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Annual Report 2012

Annual Report 2012

Interest and exchange

Interest and exchange rate risks are significant financial risks for Eitzen Chemical. Management periodicallyreview and assess the primary financial market risks. The risks are managed on a group portfolio level inaccordance with strategies, policies and authorization defined by the Board of Directors. At the end of 2012approximately 84 per cent of our interest bearing debt carried floating interest rates. The Company currentlypays floating interest rates on its bond and bank debt, while the Company’s leasing obligations have fixedrates.Eitzen Chemical’s revenues are predominately in USD. Portions of our operating expenses and general andadministrative expenses are denominated in non-USD currencies, mainly DKK, NOK, EUR and SGD. Interestbearing debt is mainly in USD. However, the Company's outstanding bond loan has one NOK tranche. Some ofthe purchase options on leased vessels are in JPY.Health, safety and environmentThe safety and well-being of our employees has our highest priority. Eitzen Chemical aims to continuouslyprovide and enhance healthy, high-quality working conditions, both onshore and onboard vessels. TheCompany has outsourced crewing and technical management. Eitzen Chemical has a fleet managementdepartment responsible for monitoring the Health, Safety, Environment and Quality performance of thetechnical managers.Attracting and retaining qualified seafarers remains an area of strategic importance for Eitzen Chemical, andthe Company is executing a comprehensive crewing strategy in close cooperation with our technical managers.The objective is to strengthen Eitzen Chemical’s brand and image in selected national pools while exploitingthe strong presence and position that the individual technical manager has established regionally.During 2012 the Company achieved a further improvement of retention rate for officers, measured at 89 percent according to Intertanko’s standard. To ensure a continued flow of dedicated and qualified officers, EitzenChemical, in close cooperation with our technical managers, is engaged in the continued training of seafarersand education of cadets and has around 40 cadet positions onboard our vessels. The Company will furtherdevelop and execute on the crewing strategy and the implementation of crew welfare initiatives in order tocontinue improving officers’ retention rate and maintaining a challenging and motivating work place, thuscreating top performing vessels.The Lost Time Injury Frequency (LTIF) was 0.63 per million working hours in 2012 for crews on Eitzen Chemicaloperated vessels. Absence due to illness for onshore employees was 0.8 per cent in 2012. For shore-basedemployees, no work-related injuries were reported during the year.Piracy is still an area of great concern. While there recently has been a decrease in acts of piracy in the Gulf ofAden and Somali Basin, the number of reported incidents in West Africa has increased. Our technical managershave adopted best management practices consistent with the industry standards and under suggestion byIntertanko and OCIMF to deter piracy. All of our vessels are registered with the EU Naval Force (Maritimesecurity centre) which co-ordinates vessel’s transit schedules with the appropriate naval vessels in the Gulf ofAden and Somali basin. Depending on the present conditions and individual risk factors for the particularvessel, preventive measures are being evaluated for each transit according to Eitzen Chemical piracy policy.Eitzen Chemical is aware of its environmental responsibility and we strive to comply with and maintain highstandards in order to reduce the environmental impact from our operations. The technical managers arecertified with Environmental Management Systems Certificate ISO 14001 as well as ISO 9001:2000. Thecertificates are issued by the classification society and establish environmental standards and implementationroutines. Continuous efforts are made in order to reduce the general waste produced by the vessels and todispose of waste onshore in a controlled manner at approved port waste reception facilities. The fleetcomplies with the IMO recommendations on waste management. Pollution by invasive species carried withballast water has become an important issue. All the ships have ballast water management systems in place.The company has further started preparing its vessels to install ballast water treatment systems in line withnew regulations entering into force. The Company has invested additional funds in new vessels, meetingrequirements that refrigeration and air-conditioning systems in the vessels be upgraded to R404 refrigerationgas, which is CFC free.18

Exhaust fumes from the vessels' engines account for the main part of the air pollution generated by theCompany's operations. All vessels contracted after 2005 are compliant with NOX emissions requirements. Themodern Siteam class of vessels from Trogir meets all the criteria of the Lloyd’s Register EnvironmentalProtection Notation. This notation covers a diversity of subjects ranging from air pollution to sea waterpollution. To further limit air pollution, the smaller vessels have been built fully compliant with currentregulations on NOX and SOX emissions and are also built to be able to further reduce SOX emissions. EitzenChemical conducts improvement projects and testing aimed at reducing our environmental impact, includinghull cleaning and propeller polishing in addition to testing of fuel additives for improved combustion, bothaimed at reducing fuel consumption and air pollution.Human resources and diversityOn 5 September 2012 Bjørn J. Sjaastad withdrew as Chairman of the Board and Aage R. B. Figenschou, who hasserved as a Board member since 2009, took up the position as new Chairman. The Board of Directors currentlyconsist of four members, and represent a strong combination of shipping, banking and financial experience.Three out of four members of the Board of Directors are independent of Eitzen Chemical’s largest shareholder,Jason Shipping ASA.As of year-end 2012, Eitzen Chemical had 1,250 crew members employed on its vessels or on leave. Inaddition, the Company had 79 permanent employees onshore.We value our employees as our key resource. Eitzen Chemical will continue to focus on attracting and keepingthe best qualified and motivated employees. Eitzen Chemical is a global organization with a diversified workingenvironment in which employment, promotions, responsibility and job enrichment are based on qualificationsand abilities, and not on gender, age, race and political or religious views.Eitzen Chemical believes in equal opportunity for men and women in the workplace. However, the shippingbusiness is historically male-dominated. Female representation among employees therefore remains low andaccounted for approximately 24 per cent of the onshore work force in 2012. At executive management level,there are currently no women represented. The Board complies with the 40 per cent gender requirement forBoard of Directors stipulated by Norwegian law.Eitzen Chemical focuses on transparency in its business practices, supports free enterprise and seeks tocompete in a fair and ethical manner. The Board of Eitzen Chemical has approved a Code of Conduct definingthe Company’s ethical standards.Corporate governanceThe Board of Eitzen Chemical is committed to developing a strong, sustainable and competitive company inthe best interest of the shareholders, employees, customers, creditors, business associates, third parties andsociety at large. The Board of Directors and Management aim for a controlled and profitable development andlong-term creation of growth through well-founded governance principles, operational procedures and riskmanagement.The responsibility and working procedures of the Board are regulated by Instructions for the Board of Directorsof Eitzen Chemical ASA, Eitzen Chemical’s Corporate Governance policy and the Company’s Code of Conduct.The Board acknowledges the Norwegian Code of Practice for Corporate Governance and will work onimplementing this Code, using the guidelines as recommendations for the board’s governance duties. Formore detailed information see the Corporate Governance principles included in the annual report.Parent companyThe Board proposes that the net loss of NOK 824.0 million for the parent company is attributed to Retainedlosses. The loss in 2012 mainly relates to a loss of NOK 760.4 from an internal sale of shares in subsidiaries dueto a company restructuring following the new loan agreements with the lenders of the Eitzen Chemical Group.19

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