions also include purchase of Intermediate Fuel Oil and
Marine Diesel Oil, from Rudder SAM, a d’Amico Group controlled company, amounting to U.S.$ 52.6
million, included in the bunker cost for the period.
Related party transactions and outstanding balances between d’Amico International Shipping S.A. and its
subsidiaries (intra-group related party transactions) are disclosed in the financial statements.
A15761609
223
The effects of related party transactions on the Group’s consolidated income statement for the first six
months of 2012 and 2011 are the following:
H1 2012
Total
H1 2011
Of which
related parties
Total
Of which
related parties
142,589
—
(U.S.$ Thousand)
Revenue ................................
157,610
Voyage costs ................................
(68,650)
(52,557)
(46,380)
(33,807)
(45,717)
(441)
(47,550)
(479)
(27,105)
(4,435)
(26,650)
(2,717)
costs ................................................................
(7,948)
(641)
(9,997)
(615)
Other operating income................................
1,003
—
1,873
—
Net financial income
(charges)................................
—
(5,916)
—
Other direct operating costs
—
(1,840)
The effects of related party transactions on the Group’s consolidated balance sheets as at 30 June 2012 and
30 June 2011 are the following:
As at 30 June 2012
Total
As at 30 June 2011
Of which
related parties
Total
Of which
related parties
(U.S.$ Thousand)
Assets
Non-current assets
Tangible assets ................................
513,726
—
546,911
—
Inventories ................................
19,525
—
22,757
—
Receivables and other
current assets................................
47,034
251
65,144
11
2,348
—
15,004
—
40,191
—
54,770
—
—
277,187
—
—
14,555
—
Current assets
Liabilities
317,248
Current liabilities
17,733
A15761609
liabilities................................
52,592
12,495
78,854
13,499
Other financial current
17,049
8,000
9,802
6
224
As at 30 June 2012
As at 30 June 2011
Of which
related parties
Total
Total
Of which
related parties
(U.S.$ Thousand)
liabilities................................
The effects, by legal entity, of related party transactions on the Group’s consolidated income statement for
the first half of 2012 are the following:
d’Amico
International
Shipping SA
Rudder
SAM
d’Amico
Società di
Nav. SpA
Cogema
SAM
Ishima
Pte Ltd
d’Amico
Shipping
UK
Compagnia
Generale
Telemar SpA
(consolidated)
(U.S.$ Thousand)
Voyage costs ................................(68,650)
of which
Bunker ................................
(52,557)
Time charter in
costs................................
(45,717)
(52,557)
—
—
—
of which
Vessel charter
agreement ................................
(441)
(441)
Other direct
(27,105)
operating costs ................................
of which
Management
agreements................................
(1,744)
(1,744)
Technical expenses................................
(2,691)
General and
administrative costs
(6)
(2,006)
(679)
(7,948)
of which
Services agreement................................
(641)
(581)
(52,557)
Total................................
(60)
(2,325)
(6)
(2,447)
(60)
(679)
The table below shows the effects, by legal entity, of related party transactions on the Group’s
consolidated income statement for the first half of 2011:
d’Amico
International
Shipping SA
Rudder
SAM
d’Amico.
Shipping
Italia SpA
d’Amico
Società di
Nav. SpA
Cogema
SAM
Compagnia
Generale
Telemar SpA
(consolidated)
(U.S.$ Thousand)
Voyage costs
(46,380)
of which
Bunker ................................................................
(33,807)
(33,807)
—
—
—
—
(479)
—
—
—
Time charter in costs................................(47,550)
of which
Vessel charter agreement ................................(479)
—
(26,650)
Other direct operating costs................................
A15761609
225
d’Amico
International
Shipping SA
Rudder
SAM
d’Amico.
Shipping
Italia SpA
d’Amico
Società di
Nav. SpA
Cogema
SAM
Compagnia
Generale
Telemar SpA
—
—
—
—
(912)
(545)
(70)
—
(1,630)
(70)
(912)
(consolidated)
(U.S.$ Thousand)
of which
Management agreements................................
(1,805)
—
—
Technical expenses................................
—
—
(912)
(1,805)
(9,997)
costs................................................................
of which
Services agreement................................
(615)
—
—
(33,807)
Total................................................................
(479)
The effect, by legal entity, of related party transactions on the Group’s consolidated Statement of financial
position as at 30 June 2012 are as follows:
d’Amico
Internat.
Shipping SA
Cogema
SAM
Rudder
SAM
d’Amico
Shipping UK
d’Amico
Società di
Nav. SpA
Ishima
Pte.Ltd
d’Amico
Dry Ltd.
Compagnia
Generale
Telemar SpA
247
—
—
(consolidated)
(U.S.$ Thousand)
Receivables and
other current assets
47,034
of which related
party................................
251
—
—
4
—
Payables and other
52,592
current liabilities................................
of which related
party................................
13,495
Total................................
5
11,047
60
1,591
—
108
684
(5)
(11,047)
(56)
(1,591)
247)
(108)
(684)
The effect, by legal entity, of related party transactions on the Group’s consolidated Statement of financial
position as at 30 June 2011 were the following:
d’Amico
Internat.
Shipping SA
d’Amico
Finance
Limited
Rudder
SAM
d’Amico
Shipping
Italia SpA
d’Amico
Società di
Nav. SpA
d’Amico
Ireland Ltd
d’Amico
Dry Ltd
Compagnia
Generale
Telemar
—
5
—
(consolidated)
(U.S.$ Thousand)
Receivables and
other current assets
of which related
party................................
66,144
11
—
—
—
6
Payables and other
78,854
current liabilities................................
of which related
party................................
Total................................
A15761609
13,505
6
11,798
37
1,185
2
—
477
(6)
(11,798)
(37)
(1,179)
(2)
5
(447)
226
(24) Commitments and contingencies
Capital commitments
As at 30 June 2012 there were no capital commitments.
As at
30 June 2012
As at
31 December
2011
(U.S.$ Million)
Within one year................................................................................................—
37.4
Between 1 – 3 years ................................................................
—
—
Between 3 – 5 years ................................................................
—
—
More than 5 years ................................................................................................
—
—
—
37.4
Total ................................................................................................
With reference to the subsequent event, the order of two “HMD ECO 40 ShallowMax” new-building
Product Tankers for a total consideration of U.S.$ 61.3 million, U.S.$ 12.3 million will be paid before 31
December 2012 and the remainder thereafter.
Operating leases – chartered in vessels
As at 30 June 2012, the Group’s minimum operating lease rental commitments amounted to U.S.$ 255.6
million, of which payments over the next 12 months will amount to U.S.$ 85 million.
As at
30 June 2012
As at
31 December
2011
(U.S.$ Million)
Within one year................................................................................................
85.0
85.4
Between 1 – 3 years ................................................................
103.7
119.3
Between 3 – 5 years ................................................................
46.6
60.1
More than 5 years ................................................................................................
20.3
28.7
255.6
293.5
Total ................................................................................................
As at 30 June 2012, d’Amico Tankers Limited operated 18 vessel equivalents on time charter-in contracts
as lessee. These had an average remaining contract period of 2.75 years at that time (3.98 years including
optional periods). Some of the charter-in contracts include options to purchase vessels in the future, details
of which are included below.
Purchase options
d’Amico Tankers Ltd. Currently has 4 vessel purchase options on time chartered vessels already on the
water. Exercise of these options is at the discretion of the Company based on the conditions prevailing at
the date of the option.
A15761609
227
Ongoing disputes
The Group is currently involved in a number of on-going commercial disputes concerning both our owned
and chartered vessels. They relate mainly to cargo contamination claims. The disputes are mostly covered
by the P&I Club insurance and no significant financial exposure is expected.
Tonnage tax deferred taxation
International Shipping in 2010. The regime includes provision whereby a proportion of capital allowances
previously claimed by the company may be subject to tax in the event that vessels are sold and not
replaced within the specified time limit or the Company fails to comply with the on-going requirements to
remain within the regime.
No provision has been made for deferred taxation as no liability is reasonably expected to arise.
(25) d’Amico International Shipping group’s companies
The table below shows the complete list of Group companies, and for each of these companies d’Amico
International Shipping’s percentage ownership, its method of consolidation, registered office, share capital
and currency.
Name
Registered
Office
Share
Capital
Shipping S.A.................................
Luxembourg
Currency
Interest
(%)
Consolidation
Method
149,949,907
USD
d’Amico Tankers
Limited ................................Dublin/Ireland
100,001
EUR
100.0%
Integral
High Pool Tankers
Limited ................................Dublin/Ireland
2
EUR
100.0%
Integral
Management Ltd................................
Dublin/Ireland
2
EUR
100.0%
Integral
Shipping Ltd ................................
Dublin/Ireland
202
USD
50.0%
VPC Logistics Limited ................................
London/UK
50,000
USD
100.0%
DM Shipping Ltd................................
Dublin/Ireland
100,000
USD
51.0%
d’Amico Tankers
Monaco SAM ................................
Monaco
150,000
EUR
100.0%
Integral
d’Amico Tankers UK
Ltd ................................................................
London/UK
50,000
USD
100.0%
Integral
d’Amico Tankers
Singapore
Singapore Pte Ltd ................................
50,000
USD
100.0%
Integral
Proportional
Integral
Proportional
The consolidation area in H1 2012 does not differ with respect to the 2011 consolidated accounts. VPC
Logistics is in the process of being liquidated.
7.4
A15761609
Auditor’s report on the interim consolidated financial statements as at 30 June 2012
228
Leudelange, 29 September 2012
Report of the Réviseur d’Entreprises Agréé
To the shareholders of d’Amico International Shipping S.A.
We have reviewed the accompanying interim consolidated balance sheet of d’Amico International
Shipping S.A. as of 30 June 2012 and the related interim consolidated statements of income, changes
in equity and cash flows for the six months then ended. Management is responsible for the preparation
and presentation of these interim consolidated financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union. Our responsibility is to
express a conclusion on these interim consolidated financial statements based on our review.
This report is made to you in accordance with the terms of our engagement. Our work has been
undertaken so that we might review the interim consolidated financial statements that we have been
engaged to review, report to you that we have done so, and state those matters that we have agreed to
state to you in this report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than d’Amico International Shipping S.A. for our work
or for this report.
We conducted our review in accordance with International Standard on Review Engagements 2410,
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A
review of interim financial information consists of making inquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
interim consolidated financial statements are not prepared, in all material respects, in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the European Union.
MOORE STEPHENS Audit S.A.R.L.
Horst SCHNEIDER
Réviseur d’Entreprises Agréé
8
Recent developments and outlook
8.1
Recent developments
Reference is made to section 6.1.2, section 6.4.1, section 6.4.2, section 6.4.3 – “Fleet new-building
programme – Order of two ECO 40 Shallowmax product tankers”, section 6.4.3 – “Fleet new-building
programme – Order of two “eco design” MR new-building product tanker vessels” and Appendix 2.
The results for the third quarter of 2012 can be found in Appendix 2.
Other than as set out in Appendix 2, no significant change in the financial or trading position of the
DIS Group has occurred since 30 June 2012.
A15761609
229
8.2
Outlook
Reference is made to section 6.1.2, section 6.4.1, section 6.4.2, Appendix 2 – “Outlook” and
Appendix 2 – “Business Outlook”.
9
Glossary
The following are definitions of certain terms that are commonly used in the shipping industry and in this
Prospectus.
Annual survey
means the inspection of a vessel pursuant to international
conventions, by a classification society surveyor, on behalf of
the flag state, that takes place every year.
Bareboat charter
means a charter of a vessel under which the ship owner is
usually paid a fixed amount of charter hire for a certain period
of time during which the charterer is responsible for the vessel
operating expenses and voyage expenses of the vessel and for
the management of the vessel, including crewing. A bareboat
charter is also known as a “demise charter” or a “time charter
by demise”.
Bunker fuel
means heavy fuel and diesel oil used to power a vessel’s
engines.
Charter
means the hire of a vessel for a specified period of time or to
carry a cargo from a loading port to a discharging port. The
contract for a charter is commonly called a charter party.
Charterer
means the party that hires a vessel for a period of time or for a
voyage.
Charter hire
means a sum of money paid to the ship owner by a charterer for
the use of a vessel. Charter hire paid under a voyage charter is
also known as “freight”.
Clarkson
Clarkson Research Services Ltd., a U.K.-based company
providing research and statistics to the shipping industry.
Classification society
means an independent society that certifies that a vessel has
been built and maintained according to the society’s rules for
that type of vessel and complies with the applicable rules and
regulations of the country of the vessel’s registry and the
international conventions of which that country is a member. A
vessel that receives its certification is referred to as being “inclass”.
Class renewal survey
means the survey carried out by the classification society every
five years to ensure that the vessel has been maintained
according to the society’s rules for that type of vessel and
complies with the applicable rules and regulations of the
country of the vessel’s registry and the international
conventions of which that country is a member. A vessel that
receives its certification is referred to as being “in-class”.
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Clean products
means liquid products refined from crude oil, whose colour is
less than or equal to 2.5 on the National Petroleum Association
scale. Clean products include naphtha, jet fuel, gasoline and
diesel/gasoil.
Contract of affreightment or COA
means an agreement between an owner and a charterer which
obliges the owner to provide a vessel to the charterer to move
specific quantities of cargo over a stated time period but
without designating specific vessels or voyage schedules,
thereby providing the owner with greater operating flexibility
than with voyage charters alone.
Dirty products
means liquid products refined from crude oil, whose colour is
greater than 2.5 on the National Petroleum Association scale.
Dirty products usually require heating during a voyage, because
their viscosity or waxiness makes discharge difficult at ambient
temperatures.
Double-hull
means a hull construction design in which a vessel has an inner
and outer side and bottom separated by void space.
Dry-docking
means the removal of a vessel from the water for inspection
and repair of those parts of a vessel which are below the water
line. During dry-dockings, which are required to be carried out
periodically, certain mandatory classification society
inspections are carried out and relevant certifications are
issued. Dry-dockings are generally required once every 30
months or twice every five years, one of which must be a
Special Survey.
Dwt
means deadweight tonne, which is a unit of a vessel’s capacity
for cargo, fuel, oil, stores and crew measured in metric tonnes
of 1,000 kilograms.
EIA
means the U.S. Energy Information Administration collecting,
analysing, and disseminating independent and impartial energy
information to promote sound policymaking, efficient markets,
and public understanding of energy and its interaction with the
economy and the environment.
Freight
means a sum of money paid to the ship owner by the charterer
under a voyage charter, usually calculated either per tonne
loaded or as a lump sum amount.
Gross tonne
means a unit of measurement for the total enclosed space
within a vessel equal to 100 cubic feet or 2.831 cubic meters.
Handysize product tanker
means a tanker with capacity ranging from 27,000 to 37,999
dwt.
Hull
means shell or body of a ship.
IEA
means the International Energy Agency, a Paris-based
autonomous intergovernmental organisation established in the
framework of the OECD.
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IMO
means the International Maritime Organisation, a United
Nations agency that issues international standards for shipping.
Intermediate survey
means the inspection of a vessel by a classification society
surveyor that takes place 24 to 36 months after each Special
Survey.
Lubricant
a substance such as oil that reduces friction when applied as a
surface coating to moving parts.
Metric tonne
a unit of measurement for weight equal to 1,000 kilogrammes
and used to measure cargo size.
MR tanker
means a medium-sized tanker with capacity ranging from
38,000 to 54,999 dwt.
New-building
means a new vessel under construction or just completed.
OECD
means The Organisation for Economic Co-operation and
Development.
Oil products
means refined crude oil products, such as fuel oils, gasoline and
jet fuel.
Off-hire
means the period in which a vessel is unable to perform the
services for which it is immediately required under a time
charter. Off-hire periods can include days spent on repairs, drydocking and surveys, whether or not scheduled.
OPA
means The United States Oil Pollution Act of 1990.
Product tanker
means a tanker designed to carry a variety of liquid products
varying from crude oil to clean and dirty petroleum products,
acids and other chemicals, as well as edible oils. The tanks are
coated to prevent product contamination and hull corrosion.
The ship may have equipment designed for the loading and
unloading of cargoes with a high viscosity.
Protection and indemnity insurance
means insurance usually obtained through a mutual association
formed by ship owners to provide liability indemnification
protection from various liabilities to which they are exposed in
the course of their business and which spreads the liability
costs of each member by requiring contribution by all members
in the event of a loss.
Scrapping
means the sale of a vessel as scrap metal.
Single hull
means a hull construction design in which a vessel has only one
hull.
Sister ship liability
is a concept permitted by some jurisdictions whereby a
claimant may arrest both the vessel that is subject to the
claimant’s maritime lien and any “associated” vessel, which is
any vessel owned or controlled by the same owner.
Special survey
means the inspection of a vessel by a classification society
surveyor that takes place every five years.
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Spot market
means the market for the immediate chartering of a vessel,
usually for single voyages.
SQE
Safety, Quality and Environment system
Tanker
means a ship designed for the carriage of liquid cargoes in bulk
with cargo space consisting of tanks. Tankers carry a variety of
products including crude oil, refined products and liquid
chemicals.
Time charter equivalent earnings per
day
is a measure of the average daily revenue performance of a
vessel on a per voyage basis. The DIS Group’s method of
calculating time charter equivalent earnings per day is
consistent with industry standards and is determined by
dividing voyage revenues (net of voyage expenses) by voyage
days for the relevant time period. Time charter equivalent
earnings per day is a standard shipping industry performance
measure used primarily to compare period-to-period changes in
a shipping company’s performance despite changes in the mix
of charter types (i.e. spot charters, time charters and bareboat
charters) under which the vessels may be employed during
specific periods.
Time charter
means a charter under which the ship owner is paid charter hire
on a per-day basis for a specified period of time. Typically, the
ship owner is responsible for providing the crew and paying
vessel operating expenses while the charterer is responsible for
paying the voyage expenses and additional voyage insurance.
Vessel operating expenses
means the costs of operating a vessel, primarily consisting of
crew wages and associated costs, insurance premiums,
management fee, lubricants and spare parts and repair and
maintenance costs. Vessel operating expenses exclude fuel cost,
port expenses, agents’ fees, canal dues and extra war risk
insurance, as well as commissions, which are included in
“voyage expenses”.
Voyage charter
means a charter under which a ship owner is paid freight on the
basis of moving cargo from a loading port to a discharging port.
The ship owner is responsible for paying both vessel operating
expenses and voyage expenses. Typically, the charterer is
responsible for any delay at the loading or discharging ports.
Voyage expenses
means expenses incurred due to a vessel’s travelling from a
loading port to a discharging port, such as fuel (bunkers) cost,
port expenses, agents’ fees, canal dues and extra war risk
insurance, as well as commissions.
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APPENDIX 1: Terms and conditions of the “D’AMICO INTERNATIONAL SHIPPING
WARRANTS 2012 – 2016”
Article 1 – d’Amico International Shipping Warrants 2012 - 2016
1.1
On 30 October 2012 the Board of Directors resolved to approve, within the limits of the authorised capital
of the Company, an increase of the share capital with Preferential Subscription Rights for Existing
Shareholders through the issue of a maximum number of up to 209,929,867 New Shares, having an
accounting value of USD 0.10 each, and 209,929,867 Warrants issued simultaneously which entitle the
Warrantholders to subscribe to a maximum number of up to 69,976,622 Warrant Shares in accordance with
the present terms and conditions (the “Terms and Conditions”).
1.2
The Warrants will be subject to an agency agreement between the Company and BNP Paribas Securities
Services, Luxembourg Branch (the “Warrant Agency Agreement”) pursuant to which BNP Paribas
Securities Services, Luxembourg Branch shall act as agent of the Warrants.
Article 2 – Form, title and status
2.1
The Warrants will be in registered form. A global registered certificate evidencing the entry of the Warrants
in the register of Warrantholders maintained at the registered office of the Company will be deposited with
a common depositary (BNP Paribas Securities Services) on behalf of Clearstream Luxembourg and
Euroclear. The Warrants will be held in book-entry form and treated as dematerialised financial instruments
in the centralised management systems operated by Clearstream Luxembourg, Euroclear and Monte Titoli
and may be settled through Clearstream Luxembourg, Euroclear and Monte Titoli. Each Warrant will
entitle its Warrantholder to acquire the number of Warrant Shares as described in, and subject to, these
Terms and Conditions.
2.2
The Warrants will be transferable freely and separately from the New Shares.
2.3
The Company will cause a register of Warrants (the “Warrants Register”) to be kept at its registered
office.
Article 3 – Exercise Periods
3.1
Subject to, and as provided in, these Terms and Conditions, the Warrantholders will be entitled to exercise
their Warrants and subscribe to the corresponding number of Warrant Shares as set out in these Terms and
Conditions at any time during the following exercise periods (each of which an “Exercise Period” and,
jointly, the “Exercise Periods”):
3.1.1 a first Exercise Period comprising all the trading days of the month of January 2014 (the “First
Exercise Period”);
3.1.2 a second Exercise Period comprising all the trading days of the month of January 2015 (the “Second
Exercise Period”); and
3.1.3 a third Exercise Period comprising all the trading days of the month of January 2016 (the “Third
Exercise Period”).
3.2
In addition to the Exercise Periods and subject to article 3.3, the Board of Directors may at any time
between 1 December 2013 and 31 December 2015 open additional exercise periods with durations of one or
two consecutive calendar months during which the Warrantholders may exercise their Warrants based on
the Warrants Ratio as set out in article 4.1 and with Exercise Prices calculated pro-rata in accordance with
article 4.2, subject to, and as provided in, these Terms and Conditions (each of which an “Additional
Exercise Period” and, jointly, the “Additional Exercise Periods”) and will in any event establish an
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Additional Exercise Period if any of the following events occur between 1 December 2013 and
31 December 2015:
3.3
3.3.1 without prejudice to the matters provided for in article 6.1, if the Company proceeds with a corporate
finance operation conferring a preferential subscription right to the Shareholders the Board of Directors will
establish an Additional Exercise Period of the time limit needed ending at the latest the trading day prior to
the detachment date of such preferential subscription rights, without prejudice to the number of Warrant
Shares set out in article 4.1 and the Exercise Prices calculated pro-rata in accordance with article 4.2;
3.3.2 if a General Meeting would be held to resolve on (i) an amendment of the provisions of the Articles of
Association relating to the distribution of profits or (ii) a merger of the Company, the Board of Directors
will establish an Additional Exercise Period of the time limit needed ending at the latest the trading day
prior to the convocation date of the General Meeting to be called to approve the relevant resolutions,
without prejudice to the number of Warrant Shares set out in article 4.1 and the Exercise Prices calculated
pro-rata in accordance with article 4.2;
3.3.3 if a public offer for purchase and/or exchange is launched on the Shares, the Board of Directors will
establish an Additional Exercise Period of the time limit needed ending at the latest the day prior to the
deadline for acceptance of the public offer for purchase and/or exchange, without prejudice to the number
of Warrant Shares set out in article 4.1 and the Exercise Prices calculated pro-rata in accordance with
article 4.2;
3.3.4 if the Board of Directors resolves to propose a distribution of Special Dividends (as defined in the
Instructions accompanying the Rules of the markets organised and managed by Borsa Italiana in force at
the date of the resolution of the Board of Directors), it will establish an Additional Exercise Period of the
time limit needed ending at the latest the day prior to the detachment date of the Special Dividend, without
prejudice to the number of Warrant Shares set out in article 4.1 and the Exercise Prices calculated pro-rata
in accordance with article 4.2;
3.3.5 if the Company proceeds with a share capital increase by means of a capitalisation of reserves, profits
or share premium, through the allocation of new Shares (unless the new Shares are assigned free of charge
in the framework of remuneration plans as set out in article 6.1.5), the Board of Directors will establish an
Additional Exercise Period of the time limit needed ending in good time to proceed with the calculation of
the ratio of allocation of the new Shares to be issued within the framework of this capital increase, without
prejudice to the number of Warrant Shares set out in article 4.1 and the Exercise Prices calculated pro-rata
in accordance with article 4.2.
3.4
If the Board of Directors establishes an Additional Exercise Period, it will notify the Warrantholders thereof
by way of a press release and on the Company’s Website and at the latest one trading day prior to the
opening of the Additional Exercise Period.
3.5
The Board of Directors may suspend any Exercise Period from the day after (inclusive) the date on which a
General Meeting is convened up to the date (inclusive) on which such General Meeting is held. If the Board
of Directors resolves to propose the distribution of dividends, without prejudice to article 3.3.4, the exercise
of the Warrants will be suspended from the date after (inclusive) the date on which the Board of Directors
passes this resolution up to the date before (inclusive) the detachment date of any dividends resolved by the
General Meeting. In such case, the Board of Directors will establish an Additional Exercise Period of the
time limit needed during the same calendar year as the suspended Exercise Period.
Article 4 – Warrants Ratio – Exercise Price per Warrant Share
4.1
During the Exercise Periods and the Additional Exercise Periods the Warrantholder will be entitled to
subscribe for one (1) Warrant Share for each three (3) Warrants exercised (the “Warrants Ratio”).
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4.2
Subject to article 6, the exercise price per Warrant Share (the “Exercise Price”) will be determined as
follows:
4.2.1 during the First Exercise Period, the Exercise Price amounts to EUR 0.36;
4.2.2 during the Second Exercise Period, the Exercise Price amounts to EUR 0.40;
4.2.3 during the Third Exercise Period, the Exercise Price amounts to EUR 0.46;
4.2.4 during an Additional Exercise Period that occurs between 1 December 2013 and 1 January 2014, the
Exercise Price will be calculated pro-rata temporis, as follows:
wherein:
Cap increase Issuance Price:
is the Issuance Price
The first availability date of the Shares
is 14 December 2012.
4.2.5 during an Additional Exercise Period that occurs following the First Exercise Period, the Exercise Price will
be calculated pro-rata temporis, as follows:
Pro-rata
temporis
price
Pro-rata
starting
price
=
+
(Preset exercise pricea – Pro-rata starting price)
________________________________________
(Pro-rata end date - Pro-rata starting date) b
*
(Pro-rata calculation date – Pro-rata starting date) b
a) Exercise price relative to the immediately subsequent exercise period
b) Difference in number of days
wherein:
Pro-rata starting price:
is the Exercise Price of each Warrant Share relative to the Exercise Period
immediately prior to the exercise of the Warrants.
Pro-rata starting date:
Warrants.
Pro-rata end date:
is the last day of the Exercise Period immediately after the exercise of the Warrants.
Pro-rata calculation date:
4.3
is the last day of the Exercise Period immediately prior to the exercise of the
is the last day of the Additional Exercise Period concerned time-by-time.
The calculations set out above will be carried out without prejudice to the Warrants Ratio set out in
article 4.1.
Article 5 – Method for exercise of the Warrants and payment of the Exercise Price
5.1
Warrantholders who wish to exercise their Warrants in accordance with the Terms and Conditions must
instruct and authorise BNP Paribas Securities Services, Luxembourg Branch by (i) submitting the
completed and signed exercise notice to their respective depository banks (an “Exercise Notice”) and
(ii) authorising the payment of the Exercise Price to the account notified by the depository banks during the
relevant Exercise Period or Additional Exercise Period.
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5.2
The Exercise Notices will be made available by the depository banks of the Warrantholders.
5.3
Warrant Shares transferred and delivered on exercise of Warrants will be fully paid and will in all respects
rank pari passu with the Shares in issue on the relevant exercise date, except in any such case for any right
excluded by mandatory provisions of applicable law and except that such Shares will not rank for (or, as the
case may be, the relevant holder shall not be entitled to receive) any rights, distributions or payments the
record date or other due date for the establishment of entitlement for which falls prior to the relevant
exercise date.
5.4
When the Exercise Notice is presented, the Warrantholder: (i) will take into account the fact that the
Warrant Shares subscribed in exercise of the Warrants have not been registered in compliance with the
Securities Act, in force in the United States of America; (ii) will declare that he or she is not a
“U.S. Person” as defined in compliance with Regulation S. No Warrant Share subscribed upon the exercise
of the Warrants will be allocated to the Warrantholder who fails to fulfil the conditions above.
5.5
The Company will issue the Warrant Shares by the tenth trading day of the calendar month following the
date of submission of the Exercise Note. The Company will issue the Warrant Shares, making them
available to the Warrantholder, through Clearstream Luxembourg, Euroclear and Monte Titoli.
5.6
Following the issuance of Warrant Shares, the Warrants that have been exercised in accordance with the
Terms and Conditions shall automatically lapse. Warrants that are not exercised before 31 January 2016 in
accordance with these Terms and Conditions will automatically lapse.
Article 6 – Rights of the Warrantholders in the event of certain resolutions
6.1
If the Company, as from the date of issue of the Warrants until the expiry date of the Warrants, set at
31 January 2016:
6.1.1 approves a corporate finance operation conferring a preferential subscription right to the Shareholders
and the Warrantholder has decided to refrain from using the right set out in article 3.3.1, without prejudice
to the number of Warrant Shares subscribable for each Warrant as set out in article 4.1, the Exercise Price
of the Warrant Shares, as set out in article 4.2, will, for all Exercise Periods and Additional Exercise
Periods that follow the completion of such financial transaction, be reduced by an amount equivalent to:
(Pcum - Pex) wherein
- Pcum is the simple arithmetic average of the last five official Share right prices (cum diritto) of the
Company recorded on the MTA;
- Pex is the simple arithmetic average of the first five official Share ex-rights prices (ex diritto) prices of
the Company recorded on the MTA;
6.1.2 approves a share capital increase by means of a capitalisation of reserves, profits or share premium
through the assignment of new Shares (unless the new Shares are assigned free of charge in the context of
remuneration plans as set out in article 6.1.5), no amendment will be made to the Warrants Ratio nor to the
Exercise Price. However, at the time of exercise of their Warrants, the Warrantholders who did not exercise
their Warrants during the Additional Exercise Period established by the Board of Directors pursuant to
article 3.3.5 will be assigned, free of charge, those Warrant Shares that would have been assigned to them if
they had exercised their Warrants in accordance with article 3.3.5;
6.1.3 approves a share capital increase by means of a capitalisation of reserves, profits or share premium
without the issue of new Shares or respectively share capital decrease without cancellation of Shares, no
amendment will be made to the Warrants Ratio nor to the Exercise Price;
6.1.4 approves the grouping or division of the Shares (1) the Warrants Ratio will be, respectively decreased
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or increased by the number of Warrant Shares subscribable for each Warrant as set out in article 4.1 in
application of the ratio whereby the grouping or division of the Shares will be performed and (2) the
Exercise Prices of each Warrant Share as set out in article 4.2 will be increased or decreased;
6.1.5 approves a capital increase within the framework of a remuneration plan, no amendment will be made
to the Warrants Ratio nor to the Exercise Price;
6.1.6 approves a capital increase with limitation of the preferential subscription right of the Shareholders,
no amendment will be made to the Warrants Ratio nor to the Exercise Price;
6.1.7 mergers of the Company with any other company (with the exception of cases wherein the Company
is the merging party), demerger operations of the Company (with the exception of cases wherein the
Company itself is the beneficiary), the Warrants Ratio will be consequently modified on the basis of the
relative exchange or allocation ratios, in such a way that the Warrantholders will be ascribed rights that are
equivalent to those that they would have accrued if the Warrants had been exercised before the merger or
demerger operation in question, without prejudice to the Exercise Prices set out in article 4.2;
6.1.8 approves a Special Dividend (as defined in the Instructions for Regulation of Markets Organised and
Managed by Borsa Italiana in force at the date of the resolution of the Board of Directors), the Exercise
Price applied for all Exercise Periods and Additional Exercise Periods that follow the payment date of the
Special Dividend will be reduced in accordance with generally accepted methods.
6.2
If another operation is performed other than those mentioned in article 6.1, which is capable of causing
comparable effects to the Warrantholders, an adjustment (either upwards or downwards) can be made to the
Warrants Ratio and/or, if appropriate, the Exercise Price, in accordance with generally accepted methods
and, in any event, using criteria that are not incompatible with these Terms and Conditions.
6.3
If due to the effect of the matters provided for by this article 6, at the time of exercise of the Warrants the
Warrantholder would be entitled to a partial number of Warrant Shares, the Warrantholder shall be entitled
to subscribe Warrant Shares up to a whole number only and shall not be authorised to claim any right in
relation to the fractional portion.
Article 7 – No issuance of Warrant Shares below the accounting value
Notwithstanding anything to the contrary in these Terms and Conditions, the Company cannot and will not issue
Warrant Shares at an Exercise Price which would be below the accounting value (pair comptable) of the Shares at
the time of issuance of the Warrant Shares upon exercise of the Warrants. The accounting value of the Existing
Shares (which do not have a nominal value) is, at the date of the Prospectus, set at USD 0.10.
Article 8 – Terms of expiry
The Warrants must be exercised, on penalty of expiration, by submitting the Exercise Notice before
31 January 2016.
Article 9 – Admission to trading of the Warrants and listing venue
An application was filed for the admission of the Warrants to trading on the STAR segment of the MTA and Borsa
Italiana admitted the Warrants to trading by decision 7582 of 30 October 2012.
The first date of trading of the Warrants on MTA will be determined by Borsa Italiana with an appropriate notice
in accordance with the rules of the markets organised and managed by Borsa Italiana, subject to the prior
verification of the sufficient circulation and availability of the financial instruments to the persons entitled thereto.
The Warrants are expected to trade under ISIN code: LU0849020044.
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Article 10 – Miscellaneous
10.1
Trading days as referred to in these Terms and Conditions are trading days on the MTA.
10.2
Unless provided otherwise by applicable law or by these Terms and Conditions, all communications of the
Company to the Warrantholders will be made by means of a press release and on the Company’s Website
and through the international central securities depositories.
10.3
Possession of the Warrants implies full acceptance of all the conditions set out in these Terms and
Conditions.
10.4
The Terms and Conditions are governed by, and shall be construed in accordance with, the laws of
Luxembourg.
10.5
The courts of the City of Luxembourg have exclusive jurisdiction to settle any disputes which may arise out
of or in connection with the Warrants and accordingly any legal action or proceedings arising out of or in
connection with the Warrants may be brought in such courts.
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ANNEX - Pro-rata temporis calculation example
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240
FIRST TIME PERIOD
First time period pro - rata temporis
A
First date of availability of the Shares - pro-rata starting date
B
Capital increase Issuance Price (1)
0.31
First predetermined exercise period (2)
C
Last day of the exercise period (3)
D
First period exercise price
from 01/01/14 to 31/01/14
31/01/14
0.36
Additional exercise period (Hp) (4)
E
14/12/12
from 01/12/13 to 31/12/13
Last day of the additional exercise period (5)
31/12/13
F=D-B
Δ first period exercise price vs Capital increase Issuance Price
0.05
G=C-A
Δ days between pro-rata end date and pro-rata starting date
420
H=F/G
Δ daily price
I
L=H*I
B+ L
A15761609/6.0/06 Nov 2012
0.0001
Δ days between last day of additional period and pro-rata starting date
389
Total increase to pro-rata starting price
0.0463
Additional period pro-rata temporis price
0.3563
(1)
Pro-rata temporis starting price
(2)
All trading days in the month of January 2014
(3)
End date of the pro-rata
241
A15761609
(4)
Hypothetical period
(5)
Pro-rata temporis calculation date
242
SECOND TIME PERIOD
Second time period pro - rata temporis
First predetermined exercise period (1)
A
B
First period exercise price (3)
Second predetermined exercise period
from 01/01/14 to 31/01/14
31/01/14
0.36
(4)
C
D
Second period exercise price
0.40
E=D-B
Δ second period exercise price vs first period exercise price
0.04
F=C-A
Δ days between second period end date and first period
365
G=E/F
Δ daily price
H
31/01/15
0.0001
A15761609
from 01/01/15 to 31/01/15
I=H-A
Δ days between last day of additional period and first period end date
L=I*G
Total increase to pro-rata temporis starting price
243
from 15/03/14 to 15/04/14
15/04/14
74
0.0081
B+ L
A15761609
(1)
(2)
Pro-rata temporis starting date
(3)
(4)
(5)
Pro-rata temporis end date
(6)
Hypothetical period
(7)
244
0.3681
THIRD TIME PERIOD
Third time period pro - rata temporis
Second predetermined exercise period (1)
A
31/01/15
B
Second period exercise price (3)
0.40
Third predetermined exercise period (4)
from 01/01/16 to 31/01/16
C
D
Third period exercise price
0.46
E=D-B
Δ third period exercise price vs second period exercise price
0.06
F=C-A
Δ days between third period end date and second period
365
G=E/F
Δ daily price
H
31/01/16
0.0002
A15761609
from 01/01/15 to 31/01/15
I=H-A
Δ days between last day of additional period and second period end date
L=I*G
Total increase to pro-rata temporis starting price
245
from 15/03/15 to 15/04/15
15/04/15
74
0.0122
B+ L
A15761609
(1)
(2)
Pro-rata temporis starting date
(3)
(4)
(5)
Pro-rata temporis end date
(6)
Hypothetical period
(7)
246
0.4122
GENERIC CALCULATION FORMULA
First time period pro-rata calculation formula:
(First period exercise price – Capital increase Issuance Price)
Pro-rata
temporis
price
=
Cap
increase
Issuance
Price

+
(First period last day – First date of shares availability) a
(Additional period last day – First date of share

*
availability) a
*
(Pro-rata calculation date – Pro-rata starting date) b
a) Difference in number of days
Second and third time periods pro-rata calculation formula
(Preset exercise price a – Pro-rata starting price)
Pro-rata
temporis
price
=
Pro-rata
starting
price

+
(Pro-rata end date - Pro-rata starting date)
b
a) Exercise price elative to the immediately successive predetermined exercise
period
b) Difference in number of days
[Signatures]
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
APPENDIX 2: Press release interim management statements third quarter 2012
Interim Management Statements – Third Quarter 2012
Luxembourg, October 25th 2012 - The Board of Directors of d’Amico International Shipping S.A. approves
the Q3 2012 Results.
Still challenging market scenario in Q3 2012 but improved spot rates compared to the previous quarter.
Confirmed the positive outlook on the Product Tankers market in the medium term with spot rates and
asset values expected to increase
THIRD QUARTER 2012 RESULTS

Time charter equivalent (TCE) earnings - US 46.8 million

Gross Operating Profit/EBITDA - US$ 4.6 million

Net loss - US$ 9.7 million

Cash Flow from Operating Activities - US$ (1.2) million
NINE MONTHS 2012 RESULTS
Time charter equivalent (TCE) Earnings - US$ 135.7 million
Gross operating profit/EBITDA - US$ 13.8 million
Net loss - US$ 107.0 million (including USD 85 million impairment charge on vessels
value)
Shareholders Equity – US$ 208 million
Net debt - US$ 320.3 million
Cash Flow from Operating Activities - US$ (1.2) million
’The current macro-economic scenario is still uncertain and affects also the Product Tanker industry.
Consequently, DIS spot performance was still relatively weak so far in 2012, even if signs of improvement on
the spot market were clearly noted in Q3 compared to previous quarter.
Q3 EBITDA was higher than the previous quarter but still at a relatively weak level, leading to a slightly
negative operating cash flow of US$ 1.2 million. Furthermore, the working capital trend did not support the
operating cash-flow generation, as it was particularly affected by the decrease in coverage compared to the
same period of last year, with the consequent delay in the timing of income cash-in.
The Net Loss in the first nine months of the year includes US$ 85 million impairment charge on vessel values.
The impairment charge is the result of the prolonged market downturn in asset values and freight rates and
this adjustment brings book values closer in line with the market values of our assets. The important thing is
that the impairment has no impact on our cash flow. At this stage and following few tough years for the whole
industry, we feel to have the responsibility of aligning our balance sheet to the market valuation. On the other
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248
hand, the current historically low vessel prices create special opportunities for a leading shipping company
such as DIS.
In October, we agreed the sale of the MR double hulled product tanker vessel M/T High Wind, built in 1999,
at the price of US$ 12.2 million. This sale will generate about US$ 1.3 million profit on disposal in Q4 and
will reduce at the same time the average age of the fleet.
DIS has a very positive outlook on the medium/long term market perspectives and in coherence with such
view we entered into contracts for the construction of four new “ECO” product/chemical tanker vessels.
These vessels will be extremely efficient in fuel consumption and technically advanced.
Besides the timing of the delivery of these new-buildings perfectly matches our positive market outlook. Two
of these vessels have already being fixed for five years in Time-Charter with one of the main Oil Majors at
levels which will generate a profit, increasing at the same time DIS coverage.
d’Amico International Shipping continues to maintain a conservative approach for the current year, with a
positive view on the medium term. We believe the market is moving into the right direction and that a period
of weak spot rates in the near-term will be positive for the balance of tanker supply and demand in the longer
term. At the same time, the consolidation of refining capacity outside the OECD, expected in the coming
years, should lead to improved ton-mile demand and better utilization rates.’
OUTLOOK
We are very positive on the medium-term perspectives on the Product tankers industry.
The tonne-mile demand and vessel utilization is expected to grow substantially in the years to come. In fact,
the current strong trend of refineries shifting towards oil production areas, especially in Asia and the Middle
East, will consolidate in the next few years and the increase of world oil demand will be supported mainly by
non-OECD countries, China and India, in particular.
According to the International Energy Agency ‘Oil Market Report’ of October 2012, over next five years
China and India will take a leading role as products exporting countries. More products will be exported from
the US and many EU refineries will shut down due to poor margins. All these factors will generate a
substantial increase in long-haul journeys for product tankers.
On the supply side, a diminishing delivery of new-building and a potential increase of scrapping of old
tonnage are expected in the next years.
Considering all these factors and also according to several market researches, we expect spot rates will
increase in the medium term and asset values will follow the same trend.
OTHER RESOLUTIONS
The Board of Directors of d’Amico International Shipping S.A. approves the Company’s 2013 financial
calendar – available on the Company’s website and filed with Borsa Italiana S.p.A., Commission de
Surveillance du Secteur Financier (CSSF) and the OAM, Société de la Bourse de Luxembourg S.A.
d’Amico International Shipping S.A. announces that, effective from today, it has accepted the resignation of
Alberto Mussini, Chief Financial Officer (CFO), who is leaving the Group to pursue different professional
paths. The Board has appointed Giovanni Barberis as the Company’s new CFO.
Giovanni Barberis was appointed as d’Amico Group CFO last September, after consolidating a strong
professional background, in Italy and abroad, in several industries and important listed companies. Giovanni
Barberis will keep also his role as Group CFO.
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The Board of Directors of d’Amico International Shipping S.A. would like to thank Alberto Mussini for the
work and commitment of the recent years and is very pleased to welcome Giovanni Barberis to DIS team.
Today at 14.00 hours (CEST), DIS will hold a telephone conference. The participants should dial the following numbers: Italy: + 39 02
8058811 from the UK+44 1 212818003, from the US +1 718 7058794. The presentation slides can be downloaded before the conference
call from the Investor Relations page on the DIS web site: www.damicointernationalshipping.com. Further information: Investor
Relations Manager, Anna Franchin, tel. +352 26262929 01
This press release relating to the third quarter 2012 results, which have not been audited, represents the interim management statements
prepared in accordance with provisions of Art. 5 of the Luxembourg Law dated 11 January 2008, which transposed Directive
2004/109/EC of the European Parliament and of Council of 15 December 2004 in the harmonization of transparency requirements in
relation to information about issuers whose securities are admitted to trading on a regulated market.
This document is deposited and available at the Company's registered office, at BorsaItaliana S.p.A., at Consob, at CSSF, on
www.damicointernationalshipping.com and at Société de la Bourse de Luxembourg S.A. (O.A.M.).
Registered office at 25C Boulevard Royal, Luxembourg
Share capital US$149,949,907 as at 31 September 2012
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Contents
BOARD OF DIRECTORS AND CONTROL BODIES ................................
4
..............................................................................................................................
KEY FIGURES ................................................................................................
5
D’AMICO INTERNATIONAL SHIPPING GROUP................................................................
6
..............................................................................................................................
INTERIM MANAGEMENT REPORT ............................................................
FINANCIAL REVIEW ........................................................................................................................
10
SIGNIFICANT EVENTS IN THE PERIOD .....................................................................................
14
SIGNIFICANT EVENTS SINCE THE END OF THE PERIOD AND BUSINESS
OUTLOOK ............................................................................................................................................
16
..............................................................................................................................
D’ AMICO INTERNATIONAL SHIPPING GROUP
CONSOLIDATED FINANCIAL STATEMENT AS AT 30
SEPTEMBER 2012 .............................................................................................
18
CONSOLIDATED INCOME STATEMENT ....................................................................................
18
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................
18
CONSOLIDATED STATEMENT OF FINANCIAL POSITION...................................................
19
CONSOLIDATED STATEMENT OF CASH FLOW................................................................
20
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY ................
21
NOTES....................................................................................................................................................
22
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Board of Directors and Control Bodies
Board of Directors
Chairman
Paolo d’Amico(1)
Marco Fiori(1)
Directors
Cesare d’Amico(1)
Massimo Castrogiovanni(2)
Stas Andrzej Jozwiak(3)
Giovanni Battista Nunziante
John Joseph Danilovich(2)
Heinz Peter Barandun(2)
Notes:
(1)
Member of the Executive Committee
(2)
Independent Director
(3)
Lead Independent Director
Independent Auditors
Moore Stephens Audit S.à.r.l.
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Key Figures
Financials
Q3 2012
Q3 2011
9 Months
9 Months
2012
2011
(U.S.$ Thousand)
Time charter equivalent (TCE) earnings...............
46,768
45,614
135,728
141,823
Gross operating profit/EBITDA............................
4,585
6,799
13,778
20,685
as % of margin on TCE......................................
Operating profit/EBIT ..........................................
Net profit/(loss) .....................................................
9.80%
(5,408)
(11.57)%
14.91%
(3,064)
(6.72)%
10.15%
(100,540)*
(74.08)%*
(7,088)
(5.00)%
(9,747)
(9,565)
(20.84)%
(20.97)%
(78.82)%*
(13.96)%
Earnings/(loss) per share .......................................
(0.065)
(0.064)
(0.713)
(0.132)
Operating cash flow ..............................................
(1,223)
12,32
(1,190)
30,753
Gross CAPEX........................................................
(7,203)
(25,547)
(77,579)
(46,112)
(106,982)*
14.59%
(19,788)
As at
30 September
As at
3 December
2012
2011
Total assets ............................................................
613,425
670,237
Net financial indebtedness ....................................
320,298
239,565
Shareholders’ Equity .............................................
208,180
315,481
Note:
*
the numbers include the fleet impairment of U.S.$85.0 million
Other Operating Measures
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
Daily operating measures - TCE earnings per
employment day (U.S.$)(1) ....................................
12,887
14 164
13 158
14 393
Fleet development - Total vessel equivalent .......
40.3
37.1
– Owned .............................................................
22.0
20.0
20.8
19.1
–Chartered ..........................................................
18.3
16.1
18.2
17.9
– Chartered through pools..................................
Off-hire days/ available vessel days (2) (%)...........
38.0
0.0
1.0
—
1.0
1.90%
1.98%
3.4%
2.1%
36.2%
48.0%
37.1%
48.1%
(3)
Fixed rate contract/available vessel days
(coverage %) .........................................................
Notes:
(1)
This figure represents time charter (“TC”) equivalent earnings for vessels employed on the spot market and time
charter contracts net of commissions. Calculations exclude vessels chartered through the pools, if any.
A15761609/6.0/06 Nov 2012
253
(2)
This figure is equal to the ratio of the total off-hire days, inclusive of dry-docks, and the total number of available
vessel days.
(3)
Fixed rate contract days/available vessel days (coverage ratio): this figure represents how many vessel days were
employed on time charter contracts, inclusive of off-hire days.
Group Structure
Luxembourg
100%
d’Amico Tankers Ltd
Ireland
100%
Management Ltd
Ireland
100%
High Pool Tankers Ltd
Ireland
51%
Holding Company
100%
VPC Logistics Ltd
UKI
99.8%
d’Amico Tankers
Monaco SAM
Monaco
100%
d’Amico Tankers
Singapore Pte Ltd
Singapore
Shipping Company
Pool Company
100%
Service Company
50%
DM Shipping Ltd
Ireland
d’Amico Tankers
UK Ltd
UK
Shipping Ltd
Ireland
VPC logistics Ltd. (UK) under liquidation
d’Amico International Shipping S.A. (DIS, the Group or d’Amico International Shipping) is an international
marine transportation company, part of the d’Amico Group that traces its origins to 1936. d’Amico
International Shipping operates, mainly through its fully owned subsidiary d’Amico Tankers Limited
(Ireland), a fleet with an average age of approximately 6.2 years, compared to an average in the product
tankers industry of 8.7 years (source: Clarkson). All DIS vessels are double-hulled and are primarily engaged
in the transportation of refined oil products, providing worldwide shipping services to major oil companies
and trading houses. All the vessels are compliant with IMO (International Maritime Organization) regulations,
including MARPOL (the International Convention for the Prevention of Pollution from Ships), with the
requirements of oil-majors and energy-related companies and other relevant international standards. Based on
MARPOL/IMO rules, cargoes such as palm oil, vegetable oil and other chemicals can only be transported by
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vessels that meet certain requirements (IMO Classed). As at 30 September 2012, 67.4% of the DIS fleet was
IMO Classed, allowing the Group to transport a large range of products.
Fleet
The following tables set forth information about the DIS fleet as at 30 September 2012, which consists of 40
vessels:
Mr fleet
Name of vessel
Dwt
Year built
Builder, Country
IMO classed
Owned
High Tide..............................................................
51,768
2012
Hyundai Mipo, South Korea ................................
IMO II/III
High Seas..............................................................
51,678
2012
IMO II/III
47,203
2011
IMO II/III
GLENDA Meryl ................................
47,251
2011
IMO II/III
(1)
47,238
2011
IMO II/III
(1)
47,162
2010
IMO II/III
GLENDA Meredith ................................ 46,147
2010
IMO II/III
46,800
2009
Nakai Zosen, Japan ................................
47,147
2009
IMO II/III
46,547
2009
High Venture ................................
51,087
2006
STX, South Korea ................................ IMO II/III
High Prosperity................................
48,711
2006
Imabari, Japan ................................
—
High Presence ................................
48,700
2005
Imabari, Japan ................................
—
High Priority ................................
46,847
2005
—
High Progress ................................
51,303
2005
STX, South Korea ................................
High Performance................................
51,303
2005
High Valor ............................................................
46,975
2005
STX, South Korea ................................
High Courage ................................
46,975
2005
High Endurance ................................
46,992
2004
STX, South Korea ................................
IMO II/III
High Endeavour ................................
46,992
2004
STX, South Korea ................................
IMO II/III
High Challenge ................................
46,475
1999
STX, South Korea ................................
IMO II/III
High Spirit ...........................................................
46,473
1999
STX, South Korea ................................
IMO II/III
High Wind ............................................................
46,471
1999
STX, South Korea ................................
IMO II/III
(1)
GLENDA Melissa ................................
(1)
GLENDA Melody ................................
GLENDA Melanie ................................
(1)
(2)
High Strength ................................
GLENDA Megan
High Efficiency
(1)
(2)
................................
................................
—
—
IMO II/III
IMO II/III
Notes:
(1)
Vessels owned by GLENDA International Shipping, in which DIS has a 50% interest.
(2)
Vessels owned by DM Shipping (in which DIS has a 51% interest) and time chartered to d’Amico Tankers Limited
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Name of vessel
Dwt
Year built
Builder, Country
IMO classed
Time chartered with purchase
option
High Enterprise................................
45,800
2009
Shin Kurushima, Japan ................................
—
High Pearl.............................................................
48,023
2009
Imabari, Japan ................................
—
High Force ............................................................
53,603
2009
—
Eastern Force ................................
48,056
2009
Imabari, Japan ................................
—
High Saturn...........................................................
51,149
2008
High Mars ............................................................
51,149
2008
STX, South Korea ................................
High Mercury ................................
51,149
2008
High Jupiter ................................
51,149
2008
Torm Hellerup ................................
45,990
2008
—
Freja Hafnia ..........................................................
53,700
2006
—
High Glow ............................................................
46,846
2006
—
High Energy..........................................................
46,874
2004
—
High Power ...........................................................
46,874
2004
—
High Nefeli ...........................................................
45,976
2003
STX, South Korea ................................
Time chartered without
purchase option
IMO II/III
IMO II/III
Handysize fleet
Name of vessel
Dwt
Year built
Builder, Country
IMO classed
Owned
Cielo di Salerno ................................
36,032
2002
STX, South Korea ................................
IMO II/III
Cielo di Parigi................................
36,032
2001
STX, South Korea ................................
IMO II/III
35,985
2001
STX, South Korea ................................
IMO II/III
Malbec ................................................................
38,499
2008
Guangzhou, China................................
IMO II/III
Marvel................................................................
38,435
2008
Guangzhou, China................................
IMO II/III
2006
Guangzhou, China................................
IMO II
Cielo di Londra................................
................................................................
Time chartered with purchase
option
Time chartered without
purchase option
Cielo di Guangzhou(1) ................................ 38,877
Note:
(1)
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256
Fleet Employment and Partnership
DIS’ No. of
Vessels
Total Pool
Vessels
Direct employment ...............................................................................................
25.5
High Pool (MR vessels) ........................................................................................
9.0
13.0
GLENDA Int. Mgmt. (MR vessels) ................................................................
6.0
9.0
Total ......................................................................................................................
40.0
As at 30 September 2012, d’Amico International Shipping directly employed 25 Vessels: 8 MRs (‘Medium
Range’) on fixed term contract, whilst 11 MRs and 6 Handy-size vessels are currently employed on the spot
market. The Group still employs a significant portion of its controlled vessels through partnership
arrangements, even if lower compared to the previous periods:
High Pool Tankers Limited – a Pool with Nissho Shipping Co. Limited (Japan) and Mitsubishi Corporation. It
operated 13 MR product tankers as at 30 September 2012. d’Amico International Shipping, through d’Amico
Tankers Limited, is exclusively responsible for the Pool’s commercial management, in particular chartering,
vessel operations and administration.
GLENDA International Management Limited – a Pool with Glencore/ST Shipping to trade vessels under a
single brand name, ‘GLENDA’. The pool, GLENDA International Management Limited operated 9 MR
product tankers at the end of September 2012, 6 of which owned by GLENDA International Shipping Limited,
a 50/50 joint venture company with the Glencore Group. This Company owns 6 MR vessels, delivered
between August 2009 and February 2011.
DIS also established another joint venture agreement, DM Shipping Limited, with Mitsubishi Group. The
Company owns two MR vessels, delivered in 2009.
d’Amico International Shipping is part of the d’Amico Group, one of the world’s leading privately-owned
marine transportation companies with over 70 years of experience in the shipping business, whose ultimate
parent company is d’Amico Società di Navigazione S.p.A. (Italy). Today, the entire d’Amico Group controls
80 owned and chartered-in vessels, of which 40 are vessels part of the DIS fleet, operating in the product
tanker market, while the remaining 40 are mainly dry-bulk vessels controlled by d’Amico Dry Limited and
d’Amico Shipping Italia S.p.A. d’Amico International Shipping benefits from a strong brand name and a
well-established reputation in the international market due to the long operating history of the d'Amico Group.
In addition, it benefits from the expertise of the d'Amico Group, which provides support for technical
management services, as well as safety, quality and technical products and services to DIS’ vessels, including
crewing and insurance arrangements.
d’Amico International Shipping has offices in Luxembourg, Dublin, London, Monaco and Singapore. As at
30 September 2012, the group employed 533 seagoing personnel and 43.5 onshore personnel.
Financial review
Summary of the Results in the Third Quarter and Nine Months of 2012
The Global economic picture still remains gloomy. The road to Economic recovery appears fraught with
continued setbacks. In the past three months any sort of rebound has shown further signs of weakness, which
was not that strong to start with. Financial market and sovereign stress in the euro area is as ever present,
despite significant and continued efforts of European policymakers. Growth in a number of major emerging
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market economies has been lower than forecast. The IMF, in their recent World Economic outlook, has
revised baseline projections to suggest that these economies are not growing at the same pace as in recent
years. They (IMF) have revised growth estimates for the Global economy down to 3.3% this year and 3.6% in
2013. Oil Product supply in the Atlantic Basin was disrupted in the middle of the quarter due to Hurricane
Isaac and the fire at the Amuay plant in Venezuela. The US Gulf refineries however came back on line
relatively quickly as any damage was not significant. Product tanker demand in the West did also marginally
improve with a late “driving season” in the United States albeit short lived. In the East, the Middle East –
Japan trade rates came off from the previous quarter’s highs as refinery runs increased in Japan.
The Net loss was U.S.$9.7 million in Q3 2012 and U.S.$107 million for the 9 months of 2012, including
U.S.$85.0 million of fleet write down occurred in second quarter of the year.
These results were driven by the TCE Earnings performance, which clearly reflect the weak product tanker
market experienced especially in Q2 2012 and showed signs of improvement in the third quarter of the year.
In fact DIS realized a daily Spot TCE average of U.S.$11,226 in Q3 and U.S.$11,532 in the 9 months of the
year, compared to U.S.$10,872 achieved in Q2. At the same time, coverage was 37.1% at the average daily
rate of U.S.$15,914.
The soft product tanker market experienced so far in 2012 did not support the cash flow generation. At the
same time, the Company had to cover relevant capital expenditures for newbuildings, second hand vessel
acquisition and dry-docks. The financial position of the Company remains solid, even if an increase in the net
debt has to be noted.
Operating Performance
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Revenue ................................................................
83,516
79,741
241,126
222,330
Voyage costs.........................................................
(36,748)
(34,127)
(105,398)
(80 507)
Time charter equivalent earnings......................
46,768
45,614
135,728
141,823
Time charter hire costs..........................................
(23,385)
(21,366)
(69,102)
(68,915)
(15,203)
(13,466)
(42,308)
(40,116)
General and administrative costs ..........................
(4,083)
(4,791)
(12,031)
(14,788)
Other operating Income ................................
488
808
1,491
2,681
Gross operating profit / EBITDA ......................
4,585
6,799
13,778
20,685
Depreciation..........................................................
(9,993)
(9,863)
(114,318)
(27,773)
Operating result / EBIT ................................
(5,408)
(3,064)
(100,540)
(7,088)
(4,198)
(6,367)
(6,038)
(12,283)
Profit / (loss) before tax ................................
(9,606)
(9,431)
(106,578)
(19,371)
Income taxes .........................................................
(141)
(134)
(404)
(417)
Net profit / (loss)..................................................
(9,747)
(9,565)
(106,982)
(19,788)
Revenue in Q3 2012 was of U.S.$83.5 million (U.S.$79.7 million in Q3 2011), while the total 9 months
figure was U.S.$241.1 million (U.S.$222.3 million last year). The YTD off-hire days percentage in September
(3.4%) was higher than the same period of the previous year (2.1%), simply due to the timing of dry-docks.
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Voyage costs in Q3 and in the first 9 months of 2012 reflected the revenue trend and the related vessel
employment portfolio mix. These costs amounted to U.S.$36.7 million in Q3 2012 (U.S.$34.1 million in Q3
2011) and U.S.$105.4 million in the first 9 months of the current year (U.S.$80.5 million in the same period
of 2011).
Time charter equivalent earnings were U.S.$46.8 million in Q3 2012 (U.S.$45.6 million in Q3 2011), while
the figure for the first 9 months of 2012 was U.S.$135.7 million (U.S.$141.8 million in the same period of
2011). As shown in the table below, September YTD average daily returns (U.S.$13,158 daily) were driven by
the reduction in the fixed rate (9 months 2012: U.S.$15,914 vs. 9 months 2011: U.S.$16,771) and by lower
spot returns, especially in the second quarter of 2012. Looking at the quarterly evolution of the spot results,
DIS performed at a daily average of U.S.$11,226 in Q3 2012, improved compared to the previous quarter of
the year and substantially in line with the same period of 2011.
2011
DIS TCE daily rates
Q1
Q2
2012
Q3
9m
Q4
Q1
Q2
Q3
9m
(U.S. Dollars)
Spot...............................
11,871
12,516
11,894
12,089
16,082
12,623
10,872
11,226
11,532
Fixed .............................
16,932
16,854
16,517
16,771
13,869
15,972
15,956
15,819
15,914
Average.........................
14,328
14,687
14,164
14,393
11,819
13,904
12,753
12,887
13,158
According to its strategy, DIS maintained a high level of ‘coverage’ (fixed contracts) throughout the first 9
months of the year, securing an average of 37.1% of its revenues. Other than securing revenue and supporting
the operating cash flow generation, those contracts pursue the objective of strengthening DIS historical
relationships with the main oil majors, which is one the pillars of its commercial strategy.
Time charter hire costs relate to the chartered-in vessels and amounted to U.S.$23.4 million in Q3 and
U.S.$69.1 million in 9 months 2012 (U.S.$21.4 million in Q3 and U.S.$68.9 million in 9 months 2011). The
average number of chartered-in vessels was 18.2 in 9 months 2012, compared to 17.9 in the same period of
2011. The daily cost for the chartered-in fleet slightly decreased compared to 2011.
The Other direct operating costs mainly consist of crew, technical, luboil and insurance expenses relating to
the operation of owned vessels. Those costs were U.S.$15.2 million in Q3 2012 (U.S.$13.5 million in Q3
2011) and U.S.$42.3 million in 9 months 2012 (U.S.$40.1 in 9 months 2011). The increase in absolute values
compared to the same period of last year, related only to the fleet growth (20.8 owned vessels on average in 9
months 2012 vs. 19.1 in 9 months 2011), while a positive trend in the daily costs were noted. The operating
costs are constantly monitored, while focusing on crew with appropriate skills, SQE (Safety, Quality &
Environment) standards and remaining in compliance with stringent market regulations. A ‘high quality’ fleet
is an essential part of the d’Amico vision and strategy.
The General and administrative costs were U.S.$4.1 million in Q3 of the current year (U.S.$4.8 million in
Q3 2011) and U.S.$12.0 million as of September 2012 (U.S.$14.8 million in 9 months 2011). The variance
compared to the same periods of last year is mainly due to US dollar trend compared to the other currencies,
together with the write-down of some insurance claims receivables booked last year. Net of said items, G&A
are substantially in line with the previous year.
Other operating income amounted to U.S.$0.5 million in Q3 2012 (U.S.$0.8 million in Q3 2011) and
U.S.$1.5 million in the first 9 months of the current year (U.S.$2.7 million in 9 months 2011). The balance
refers to chartering commissions from third parties vessels operated through pools.
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Gross operating profit (EBITDA) for Q3 2012 was U.S.$4.6 million (U.S.$6.8 million in Q3 2011) and for
the first nine months of 2012 was U.S.$13.8 million (U.S.$20.7 million in 9 months 2011). The lower result
was mainly due to the lower average fixed rate, together with the relatively weaker spot market rates.
Depreciation and impairment amounted to U.S.$10 million in Q3 2012 and U.S.$114.3 million in 9 months
2012, of which U.S.$29.3 million recurring depreciations and U.S.$85.0 million write downs arising from the
fleet impairment. The depreciation charges increase compared to last year was mainly due to the higher
number of owned vessels, following the delivery of ‘new-building’ vessels.
The Operating result (EBIT) of the third quarter of the year was negative: U.S.$5.4 million of operating loss
with respect to U.S.$3.1 million negative EBIT of Q3 2011. The 9 months 2012 EBIT was negative for
U.S.$100.5 million vs. U.S.$7.1 million negative result posted in the same period last year.
Net financial charges amounted to U.S.$4.2 million in Q3 2012 (U.S.$6.4 million in Q3 2011), while U.S.$6
million was the total cost of the first nine months of the year (U.S.$12.3 million in 9 months 2011). The
overall positive variance compared to the previous year was mainly due to FX gain, trading gain on FX
derivatives instruments and realized capital gain on bond portfolio. Following the renegotiation of two IRS
contracts, interest on the loans, amounted to U.S.$7.9 million in 9 months 2012, lower compared to the same
period of last year (U.S.$8.8 million), despite the new loan draw-down to finance the ’new-building‘ vessels
delivered during the first semester of 2012 and the purchase of the second-hand vessel M/T High Prosperity.
The Company’s Loss before tax in Q3 2012 was U.S.$9.7 million (loss of U.S.$9.6 million in Q3 2011) and
U.S.$107 million in 9 months 2012 (loss of U.S.$19.8 million in the same period of 2011).
Income taxes amounted to U.S.$0.1 million in Q3 2012 and U.S.$0.4 million in the 9 months of 2012, in line
with the same period of last year.
The Net loss for Q3 2012 was U.S.$9.7 million vs. U.S.$9.6 million in the same quarter of last year. The 9
months 2012 Net loss was U.S.$107 million (Net loss of U.S.$19.8 million in 9 months 2011).
Consolidated Statement of Financial Position
As at
30 September
As at
31 December
2012
2011
(U.S.$ Thousand)
Assets
Non-current assets ................................................................................................
510,928
547,634
Current assets ................................................................................................
102,497
122,603
Total assets ...........................................................................................................
613,425
670,237
Shareholders’ equity .............................................................................................
208,180
315,481
Non-current liabilities ..........................................................................................
316,269
286,527
88,976
68,229
613,425
670,237
Liabilities and Shareholders’ Equity
Current liabilities
Total liabilities and shareholders’ equity...........................................................
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Non-current assets mainly relate to the DIS owned vessels net book value. According to the valuation report
provided by a primary broker, the estimated market value of the DIS owned fleet of U.S.$443.2 million as at
30 September 2012, compared to the net book value of U.S.$533.3 million, following the impairment of
U.S.$85.0 million accounted for at 30 June 2012.
Gross Capital expenditures for the third quarter of the year were U.S.$7.2 million and U.S.$77.6 million
since the beginning of the year. These significant amounts comprise the final instalments paid on the two
Hyundai-Mipo new-building vessels, delivered respectively in March and April 2012, the purchase of the
second-hand vessel High Prosperity in March 2012 and the first instalments paid in Q3 on the two Handy
newbuiding vessels recently ordered and under construction at Hyundai-Mipo. Dry-dock costs pertaining to
owned vessels are also included in capitalized costs.
Current assets as at 30 September 2012 were U.S.$102.5 million. Other than the working capital items,
inventories and trade receivables, amounting to U.S.$19.2 million and U.S.$41.7 million respectively, current
assets include cash on hands of U.S.$41.6 million.
Non-current liabilities (U.S.$316.3 million) consist of the long-term portion of debt due to banks, disclosed
under the following section (Net Indebtedness).
The balance of Current liabilities, other than the debt due to banks and other lenders (see the following
section), includes the working capital items, amounting to U.S.$43.3 million, essentially relating to trade and
other payables.
Following the losses occurred in the year, including the impairment of U.S.$85 million booked at 30 June
2012, the Shareholders’ equity balance at 30 September 2012 was U.S.$208.2 million (U.S.$315.5 million as
at 31 December 2011).
Net Indebtedness
Net debt as at 30 September 2012 amounted to U.S.$320.3 million, compared to the balance of U.S.$239.6
million at the end of 2011. The increase in net debt, considering that operating cash flow was negative for
U.S.$1.2 million in 9 months 2012, was mainly driven by the vessels delivery and/or purchased in the course
of the current year.
As at
30 September
As at
31 December
2012
2011
(U.S.$ Thousand)
Liquidity
Cash and cash equivalents.....................................................................................
41 572
51 068
Current financial assets .........................................................................................
—
14 396
Total current financial assets..............................................................................
41 572
65 464
Bank loans – current ...........................................................................................
21 078
14 864
Amount due to parent company ............................................................................
20,000
-
Due to third parties ...............................................................................................
4,522
3,638
Total current financial debt................................................................................
45,600
18,502
Other current financial liabilities
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As at
30 September
As at
31 December
2012
2011
(U.S.$ Thousand)
Net current financial debt...................................................................................
4,028
(46,962)
Bank loans non-current ......................................................................................
311,091
282,492
5,178
4,035
Total non-current financial debt ................................................................
316,269
286,527
Net financial indebtedness ..................................................................................
320,297
239,565
Other non-current financial liabilities
Due to third parties................................................................................................
Cash and cash equivalents is U.S.$41.6 million at the end of September 2012, while treasury investments
(previously showed under Current financial assets) were liquidated in the course of the current year.
The total outstanding bank debt (Bank loans) as at 30 September 2012 amounted to U.S.$332.2 million, of
which U.S.$21.1 million is due within one year. DIS debt structure is based on the following facilities granted
to d’Amico Tankers Limited (Ireland), the key operating company of the Group: (i) Crédit Agricole 10 years
revolving facility (syndicated by other banking institutions) of U.S.$149.6 million; (ii) Mizuho syndicated
loan facility of U.S.$24.7 million; (iii) Crédit Agricole and DnB NOR Bank seven years term loan facility to
finance the two newbuilding MR vessels delivered in H1 2012 for total U.S.$44.8 million; (iv) Danish Ship
Finance 18 months term loan facility to finance the purchase of the second-hand vessel High Prosperity,
purchased in H1 2012, for U.S.$11.4 million. DIS debt also comprises of the share of the loans existing at the
two joint ventures level, GLENDA International Shipping Ltd and DM Shipping Ltd: (i) Commerzbank AG
Global Shipping and Credit Suisse loans of U.S.$75 million for the Glenda International Shipping Ltd
Hyundai-Mipo vessels, all of which have been already delivered (ii) Mitsubishi UFJ Lease loan of U.S.$26.7
million in connection with the financing of the DM Shipping Ltd two vessels delivered in 2009.
Net debt also includes U.S.$20 million subordinated loan granted in September 2012 by DIS’ parent company
d’Amico International S.A. Also, U.S.$9.7 million of negative valuation of derivatives hedging instruments
(essentially interest rate swap agreements – IRS) are shown under Other Financial Liabilities.
Cash Flow
The net cash flow for the period ended on 30 September 2012 was negative for U.S.$9.6 million.
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Cash flow from operating activities ......................
(1,223)
12,329
(1,190)
30,753
Cash flow from investing activities ......................
(7,203)
(25,547)
(77,579)
(46,113)
Cash flow from financing activities ......................
9,457
13,643
69,143
2,618
Change in cash balance ................................
1,031
425
(9,627)
(12,742)
40,191
54,770
51,068
68,266
Cash & cash equivalents at the beginning
of the period..........................................................
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Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Exchange gain (loss) on cash and cash
equivalents............................................................
350
257
131
Cash & cash equivalents at the end of
the period.............................................................
41,572
55,452
41,572
(72)
55,452
Cash flow from operating activities for Q3 2012 was negative for the amount of U.S.$1.2 million (positive
for U.S.$12.3 million in Q3 2011). In the 9 months of 2012 DIS had a negative operating cash flow of
U.S.$1.2 million (positive for U.S.$30.8 million in 9 months 2011). The operating cash flow performance was
essentially driven by the relatively weak EBITDA of the period.
The net Cash flow from investing activities of U.S.$7.2 million in Q3 2012 and U.S.$77.6 million in
9 months 2012 was made up of the capital expenditures in connection with the instalments paid for the new
building plan, the purchase of the second-hand vessel High Prosperity as well as dry-dock expenses.
Cash flow from financing activities was a net inflow of U.S.$9.5 million in Q3 2012 and U.S.$69.1 million in
9 months 2012, following the planned bank loan drawdowns relating to the vessels delivery/purchased, net of
the debt repayments, together with around U.S.$14.4 million sale of bonds since the beginning of the year and
U.S.$20 million subordinated loan granted in Q3 2012 by DIS’ parent company d’Amico International S.A.
Significant Events in the Period
Controlled Fleet – D’amico Tankers Limited
During the first three quarters of 2012 the following changes occurred in the Fleet controlled by d’Amico
Tankers Limited:

New-building Deliveries:
M/T High Seas and M/T High Tide, two Medium Range (MR) owned new-building vessels were
delivered by Hyundai-Mipo dockyard, South Korea, to d’Amico Tankers Limited, respectively in
March and April 2012.

Order of two eco 40 Shallowmax new-building Product Tankers:
In July 2012 d’Amico Tankers Limited, the fully owned operating subsidiary of d’Amico International
Shipping S.A., entered into contracts for the construction of two additional new product/chemical
tanker vessels (Hulls 2385 and 2386 - 40,000 dwt Handysize) with Hyundai Mipo Dockyard Co. Ltd. –
Korea, expected to be delivered early in 2014, for a consideration of U.S.$30.65 million each and with
an option for two further vessels, under same terms and conditions, to be exercised by the end of 2012.
These two new-buildings in addition to being double-hulled, and IMO classed vessels belong to a new
generation of vessels with lower consumption of fuel. The design of these vessels is the latest HMD
concept of low fuel consumption /high efficiency and cubic/shallow-draft combination denominated
“HMD ECO 40 ShallowMax”. The vessel are designed to be able to save on fuel between 5 to 6 tonnes
of fuel per day, compared to older type ones, allowing a lower operating cost, at the same speed of 14
Knots, comprised between U.S.$2,000 to U.S.$4,000 per day. Another financial advantage of these
ships can be found in the fact that they incorporate all the most recent regulatory requirements and
therefore they will not need any modifications to operate them. On older tonnage these improvements
have been calculated as impacting daily cost for at least U.S.$700. These vessels are more flexible to
operate since the have a draught of 9.5 meters instead of over 10 meters for older design vessels.
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Moreover d’Amico Tankers Limited signed Time Charter agreements with one of the main Oil Majors
for these two vessels for a period of five years. These Time Charter contracts increase DIS coverage
(revenue generated by fixed contracts) and are fixed at levels which will generate a profit.

Order of two eco Medium Range new-building Product Tankers:
In September 2012 d’Amico International Shipping S.A., announced that its operating subsidiary
d’Amico Tankers Limited (Ireland), entered into contracts for the construction of two additional new
product/chemical tanker vessels (Hulls 2407 and 2408 - 50,000 dwt Medium Range) with Hyundai
Mipo Dockyard Co. Ltd. – Korea, expected to be delivered early in 2014, for a consideration of
U.S.$33.0 million each. These two newbuildings are the latest IMO II MR design with the highest fuel
efficiency. The design is the utmost HMD concept of hull shape and propulsion efficiency leading to a
fuel saving of 6 -7 T/day compare to the average consumption of world existing MR fleet. The vessels
will have an attained Energy Design Index (EEDI) falling already well within the IMO phase-in 3
requirement due for vessels to be built after Jan 1st 2025, being of 31.5% lower than the current IMO
reference line. In order to fully support DIS in this new investment project, d'Amico International S.A.
(Luxembourg) granted a subordinated loan of U.S.$20 million expiring on December 31st, 2013. The
loan is based on terms and conditions in line with current financial market conditions for similar
transactions and will be used for general corporate purposes, future potentials vessels purchases and
new building orders.

Vessel Purchase:
In March 2012 d’Amico Tankers Limited agreed the purchase of the Medium Range (MR) double
hulled product tanker vessel M/T High Prosperity, built in 2006 by Imabari Shipbuilding Co. Ltd,
Japan, at the price of U.S.$22.5 million. The time charter-in contract included a purchase option, which
was not exercised earlier this year as it was not ’in the money’. This purchase allowed us to lower our
break-even level on the vessel by an amount in excess of 2,500 U.S. dollars per day. The Vessel was
delivered to d’Amico Tankers in May 2012.

Other Changes:
In January 2012, M/T Freja Hafnia, a Medium Range (MR) vessel built in 2006, was delivered to
d’Amico Tankers Limited for a 1 year time charter period. In April 2012, M/T Eastern Force, a
Medium Range (MR) vessel built in 2009, was delivered to d’Amico Tankers Limited for a 1 year time
charter period, with an option for a further 1 year. In May 2012, M/T Torm Hellerup, a Medium Range
(MR) vessel built in 2008, was delivered to d’Amico Tankers Limited for a 1 year time charter period,
with an option for a further 1 year.
Significant Events Since the End of the Period and Business Outlook
Controlled Fleet – D’amico Tankers Limited

On October 25, 2012 d’Amico Tankers Limited agreed the sale of the Medium Range (MR) double
hulled product tanker vessel M/T High Wind, built in 1999 by STX, South Korea at the price of US$
12.2 million. This sale will generate a profit on disposal in Q4 of about US$ 1.3 million and will
reduce at the same time the average age of DIS Fleet.
The profile of d’Amico International Shipping’s vessels on the water is summarized as follows.
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As at 30 September 2012
As at 25 October 2012
MR
Handysize
Total
MR
Handysize
Total
Owned ............................................................
19.0
3.0
22.0
19.0
3.0
22.0
Time chartered................................................
15.0
3.0
18.0
15.0
3.0
18.0
Chartered through pools................................
0.0
0.0
0.0
0.0
0.0
0.0
Total...............................................................
34.0
6.0
40.0
34.0
6.0
40.0
Share Capital Increase Authorization
On October 2nd 2012, the Extraordinary General Meeting of Shareholders of d’Amico International Shipping
S.A. resolved to amend the authorised corporate capital to USD 50,000,000 divided into 500,000,000 shares
with no nominal value and to authorise the Board of Directors to increase the share capital, in one or several
times, within the limits of the above amended authorised capital during a new period ending five (5) years
after the date of publication of the relevant minutes and to subsequently amend the Company’s articles of
association. The Extraordinary General Meeting of Shareholders further resolved to reduce the accounting
value of each share of the issued share capital of the Company to US$0.10 per share, to reduce the total
amount of the issued share capital to U.S.$14,994,990.70 and to subsequently amend the Company’s articles
of association.
Dissolution of VPC Logistic Limited
VPC Logistic Limited, the Company wholly owned subsidiary held through d’Amico Tankers Ltd completed
the process of liquidation and on 2 October 2012 was dissolved and cancelled from the UK Companies House
Register.
Business Outlook
Going into Q4, supply issues dominate the entire Oil Product market. Total product stocks within the OECD
remain below the five year average by 42 million barrels. Global product stocks are 60 million barrels below
the same period last year. This deficit is being led by distillate stocks that are around 30 million barrels below
the same quarter in 2011. So Gasoil markets are seen as tight ahead of the Northern Hemisphere winter as
these low inventories are in key consuming markets.
There has been resurgence in demand for gasoline in emerging economies, as much as 10% in some cases.
Brazil’s appetite for products has slowed but demand is still 500,000 barrels per day above the five year
average. This has primarily been met by domestic refinery runs, however they remain a net importer of
products.
Refinery runs and margins have improved throughout the last quarter as product supply tightened due to
outages in the United States and Venezuela coupled with refinery down time due to planned maintenance.
There has been no decline in United Kingdom refinery runs despite the closure of the Sunoco 220,000 barrels
per day plant in June.
Therefore the short term view is bearish under the current Economic conditions. Concerns over the current
European sovereign debt issues and a short term slowing of the emerging economies prevail. The longer term
view is still relatively positive but any substantial improvement in demand is fragile and the current Economic
environment could moderate any growth potential. However this being said d’Amico International Shipping
maintains a wary approach going into this quarter.
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The key drivers that should affect the product tanker freight markets and d’Amico International Shipping
performances are (1) Global oil demand and (2) worldwide GDP growth and (3) the large modern fleet
delivered in recent years.
The factors that could mitigate and partially off-set the current scenario for the Product Tanker demand and
supply in the longer term are disclosed in more details below:
Product Tanker Demand

Global refinery crude distillation capacity is set to increase by close to 7.0 million barrels per day from
2011 to 2017, with expansions from 2013 onwards exceeding global oil demand growth. However new
capacity in Latin America and Africa will not meet projected growth and thus require imports in the
medium term.

OECD refinery rationalisation intensified over 2012, as completed and committed shutdowns cut
capacity by 1.3 million barrels per day since December 2011. Total refinery closures now amount to
4 million barrels per day since the economic downturn of 2008, led by 1.7 million barrels per day cut
in Europe. Continued OECD demand contraction will call for additional industry consolidation before
2017.

More than half the new capacity will be in non-OECD Asia. Based on available data an additional one
million barrels will have been added in 2012. The shift of crude runs from the West to the East should
favour product trades routes.

The United States has firmly established itself as a net exporter of Petroleum Products. Exports have
risen from 950,000 barrels per day in 2003 to 2.8 million barrels per day in 2012. They net difference
to imports is now close to 1 million barrels per day.

Continued poor harvests across the World will result in the decrease of available feedstock for bio fuels
which fundamentally support improved demand for Petroleum products.

South American Oil Product demand is still increasing year on year. This provides a home for Products
being exported from the United States Gulf coast refineries and the Gasoline producing refiners in
Europe.
Product Tanker Supply

The forward order book has been boosted by the additional orders placed this year and last. On paper
this would appear relatively large but it is expected that the estimated deliveries will be reduced,
helped by cancellations, finance issues and Slippage as experienced in recent years

The question of whether or not financing could be readily available remains an issue. There is still a
certain amount of speculation that all the ships ordered will be delivered.

Forty three MR Product tankers have been delivered this year compared to seventy in the same period
last year. Twenty one ships have been permanently removed from this sector so far this year.

The MR Sector net growth should still only run at between 2% and 4% on average till 2016. Therefore
it should remain below the projected growth in seaborne trade in the same period.

Slow steaming and lack of investment into Port infrastructure causes voyages to be lengthening and
reducing tonnage supply.

Reducing crude runs and increasing longer haul product trades from emerging markets are expected to
effectively reduce the available supply of Product Tanker tonnage.
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Consolidated Financial Statements as at 30 September 2012
Consolidated Income Statements
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Revenue ................................................................
83,516
79,741
241,126
222,330
Voyage costs.........................................................
(36,748)
(34,127)
(105,398)
(80,507)
Time charter equivalent earnings......................
46,768
45,614
135,728
141,823
Time charter hire costs..........................................
(23,385)
(21,366)
(69,102)
(68,915)
(15,203)
(13,466)
(42,308)
(40,116)
General and administrative costs ..........................
(4,083)
(4,791)
(12,031)
(14,788)
Other operating income ................................
488
808
1,491
2,681
Gross operating profit ................................
4,585
6,799
13,778
20,685
Depreciation and impairment................................
(9,993)
(9,863
(114,318)
(27,773)
Operating profit ..................................................
(5,408)
(3,064)
(100,540)
(7,088)
(4,198)
(6,367)
(6,038)
(12,283)
Profit/(loss) before tax ................................
(9,606)
(9,431)
(106,578)
(19,371)
Income tax ............................................................
(141)
(134)
(404)
(417)
Net profit/(loss) ...................................................
(9,747)
(9,565)
(106,982)
(19,788)
(0.065)
(0.064)
(0.713)
(0.132)
The net profit is attributable to the equity
holders of the Company
Earnings/(loss) per share (U.S.$) .......................
Consolidated Statement of Comprehensive Income
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Profit/(loss) for the period................................
(9,747)
(9,565)
(19,788)
Cash flow hedges..................................................
(330)
Total comprehensive result for the period ............
(10,077)
(8,111)
(107,273)
(16,185)
(0.067)
(0.054)
(0.715)
(0.108)
As at
30 September
2012
As at
31 December
2011
Earnings/(loss) per share................................
1,454
(106,982)
(291)
3,603
Consolidated Statement of Financial Position
(U.S.$ Thousand)
ASSETS
Non-current assets
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267
As at
30 September
2012
As at
31 December
2011
(U.S.$ Thousand)
Tangible assets ................................................................................................
510,928
547,634
Total non-current assets......................................................................................
510,928
547,634
Inventories.............................................................................................................
19,198
17,522
Receivables and other current assets ................................................................
41,727
39,617
Current financial assets .........................................................................................
—
14,396
Cash and cash equivalents.....................................................................................
41,572
51,068
Total current assets .............................................................................................
102,497
122,603
Total assets ...........................................................................................................
613,425
670,237
Share capital..........................................................................................................
149,950
149,950
Retained earnings................................................................................................
11,451
118,433
Other reserves ................................................................................................
46,779
47,098
208,180
315,481
311,091
282,492
5,178
4,035
316,269
286,527
Banks and other lenders ........................................................................................
21,078
14,864
Amount due to parent company ............................................................................
20,000
—
Payables and other current liabilities................................................................
43,198
49,678
Other current financial liabilities...........................................................................
4,567
3,638
Current taxes payable............................................................................................
133
49
Total current liabilities........................................................................................
88,976
68,229
Total shareholders’ equity and liabilities...........................................................
613,425
670,237
Current assets
SHAREHOLDERS’ EQUITY AND LIABILITIES
Total shareholders’ equity ..................................................................................
Banks and other lenders ........................................................................................
Other non-current financial liabilities ................................................................
Total non-current liabilities ................................................................................
Current liabilities
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25 October 2012
On behalf of the Board
Paolo d’Amico
Chairman
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269
Consolidated Statement of Cash Flow
Q3 2012
Q3 2011
9 Months 2012
9 Months 2011
(U.S.$ Thousand)
Loss for the period ..............................................
(9,747)
(9,565)
(106,982)
(19,788)
Depreciation and amortisation ..............................
9,993
9,863
114,318
27,773
Current and deferred income tax...........................
141
134
404
417
Financial charges ..................................................
2,293
2,275
6,276
7,792
Fair value loss on foreign currency
retranslation ..........................................................
1,269
3,552
(238)
4,079
Other non-cash items ...........................................
615
540
(21)
412
Cash flow from operating activities
before changes in working capital .....................
4,564
6,799
13,757
20,685
327
3,112
(1,676)
1,527
Movement in amounts receivable .........................
5,307
23,364
(2,110)
24,767
Movement in amounts payable .............................
(9,394)
(18,028)
(6,480)
(8,029)
Taxes paid.............................................................
(29)
(4)
(371)
(296)
Interest and other financial cost (paid)
received................................................................
(1,998)
(2,914)
(4,310)
(7,901)
Net cash flow from operating activities.............
(1,223)
12,329
(1,190)
30,753
Acquisition of fixed assets................................
(7,203)
(25,547)
(77,579)
(46,113)
Net cash flow from investing activities.................
(7,203)
(25,547)
(77,579)
(46,113)
Movement in inventories ................................
Other changes in shareholders’ equity .................
2
(326)
(40)
(53)
Treasury shares .....................................................
—
(563)
—
(563)
Movement in other financial assets.......................
1,638
—
14,396
(6,600)
Movement in other financial payable....................
12,000
(1)
20,000
Bank loan repayments...........................................
(4,183)
—
(24,027)
(12,301)
(31,164)
—
38,560
47,088
40,998
Net cash flow from financing activities .............
9,457
13,643
69,143
2,618
Net increase (decrease) in cash and cash
equivalents...........................................................
1,031
425
(9,627)
(12,742)
Cash and cash equivalents at the beginning
of the period..........................................................
40,191
54,770
51,068
68,266
Exchange gain (loss) on cash and cash
equivalents............................................................
350
257
131
Cash and cash equivalents at the end of
the period.............................................................
41,572
55,452
41,572
Bank loan draw-downs ................................
A15761609
270
(72)
55,452
Statement of Changes in Consolidated Shareholders’ Equity
Share
capital
Retained
earnings
Other Reserves
Total
Cash-Flow
hedge
Other
(U.S.$ Thousand)
149,950
118,433
Other changes (consolidation reserve) ................
—
—
—
Balance as at 30 September 2012.....................
149,950
11,451
Share
capital
Retained
earnings
54,715
(7,617)
(28)
(106,982)
—
(291)
54,729
(7,908)
Other Reserves
Other
315,481
(28)
(107,273)
208,180
Total
Cash-Flow
hedge
(U.S.$ Thousand)
149,950
139,446
Other changes .....................................................
—
—
55,464
(53)
—
(53)
Treasury shares ...................................................
—
—
(563)
—
(563)
—
3,603
(16,185)
Balance as at 30 September 2011.....................
149,950
(8,150)
316,305
(19,788)
119,658
54,847
(11,754)
333,106
Notes
The financial statements have been prepared in accordance with provisions of Art. 5 of the Luxembourg Law
dated 11 January 2008, which transposed Directive 2004/109/EC of the European Parliament and of Council
of 15 December 2004 in the harmonization of transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated market.
The d’Amico International Shipping Group has adopted International Financial Reporting Standards (IFRS –
International Financial Reporting Standards and IAS – International Accounting Standards) as issued by the
‘IASB’ (International Accounting Standards Board) and adopted by the European Union. The designation
’IFRS‘ also includes all ‘IAS’, as well as all interpretations of the International Financial Reporting
Interpretations Committee ‘IFRIC‘, formerly the Standing Interpretations Committee SIC as adopted by the
European Union. This interim financial information was prepared in compliance with IAS 34.
The d’Amico International Shipping Group has adequate resources to continue in operational existence for the
foreseeable future; accordingly, the financial statements have been prepared on a going concern basis.
The financial statements are expressed in U.S. Dollars, being the functional currency of the Company and its
principal subsidiaries.
A15761609
271
1.
Accounting Policies
The financial statements present the results of the parent company, d’Amico International Shipping SA, and
its subsidiaries for the period ended 30 June 2012. The accounting policies used in the presentation of the
interim report on the same as those adopted in the 2011 annual report.
Shipping SA, and its subsidiaries for the period ended 30 June 2012.
Critical Accounting Judgments and Key Estimates
The preparation of the financial statements requires Management to make accounting estimates and in some
cases assumptions in the application of accounting principles. The Directors’ decisions are based on historical
experience as well as on expectations associated with the realization of future events, considered reasonable
under the circumstances. Critical accounting estimates and judgments are exercised in all areas of the
business.
Segment Information
d’Amico International Shipping only operates in one business segment: Product Tankers. With reference to
geographical area, the Group only has one geographical segment, considering the global market as a whole,
and the fact that individual vessels deployment is not limited to a specific area of the world. As a result, no
geographical segment information disclosures are necessary.
Accounting principles
There are no new International Financial Reporting Standards or IFRICs applicable to this quarterly financial
report with respect to those applied for 31 December 2011 year end.
2.
Commitments and Contingencies
As at 30 September 2012, the Group’s total capital commitments amounted to U.S.$121.2 million of which
U.S.$24.8 million are due over the next 12 months.
As at
30 September
2012
As at
31 December
2011
(U.S.$ Million)
Within one year ................................................................................................
24.8
37.4
Between 1 – 3 years ..............................................................................................
96.4
—
Between 3 – 5 years ..............................................................................................
0.0
—
More than 5 years................................................................................................
0.0
—
121.2
37.4
Total......................................................................................................................
On behalf of the Board
............................................................
Paolo d’Amico
Chairman
A15761609
............................................................
Marco Fiori
272
The manager responsible, Marco Fiori, in his capacity of Chief Executive Officer of the Company, declares
that the accounting information contained in this document corresponds to the results documented in the
books, accounting and other records of the Company.
Marco Fiori
A15761609
273
Curriculum Vitae of Giovanni Barberis
Giovanni Barberis, joined d’Amico Società di Navigazione S.p.A. in September 2012 as Group CFO and as
interim CFO of International Shipping S.A. in October 2012. Prior to joining to the d’Amico Group, Mr.
Barberis, after graduating from the University of Rome “La Sapienza” with a degree in Economy and
Commerce, he started his professional career in the treasurer dept of the chemical branch of the Exxon Group.
In January 1990, he joins Eridania Z.N. S.p.A., Gruppo Ferruzzi, where his initial responsibilities are those of
International Audit Manager Agroindustria eventually assuming the position of Financial Manager for Italy. In
1993, Barberis is appointed International Auditing Mgr for Simint SpA, the listed company of Giorgio
Armani S.p.A., where he assumes also, soon after, the post of CFO, in addition to other important
responsibilities within the company. In 1995, Barberis fills the position of CFO and Board Member of Gruppo
Cremonini, Italian food listed company. In 2003 he joins to Gruppo Arena, Italian food listed company, in
capacity of CEO. In 2005 joins to Hera SpA, moving to Acea Spa in 2009 – both Italian multi-utilities listed
in Milan Stock Exchange, as CFO.
He has numerous publications to his credit and has participated in various financial and academic conference
panels in which he addressed the subject of financial economy.
Contacts
Investor Relations
d’Amico International Shipping S.A
Anna Franchin – Investor Relations Manager
Tel: +352 26262929
Tel: +377 93105472
E-mail: [email protected]
Media Relations
PMS Group
Antonio Buozzi
Tel: +39 02 48000250
Mob: +39 329 7605000
E-mail: [email protected]
A15761609
274
THE COMPANY
25 C Boulevard Royal, 11th floor
L-2449 Luxembourg
LEGAL ADVISORS TO THE COMPANY
As to Luxembourg law
As to Italian law
Linklaters LLP
35 avenue John F. Kennedy
L-1855 Luxembourg
Studio Legale Ughi e Nunziante
Via Venti Settembre, 1
00187 Rome
Italy
AUDITOR OF THE COMPANY
Moore Stephens Audit S.à r.l.
2-4 rue du Château d’Eau
L-3364 Leudelange
FINANCIAL ADVISOR TO THE COMPANY
Tamburi Investment Partners S.p.A.
Via Pontaccio 10
20121 Milan
Italy
SUBSCRIPTION RIGHTS AGENT, WARRANT AGENT AND PAYING AGENT
BNP Paribas Securities Services, Luxembourg Branch
33 rue de Gasperich
Howald Hesperange
L-5826 Hesperange
A15761609
275

A15761609 - D`Amico International Shipping

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