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Annual Report 2009

| Annual Report 2009 | 1

Annual Report 2009

(2)

2 | Annual Report 2009 |

Contents

MANAGEMENT REVIEW

About Eitzen Bulk Shipping

3

2009 highlights and 2010 outlook

4

Group key fi gures and ratios

5

Eitzen Bulk Shipping - a new company with a long history

6

Strategic insight

8

2009 market review

14

2010 market outlook

16

Financial review

18

Corporate governance

20

People and planet

22

About the share

25

Management biographies

26

Management’s statement on the Annual Report

28

Independent auditor’s report

29

ANNUAL ACCOUNTS

Consolidated Financial Statement

30

Notes to the Financial Statements

35

Financial Statements- Parent

61

Group Structure

74

Defi nitions of key fi gures and fi nancial ratios

75

Company information

76

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About Eitzen Bulk Shipping

| Annual Report 2009 | 3

Eitzen Bulk Shipping is a globally recog-nised dry bulk cargo operator primarily in the supramax segment and secondarily in the panamax segment.

The company aim for constant profi t-able growth based on a diversifi ed earn-ings base, an attractive fi nancial position, long-term customers and a management team with decade-long hands-on shipping experience.

A strong market recognition has been consolidated through decades of shipping activities and close long-term customer relationships that maximise our access to cargo contracts. Eitzen Bulk Shipping controls the commercial management of 50-70 vessels. The fl eet size depends on market fl uctuations and seasonal con-tractual commitments.

A combination of short to medium term trading and arbitrage of vessels and car-goes, and long-term vessel charters with purchase options supports optimal fl ex-ibility and reduces the business impact of segment-specifi c changes in supply and demand.

Eitzen Bulk Shipping reaps on its strong customer relations when expanding into shipowning to create additional value from existing operations and further in-crease earnings visibility. Additionally, we will make strategic investments in areas that create synergies with core shipping activities, such as cargo handling and warehousing facilities.

Detailed market surveillance, risk man-agement and planning systems have been implemented to optimise the balance be-tween cargo contracts and tonnage com-mitments.

The company carries no debt to fi nan-cial institutions.

About Eitzen Bulk Shipping

By the end of 2009 Eitzen Bulk Shipping commercially controlled a fl eet of 58 ves-sels and had 16 new buildings on order of which one will be fully owned and 15 long-term chartered with partly shared purchase options.

The company had approximately 50 employees in offi ces in Copenhagen, New York, Rio de Janeiro, Singapore, Hong Kong and Beijing. In 2009 the total cargo carryings amounted to 18.7 million tons generating revenues of 376 MUSD.

Eitzen Bulk Shipping is listed on Nas-daq OMX Copenhagen under the ticker name Eitzen.

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4 | Annual Report 2009 |

2009 highlights and 2010 outlook

In December 2009, the global dry cargo activities in the Eitzen group were carved out into the independent company Eitzen Bulk Shipping A/S and listed on NASDAQ OMX Copenhagen through a merger with Dampskibsselskabet Orion A/S. As part of the merger restructuring, employees invested in the company with a sharehold-ing of 14.7%.

The business performance in 2009 is considered satisfactory viewed in the light of the diffi cult market conditions. The company reported a net profi t of 19.0 MUSD and an EBITDA of 20.7 MUSD, which are in line with the latest expectations as published in the company announcement regarding the merger restructuring in No-vember 2009.

• Adjusted EBITDA was 28.9 MUSD down 14% from 2008, excluding the non-cash impact of the share options program. • New share options program expensed

in 2009 reduced EBITDA by 8.2 MUSD. Treasury shares are allocated to cover the entire program.

• Revenues in 2009 were 376 MUSD, down 55% from 838 MUSD in 2008, re-fl ecting the substantial change in mar-ket rates.

• Gross profi t margin was 12.1%, an in-crease from 7.0% in 2008.

• The fl eet activity level increased to 58 vessels by the end of 2009 from 41 ves-sels in 2008.

• Total number of ship days decreased from 15,129 days to 14,361 days (-5%). • The Board of Directors will propose not

to pay out any dividend for 2009. • As part of the merger restructuring

57 MUSD was distributed as dividends settling intercompany accounts with Camillo Eitzen & Co. ASA.

• No debt to fi nancial institutions. • No major counterpart losses were

re-corded during 2009.

DEVELOPMENTS IN FOURTH QUARTER

Business performance showed positive results in fourth quarter with revenues increasing 11% to 147 MUSD, compared to Q4, 2008. Quarterly earnings (EBITDA) were reduced by 8.2 MUSD due to the expensed share options program imple-mented 22 December 2009. Adjusted EBITDA was 6.9 MUSD compared to -7.6 MUSD in 2008.

OUTLOOK 2010

EBITDA of 14-22 MUSD is expected based on the company’s current coverage and market conditions. The estimate excludes the impact of the share options program and does not include provisions for any impairment on prepayments for the con-tracted new buildings.

The shipping markets remain uncertain due to the ambiguity as to whether the current positive trend in short term eco-nomic confi dence indices are sustainable or a provisional result of fi nancial stimulus packages. Weak public fi nances with huge defi cits in major economies require fi scal tightening and thus less spending and de-mand for goods transportation. Whether structural changes and increased spend-ing in China, Brazil, South Africa and India will counterbalance the rest of the world remains uncertain.

Although the bulk market will be under continued pressure and volatility is una-voidable, the volume of trade is set to grow and for an operator company such as Eitzen Bulk Shipping, opportunities to increase our activity level exists.

Going into 2010 a substantial percent-age of the known ship days has been cov-ered. On December 31st 2009 the com-pany had a cargo coverage of 86% on the known vessel days. As of 1st of March 2010 that fi gure remained at the same

2009 highlights and 2010 outlook

level. The company expects to increase its activities in 2010 with a corresponding increase in ship days. The current fl eet ac-tivity level is around 70 vessels.

In 2010 Eitzen Bulk Shipping will take delivery of two newbuilds on operational leases from Japanese shipyards as part of the newbuild program of 17 ships in to-tal.

Eitzen Bulk Shipping A/S and Camillo Eitzen & Co ASA will during 2010 aim at establishing a broader shareholder base for the company securing a larger free fl oat and better liquidity in share of which the majority presently is owned by Camillo Eitzen & Co ASA and Eitzen Bulk Shipping A/S management and staff. At the same time, Camillo Eitzen & Co ASA has decided in the process to review other strategic opportunities for its ownership position in Eitzen Bulk Shipping A/S.

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Group key fi gures and ratios

| Annual Report 2009 | 5

Group key fi gures and ratios

(USD ‘000) 2009 2008 2007 2006 2005

INCOME STATEMENT

Revenue 376,029 838,307 771,746 426,902 457,314

Gross profi t (Net earnings from shipping activites) 45,495 59,092 53,245 974 43,612

Profi t before depreciation etc. (EBITDA) 20,741 33,665 29,185 -9,118 25,198

Profi ts from sale of vessels 0 49,542 54,237 0 0

Operating profi t (EBIT) 20,296 82,439 84,256 -9,329 25,069

Net fi nancials 2,399 3,938 -116 484 2,745

Profi t before tax 22,695 86,377 84,140 -8,845 27,814

Net profi t 19,037 92,769 81,576 -8,065 22,307

Profi t for the year for the Eitzen Bulk Shareholders 18,890 92,613 81,390 -8,237 22,162 STATEMENT OF FINANCIAL POSITION

Non-current assets 19,862 99,921 82,908 7,215 8,958 Current assets 82,888 139,268 111,334 42,543 96,040 Total assets 102,750 239,189 194,242 49,758 104,998 Equity 25,150 57,317 83,177 13,514 50,420 Non-current liabilities 9,825 51,570 20,479 1,032 3,803 Current liabilities 67,152 129,826 90,268 34,937 50,576

Net interest-bearing debt -24,533 -54,750 -44,298 -6,221 -21,399

Cash and securities 24,806 66,052 45,029 6,842 21,925

CASH FLOW

From operating activities -19,526 14,605 46,648 -24,587 49,925

From investing activities 291 101,703 53,913 9,291 -15,708

From fi nancing activities -22,011 -105,664 -66,000 0 -25,000

Total net cash fl ow -41,246 12,493 34,561 -15,295 9,218

FINANCIAL RATIOS AND PER SHARE DATA

Gross profi t margin 12.1% 7.0% 6.9% 0.2% 9.5%

EBITDA margin 5.5% 4.0% 3.8% -2.1% 5.5%

Return on equity (ROE) 45.8% 131.8% 168.4% -25.8% 87.9%

Payout ratio 48.0 105.6 81.1 0.0 112.8

Equity ratio 24.5 24.0 42.8 27.2 48.0

USD rate year-end 519.01 528.49 507.53 566.14 632.41

Average USD rate 536.09 509.86 544.56 594.70 600.34

Total number of physical ship days 14,361 15,129 18,746 21,441 22,867

Average number of employees 52 58 61 62 55

No. of shares end of period, DKK 1 each 24,638,502 24,638,502 24,638,502 24,638,502 24,638,502 No. of shares excluding treasury shares, DKK 1 each 22,174,652 24,638,502 24,638,502 24,638,502 24,638,502

Earnings per share basic (EPS basic), USD 0.77 3.76 3.30 -0.33 0.90

Earnings per share diluted (EPS diluted), USD 0.77 3.76 3.30 -0.33 0.90

Dividend per share, USD 0.4 4.0 2.7 0.0 1.0

Dividend per share, DKK 1.9 21.0 13.6 0.0 6.4

Proposed dividend 0 47,800 66,000 0 25,000

Interim dividend 9,102 50,000 0 0 0

Share price at year end, DKK 40.0 * * * *

The key fi gures for 2009 and 2008 have been calculated based upon the combined fi gures of Eitzen Bulk Shipping A/S. The key fi gures for 2007, 2006 and 2005 have been calculated based upon the fi gures of Eitzen dry bulk cargo activities. The key fi gures of Dampskibsselskabet Orion A/S for 2007, 2006 and 2005 have been eliminated in order to present key fi gures for a fi ve years period, which is comparable with the continuing activities of Eitzen Bulk Shipping A/S.

The only activity in Dampskibsselskabet Orion A/S in the period 2005-2007 has been to carry through a closing of the former activity. The former activity of Dampskib-sselskabet Orion A/S is not within the line of business or strategy of Eitzen Bulk Shipping A/S. Neither previously nor going forward. The result of DampskibDampskib-sselskabet Orion A/S is not material compared to the activity in Eitzen Bulk Shipping.

Per share data for the period 2005-2009 is based upon the share capital of Eitzen Bulk Shipping A/S after the capital reduction completed 22 March 2010. The reduc-tion has been allocated to a separate fund under the equity. The share capital at 22 March 2010 amounts to DKK 24,638,502 shares of nominal DKK 1. This due to present comparable per share data fi gures for the period 2005-2009 based upon a nominal share capital, which is deemed reasonable to former and current activity level of the Group. The number of shares excluding treasury shares is also calculated based on the number of treasury shares after the capital reduction.

* There is no share price available for Eitzen Bulk Shipping A/S for the period 2005 - 2008 refl ecting the activity presented in the key fi gures. The share price for Damp-skibsselskabet Orion A/S for the period 2005 - 2008 is not comparable, whereas no share price is presented for the period in question.

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6 | Annual Report 2009 |

Eitzen Bulk Shipping

Although presented as a new name, Ei-tzen Bulk Shipping A/S has roots going back to the 19th century. The origin of the company can be traced back to the ship owning company Myren, which was founded in Denmark in 1891.

In 1973, Myren was taken over by the Danish shipping and trading group East Asiatic Company (EAC), which was estab-lished in 1897. EAC’s initial shipping activ-ity was a liner service between Europe and the Far East. Together with Burmeister & Wain Shipyard, EAC built the world’s fi rst diesel powered motor ship in 1912, al-lowing EAC to extend its shipping activi-ties to other main trading routes. When EAC built its fi rst containership in 1969, it was among the pioneers who started the transformation from conventional liner vessels to container ships. EAC developed into a major international conglomerate with offi ces around the world. In 1997 the EAC group divested its shipping activities to Norwegian Tschudi & Eitzen (T&E).

T&E itself was founded in 1883 by Captain Camillo Eitzen in the name of Camillo Eitzen & Co. Captain Henry F. Tschudi joined the company as partner in 1894, and the company changed name to Tschudi & Eitzen in 1936. In 2003, the Tschudi and Camillo families decided to pursue their respective areas of interest.

Since then, the dry bulk activities have been part of Camillo Eitzen & Co ASA.

When taking over EAC’s shipping ac-tivities in 1997, T&E decided to retain the organisation and commercial manage-ment of the fl eet in Copenhagen in order to build on the existing team’s skills and market insight. Since then, the dry cargo bulk activities have grown from about eight million DWT of cargo carried to al-most 19 million DWT in 2009.

In September 2007, Camillo Eitzen & Co ASA acquired 93.1% of the shares in the Danish listed company Dampskibsel-skab Orion A/S. At that time, Orion was an inactive company after 85 years of ship-ping activities. This acquisition paved the way for restructuring and consolidation of the Eitzen Group’s bulk activities into one company.A major milestone was achieved on December 23, 2009, when shares in Eitzen Bulk Shipping A/S were traded on the NASDAQ OMX Copenhagen for the fi rst time.

Throughout more than a century en-trepreneurship and dedication have been cornerstones in the company’s ability to overcome market crisis and exploit growth opportunities. These are impor-tant values, which also in the future will supportthe growth for Eitzen Bulk Ship-ping A/S.

Eitzen Bulk Shipping

– a new company with a long history

Vision, values and promises

VISION

“ Through dedication and innovation we will make a difference”

VALUES

• High ethics • Human touch • Innovation • Dynamics

PROMISES

• We have transparancy in our business practices

• We are a dedicated and dynamic global partner

• We provide innovative, high quality shipping solutions • We deliver

Timeline

1883

1891

1894

1895

1897

1912

1936

1969

1973

Camillo Eitzen is established in Christiania (Oslo), Norway by Captain Camillo Eitzen Rederiet Myren is established in Denmark Camillo Eitzen changes name to Camillo Eitzen & Co as Captain Henry F. Tschudi becomes partner in the company From sail to steam. Camillo Eitzen & Co invests in its fi rst steamship (S/S Uto), a 2,000 DTW tweendecker with a 650 HP steam engine The East Asiatic Company (EAC) is founded in Copenhagen, Denmark The Shipping Co. Orion Ltd. is founded EAC and Burmeister & Wain Shipyard built the world’s fi rst diesel powered motor ship Camillo Eitzen & Co changes name to Tschudi & Eitzen (T&E) EAC builts its fi rst containership Rederiet Myren is taken over by EAC

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Eitzen Bulk Shipping

| Annual Report 2009 | 7 T&E acquires EAC Shipping, marking the company’s re-entry into the dry bulk segment The bulk segment orders the fi rst newbuilding Camillo Eitzen & Co is re-established following the demerger of Tschudi & Eitzen Holding Camillo Eitzen & Co ASA is listed on the Oslo Stock Exchange The bulk segment enters into fi rst landside investment in the form Perola S/A terminal, Santos, Brazil The bulk segment opens commercial offi ce in Beijing, PRC Entry into the panamax segment Camillo Eitzen & Co ASA acquires 93.1% of the shares in D/S Orion A/S Eitzen Bulk Shipping A/S is created and listed on NASDAQ OMX Copenhagen following a merger of D/S Orion A/S and Camillo Eitzen & Co’s Shipholding Holding A/S

1997

2001

2003

2004

2005

2006

2007

2009

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8 | Annual Report 2009 |

Strategic insight

Eitzen Bulk Shipping is organised in two business segments;

1. Operator, with a focus on short- and medium-term trading and arbitrage 2. Ship holding, with a focus on long-term

activities

The operator activities covers all oppor-tunistic and arbitrage market positions that are concluded within the company. As an operator, Eitzen Bulk Shipping is not bound by a large fi xed fl eet, but has the fl exibility to actively pursue suddenly emerging cargo or vessel opportunities. The overall principle is a year-on-year book building but with a constant focus on customer service ensuring the long-term viability of the business model.

The portfolio of contracts of affreight-ments (CoA) represents the backbone of the company’s operator activities. Nearly all of the company’s coverage are done through CoAs with multiple counterpar-ties. All contracts covering more than two cargoes are through CoAs with volume ranging from 3-60 cargoes and duration from one month to ten years under one contract. All existing long-term CoAs are based on fi xed rates, except for one, which

is index linked. The CoAs and associated partner relationships facilitate further opportunities for single voyage contracts as well as the potential to optimise trade legs and logistical effi ciencies. Vessels are chartered in the spot market on short- or medium-term or as single trip.

The Ship holding activities involves investment in vessels, charter commit-ments exceeding fi ve years as well as op-erational and fi nancial leases of vessels. Exposure related to ship owning is man-aged through coverage with industrial customers.

Eitzen Bulk Shipping is focused on ben-efi tting on the many synergies shared between the two segments whilst at the same time keeping a strict focus on the advantages of each of the strategies.

In 2009, the short-term spot and arbi-trage activities accounted for around 39% of ship days, while medium-term con-tracts of affreightments (CoA) covered with own or market tonnage, and own tonnage covered with market cargoes ac-counted for 61% of ship days.

Long-term customer relationships, a very close market presence via the company’s overseas offi ces and a unique real-time IT platform enables Eitzen Bulk

Shipping to assess and act swiftly on at-tractive market opportunities.

With the two business segments, the business model of Eitzen Bulk Shipping is tailored to combine the fl exibility of a traditional operator with the long-term opportunities available to ship holders, always subject to strict exposure con-trol and maintaining focus on profi tability rather than volume.

Strategic insight

Eitzen Bulk Shipping is a major

player in the Supramax segment,

and the company continually

strives to consolidate and expand

on this position, supplemented by

increased trading in the Panamax

segment.

Only 1223 voyage days under COAs were covered with own tonnage.

The remainder of the company’s positions (cargo or vessels) were

covered in the market, optimising the bottom line for the company, and

securing the right vessel at the right time for the customers

Segment focus and current fl eet

Supramax/Handymax (45-65,000 dwt)

• ~55 vessels on short/medim term charters • 2 vessels and 12 newbuilds on long term

charters • 1 owned newbuild

Panamax (65-85,000 dwt)

• ~15 vessels on short/medim term charters • 1 newbuild on long term charter

Handysize (37,000 dwt)

• 2 newbuilds on long term charter

Business model

2009 trading days

Sta te o f art infor

mation & business supp

ort syst em s

Controlled

Exposure

Shor t and long term v essel char ters Owned tonnage Cargo contr acts Spot and arbitr age activities E ffectiv

e market entry & exit poli

cy

8,810 (61

%

)

5,551 (39

%

)

14,361 (100

%

)

3,616 1,223 3,971

Trading/arbitrage vesseles and cargoes

2009 trading days Medium/Long Short Total COA’s covered with Market tonnage COA’s covered with own tonnage Own tonnage covered with market cargoes

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Strategic insight

| Annual Report 2009 | 9

Asset light business model

• Highly fl exible business model with limited capital tied up

• Industrial client portfolioproviding an attractive platform for growth

Best-in-class trade management

• Highly effi cient and scalable operations – best-in-class trade mngmt system

• Leading risk management with instant mark-to-market exposure systems

Gross Profi t per ship day in the Operator segment

50,000 40,000

30,000 20,000

BALTIC SUPRAMAX INDEX (USD) GROSS PROFIT PER SHIP DAY (USD)

10,000 0 0 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Our operator activities are focused

on getting the right combination

of cargo and vessel exposure, and

provided the company is correct in

its market forecast, we have

histori-cally been able to generate positive

earnings per ship day irrespective of

prevailing market levels. Earnings

from the operator segment are

se-cured by constantly striving for

im-proving margins; in trading as well

as in the daily post fi xture work. The

business model demonstrates an

ability to absorb substantial market

fl uctuations.

Eitzen Bulk Shipping investment highlights

Cash fl ow visibility

• 10 years earnings visibility though substantial fi xed charter coverage

• Approximately 10 MUSD in contrated revenues per year from 2012

Upside potential

• plans and potential for expanding the trading activity

• Attractive spot exposure and purchase options on long term charters

Strong track record

• Highly experienced management team with senior team members having worked 20-30 years within dry-bulk shipping

• Team with proven trading record and also for identifying attractive asset investment opportunities

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10 | Annual Report 2009 |

Strategic insight

40

%

5%

5

%

7

%

10

%

5

%

6

%

11

%

11

% Coal Petcoke Iron Ore Mineral/ ores Other Bauxite Fertilizer Grain, Sugar Scrap

WORLD WIDE TRADING ROUTES AND NETWORK

Eitzen Bulk Shipping constantly strives to maintain and further develop a strong and productive network in relation to both vessel owners and cargo customers alike. The strong relationship, built on high eth-ics and professionalism is important to maintain, as it expands the access to the widest possible range of available car-goes and vessels and ensures the ability to position the company in the best pos-sible way when the world trade changes.

Eitzen Bulk Shipping offi ces and staff are strategically sited around the world in terms of regions and time zones. Through this presence we achieve direct access to cargo and contract opportunities that would not have been available otherwise. In many cultures trust is only achieved by personal contacts between the cargo owners and the owners (or their repre-sentatives), and a local offi ce is an impor-tant tool to establish such trust and de-velop new business opportunities.

The main bulk trading routes are deter-mined by regional supply and demand requirements in respect of the raw ma-terials, which can be most economically transported in dry bulk shipments, the ma-jority of which are steel or energy related as illustrated by the Eitzen Bulk Shipping 2009 lifting. Eitzen Bulk Shipping has been able to establish a comparatively diversi-fi ed cargo portfolio. Involving our fl eet in transportation of a diversifi ed portfolio of commodities ranging from the min-ing industry to construction and farmmin-ing related products like fertilizers, we have achieved a cargo platform minimising the dependency on one single industry.

Eitzen Bulk Shipping offi ces and major trading routes

31 employees

Copenhagen (HQ)

3 employees

Rio de Janeiro

4 employees

New York

6 employees

Singapore

4 employees

Hong Kong

4 employees

Beijing

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Strategic insight

| Annual Report 2009 | 11

COMPETITIVE EDGE THROUGH TAILORED BACK OFFICE SYSTEMS Eitzen Bulk Shipping has a long track record of effi cient operations and cost ef-fective trading. The company’s fl eet man-agement and control system offers single point data entry with full integration of commercial-, operational- and fi nancial operations as well as risk management. It has been tailored to the company’s re-quirements with a strong focus on scal-ability and optimal matching of cargoes and vessels.

The system provides a global overview of both present and future cargo and ves-sel commitments, the minute a vesves-sel and/ or a cargo commitment is concluded and inserted. The information is a live platform and is simultaneously available to all our offi ces and departments worldwide. This way, the company can fully utilise the lo-cal offi ces’ customer relations and access to cargoes with the global organisation’s ability to provide real-time mark-to-mar-ket values of future concluded commit-ments for any segment, counterparty or fi nancial period that may be required for decision making.The tailored back-offi ce system provides a competitive edge, which

together with the high activity level forms a platform that facilitates the ability to perform cost effective trading through: • Effi cient operations due to critical mass • Minimised ballasting, by amongst other

optimising of triangular trades • Effective fl eet scheduling

• Optimal matching of cargoes & vessels • Hedging opportunities, due to

consist-ent high volumes

• High activity level which creates op-portunity for attractive spot / arbitrage trading

The company has adopted a

con-servative but fl exible risk profi le and

an active risk management policy

– tonnage and cargo commitments

are matched by adjusting the

physi-cal exposure, or hedged in the FFA

market. Trading and risk

manage-ment systems are fully integrated

giving instant mark-to-market

expo-sure reports.

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12 | Annual Report 2009 |

Strategic insight

Of the 16 new buildings still to be deliv-ered, one vessel to be delivery in 2011 will be owned. The remaining vessels are on long-term operational leases from Japa-nese shipowners. When securing these vessels under operational leases, Eitzen Bulk Shipping secured a long-term ton-nage portfolio (up to 13 years) with fi xed daily lease cost for the full contract pe-riod. The capital, cost and currency ex-posure rests with the operational lease counterparts.

In line with the company’s conserva-tive approach to exposure, by the end of 2009, 80 per cent of all exposure related to newbuildings was covered with long-term contracts at profi table returns. All operational leases carry purchase options to Eitzen Bulk Shipping, of which the ma-jority are partly shared.

For many years it has been an industry standard that Handymax vessels has a length of 190 meters. However, after ex-tensive analysis of the Eitzen Bulk Shipping trading pattern and in close coordination with industrial customers and ship yards, results showed that the majority of the regular ports of call wereable to accom-modate a vessel with 200 meter length.

The newbuilding program of Eitzen Bulk Shipping consists of 12 Supramax vessels with a length of 200 meters, which means that their cargo carrying capacity is in-creased by an estimated 10-15%, making them more competitive than the standard industry index for Supramax bulk carriers, the so called BSI std52 design.

STABILITY DURING FINANCIAL CRISES AND PLATFORM FOR FUTURE PROFITABLE GROWTH

Although many businesses are still bat-tling against the fi nancial crises, the dry bulk market showed an early and remark-able recovery in 2009. Seen in historical perspective 2009 did not represent at setback for Eitzen Bulk Shipping as the operational, fi nancial and exposure con-trol systems proved their value in allowing the company to adjust quickly and benefi t from the market development.

The business model proved to be an invaluable asset during 2009 in terms of controlling vessel and cargo exposure. Running in parallel to which, time and ef-forts are continually invested in practicing due diligence towards reviewing the cred-itability of new contractual counterpart as well as current clients on a regular basis. As a result thereof Eitzen Bulk Shipping only suffered losses in 2009 from one counterpart as consequence of the crises in respect of cargo contracts, Forward Freight Agreements, bunker and currency hedges.

The present business model and sup-port systems are structured to facilitate absorption of the increasing numbers of vessels, cargo and contract commitments resulting from our three to fi ve years growth plan, without further major invest-ment in new systems and people. VALUE ADDING ACTIVITIES

Whilst operator and owner activities are the primary business segments, Eitzen Bulk Shipping has also established cargo handling and port facilities. Presently cargo-handling equipment consists of 78 cargo grabs and three purpose designed grabs for log-handling.

The grabs are used for own cargo han-dling purposes but also leased to third par-ties. Eitzen Bulk Shipping grab activities in India are developed through a joint venture in the name of Eitzen Logistic Services.

Port facility involvement is presently in the form of investment in Perola a fer-tilizer terminal in Santos, Brazil. In 2009 the terminal was hit and damaged by an extreme storm. The terminal remained partly operative, but re-building and pos-sible expansion options are currently being reviewed.

Cargo handling and port facility invest-ment opportunities are pursued in order to create value added activities and/or con-solidate co-operations with core clients. The cargo handling and port facilities sup-ports and increases trading effi ciency. NEWBUILDING PROGRAM

AND COVERAGE

Eitzen Bulk Shipping has committed to 18 newbuildings of which two vessels are already in service. The remaining vessels will be delivered in the period 2010 to 2014.

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Strategic insight

| Annual Report 2009 | 13

Newbuild program – expected delivery

2007

Supramax Mitsui (Sibulk Initiator) 56,000 DWT

2010

Supramax Oshima (Sibulk Prosperity) 60,700 DWT Imabari 61,000 DWT

2011

Supramax Imabari 61,000 DWT Oshima 60,700 DWT Imabari 61,000 DWT Panamax Sanoyasa (Sibulk Panache) 78,000 DWT

2013

Handysize Imabari 37,000 DWT Supramax Imabari 61,000 DWT

2014

Supramax Imabari 61,000DWT

2012

Handysize Imabari 37,000 DWT Supramax Imabari 61,000 DWT Imabari 61,000 DWT Oshima 60,700 DWT Imabari 61,000 DWT Oshima 60,700 DWT Tsuneishi 58,100 DWT

2008

Supramax Imabari (Sibulk Tradition) 53,000 DWT

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14 | Annual Report 2009 |

2009 market review

2009 was a challenging year for many businesses and dry cargo shipping was no exception.

The time charter rates for a Supramax vessel was at the beginning of the year USD 4,000 per day – lower than the actual costs of operating a vessel, but by year-end the daily rate was USD 25,000 giving an annual average of USD 17,300 – sub-stantially higher than most analysts had forecasted at the beginning of the year.

During 2009 the world dry bulk fl eet grew from 418 to 460 million dwt. 43 million dwt entered the market as new-buildings and approximately 10 million dwt were conversions from tank to bulk. 11 million dwt of old ships were scrapped. This fl eet growth would have sent hun-dreds of older ships into layup, and even more to the demolition yards had it not been for the strength of the emerging markets.

China again demonstrated how the world has changed since the 1990’s from a world with OECD as the focal point to a situation with big emerging markets and the developed economies falling behind. The fi nancial ‘melt-down’ was an OECD problem affecting China, but irrespective of which China and other emerging econo-mies grew as much in dry cargo volume as OECD shrank. During the fi nancial turmoil China consumed raw materials at a level

which hardly anybody had forecasted, and it naturally poses the question of short- and mid-term sustainability. In 2009 China imported 628 million tons of iron ore occupying about 25% of the world dry bulk fl eet. In 2008 the corresponding fi g-ure was 440 mill tons.

The long term sustainability of China’s demand is considered pretty certain. Chi-na’s price-corrected industrial production is now bigger than that of USA. China con-sumes more cars than USA, and produces as much steel as the rest of the world ac-cumulated. China constitutes 42 percent of the world coal market.

2009 market review

BSI and forward curves, monthly averages, USD per day

2001

Eitzen Research using Baltic Exchange Data

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

30,000

10,000

50,000

70,000

Baltic historical Baltic forward feb 24, 2010

Dry Bulk Cargo Ships, million DWT

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010

In Operation Demolished Expected Delivery

80

60

40

20

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2009 market review

| Annual Report 2009 | 15

Dry Bulk Commodity Imports in Million Tonnes – China’s Cut

Ship capacity caught in congestion, million DWT

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

500

1,500

2,500

3,500

Rest of world China

Eitzen Research, Reuters Ecowin, Various other sources

2008 2009 USWC Indonesia Panama India South Africa China Brazil Australia

20

40

60

Eitzen Research, Industry Sources

Monthly Major Dry Bulk Commodity, Exports, 000 tonnes

JAN 08 FEB 08 MAR 08 APR 08 MAJ 08 JUN 08 JUL 08 AUG 08 SEP 08 OCT 08 NOV 08 DEC 08 JAN 09 FEB 09 MAR 09 APR 09 MAJ 09 JUN 09 JUL 09 AUG 09 SEP 09 OCT 09 NOV 09 DEC 09

Dry Bulk Exports to China Dry Bulk Exports to Rest of World

140,000

100,000

60,000

20,000

Eitzen Research

As the year closed, a harsh winter sent a clear message to the dry bulk market that coal may be the next big feedstock nec-essary to import in increasingly large vol-umes to China. Despite being the biggest producer of coal in the world, with 2.9 bil-lion tons, requirements for increased im-port came up as China scoured the world coal markets for more input.

In total, global dry bulk volumes were about the same in 2009 as in 2008, but with a drastic change in trading patterns as illustrated by the monthly exports 2008 to 2009 where Chinese destina-tions jumped in share of total exports. Due to the change in trading patterns, the average voyage distance and necessary ballasting increased about 5 percent. In addition, recorded vessels tied up in congestion at ports around the world in-creased from 30 mill dwt to 50 mill dwt, corresponding to about 7 and 11 percent of the world bulk fl eet.

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16 | Annual Report 2009 |

2010 market outlook

Dry bulk shipping demand from OECD countries should continue to recover in 2010 and Chinese and Indian demand growth is expected to continue at una-bated pace. China is still at a moderate development level and has a big potential for higher steel consumption per capita, and in addition, Chinese energy supply seems to be increasingly reliant on coal from Australia and Indonesia. In 2008 China imported 40 million tons of coal growing to 127 million tons in 2009 of which about 85 mill tons were seaborne. If Chinese coal production stalled in 2010 another 400 mill tons would probably have to be imported.

India has a fast developing coal demand with 55 million tons of coal imported in 2008 and 65 mill tons in 2009. This de-mand is driven by developments in the In-dian energy and steel sectors. The InIn-dian market potential is less than China’s but signifi cant enough in setting freight rates.

The fact that demand keeps increas-ing makes it diffi cult for many publicly controlled ports to catch up and capac-ity growth keeps lagging behind demand growth. Therefore it is expected that ship capacity volumes caught in congestion will persist or even increase.

Due to the growing demand in Asia the increasing imbalance of trade to the Pa-cifi c from the Atlantic will grow. The long term trend of trading patterns are thus believed to require more ballasting from the Pacifi c to the Atlantic, though OECD recovery may pause this growing imbal-ance in 2010.

Deliveries of new ships will probably ac-celerate in 2010 compared to 2009. After four years with high dry bulk freight rates, 2009 was the fi rst year that dry bulk ship deliveries accelerated. But actual

deliver-1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

800

400

1,200

1,600

US Japan China India Korea

Eitzen Research using data from ICAP, SBB, WorldSteel, Thomson-Reuters

Orderbook Snapshots, Dry Bulk, millions DWT

Steel consumption per capita, kilogram

2005 2006 2007 2008 2009 2010 2011 2012 Jan 09 On Order Expected Delivered

23 25 25 22

72 112 78

6

30

23 25 25 24 42

6

117

99 45

2005 2006 2007 2008 2009 2010 2011 2012 Feb 10

Eitzen Research, Industry Sources

2010 market outlook

ies were only 66% of what was scheduled and such delays are expected to con-tinue.

The shipping markets remain uncer-tain due to the ambiguity of the current positive trend in short term economic indicators that could be sustainable or a provisional result of fi nancial stimulus packages. Weak public fi nances with huge defi cits in major economies require fi scal tightening and thus less spending and de-mand for goods transportation.

The volume of trade is set to grow and therefore opportunity to grow the market exists for EBS. Volatility has been inherent in the dry bulk market since 2003 when Chinese imports became decisive for the market balance and volatility is expected to continue.

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2010 market outlook

| Annual Report 2009 | 17

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18 | Annual Report 2009 |

Financial review

Eitzen Bulk Shipping has adopted all new or amended and revised accounting stand-ards and interpretations (IFRS’s) endorsed by the EU effective for the accounting pe-riod beginning on 1 January 2009.

The IFRS 8 replacing IAS 14 has an im-pact on the presentation and disclosure of the consolidated fi nancial statements, representing a change from last year. The Group had previously one segment, the dry bulk cargo segment. Following the merger restructuring, the operating segments are reported in a manner consistent with the internal reporting provided to Executive Management and the Board of Directors of Eitzen Bulk Shipping. For management reporting purposes, the Group operates in two global business segment based on the operator and shipholding activities within the dry bulk cargo industry.

Please see note 1 ‘Group accounting policies’ and note 3 ‘Segment information’ for additional information.

NET PROFIT

The business performance in 2009 is considered satisfactory in the light of the diffi cult market conditions, and net profi t amounted to 19.0 MUSD.

EBITDA

The EBITDA of 20.7 MUSD developed in line with expectations. The result was substantially impacted by the share op-tions program being expensed in 2009. Adjusted EBITDA of 28.9 MUSD was down 14% compared to 33.7 MUSD in 2008.

Revenues in 2009 were 376 MUSD down 55% from 838 MUSD in 2008 re-fl ecting the substantial drop in market rate levels.

The company adjusted its commercial activities and cost base to the changed market conditions. Closing down the Mel-bourne offi ce late 2008 and cutting back on staff related costs, although partly counterbalanced by restructuring costs, reduced the overall cost base compared to 2008.

GROSS PROFIT (NET EARNINGS FROM SHIPPING ACTIVITIES)

The gross profi t was 45.5 MUSD in 2009 corresponding to a gross margin of 12.1% compared to 7.0% in 2008.

Number of ship days was 14,361, a de-crease of 5% compared to 2008. The ac-tivity level in terms of vessels has grown throughout 2009 and was 59 at the end of 2009. Current fl eet activity is around 70 vessels.

The freight market in 2009 reached an average BSI time charter rate of USD 17,300 per day compared to USD 42,500 per day in 2008, corresponding to a drop in 59%. Eitzen Bulk Shipping’s gross profi t per ship day have historically varied in line with the time charter rates, but in 2009 the company outperformed the signifi -cant drop in rates in 2008 with a gross profi t per ship day of USD 3,200 in 2009 compared to 3,900 in 2008, a drop of only 18%.

FAIR VALUE ADJUSTMENT

The group enters FFA agreements to hedge contracts concluded on both COA and vessels (T/C). The fair value adjust-ment that did not qualify for hedge ac-counting under IFRS constituted an in-come of 3.0 MUSD.

Financial review

2007 2008 2009

53

59

45

2007 2008 2009

18,746

15,129

14,361

Q1, 09 * Q1, 2010 ESTIMATE Q2, 09 Q3, 09 Q4, 09 Q1, 10*

3,193 3,017 3,907 4,243 5,000

Gross Profi t (MUSD)

Ship days

(19)

Financial review

| Annual Report 2009 | 19

NET FINANCIAL ITEMS AND TAX Financial income was 1.3 MUSD compared to 3.3 MUSD primarily refl ecting lower in-terest from settling loans with Camillo Eitzen & Co ASA as part of the merger re-structuring. Financial expenses amounted to 0.2 MUSD as the company continues to have no debt to fi nancial institutions. Other fi nancial items were 1.3 MUSD, an increase of 0.9 MUSD from 2008, prima-rily due to foreign currency gains.

Tax on profi t was 3.7 MUSD corre-sponding to an effective tax rate of 16.1%, an increase from -7.4% in 2008, primarily related to the tonnage tax.

CASH FLOW

Cash and cash equivalents were 24.8 MUSD down from 66.1 MUSD in 2008, and consisted of USD and DKK cash at bank and bank deposits at year-end.

Cash fl ow from operating activities was -19.5 MUSD compared to 14.6 MUSD in 2008. The cash fl ow in 2009 was im-pacted by the relative high profi t split payment from gains on ship sale, a rather steep increase in vessel activity level by the end of 2009, and onerous contracts related to two vessels sold and delivered in 2008, which required the company to charter relatively more expensive tonnage to lift cargo obligations committed against same vessels. Provisions for the onerous

contracts in 2009 and 2010 totalling 33 MUSD was made in 2008 of which 25.5 MUSD was reversed in 2009.

ASSETS

Total assets amounted to 102.8 MUSD. Non-current assets decreased to 19.9 MUSD from 100.0 MUSD in 2008, prima-rily due to fair value adjustments of deriva-tives and settling of loans and receivables from Camillo Eitzen & Co ASA as part of the merger restructuring. Current assets decreased by 56.3 MUSD to 82.9 MUSD, primarily due to lower liquidity and fair value adjustment of derivatives.

The company has one newbuilding on order with delivery in 2011. The prepay-ments in 2008 were fi nanced through cash fl ow from operations, whereas the remaining instalments will take place in 2011. No impairments were recognised in 2009 with respect to prepayments on the newbuild contract.

LIABILITIES

Total liabilities amounted to 77.0 MUSD, a decrease of 104.4 MSUD from 2008. This was primarily due to fair value adjust-ments of derivatives, onerous contracts and the profi t split agreement).

EQUITY

Total equity amounted to 25.8 MUSD, and earnings per share were 0.8 USD.

Dividend

At the Annual General Meeting on 21 April 2010, the Board of Directors will propose not to pay out any dividend for 2009 to maximise the company’s fi nancial fl exibil-ity and thus be prepared for the business opportunities that may arise.

As part of the merger restructuring 57 MUSD was distributed as dividends set-tling loans and receivables with Camillo Eitzen & Co. ASA in 2009.

Share options program

The Board of Directors approved 21 De-cember 2009 a share options program. Management and employees (70% of total staff) were granted 2,537,766 share op-tions by 22 December corresponding to 10.3% of the total number of outstanding shares.

The estimated theoretical fair value of the share option program is assessed to 16.5 MUSD with a non-cash expense in the income statement for 2009 of 8.2 MUSD. Legal cases

Eitzen Bulk Shipping is party to a number of legal cases. See key legal issues and information on contingencies for pending litigations on note 30.

(20)

20 | Annual Report 2009 |

Corporate governance

The Board of Directors and Executive Management of Eitzen Bulk Shipping A/S is convinced that effi cient and clear divi-sion of responsibilities as well as trans-parent decision making processes are pre-requisites of a company’s long term value creation. Eitzen Bulk Shipping therefore reviews at least annually the company’s practices in the fi eld against corporate governance principles vested in legisla-tion, customs and recommendations. As part of this process, the Board and Execu-tive Management assess the company’s strategy, organisation, business proc-esses, risks, control mechanisms and re-lations with its shareholders, customers, employees and other stakeholders. CORPORATE GOVERNANCE IN DENMARK

It is mandatory for companies listed on Nasdaq OMX Copenhagen to account for their governance practices in relation to the recommendations issued by the Dan-ish Committee on Corporate Governance. As the main objective of the recommen-dations is to make company management structure transparent it is emphasised by the committee that explaining non-compliance is just as legitimate as com-plying with a specifi c recommendation. The committee is currently revising the recommendations. Eitzen Bulk Shipping follows this development closely, but re-ports according to the present set of rec-ommendations.

Eitzen Bulk Shipping presents an over-view of corporate governance in this an-nual report while a full disclosure of cor-porate governance practices is provided on the company’s website. As a general rule, the company complies with the rec-ommendations. Any exceptions are ac-counted for here in the annual report. MANAGEMENT STRUCTURE

Eitzen Bulk Shipping is a Danish listed company with a two-tier management structure. The Board of Directors de-termines the company’s objectives, strategies, budgets and supervises the company’s performance and day-to-day management, which is run by a manage-ment group consisting of CEO and CFO (registered with the Danish Commerce and Companies Agency) as well as fi ve Executive- and Senior Vice Presidents.

The management group determines the required action plans and is responsible for the execution of same to fulfi l the ob-jectives as set out by the Board of Direc-tors. In addition, the management group delivers feedback to the Board of Direc-tors on developments and opportunities in the market, which will enable timely adjustments to the strategies carrying the company forward.

SHAREHOLDER STRUCTURE AND INTERACTION WITH MANAGEMENT Eitzen Bulk Shipping A/S was listed on Nasdaq OMX Copenhagen in December 2009 with one share class with one vote per share and no limits to voting rights or sale of individual shares. The company ex-pects to establish a broader shareholder base thereby securing a larger free fl oat and higher liquidity of the shares, of which Camillo Eitzen & Co. and the manage-ment group of Eitzen Bulk Shipping A/S presently own the majority.

Opportunities for consolidation are pur-sued on an ongoing basis and the compa-ny’s listing is considered a natural source for funding of these investments through new share issues.

The general meeting constitutes the highest authority of the company through its election of the Board of Directors and approves the annual report, and it is con-vened by two to four weeks notice includ-ing the agenda with summary of each item. Financial reports, presentations and other relevant information is available on the company’s website. Regulatory dis-closures are distributed through estab-lished communication channels.

THE ROLE OF STAKEHOLDERS The Company has adopted a code of con-duct, which sets the ethical standards expected from all employees regarding behaviour, attitude and performance to-wards stakeholders. The code addresses issues such as health, safety & environ-ment, business integrity, legal compli-ance, IPR and internal control and it is every employee’s responsibility to be aware of and live up to the guidelines set forth in the code.

OPENNESS AND TRANSPARENCY Eitzen Bulk Shipping A/S aims to be per-ceived as transparent, accessible, reliable and open to dialogue with the company’s shareholders. The Investor Relations function headed by the CFO will provide relevant, accurate, consistent and timely information to the capital market that may infl uence the pricing of the Eitzen Bulk Shipping shares, while observing the rules and regulation for listed companies on Nasdaq OMX Copenhagen, including: • Full year- and quarterly fi nancial

state-ments and annual report

• Special investor section on the com-pany’s website

• Presentations at investor conferences • One-on-one- and group meetings with

Danish and international investors- and equity analysts

DUTIES AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS

The work of the Board of Directors is gov-erned by a written set of procedures stat-ing that it is the responsibility of the Board to approve the company’s short- and long-term strategies, to establish policies for capital structure, risk management and to monitor fi nancial- and organisa-tional performance. The Board approves all large investments and contractual ar-rangements related to cargo and tonnage running beyond 36 months and it is con-currently informed about such obligations lasting less than 36 months.

The Board meets a minimum of fi ve times a year in connection with the processing and approval of fi nancial re-porting. Additional meetings are con-vened as needed. In 2009, the board met 5 times.

Executive Management reports monthly to the Board about market de-velopments and macroeconomic factors with relevance for the bulk market, budg-ets, fi nancial key ratios, exposures and counterparty risks. The chairman of the Board and the CEO are in proactive dia-logue when developments in the market or key projects require extra attention.

Corporate governance

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Corporate governance

| Annual Report 2009 | 21

The Board of Directors currently attends to the audit committee function. This re-quires that no members of the Board of Directors are also members of Executive Management and that at least one mem-ber of Board of Directors is both independ-ent of the company and has qualifi cations within accounting and auditing. The Board of Directors acknowledges this responsi-bility and will perform renewed assess-ment of this.

COMPOSITION OF THE BOARD OF DIRECTORS

The Board is elected by the annual gen-eral meeting. Potential board candidates are reviewed by the Board based on regu-lar discussions about the composition of the Board, including its competences and experiences. On the company’s website there is a presentation of each member of the Board.

The Danish Committee on Corporate Governance recommends that at least half of the board members elected by the general meeting are independent per-sons. Additionally, it is recommended that members of the executive management of a company are not members of the board of directors of the same company.

The Board of Directors at Eitzen Bulk Shipping A/S consists currently of the chairman of the board and CEO of the ma-jority shareholder, Camillo Eitzen & Co., a partner from the company’s lawyer, Gor-rissen Federspiel, and two Executive Vice Presidents from the company’s manage-ment group. As such, Eitzen Bulk Shipping has given priority to signifi cant market insight and shipping experience over in-dependence. That said, the Board of Di-rectors is determined to adopt members independent of the company.

REMUNERATION OF BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

The Danish Public Companies Act pro-vides that shareholders adopt, at the gen-eral meeting, guidelines for incentive pay to members of the company’s board and it’s executive management. Such guide-lines was adopted by the extraordinary general meeting in December 2009, and, in accordance with the Act, Eitzen Bulk Shipping will propose a set of guidelines at the ordinary general meeting in April

2010. The main elements of the current guidelines are set out below. The plete guideline is available on the com-pany’s website.

Board of Directors

The Board of Directors has refrained from receiving any compensation for their work in 2009. From 2010, members of the Board of Directors will receive a fi xed an-nual fee, which must be approved by the annual general meeting in April 2010. If company activities require a temporary, but extraordinary workload by the Board, a supplement to the fi xed annual fee can be authorised. The members of the Board receive no incentive pay for their Board of Directors work.

Executive Management

Members of the Executive Management are employed under executive service contracts, and all terms of their remu-neration are fi xed by the Board based on the guidelines approved by the general meeting.

The Executive Management of Eitzen Bulk Shipping consists currently of the CEO and CFO. Members of Executive Management receive a competitive re-muneration package consisting of four elements; a fi xed salary, benefi ts such as company car and phone, cash bonus and share options.

In 2009, a total of 0,3 MUSD was paid in salaries to the Executive Management. In addition, 0,2 MUSD was expensed in bonus.

Share options program

The share options program for the com-pany’s management and key employees, a total of 37 persons, was approved by the general meeting in December 2009 and gives the option holders a right to acquire shares corresponding to a total of 10.3% of the company share capital as of 22 December 2009. The share options will be vested with 50% in 2009, 25% in 2010 and 25% in 2011, and can be exercised in the period from 1 March 2010 through 31 March 2016 on a 4 year rolling basis. Treasury shares have been allocated to cover the entire program.

The exercise price for the share options will be determined as 1% of the market price for the company’s shares at the time of granting the share options to the holder. The exercise price can be adjusted in the event of changes to the capital structure. The estimated theoretical present value of the scheme is assessed to 16.5 MUSD using the Black & Scholes model and in accordance with IFRS.

In 2009, 8.2 MUSD was expensed cov-ering the share options program.

RISK MANAGEMENT

Main risk exposures and risk management processes are described in note 27. AUDIT

The overall responsibility for the internal control in relation to fi nancial reporting including compliance with applicable leg-islation and other fi nancial reporting regu-lations rests with the Board of Directors and Executive Management.

Nomination of external auditors is done annually by the general meeting. The au-ditor agreement and fees are agreed be-tween the Board and auditors. The Board has approved the use of the company’s external auditors for non-audit services provided these services are kept within the guidelines of approved strategy and budgets.

In connection with the audit of the an-nual report, external accountant review all internal controls and fi nancial proce-dures. The external auditor’s report is re-viewed by the Board.

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22 | Annual Report 2009 |

People and planet

8

%

11

%

59

%

6

%

8

%

8%

NYC CPH BJG SIN RIO HKG

25

%

4

%

50%

17

%

4%

Chartering Postfixture Business support Finance & operations control Ship-holding

Geographical split of employees

Employees split by function

Eitzen Bulk is built on a philosophy whereby staff is considered to be one of the company’s most important resources and assets. A conscious effort is made to maintain a fl at organisational structure, where all directly involved persons are also part of the related decision making process. Annual strategic reviews are made in order to regularly align individual efforts to the ever-changing needs of our clients and address prevailing market con-ditions. These reviews are staff focused and where all participate on a level foot-ing, regardless of status. In consequence of which a culture has been established and maintained which promote the Eitzen Bulk Shipping team spirit.

By the end of 2009, Eitzen Bulk Ship-ping employed 52 people, of which 31 were based in Copenhagen. In order to provide optimal round the clock service to customers, the company has established 6 regional offi ces employing 21 people, strategically sited around the world in terms of regions and time zones. The in-tegrated back offi ce system has been designed to promote and enable decision making on business level irrespective of the geographical location. At the same to-ken the back offi ce system enables prompt and exact knowledge sharing across func-tional and geographical borders strength-ening team spirit world-wide.

The employees can roughly be divided into fi ve main functions; Chartering, Post fi xture, Ship holding, Business Support and Finance & Operations Control.

Requirements in respect of research, fuel procurement and HR services are provided through service agreements with Camillo Eitzen (Denmark) A/S shared with Eitzen Chemical ASA and Eitzen Gas A/S. The average employment time in the com-pany is seven years, with many managers having served the company for 10 to 15 years.

People and planet

Eitzen Bulk Shipping does not currently own any ships and therefore sea-going personnel fall under the responsibility of the ship owners from whom vessels are chartered. The company select their chartered fl eet based on the analysis of international vetting agencies as well as membership of the International Group of P&I clubs, a type of mutual insurance scheme for ship owners covering mainly personal injuries, cargo damage and pol-lution.

Ded

icatio

n

Qua

lity

Dyna

mic

Trust

Inno

vation

Hum

an to

uch

Partn

er

Integrity

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People and planet

| Annual Report 2009 | 23

15.3

%

4.6

%

18.2

%

0.5

%

0.6%

35

%

1.9%

2.7%

21.3

% Electricity and heat production Other Manufacuting industries and construction Other transport (road) Rail International aviation International shipping

Domestic shipping & fishing

Other energy industries

Second IMO GHG Study 2009 (MEPC 59/INF. 10)

Shipping contribution to global CO

2

emissions

Human resource development and focus

HUMAN RESOURCE DEVELOPMENT A career at Eitzen Bulk Shipping is a glo-bal and constant evolving experience. The company provides a fl exible competence development package, which may include professional and personal development as well as language courses and expatria-tion. Attention is given to meeting specifi c needs of the individual rather than just ad-herence to standard course participation patterns.

A career development plan has been

established for all employees, ranging from trainee to senior manager. Trainee programs are managed in association with the Danish Shipowners’ Association, and junior employees can enrol in TutorShip, a 2-3 year long distance learning program offered by the Institute of Chartered Ship-brokers that qualifi es for an ICS Founda-tion Diploma, which is an accredited and internationally recognised qualifi cation. The traineeship resolves around a rota-tion plan, whereby all main areas of com-mercial and operational activities are ad-dressed. In addition to in-house training, the company encourages participation in external training and courses for shipping professionals as well as selected personal development and management courses. Theoretical training is complimented with orientation visits to ports, vessels etc. in order to give practical experience.

Eitzen Bulk Shipping is a globally op-erating company and to be a successful operator, it is a prerequisite to be in close contact with customers locally, and to have knowledge of the specifi c trading conditions in the local areas; interacting with agents and stevedores, knowing the special features of a given port and be conversant with the characteristics of the cargo etc. The company therefore provides

extensive ‘on-the-job’ training and expa-triation, which is managed through an ex-change program between the company’s offi ces and also frequently with business partners.

CORPORATE SOCIAL RESPONSIBILITY

Eitzen Bulk Shipping acknowledges a re-sponsibility to manage the company in a way that balance the business results with respect for climate changes, health and safety of seafarers and other employees as well as for business ethics. These con-siderations are vested in the corporate cul-ture and refl ected in the company’s code of conduct. The company obeys all relevant legislation set by national or international legal bodies such as the International Mar-itime Organisation (IMO) and The MarMar-itime Labour Convention. The company intend for none of its practices to be contrary to the UN Global Compact’s ten principles that have become a global standard for corporate social responsibility.

For the shipping industry, climate changes are of special attention. In total, shipping account for about 90% of global trade and approximately 3% of man-made CO2 emissions. Measured per ton of

trans-ported goods, shipping is the least environ-mentally damaging means of transport. Despite the fact that shipping is impacting the climate less than comparable forms of transportation, such as airfreight and truck, Eitzen Bulk Shipping is committed to reduce its contribution further.

When planning a cargo voyage, Eitzen Bulk Shipping aims to optimise the vessel speed and thus fuel consumption, which is the most infl uential parameter on CO2 -emissions. Also, in the development of a newly designed Supramax vessel, Eitzen Bulk Shipping have together with Japa-nese shipyards succeeded in designing a vessel that carry an additional 6.3 percent cargo per metric ton fuel consumed, as compared with previous designs.

Main engines contracted for the new building program have been upgraded from original design specifi cations to the latest version of environmental friendly engine available. Management & Leadership Traineeship Personal development Professional compentences

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24 | Annual Report 2009 |

People and planet

(25)

About the share

| Annual Report 2009 | 25

INVESTOR RELATIONS

Eitzen Bulk Shipping A/S was listed on Nasdaq OMX Copenhagen in December 2009 and the company aims to be per-ceived as transparent, accessible, reliable and open to dialogue with our existing and potential shareholders.

Opportunities for consolidation are pur-sued on an ongoing basis and the compa-ny’s listing is considered a natural source for funding of these investments.

The company will provide relevant, ac-curate, consistent and timely information to the capital market to facilitate a trans-parent and effi cient pricing of the com-pany shares, while observing the rules and regulation for listed companies on Nasdaq OMX Copenhagen.

The main communication channels are the company’s website, annual reports and quarterly fi nancial statements as well as operational company announce-ments. In addition, the Executive Man-agement will engage in regular meetings with investors in Europe and US. The Board and management regularly review feedback from shareholders and potential investors to ensure effi cient transmission of information.

THE SHARE CAPITAL

The share capital consist of 24,638,502 shares with a nominal value of 1 DKK in one share class with one vote per share and no limits to voting rights or sale of individual shares. By 31 December 2009 the company had 427 registered share-holders.

The following shares and shares op-tions were owned by senior management at 31 December 2009:

The Board of Directors receives a cash remuneration, which is approved by the shareholders in general meeting in con-nection with the approval of the annual report. The Board of Directors does not receive share-based remuneration and did not receive any remuneration for their work in 2009.

By the end of 2009, employees and executives owned a total of 14.7% of the company’s share capital. Eitzen Bulk Ship-ping owned 2,463,850 of treasury shares corresponding to 10.0% of the share capi-tal to fulfi l company obligations regarding the share options program. The Company does not intend to own company shares beyond what is required to fulfi l such ob-ligations.

The shareholder register is maintained by Computershare, Kongevejen 418, DK-2840 Holte.

DIVIDEND POLICY

The dry bulk shipping market and the re-lated investment opportunities are cycli-cal, and the current global economic crisis has opened new possibilities for consoli-dation and investments. To maximise the company’s fi nancial fl exibility and thus be prepared for the business opportunities that may arise, Eitzen Bulk Shipping pro-poses to the annual general meeting 2010 not to pay out dividends for 2009. SHARE PRICE AND TURNOVER In 2009 Eitzen Bulk Shipping had only six trading days from the fi rst day of listing, 21 December 2009. The share price at year-end was 40 DKK against 37.5 DKK on the fi rst trading day, a development of 6.7%. The market capitalisation of the

listed shares was approximately 1 billion DKK at year-end, corresponding to 190 million USD. FINANCIAL CALENDAR 2010 24 March Annual Report 2009 21 April

Annual General Meeting 20 May Financial Statements Q1 2010 24 August Financial Statements 1H 2010 19 November Financial Statements Q3 2010

All regulatory releases and fi nancial ac-counts are available in Danish and English on the company website

www.eitzen-bulk.com. IR CONTACT

Bjarne Skov Faber Chief Financial Offi cer Direct tel.: +45 3997 0401 Mobile tel.: +45 2630 9501

E-mail: bsf@eitzen-bulk.com Camillo Eitzen House

Amerika Plads 38 DK-2100 Copenhagen Denmark

14.7

%

74.3

%

0.7

%

10.3

%

Camillo Eitzen & Co. ASA

Staff Treasurey shares allocated to stock options program

Minority Shareholders

Eitzen Bulk Shipping ownership after merger

About the share

No. of share

Name Position No. of shares options

Per Lange CEO 739,886 (3.00%) 359,648

Bjarne Skov Faber CFO 0 0

Henrik Sleimann Petersen Board member and

Executive Vice

President 386,550 (1.57%) 201,555

Hans-Christian Olesen Board member and

Executive Vice

President 355,362 (1.44%) 188,004

Kaare Grenness Senior Vice President 393,548 (1.60%) 201,125

Søren C. Thomsen Senior Vice President 209,950 (0.85%) 140,372

(26)

26 | Annual Report 2009 |

Management biographies

BOARD OF DIRECTORS

Axel C. Eitzen (b. 1954), Chairman Norwegian citizen

Chairman of Camillo Eitzen & Co ASA (2008-)

Elected for the Board fi rst time in 2009, term expires in 2010 Education 1976-1980: Master of Mechanical Engineering 1973-1975: M.Sc. Economics Former positions

2003-2008: CEO, Camillo Eitzen & Co ASA

1980-2003: Partner & CEO, Tschudi & Eitzen AS

Management assignments Eitzen Chemical ASA (CM) Eitzen Maritime Services ASA (CM) Gard AS (M)

Peter D. Knudsen (b. 1957), Norwegian citizen

CEO, Camillo Eitzen & Co ASA (2008-)

Elected for the Board fi rst time in 2009, term expires in 2010

Education

1979: Master of Business Adm. 1977: Bachelor Finance Former positions

2007-2008: General Manager, Nordea Bank Singapore Pte. Ltd.

1993-2007: Senior Vice President, Nordea Bank Norge ASA, shipping, oil services and international division Management assignments Eitzen Maritime Services ASA (M) Eitzen Solvang Ethylene A/S (M) Subsidiaries of Camillo Eitzen & Co ASA (M)

Peter Appel (b. 1961) Danish citizen

Managing Partner, Gorrissen Federspiel (2010-), partner since 1994

Elected for the Board fi rst time in 2009, term expires in 2010

Education

1990: Master of Law, London school of Economics

1985: Maritime Law, Oslo University 1985: Master of Law, Copenhagen University

Former positions

1994-2009: Partner, Gorrissen Federspiel

Management assignments Bimco Informatique A/S (M) P.E.P. Shipping A/S (M)

European Maritime Law Organisation (M) Maritime and Transport Law Committee, International Bar Association (CM)

Management biographies

References

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