Golden Close Maritime Corporation Ltd. · Golden Close Maritime Corp Ltd. Group ... Industries in South Korea on 22 June 2011 and commenced on its contract with BG in Tanzania on

Golden Close Maritime Corporation Ltd.

Consolidated Financial Statement

2013

Golden Close Maritime Corp Ltd. Group The Board of Directors report as of 31 December 2013

The Golden Close Maritime Corp Ltd. Group ("the Group) consists of Golden Close Maritime Corp Ltd. (parent company),

and its two wholly-owned subsidiaries, Deepsea Metro I Cooperatief UA and Golden Close II Ltd, which were incorporated in

the Netherlands, Deep Sea Metro Holland II BV and Deep Sea Metro Holland III BV, with the purpose of being the contract

parties for the drilling contract with oil companies.

The Group is the owner of, through the parent company, the ultra-deepwater drillship Deepsea Metro I. The Group is part of

the Deep Sea Metro Ltd. Group.

Parent company

Golden Close Maritime Corp Ltd. was incorporated in Bermuda on 4 September 2008. As of 31 December 2013, the

company was 100% owned by Deep Sea Metro Ltd, which was, in its turn, owned by Metro Exploration Holding Corp. at 60%

and Odfjell Offshore Ltd. (a subsidiary of Odfjell Drilling Ltd.) at 40% of the shares and the voting rights.

The Company is the owner of the drillship Deepsea Metro I. The drillship was delivered from the yard Hyundai Heavy

Industries in South Korea on 22 June 2011 and commenced on its contract with BG in Tanzania on 26 December 2011.

Deepsea Metro I achieved a good and stable economical utilization from its operations throughout 2013, its second year of

operations. Deepsea Metro I operates offshore in Tanzania for the BG Group under a contract that originally matured in June

2013. In May 2013, The Group extended the drilling contract for Deepsea Metro I with the BG Group and Ophir Energy in

Tanzania. The extension covers a 540 day period from 7 June 2013 at a day rate reflecting the current market level, ending

in fourth quarter 2014. The agreement also includes an additional un-priced 18 month option. BG has not exercised unpriced

540 days option, commencing 29 November 2014. The rig is currently being marketed towards new clients.

Outlook

Demand for the company’s units and services is high under the current market conditions and the market is expected to

remain strong in the years to come with a utilization of high spec ultra deepwater drilling assets close to 100 per cent. The oil

industry’s demand for deepwater drilling services will continue to be supported by the need for reserves replacement, and by

increased spending on exploration and field development in deep- and ultradeep water regions.

There is often considerable uncertainty as to the duration of offshore drilling contracts because the agreements may give the

operator both extension and early cancellation options. There can also be off-hire periods between contracts. The

cancellation or postponement of one or more contracts can have a material adverse impact on the earnings of the Group.

Organization, Health, Safety and Environment

The operational activities of the Group were carried out in Tanzania in 2013.

The Board of Directors consists of five members. There are no employees in the Group or in its subsidiaries.

The drillship manager, Odfjell Drilling Group, is responsible for all aspects of the marketing, management and operations of

Deepsea Metro I.

Safety

The Group strives continuously to improve safety and security towards a zero fault target and focusing on:

• Prevention of risk of a major accident

• CMS improvements & simplification

• Safety Leadership & Compliance

• ISO 9001 certification

• Quality improvement of all key processes


The drillship manager, Odfjell Drilling Group, has reported that level of risk has decreased over the past few years, and most

HSE trends are moving in the right direction. The lost time incident frequency and total recordable incident rate have both

improved steadily, also in 2013, as high-potential incidents and reportable spills to sea.

The drillship manager’s QHSE Safety Management Leadership program covers a range of important topics, including HSE

culture and management, procedure compliance, HSE rules and the establishment of safety contracts, and risk

understanding. No serious personal injuries were reported in 2013 by Deepsea Metro I operating company.

The drillship manager has further strengthened the processes for Safety Leadership Training globally, for both offshore and

onshore management, in the belief that the leadership behaviour of managers is often a key influence on risk taking.

Leadership and compliance are fundamental elements in building and maintaining a strong QHSE culture.

Environmental reporting

The Group has a goal of zero environmentally hazardous discharges to sea. This includes eliminating or significantly

reducing the emission of defined environmental toxins and substantially reducing the risk of harm from the use and discharge

of chemicals. The Group companies work in a multidisciplinary environment and focus on the zero discharge goal throughout

the organisation and in all processes. The drillship manager, Odfjell Drilling Group, is in the process of certifying all business

areas globally to the Environmental Management standard ISO 14001. In 2013 the certification process will took place.

Preventive actions have focused on identifying onboard processes where spill to sea is possible and strengthening of related

barriers in that respect, in addition to good communication and interaction with supply vessels and optimalization of

environmental related working procedures.

Risk factors

Operational and industrial risk factors

The Group provides drilling services for the oil and gas industry, which historically has shown a cyclical development. The

level of activity in the offshore oil and gas industry will, among other things, depend on the general climate in the global

economy, oil and gas prices, investment patterns for oil and gas exploration, production and drilling, and regulatory issues

with respect to operational safety and environmental hazards. Financial performance will also depend on the demand and

supply balance for mobile drilling units.

The Group seeks to mitigate these risks by securing long-term contracts for its main assets and services with renowned

counterparts. However, all offshore contracts are associated with considerable risk and responsibilities, including technical,

operational, commercial and political risks. The company will take out the insurance coverage deemed adequate in order to

limit these risks.

Financial risk factors

Most of the Group’s investments and costs are denominated in USD, as well as drilling contract revenue is earned in USD,

thus the Group’s currency exposure is very limited.

The interest rate of this financing is fixed at 12% p.a. and currently there is no exposure to the risk of changes in market

interest rates related to the Group's long-term debt. The Group will consider entering into interest hedging in connection with

any other future external long-term debt obligations.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities

and to have sufficient cash or cash equivalents at any time to be able to finance its investments and future operations in

accordance with its strategic plan. The Group monitors its liquidity risk by considering the maturity of both its financial

investments and financial assets and projected future cash flow from operations.


Presentation of accounts

The consolidated financial statements are prepared on a basis consistent with simplified IFRS in compliance with Norwegian

laws. The Group has adopted the going concern basis in preparing its consolidated financial statements. When assessing

this assumption, management has assessed all available information about the future. This comprises information about net

cash flows from existing time charter contract, debt service and possibilities for new drilling contracts. After making such

assessments, management has a reasonable expectation that the Group has adequate resources to continue its operational

existence for the foreseeable future.

Consolidated accounts

The below information describes the development for the Group in 2013 compared to 2012

Golden Close Maritime Corporation Ltd. Group

The Group’s annual operating revenue was reported at USD 231.1 million, as compared to USD 174.0 in 2012. The revenue

was earned as per operating rate according to the contract for 366 days and mark-up on reimbursables in 2013.

The revenue earned in 2013 was mainly derived from the contractual operations in Tanzania for British Gas, with exception

of the period from end November 2013 to 31 December 2013, when the drillship was re-assigned from Britsh Gas to

Dominion Tanzania Ltd.

In 2013, the owner of the drillship Deepsea Metro I, Golden Close Maritime Corporation Ltd. earned bareboat revenue as per

bareboat charter contract with operator of the drillship, Deep Sea Metro Holland II BV and Deep Sea Metro Holland III BV.

The bareboat revenue was levied with withholding tax while operating in Tanzanian waters for British Gas, which was

classified and reported in a tax expense line.

The operating profit was up to USD 111.4 million in 2013 from operating profit of USD 59.6 million in 2012.

Net financial loss was USD 50.3 million as of 31 December 2013 as compared to the financial loss of USD 53.6 million as of

31 December 2012, resulting in the annual net profit of USD 36.2 million for 2013, compared to a net loss of USD 9.9 million

for 2012.

As of 31 December 2013, the total assets amounted to USD 867.2 million, compared to USD 892.4 million as of 31

December 2012. The book value of Deepsea Metro I was reported at USD 761.6 million as of 31 December 2013,

corresponding to USD 795.8 million as of 31 December 2012.

Long-term liabilities were reported at USD 387.9 million as of 31 December 2013, as compared to USD 451.6 million as of 31

December 2012 and comprised the USD 460 million bond loan of Golden Close Maritime Corporation Ltd. from Norsk

Tillitsmann, disclosed net of capitalized financing costs.

Cash and cash equivalents were USD 58.4 million as of 31 December 2013, compared to USD 56.9 million as of 31

December 2012.

On 31 December 2013, the total equity of the Group was USD 458.0 million. The equity ratio was 53% percent at the end of

2013, compared to 47% at the end of 2012.

Cash flow

Cash flow from operating activities was positive at USD 68.8 milion in 2013, as compared to USD 18.3 million in 2012,

primarily due to increased profit before tax..

Cash flow from investing activities amounted to negative USD 0.8 million in 2013, compared to USD 0.1 million in 2012.


Cash flow from financing activities amounted to a negative USD 66.5 million in 2013, as compared to negative USD 0.4

million in 2012. The change is mainly due to the redeemed amount of USD 66.5 million on the USD 460 million bond loan in

2013.

Parent company accounts The parent company Golden Close Maritime Corporation Ltd. reported an operating profit of USD 99.4 million in 2013, as

compared to the operating profit of USD 45.96 million in 2012, primarily due to the revenue earned under bareboat

agreement with Deep Sea Metro Holland II BV and Deep Sea Metro Holland III BV .

The annual net profit of the parent company was reported at USD 38.3 million in 2013, compared to the net loss of USD 19.1

million in 2012.

Total assets in the parent company amounted to USD 842.8 million as at 31 December 2013, as compared to USD 868.2

million as at 31 December 2012. The book value of Deepsea Metro I in the parent company was reported at USD 761.6

million at the end of the year, corresponding to USD 795.8 million at the end of the prior year.

Total equity in the parent company stood at USD 451.21 million at the end of 2013, as compared to USD 412.92 million at

the end of 2012. The equity ratio was 54% at the end of 2013, compared to 48% at the end of 2012. The unrestricted equity

as of 31 December 2013 was equal USD 451.20 million.

Cash flow from operating activities was USD 44.6 million in 2013 compared to USD 13.2 million in 2012 primarily due to

increased profit before tax.

Cash flow from investing activities was reported at positive USD 9.8 million in 2013, as compared to positiv USD 0.05 million

in 2012.

Cash flow from financing activities was reported at negative USD 66.5 million in 2013 with corresponding USD 0.2 million in

2012, due to redeemed amount on the USD 460 million bond loan.

Allocation of profits

The parent company Golden Close Maritime Corporation Ltd. had distributable equity of USD 451.2 million as at 31

December 2013.

The Board of Directors proposes the following allocation of the parent company’s net profit carried forward of USD 38.3

million in 2013:

Transferred to other equity USD 38.3 million

Total allocated USD 38.3 million

Golden Close Maritime Corporation Ltd Group

(All amounts are in USD unless otherwise stated)

Consolidated Income Statement

Note 2013 2012

Operating revenue 11 231 072 276 174 033 148

Total operating income 231 072 276 174 033 148

Personnel expenses 2,8 -38 745 408 -35 362 316

Depreciation and impairments 4 -35 231 196 -34 772 021

Other operating expenses 2,8 -45 724 080 -44 271 383

Total operating expenses 2 -119 700 684 -114 405 719

Operating profit (EBIT) 111 371 592 59 627 429

Interest income 2 368 179 86 145

Interest cost 2 -48 207 830 -50 601 531

Other finance income / (costs) 2 -2 478 246 -3 123 311

Finance income / (costs), net -50 317 898 -53 638 697

Profit/(loss) before tax 61 053 694 5 988 732

Income tax (expense) income 3 -24 839 283 -15 848 504

Profit/(loss) for the period 36 214 410 -9 859 772



Consolidated Statement of Comprehensive Income

Note 2013 2012

Net profit / (loss) for the period 36 214 410 -9 859 772

Other comprehensive income

Currency translation differences 9 271

Other comprehensive income, net of tax 9 271

Total comprehensive income 36 214 419 -9 859 501



Consolidated Statement of Changes in Invested Equity

Share capital

Other contributed

capital Retained earnings Total equity

Balance at 1 January 2012 10 000 439 690 967 -7 963 304 431 737 663

-

Profit/(loss) for the period - - -9 859 772 -9 859 772

Other comprehensive income for the period - - 271 271

Total comprehensive income for the period - - -9 859 501 -9 859 501

Equity contribution from owners:

Proceeds from owner´s capital contribution - - - -

Transactions with owners - - - -

Balance at 1 January 2013 10 000 439 690 967 -17 822 805 421 878 162

Profit/(loss) for the period - - 36 214 410 36 214 410

Other comprehensive income for the period - - 9 9

Total comprehensive income for the period - - 36 214 419 36 214 419

Equity contribution from owners:

Proceeds from owner´s capital contribution - - - -

Transactions with owners - - - -

Balance at 31 December 2013 10 000 439 690 967 18 391 614 458 092 581



Consolidated Statement of Cash Flows

2013 2012

Profit / (Loss) before Tax 61 053 694 5 988 732

Adjustments for:

Finance items, net 50 317 898 53 638 697

Depreciation 35 231 196 34 772 021

Foreign Exchange gain / (loss) 450 886 -6 980

Changes in working capital

Decrease/(increase) in trade accounts and other receivables -6 938 999 -10 253 070

Decrease/(increase) in prepayments -615 717 907 166

(Decrease)/increase in provisions -200 000 -2 373 512

(Decrease)/increase in accounts payable 603 676 -1 233 247

(Decrease)/increase in other receivables and liabilities 2 603 560 2 729 773

Income Tax -24 902 418 -15 309 998

Interest paid -48 769 325 -50 600 024

Cash flows from operating activities 68 834 451 18 259 557

Cash flows from investing activities

Purchase of property, plant and equipment -1 023 070 -5 433 182

Reimbursed by customer on construction in progress - 5 488 000

Interest received 187 093 81 020

Net cash flow used in investing activities -835 977 135 838

Cash flows from financing activities

Proceeds from issue of share capital -

Redemption of bond loan -66 500 000 -

Capitalization finance cost bond loan - -186 117

Bond loan handling direct fees - -183 332

Borrowings related expenses - -20 331

Net cash used in financing activities -66 500 000 -389 780

Net change in cash and cash equivalents 1 498 473 18 005 615

Cash and cash equivalents at beginning of period 56 858 291 38 829 473

Exchange gains/losses on cash and cash equivalents -107 679 23 203

Cash and cash equivalents at 31.12 58 356 764 56 858 291


Notes to the Consolidated Financial Statements


Note 1 Accounting Principles

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions -that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

1.3 Basis of preparationThe financial statements have been prepared under the principals of historical cost.

1.4 Currency The financial statements are presented in USD which is the Groups functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. The assets and liabilities of non-USD currency are translated into USD at the rate of exchange as of the balance sheet date.

1.5 Accounting estimates and judgementsThe preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in accounting estimates are accounted for in the same period as the change occurs.

The most material estimates and assumptions are related to the company's fixed assets impairment test.

GeneralGolden Close Maritime Corporation Ltd. was incorporated in Bermuda on 4 September 2008. The Golden Maritime Corporation Ltd Group ("the group) consists of Golden Close Maritime Corp. Ltd. (parent company), and its two wholly-owned subsidiaries DSM I coop and Golden Close II Ltd, which furthermore own Deep Sea Metro Holland II BV and Deep Sea Metro Holland III BV.

The financial statements have been prepared in accordance with simplified IFRS (International Financial Reporting Standards) pursuant to section 3-9 of the Norwegian Accounting Act and with the Directives of simplified IFRS specified by the Norwegian Ministry of Finance on 21. of January 2008. This implies that estimates and measurements follows IFRS, and that presentation and notes to the financial statement are in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway.

1.1 Simplified IFRSThe Group has applied all relevant simplifications in regard to IFRS, including:• Dividend will be treated in accordance with the Norwegian Accounting Act and deviates from IAS 10 no. 12 and 13.

1.2 ConsolidationSubsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values of the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.




Note 1 Accounting Principles (continued)

1.6 Revenue recognitionRevenue is recognised to the extent that it is probable that the financial benefits will accrue to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received. Revenues are recognised as they are earned, based on contractual daily rates contract with BG.

1.7 Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.

1.8 Income taxPayable tax for the period is estimated in accordance with those tax rules that is approved, or mainly approved on the balance-sheet date, in those countries where the Group and its subsidiaries are operating and generating income. The management evaluate consecutive those point of views that is taken in the tax forms where existing tax rules is object for interpretation. Based on the managment's evaluation, it will be made provisons to expected tax payments where this is considered as necessary.

Golden Close Maritime Corp Ltd is registered in Bermuda.

There is no Bermuda income, corporation, or profit tax, witholding tax, capital gains, capital transfer tax, estate duty or inheritance tax payable by the company or its shareholders not ordinarily resident in Bermuda. The company is not subject to Bermudan stamp duty on the issue, transfer or redemption of its shares.

As an exempted company, the company is liable to pay a registration fee in Bermuda. The present rate is USD 4,070 per annum.

Deep Sea Metro Holland II BV (DSMH II BV) and Deep Sea Metro Holland III BV (DSMH III BV) are registered in the Netherlands.

The Group is to pay corporate income tax and withholding tax to Tanzanian tax authorities for operations of Deepsea Metro I in Tanzania waters, since DSMH II BV has a registered branch in Tanzania.

For operations in Kenya, DSMH II BV is to pay 30% on profit before tax to Dutch authorities and withholding tax is to be withheld by the customer (Apache Ltd.) for further payment to Kenyan Authorities. Withholding tax paid to Kenyan Authorities by Apache Ltd will be exempt from the taxation in the Netherlands.

1.9 Fixed assetsFixed assets are valued at cost, less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs for maintenance are expensed as incurred, whereas costs for improving and upgrading property, plant and equipment are added to the acquisition cost and depreciated with the related asset. When carrying value of a non current asset exceeds the estimated recoverable amount, the asset is written down to its recoverable amount. The recoverable amount is the greater of the net realisable value and value in use. In assessing value in use, the estimated future cash flows from the asset are discounted to net present value.

1.10 BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

1.11 Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (drillships). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

1.12 Cash and cash equivalentsCash and cash equivalents includes cash, bank deposits and all other monetary instruments with a maturity of less than three months from the date of acquisition.

Cash and cash equivalents, as defined for reporting purposes in the statement of cash flows, consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts connected to cash management activities.

1.13 EquityCost of equity transactions:Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.




Note 1 Accounting Principles (continued)

1.14 Year-end provisionsA provision is accounted when the Group has an obligation (legal og self-imposed) as a consequence of a former incident, it is probable (more likely than not) that an economic settlement will occur as a consequense of the obligation and the amount can be reliably measured. If the effect is substantial, the provision would be estimated by discounting expected future cashflows with a discount rate before tax that reflects the market price of cash and, if relevant, risks spesifically attached to the obligation.

1.15 Contingent liabilities and assetsContingent liabilities are not accounted for in the financial statement. Substantial contingent liabilities, except for contingent liabilities, where the probability of the liability is low, are reported. Contingent assets are not accounted for in the financial statement, but reported if there exists a certain probability that the Group will accrue an advantage.

1.16 Events after the balance sheet dateNew information after the balance sheet date, concerning Group's financial standing, is taken into account in the financial statement.

Events after the balance sheet date that not affect the Group's financial standing on the balance sheet date, but will affect the Group in the future are reported if it is considered substantial.

1.17 Cash flow statementThe cash flow statement is prepared using the indirect method.




Note 2 Auditor's fee, other operating expenses and net financial items

Summary of operating expence by source 2013 2012

Total Cost from External -74 820 011 -72 334 359

Total Cost from Related * -44 880 673 -42 071 360

Total Operating expences -119 700 684 -114 405 719

* Specification of Cost from Related parties is presented in Note 8 Related Party Transactions

Auditor 2013 2012

Statutory Audit -48 423 -57 572

Other assurance services - -

Other advisory services * -166 342 -101 551

Total fee of the auditor** -214 765 -159 123

* Other advisory services is comprised of VAT reporting in Tanzania

** The fees are excluding VAT

Specification of other operating expenses, excl Audit expenses 2013 2012

Hired services -5 722 034 -5 375 798

Tools, fixtures and fittings -19 387 694 -20 729 453

Insurance, guarantees and service costs -1 657 073 -1 239 803

Management fee -17 066 616 -14 035 325

Other operating expenses -1 675 898 -2 731 882

Total -45 509 315 -44 112 260

Total Other Operating expenses -45 724 080 -44 271 383

Specification of finance income / costs 2013 2012

Interest income 368 179 86 145

Interest cost -48 207 830 -50 601 531

Currency gain, realized 954 548 704 947

Currency gain, unrealized 55 103 -66 142

Other finance income 88 945 248 631

Currency loss, realized -503 662 -711 927

Currency loss, unrealized 5 674 -34 461

Amortization on loan related finance fee -2 845 788 -3 018 599

Bank charges & commissions -36 443 -20 331

Other finance costs -196 623 -225 428

Net finance income / (costs) -2 478 246 -3 123 311

The are no employees in the Group. The Group is managed pursuant to a Drillship Management Agreement and a Project Management Agreement with Odfjell Drilling AS.

Management remunerationNo loans/securities have been granted to the chairman of the board or other related parties. No remuneration was paid to the Board of Directors during the year.

The Interest expense for 2013 was calculated in accordance with the USD 460 million bond loan agreement between Golden Close Maritime Corp Ltd and Norsk Tillitsmann ASA as bond trustee. The Interest on the same bond loan, calculated in previous years, was capitalized into the drillship on the balance sheet until drillship was placed in service.




Note 3 Tax

The details on withholding tax are presented in the Note 13 of these accompanying notes to the financial statements

Tax expenses for the year are as follows:

2013 2012

- 9 463

-3 761 208 -3 247 969

Withholding Tax Kenya operations - -1 104 800

Tax expense -3 761 208 -4 343 306

Withholding Tax paid on bareboat -21 078 075 -11 505 198

Total Tax expense -24 839 283 -15 848 504

Prepaid Tax 2013 3 247 277 3 804 800

Tax payable -513 931 -577 066

Adjustment of tax expense for prior year

Tax payable 30%, Tanzania operations

The tax expense at Golden Close Maritime Corp Ltd is registered in Bermuda, therefore no Bermuda income, corporation, or profit tax, capital gains, capital transfer tax, estate duty or inheritance tax payable by the Company or its shareholders not ordinarily resident in Bermuda. The Company is not subject to Bermudan stamp duty on the issue, transfer or redemption of itsshares. As an exempted company, the Company is liable to pay a registration fee in Bermuda at a rate presently at USD 4,070 per annum.

For bareboat operations of Deepsea Metro I in Tanzania, the Company was liable to USD 21 078 015 withholding tax on revenue, to be deducted and paid at the source by the customer to the Tanzanian authorities.

The tax expenses at Deep Sea Metro Holland III BV for 2013 are related to operations in Tanzania (Tanzania branch) . For operations in Tanzania, DSMH III BV will pay 30 % income tax to Tanzanian Authorities.




Note 4 Tangible assets

"Deepsea Periodic Total

Metro I" maintenance rig

Acquisition cost 31.12.2012 801 037 089 30 000 000 831 037 089

Accumulated Depreciation -29 158 549 -6 080 645 -35 239 194

Closing net carrying value at 31.12.2012 771 878 540 23 919 355 795 797 895

Depreciation 2013 -28 869 233 -6 361 963 -35 231 196

Reimbursed amount 2013 - -

Additions 1 023 070 - 1 023 070

Net carrying value at 31.12.2013 744 032 377 17 557 392 761 589 769


Accumulated Depreciation -58 027 782 -12 442 608 -70 470 390


Movements during the year

Movements in 2013 include depreciations and periodic maintenance.

Basis for depreciation / allocation of expenditure

The drillship started depreciating when placed in service under bareboat charter agreement between Golden Close Maritime

Corporation Ltd and Deep Sea Metro Holland II BV, which coincided with commencement of the drilling contract of the latter with

British Gas on 26 December 2011.

The total expenditure on the drillship has been decomposed into components that have different expected useful lives. Periodic

maintenance is one of the decomposed components. The different components are depreciated over their expected useful lives as

per straight line method. The main component is expected to have an economic useful lifetime of 30 years. When calculating

depreciation, the estimated residual value has been taken into consideration.

Impairment of values

The operating company for Deepsea Metro I entered into a drilling contract with BG effective from 7 June 2011 The drilling

contract with BG in Tanzania is ending 29 Nov 2014. The market for ultra deep water drilling units remains strong. The ultra deep

market is an atractive market because this is both a replacement market of older mid-and deepwater floaters and growth market,

especially in Africa.

The Group has carried out net present value analysis which support the carrying amount of the drillship and based on this

concluded that the carrying value amount of Deepsea Metro I is not considered to be higher than value in use. The Group has,

based on sensitivity analysis of future cash flow from operations taken into account a variety of day rates and using reasonable

discount rates, substantiated that the value in use exceeds the carrying amount of the drillship.




Note 5 Share capital and shareholder information

Golden Close Maritime Corp. Ltd. Group had one (1) registered shareholder at 31 December 2013.

There is only one class of shares, and all shares have the same rights.

The share capital consists of:

Shareholder Shares Nominal value Share capital

Deep Sea Metro Ltd. 10 000 USD 1,00 10 000

Total 10 000 10 000




Note 6 Non-current liabilities

Non-current liabilities

2013 2012

Long-term debt 460 000 000 460 000 000

Redeemed amount (66 500 000) -

Capitalized financing cost -5 525 570 -8 371 359

Total non-current liabilities 387 974 430 451 628 642

Long-term debt:USD 460 million Bond Agreement

On 3 December 2010, Golden Close Maritime Corp Ltd (“the Issuer”) entered into a USD 460 million bond agreement with Norsk Tillitsmann ASA as bond trustee. The purpose of the bond issue was to secure construction and take-out financing of Deepsea Metro I. Settlement date for the bond loan was 9 December 2010 (“the Settlement Date”).

The bonds shall be repaid in full at 9 December 2015 (unless redeemed earlier). Golden Close may redeem the bonds, all or nothing, at a price equivalent to the sum of between 102% and 104% of the par value (plus accrued interest), depending on the date of redemption.

The interest payable on the bonds is 11 per cent pro annum, payable as semi-annual coupons.

The bonds are secured by, amongst others, a pledge over all the shares of the Company, and further a pledge over substantially all of the Company's assets, hereunder bank accounts, a security trust deed, an assignment of a Drilling Unit Management Agreement , a mortgage over Deepsea Metro I and assignment of insurances and revenue deriving from the vessel. Further, the Company's subsidiaries which are relevant to Deepsea Metro I have guaranteed the fulfilment of the obligations of the obligors under the bond agreement, and the bonds have further been secured by pledges over substantially all the assets of Golden Close's subsidiaries relevant to Deepsea Metro I, hereunder by pledges of shares of relevant subsidiaries, bank accounts, assignment of insurance proceeds and revenue and assignment of any rights under the Drilling Unit Management Agreement.

The main restrictive covenant is that the Company is obliged to accumulate a working capital buffer of USD 25 million onceearnings related to Deepsea Metro I have started to accumulate. The bond agreement also includes a payment and account structure which provides for payment of all earnings of the Company and all net earnings related to Deepsea Metro I to certain accounts. In the event the Company accumulates a working capital exceeding USD 30 million over allowed working capital buffer, the Company is obliged to redeem the bonds with the amount exceeding the allowed capital buffer at 100% of par value (plus accrued interest on redeemed amount), hence, the Company shall not declare or make any dividend payments to Deep Sea Metro Ltd.

The bond agreement is otherwise based on terms and conditions which the Company considers to be customary for similar types of bond financings, hereunder but not limited to event of default provisions, cross-default provisions, restrictions in distributions, and mandatory redemption provisions relating to ownership and condition of Deepsea Metro I and ownership of Golden Close. Through a certain covenant agreement, any relevant subsidiary of the Companyis similarly bound of the same restrictions as the Company.The transaction costs (including arrangement fees to managers and bookrunners, legal fees, etc.) in connection with the establishment of the bond are recorded as prepayments. Thiscapitalized financing cost is amortised over the life of the bond. In 2013, USD 2 847 666 was booked as amortised cost in the profit and loss statement.




Note 7 Financial risk

Market riskDemand for drilling services in connection with exploration, development and production in the offshore oil and gas sector is particularly sensitive to decreases in the prices for oil and gas, reductions in production levels and disappointing exploration results. On the supply side, there is uncertainty when it comes to the level of construction of new units, the upgrading and maintenance of existing units, the conversion of units into other types of units and alternative uses for equipment as market conditions change. The Group will utilise the current resources of its manager, Odfjell Drilling, in its endeavours to ensure that bareboat charter agreements with customers are secured for the unit. Deepsea Metro I is employed a 540 days contract with BG Tanzania Limited until 29 November 2014 . BG Group has decided not to exercise any further options. As a consequence, Deepsea Metro will be free of charter in Tanzania from 29 November 2014. Deepsea Metro I is currently being marketed to potential clients world-wide. No assurances can be given that the Group will be sufficiently successful in deploying its unit in the future. A failure in this respect may have a material adverse impact on the financial position of the Group.

Historically, demand for offshore exploration, development and production has been volatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reduction in exploration drilling as the oil companies scale down their investment budgets. The sharp reduction in production costs on new oil fields and the increase in the use of drilling units for production drilling will probably to some extent reduce the strong historical correlation between drilling unit rates and oil prices. Nevertheless, a decrease in the oil and gas prices may have a material adverse impact on the financial position of the Group.

There is often considerable uncertainty as to the duration of offshore drilling contracts because the agreements may give the operator both extension and early cancellation options. There can also be off-hire periods between contracts. The cancellation or postponement of one or more contracts can have a material adverse impact on the earnings of drilling companies, including the Group.

Changes in the legislative and fiscal framework governing the activities of the oil and utility companies could have material adverse impact on exploration, production and development activity or adversely affect the Group's operations directly.

Currency riskMost of the Group's investments and administrative costs are in USD, same currency as its financial obligations. The revenues according the bareboat charter agreement with Deep Sea Metro Holland II BV are in USD. The Group's current currency exposure is thus very limited.

Interest riskThe Group's long-term financing is a bond loan of USD 460 millions with a five year duration. The interest rate of this financing is fixed at 11% p.a. and currently there is no exposure to the risk of changes in market interest rates related to the company's long-term debt. The Group will consider to enter into interest hedging in connection with any future external long-term debt obligations.

Credit riskThe market for the Group’s services is the offshore oil and gas industry, and the customers consist primarily of major integrated oil companies, independent oil and gas producers and government-owned oil companies. The credit risk of the oil companies is considered as minor. The Group performs ongoing credit evaluations of the customers and generally do not require material collateral. Reserves for potential credit losses are maintained when necessary. With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents, marketable securities, other receivables and certain derivatives instruments receivable amount, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. However, the Group believes this risk is remote as the counterparties are of high credit quality parties.

Liquidity riskThe Group's objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its investments and future operations in accordance with its strategic plan. The Group monitors its liquidity risk by considering the maturity of both its financial investments and financial assets and projected future cash flow from operations.




Note 8 Related parties

Balances with related parties

Short-term liabilities to group companies

Type of transaction Related party Relation 2013 2012

Management services DS Metro Ltd, Finance Related - 13 250

Reimbursable expenses Chloe Marine Corporation Ltd Related - 19 681

Total - 32 931

Short-term liabilities to related parties


Management services Odfjell Drilling AS Related 2 673 752 1 084 647

Hire offshore personnel Deep Sea Management AS Related 271 191 858 791

Hire offshore personnel Deep Sea Management Ltd FZE Related 1 861 981 1 886 474

Casing Services Odfjell Casing Services AS Related - 4 418

Rental Services Odfjell Well Services Ltd Related 329 036 309 578

Engineering services Odfjell Drilling Technology AS Related 541 517 3 176 164

Engineering services Odfjell Technology Manila Corp. Related 8 -

Total 5 677 485 7 320 072

Capitalized cost from related parties

Type of transaction Related party Relation 2013* 2012

OPO Operational preporational organization Odfjell Drilling AS Related - 1 388 931

Hire offshore personnel Deep Sea Management AS Related - 525 627

Hire offshore personnel Deep Sea Management Ltd FZE Related - 2 336 246

Casing Services Odfjell Casing Services AS Related - 5 364

Rental Services Odfjell Well Services Ltd Related - 1 382 983

Rental Services Odfjell Rental Service AS Related - 684

Engineering services Odfjell Drilling Technology AS Related - 2 072 344

Engineering services Odfjell Technology Manila Corp. Related - 7 948

Other services Odfjell Drilling Management AS Related - 9 990

Total - 7 730 117

* No capitalized cost from related parties in 2013.




Note 8 > Related parties (continued)

Costs from related parties


Management services Odfjell Drilling AS Related -16 768 858 -13 553 976

Hire offshore personnel Deep Sea Management AS Related - -5 175 969

Hire offshore personnel Deep Sea Management FZE Related -21 073 304 -18 963 197

Personnel on hire Odfjell Drilling Management AS Related -2 925 832 -71 037

Rental Services Odfjell Well Services Ltd Related - -3 776 078

Engineering services Odfjell Drilling Technology AS Related -218 810 -455 737

Hired equipment Odfjell Drilling Management AS Related - -54 844

Hired equipment Odfjell Well Services Europe AS Related -3 811 852 -31 451

Hired equipment Odfjell Rental Services AS Related - -334

Personnel on hire Chloe Marine Corporation Ltd. Associate -82 018 10 929

Total -44 880 673 -42 071 694

The Company carried out the material transactions with related parties in 2013, as follows:

Odfjell Drilling AS:The Company has signed a Drillship Management Agreement with Odfjell Drilling AS, which is 100 % owned by Odfjell Drilling Ltd.,which, in its turn, is a 40 % shareholder in Golden Close Maritime Corp. Ltd.'s parent company, Deep Sea Metro Ltd. All capitalized costs from Deep Sea Management AS and Deep Sea Mangement Ltd FZE are included under the Drillship Management Agreement with Odfjell Drilling AS

Odfjell Drilling Technology AS: The Company has signed a Project Management Agreement with Odfjell Drilling Tecnology AS. Odfjell Drilling Technology AS is 100 % owned by Odfjell Drilling Technology Ltd., which again is 100 % owned by Odfjell Drilling Ltd. Odfjell Drilling Ltd. is a 40 %shareholder in Golden Close Maritime Corp. Ltd.'s parent company, Deep Sea Metro Ltd. An amount of USD 2 072 344 was paid forproject management services under this agreement in 2012 and capitalised.




Note 9 Guarantees and securities

Secured debt 2013 2012

Secured long term debt 387 974 430 451 628 642

Book value of assets pledged as security for long term debt: 2013 2012

Bank accounts 58 356 764 56 858 291

Receivables 47 291 522 39 736 806

Mobile drilling unit 761 589 769 795 797 895

Total book value of assets pledged as security 867 238 055 892 392 992

On 3 December 2010, Golden Close Maritime Corp Ltd entered into a USD 460 million bond agreement with Norsk Tillitsmann ASA

as bond trustee.

As security for any amounts outstanding under the bond loan, Golden Close Maritime Corp Ltd has provided the following securities:

- pledge over all bank accounts

- security trust deed

- assignment of receivables

- mortgage in the drillship Deepsea Metro I

- floating charge

- assignment of management agreements

- assignment of earnings

- assignment of insurances

- assignment of the rights of the company under any drilling contract having a duration of minimum 12 months




Note 10 Operating income

DSMH III BV has received rate according to contract for 207,25 days and related drilling services in 2013.

DSMH II BV has received rate according to contract for 157,75 days and related drilling services in 2013.

The drillship Deepsea Metro I has been operating for British Gas in Tanzania in the period 01.01.13 until completion of contract with

British Gas 07.06.2013.

The drillship Deepsea Metro I has been operating for British Gas and Dominion Tanzania Ltd in Tanzania in the period 07.06.13 until

31.12.2013.




Note 11 Events after the balance sheet date

Deep Sea Metro Holland III BV - Tanzania branch (DSMH III BV - Tanzania branch) rents the drillship Deepsea Metro I

from Golden Close Maritime Corporation Ltd (GCMC) according to a bareboat agreement.

During the period July to December 2013, DSMH III BV - Tanzania branch has been withholding tax on rental payments

at 15%. A review of Tanzania's practice note 1 of Finance act 2013 shows that the Withholding tax rate on rental

payments to non resident companies, as GCMC, was reduced to 10%, with effect from 1 July 2013.

Based on this change, DSMH III BV - Tanzania branch has withheld tax on rental lease payment with a higher amount than

it is entitled to under the reviewed rules - the exceeding amount is USD 3,962,062.

A letter regarding the overpayment of Withholding tax was sent to the Tanzania Revenue Authority 7 February 2014, but

no answer is received yet. Overpaid amount will be offset against future withholding tax payable on rental of drillship towards

Tanzania Tax Authority, and accordingly between DSMH III BV - Tanzania Branch and GCMC.


Financial Statements

2013

Golden Close Maritime Corporation Ltd

(all amounts are in USD unless otherwise stated)

Income Statement

Notes 2013 2012

Other operating income 9,13 140 520 163 86 225 138

Cost of operations 0 0

Gross profit 140 520 163 86 225 138

Depreciation 5 -35 231 196 -34 772 021

Other operating expenses 2 -5 857 990 -5 497 248

Operating profit / (loss) 99 430 977 45 955 869

Finance income 2,10 11 055 654 555 464

Finance costs 2,10 -51 112 881 -54 133 077

Net financial income / (costs) -40 057 227 -53 577 612

Profit / (Loss) before tax 59 373 751 -7 621 743

Income tax expense 4,13 -21 078 075 -11 505 198

Net Income / (loss) for the year 38 295 676 -19 126 941

Transferred to:

Other equity 38 295 676 -19 126 941



Statement of Comprehensive Income

2013 2012

Profit/(-loss) for the year 38 295 676 -19 126 941

Total comprehensive income for the year 38 295 676 -19 126 941



Statement of Changes in Equity

Share capital

Other contributed

capital Other equity Total equity

Balance at 31 December 2011 10 000 439 690 967 -7 657 356 432 043 611

Profit/(loss) for the period - - -19 126 941 -19 126 941

Total comprehensive income for the year 0 - -19 126 941 -19 126 941

Transactions with owners 0 - - -

Balance at 31 December 2012 10 000 439 690 967 -26 784 297 412 916 670

Profit/(loss) for the period - - 38 295 676 38 295 676

Total comprehensive income for the year 0 - 38 295 676 38 295 676

Transactions with owners 0 - - -

Balance at 31 December 2013 10 000 439 690 967 11 511 379 451 212 346



Statement of Cash Flow

2013 2012

Profit / loss before tax 59 373 751 -7 621 743

Changes in a working capital:

(Decrease)/increase in accounts receivables intercompany -17 962 803 24 796 243

(Decrease)/increase in accounts payable 368 436 -3 422 418

Decrease/(increase) in other short-term receivables and liabilities 216 825 -12 058 493

Decrease/(increase) in intercompany short-term receivables and liabilities 7 887 957 -14 715 753

Adjustments for:

Depreciation 35 231 196 34 772 021

Finance income / costs, net 29 208 231 53 577 612

Interest paid -48 769 325 -50 600 000

Interest received 188 060

Income tax paid -21 078 075 -11 505 198

Foreign exchange losses / (gains) -16 945 4 523

Cash flows from operating activities 44 647 308 13 226 795

Cash flows from investing activities

Paid on construction in progress -1 023 070 -5 433 182

Investments in subsidiaries 10 848 995 -

Net cash flow used in investing activities 9 825 925 54 818

Cash flows from financing activities

Borrowing related income / costs -66 500 000 -186 117

Net cash flow from financing activities -66 500 000 -186 117

Net increase/(decrease) in cash and cash equivalents -12 026 767 13 095 496

Cash and cash equivalents at beginning of period 40 240 910 27 145 414

Cash and cash equivalents at end of period 28 214 143 40 240 910


Notes to the Financial Statements

(all amounts are in USD unless otherwise is stated)

Note 1 Accounting Principles

Golden Close Maritime Corp Ltd was incorporated in Bermuda on 4 September 2008.

The Company is the owner of the drill ship Deepsea Metro I (DSM I). The drill ship was delivered from the yard Hyundai Heavy Industries in South Korea 22 June 2011.

In 2013 the drill ship has been bareboated to Deep Sea Metro Holland II B.V.'s Tanzanian branch from 1 January to 7 June 2013 and then to Deep Sea Metro Holland III B.V's Tanzania branch from 7 June to 31. December 2013. Both operating companies have been under drilling contract with British Gas in Tanzania in the mentioned periods .

The financial statements have been prepared in accordance with simplified IFRS (International Financial Reporting Standards) pursuant to section 3-9 of the Norwegian Accounting Act and with the Directives of simplified IFRS specified by the Norwegian Ministry of Finance on 21. of January 2008. This implies that estimates and measurements follows IFRS, and that presentation and notes to the financial statement are in accordance with the Norwegians Accounting Act and generally accepted accounting principles in Norway.

1.1 Simplified IFRSThe Company has applied all relevant simplifications in regard to IFRS.

1.2 Basis of preparationThe financial statements have been prepared under the principals of historical cost.

1.3 Currency The financial statements are presented in USD which is the Company’s functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. The assets and liabilities of non-USD currency are translated into USD at the rate of exchange as of the balance sheet date.

1.4 Accounting estimates and judgmentsThe preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in accounting estimates are accounted for in the same period as the change occurs.

The most material estimates and assumptions are related to the company's fixed assets impairment test.

1.5 Revenue recognitionRevenue is recognized to the extent that it is probable that the financial benefits will accrue to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates and other sales taxes or duty. The sales invoices are prepared in accordance with Tanzanian regulations and grossed up for Withholding tax. The Withholdingtax is collected by third parties and reported as tax costs in the income statement.

Revenues are recognized as they are earned, based on contractual daily rates in the Bareboat contract with the operating companies Deep Sea Metro Holland II BV and Deep Sea Metro Holland III BV .

1.6 Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.

1.7 Income taxGolden Close Maritime Corp Ltd is a company registered in Bermuda.There is no Bermuda income, corporation, or profit tax, capital gains, capital transfer tax, estate duty or inheritance tax payable by the company or its shareholders not ordinarily resident in Bermuda. The company is not subject to Bermudan stamp duty on the issue, transfer or redemption of its shares.As an exempted company, the company is liable to pay a registration fee in Bermuda. The present rate is USD 4,070 per annum.




Note 1 Accounting Principles (cont)

1.8 Fixed assetsFixed assets are valued at cost, less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs for maintenance are expensed as incurred, whereas costs for improving and upgrading property, plant and equipment are added to the acquisition cost and depreciated with the related asset. When carrying value of a non current asset exceeds the estimated recoverable amount, the asset is written down to its recoverable amount. The recoverable amount is the greater of the net realizable value and value in use. In assessing value in use, the estimated future cash flows from the asset are discounted.

1.9 BorrowingsBorrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

1.10 Impairment of assetsAssets that have an indefinite useful life are not subject to amortization and are tested annually for impairment at year end. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

1.11 Cash and cash equivalentsCash and cash equivalents includes cash, bank deposits and all other monetary instruments with a maturity of less than three months from the date of acquisition.Cash and cash equivalents, as defined for reporting purposes in the statement of cash flows, consist of cash and cash equivalentsas defined above, net of outstanding bank overdrafts connected to cash management activities.

1.12 EquityCost of equity transactions:Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.13 Year-end provisionsA provision is accounted when the Company has obligation (legal og self-imposed) as a consequence of a former incident, it is probable (more likely than not) that an economic settlement will occur as a consequence of the obligation and the amount can be reliably measured. If the effect is substantial, the provision would be estimated by discounting expected future cash flows with a discount rate before tax that reflects the market price of cash and, if relevant, risks specifically attached to the obligation.

1.14 Contingent liabilities and assetsContingent liabilities are not accounted in the financial statement. Substantial contingent liabilities, except contingent liabilities where the probability of the liability is low, are reported. Contingent assets are not accounted in the financial statement, but reported if there exists a certain probability that the Company will accrue an advantage.

1.15 Events after the balance sheet dateNew information after the balance sheet date concerning the Company's financial standing is taken into account in the financial statement. Events after the balance sheet date that not affect the Company's financial standing on the balance sheet date, but will affect the Company in the future are reported if it is considered substantial.

1.16 Cash flow statementThe cash flow statement is prepared using the indirect method.




Auditor

2013 2012-Statutory Audit (21 851) (12 231)

-Other advisory services (42 123)

Total fee of the auditor (21 851) (54 354)

Specification of other operating expenses

2013 2012Fee of the auditor (21 851) (54 354)

Management fee (3 023 601) (3 234 152)

Insurance cost (1 974 292) (1 835 150)

Financial and legal costs (521 942) (373 592)

Other (316 303)

Total Other operating expenses (5 857 990) (5 497 248)

Specification of finance income and costs

2013 2012

Income from sale of shares in subsidiaries 10 848 995Currency gain 16 955 469 978

Interest income 188 060 85 486

Other financial income 1 645

Finance income 11 055 654 555 464

Currency loss (15 188) (276 050)

Borrowing costs (48 205 458) (50 600 024)

Other financial expenses (2 892 235) (3 257 002)

Finance costs (51 112 881) (54 133 077)

Net finance income / (costs) (40 057 227) (53 577 612)

The are no employees in the Company. The Company is managed pursuant to a Drillship Management Agreement with Odfjell Drilling

AS. No remuneration were paid to the Board of Directors during the year.

Management remuneration

No loans/securities have been granted to the chairman of the board or other related parties.

Note 2 Employee benefits expense, number of employees, loans to employees, auditor's fee and

net financial items




Note 3 Intercompany short-term receivables and liabilities

Receivables Intercompany Receivable Relation 2013 2012

Bareboat hire Deep Sea Metro Holland II BV Group company - 15 185 386

Bareboat hire Deep Sea Metro Holland III BV Group company 33 148 189 -

Total receivables from group companies 33 148 189 15 185 386

Receivables Intercompany Receivabl Relation 2013 2012

Short-term intercompany loan Deep Sea Metro Holland II BV Group company 10 900 000 16 035 300

Short-term intercompany loan Deep Sea Metro Holland III BV Group company 8 000 000 -

Total receivables from group companies 18 900 000 16 035 300

Liabilities Relation 2013 2012

Reimbursable cost Deep Sea Metro Holland II BV Group company 449 779 449 779

Reimbursable cost Deep Sea Metro Holland III BV Group company 14 775 -

Reimbursable cost Deep Sea Metro Holland Ltd Parent - 13 250

Total liabilities to group companies 464 554 463 029




Note 4 Tax

Golden Close Maritime Corp Ltd is registered in Bermuda.

There is no Bermuda income, corporation, or profit tax, capital gains, capital transfer tax, estate duty or inheritance tax

payable by the Company or its shareholders not ordinarily resident in Bermuda. The Company is not subject to Bermudan

stamp duty on the issue, transfer or redemption of its shares.

As an exempted company, the Company is liable to pay a registration fee in Bermuda at a rate presently at USD 4,070 per

annum.

For bareboat operations of Deepsea Metro I in Tanzania, the Company was liable to USD 21 078 075 withholding tax on

revenue, to be deducted and paid at the source by the customer to the Tanzanian authorities.

The details on withholding tax are presented in the Note 13 of these accompanying notes to the financial statements




Note 5 Tangible assets

"Deepsea Periodic Total

Metro I" maintenance rig


Depreciation 2012 -28 772 021 -6 000 000 -34 772 021

Reimbursed amount 2012 -5 488 000 - -5 488 000

Additions 5 433 182 - 5 433 182



Accumulated Depreciation (29 158 549) (6 080 645) (35 239 194)


Depreciation 2013 -28 869 233 -6 361 963 -35 231 196

Reimbursed amount 2013 0 - 0

Additions 1 023 070 - 1 023 070



Accumulated Depreciation (58 027 782) (12 442 608) (70 470 390)


Included in Net carrying value: estimated residual value 100 000 000 100 000 000

Useful life 5-30 years 5 years

Expected basis for depreciation / allocation of expenditure

The drill ship started depreciating when placed in service under bareboat charter agreement between Golden Close Maritime

Corporation Ltd and Deep Sea Metro Holland II BV, which coincided with commencement of the drilling contract of the latter with

British Gas on 26 December 2011.

The total expenditure on the drillship has been decomposed into components that have different expected useful lives. Periodic

maintenance is one of the decomposed components. The different components are depreciated over their expected useful lives as

per straight line method. The main component is expected to have an economic useful lifetime of 30 years. When calculating

depreciation, the estimated residual value has been taken into consideration.

Impairment of values

The operating company for Deepsea Metro I entered into a drilling contract with BG effective from 7 June 2011 The drilling contract

with BG in Tanzania is ending 29 Nov 2014. The market for ultra deep water drilling units remains strong. The ultra deep market is a

attractive market because this is both a replacement market of older mid-and deepwater floaters and growth market, especially in

Africa.

The Company has carried out net present value analysis which support the carrying amount of the drillship and based on this

concluded that the carrying value amount of Deepsea Metro I is not considered to be higher than value in use. The Company has,

based on sensitivity analysis of future cash flow from operations taken into account a variety of day rates and using reasonable

discount rates, substantiated that the value in use exceeds the carrying amount of the drillship.




Note 6 Share capital and shareholder information

Golden Close Maritime Corp. Ltd. had one (1) registered shareholder at 31 December 2013.

There is only one class of shares, and all shares have the same rights.

The share capital consists of:

Shareholder Holding (%) Shares Nominal value Share capital

USD

Deep Sea Metro Ltd. 100 % 10 000 1 10 000

Total 100 % 10 000 1 10 000




Note 7 Investments in subsidiaries

Company

Date of

incorporation

Country of

incorporation Curr

Acquisition

Cost

Shares and

percent of

votes

Profit & Loss Equity Book value

in USD

Deep Sea Metro Cooperatief U.A. 07.06.2013 The Netherlands EUR 99 000 99 % 0 137 190 135 818

Golden Close II 31.05.2013 Bermuda USD 10 000 100 % -8 421 1 579 10 000

Total as of 31 December 2013 -8 421 138 769 145 818

Total members in Deep Sea Metro Cooperatief U.A. is two. The other owner has a member percentage of 1%

Total number of shares in Golden Close II Ltd is 100 valued at USD 100 each




Note 8 Non-current liabilities

Non-current liabilities 2013 2012

Long-term debt 393 500 000 460 000 000

Capitalized financing cost -5 525 571 -8 371 359

Total non-current liabilities 387 974 430 451 628 642

Long-term debt:USD 460 million Bond Agreement

On 3 December 2010, Golden Close Maritime Corp Ltd (“the Issuer”) entered into a USD 460 million bond agreement with Norsk Tillitsmann ASA as bond trustee. The purpose of the bond issue was to secure construction and take-out financing of Deepsea Metro I. Settlement date for the bond loan was 9 December 2010 (“the Settlement Date”).The bonds shall be repaid in full at 9 December 2015 (unless redeemed earlier). Golden Close may redeem the bonds, all or nothing, at a price equivalent to the sum of between 102% and 104% of the par value (plus accrued interest), depending on the date of redemption.

The interest payable on the bonds is 11 per cent pro annum, payable as semi-annual coupons.

The bonds are secured by, amongst others, a pledge over all the shares of the Company, and further a pledge over substantially all of the Company's assets, hereunder bank accounts, a security trust deed, an assignment of a Drilling Unit Management Agreement a mortgage over Deepsea Metro I and assignment of insurances and revenue deriving from the vessel. Further, the Company's subsidiaries which are relevant to Deepsea Metro I have guaranteed the fulfilment of the obligations under the bond agreement, and the bonds have further been secured by pledges over substantially all the assets of Golden Close's subsidiaries relevant to Deepsea Metro I, hereunder by pledges of shares of relevant subsidiaries, bank accounts, assignment of insurance proceeds and revenue and assignment of any rights under the Drilling Unit Management Agreement.

The main restrictive covenant is that the Company is obliged to accumulate a working capital buffer of USD 25 million once earnings related to Deepsea Metro I have started to accumulate. The bond agreement also includes a payment and account structure which provides for payment of all earnings of the Company and all net earnings related to Deepsea Metro I to certain accounts. In the event the Company accumulates a working capital exceeding USD 30 million over allowed working capital buffer, the Company is obliged to redeem the bonds with the amount exceeding the allowed capital buffer at 100% of par value (plus accrued interest on redeemed amount), hence, the Company shall not declare or make any dividend payments to Deep Sea Metro Ltd.

The bond agreement is otherwise based on terms and conditions which the Company considers to be customary for similar types of bond financings, hereunder but not limited to event of default provisions, cross-default provisions, restrictions in distributions, and mandatory redemption provisions relating to ownership and condition of Deepsea Metro I and ownership of Golden Close. Through a certain covenant agreement, any relevant subsidiary of the Companyis similarly bound of the same restrictions as the Company.The transaction costs (including arrangement fees to managers and bookrunners, legal fees, etc.) in connection with the establishment of the bond are recorded as prepayments. This capitalized financing cost is amortised over the life of the bond. In 2013, USD 2 847 666 was booked as amortised cost in the profit and loss statement.




Note 9 Financial risk

Market risk

Demand for drilling services in connection with exploration, development and production in the offshore oil and gas sector is particularly sensitive to decreases in the prices for oil and gas, reductions in production levels and disappointing exploration results. On the supply side, there is uncertainty when it comes to the level of construction of new units, the upgrading and maintenance of existing units, the conversion of units into other types of units and alternative uses for equipment as market conditions change. The Company will utilise the current resources of its manager, Odfjell Drilling, in its endeavours to ensure that bareboat charter agreements with customers are secured for the unit.

Deepsea Metro I is employed under a 540 days contract with BG Tanzania Limited until 29 November 2014. BG Group has decided not to exercise any further options. As a consequence, Deepsea Metro I will be free of charter in Tanzania from 29 November 2014. Deepsea Metro I is currently being marketed to potential clients world-wide. No assurances can be given that the Company will be sufficiently successful in deploying its unit in the future. A failure in this respect may have a material adverse impact on the financial position of the Company.

Historically, demand for offshore exploration, development and production has been volatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reduction in exploration drilling as the oil companies scale down their investment budgets. The sharp reduction in production costs on new oil fields and the increase in the use of drilling units for production drilling will probably to some extent reduce the strong historical correlation between drilling unit rates and oil prices. Nevertheless, a decrease in the oil and gas prices may have a material adverse impact on the financial position of the Company.

There is often considerable uncertainty as to the duration of offshore drilling contracts because the agreements may give the operator both extension and early cancellation options. There can also be off-hire periods between contracts. The cancellation or postponement of one or more contracts can have a material adverse impact on the earnings of drilling companies, including the Company.

Changes in the legislative and fiscal framework governing the activities of the oil and utility companies could have material adverse impact on exploration, production and development activity or adversely affect the Company’s operations directly.

Currency riskMost of the Company's investments and administrative costs are in USD, same currency as its financial obligations. The revenues according the bareboat charter agreement with Deep Sea Metro Holland II BV are in USD. The Company's current currency exposure is thus very limited.

Interest riskThe Company's long-term financing is a bond loan ofUSD 460 millions with a five year duration. The interest rate of this financing is fixed at 11% p.a. and currently there is no exposure to the risk of changes in market interest rates related to the company's long-term debt.The Company will consider to enter into interest hedging in connection with any future external long-term debt obligations.

Credit riskThe group company Deep Sea Metro Holland III BV is the Company's single customer. The credit risk of the subsidiary is considered as minor. With respect to credit risk arising from other financial assets of the Company, which comprise cash and cash equivalents, marketable securities, other receivables and certain derivatives instruments receivable amount, the Company's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. However, the Company believes this risk is remote as the counterparties are of high credit quality parties.

Liquidity riskThe Company's objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its investments and future operations in accordance with its strategic plan. The Company monitors its liquidity risk by considering the maturity of both its financial investments and financial assets and projected future cash flow from operations.




Note 10 Related parties

Accounts payable and short-term liabilities related parties


OPO Operational preparational expensesOdfjell Drilling AS Associate 1 799

Management Services Odfjell Drilling AS Associate 335 235

Reimbursables Deep Sea Metro Holland III BV Subsidiary 464 554

Total 799 789 1 799

Capitalized cost from related parties


Spareparts Deep Sea Metro Holland II BV Subsidiary 366 444 1 510 993

Reimbursables Deep Sea Metro Holland III BV Subsidiary 155 787 32 998

OPO Operational preporational organizationOdfjell Drilling AS Associate 1 388 931

Hire offshore personnel Deep Sea Management AS Associate 525 627

Hire offshore personnel Deep Sea Management FZE Associate 2 336 246

Casing Services Odfjell Casing Services AS Associate 5 364

Rental Services Odfjell Well Services Ltd Associate 1 382 983

Rental Services Odfjell Rental Service AS Associate 684

Engineering services Odfjell Drilling Technology AS Associate 2 072 344

Engineering services Odfjell Technology Manila CorporationAssociate 7 948

Other services Odfjell Drilling Management AS Associate 9 990

Total 522 231 7 730 117

Income from related parties


Bareboat hire Deep Sea Metro Holland II BV Group company 46 552 953 86 225 138

Bareboat hire Deep Sea Metro Holland III BV Group company 93 967 210

Total 140 520 163 86 225 138

Costs from related parties


Management services Odfjell Drilling AS Associate 3 023 605 2 734 152

Hired services Odfjell Drilling Technology AS Associate 190 252

Total 3 213 857 2 734 152

The Company has been a party to the following material agreements with related parties:

Odfjell Drilling AS:

The Company has signed a Drillship Management Agreement with Odfjell Drilling AS. Odfjell Drilling AS is 100 % owned by Odfjell

Drilling Ltd., which is a 40 % shareholder in Golden Close Maritime Corp. Ltd.'s parent company, Deep Sea Metro Ltd. USD 3 023 605

was paid for management services in 2013 and booked as administrative expenses. All capitalized costs from Deep Sea Management

AS and Deep Sea Mangement Ltd FZE are included under the Drillship Management Agreement with Odfjell Drilling AS

Odfjell Drilling Technology AS:

The Company has signed a Project Management Agreement with Odfjell Drilling Tecnology AS. Odfjell Drilling Technology AS is 100

% owned by Odfjell Drilling Technology Ltd., which again is 100 % owned by Odfjell Drilling Ltd. Odfjell Drilling Ltd. is a 40 %

shareholder in Golden Close Maritime Corp. Ltd.'s parent company, Deep Sea Metro Ltd. An amount of USD 190 252 was paid for

project management services under this agreement in 2013.




Note 11 Financial assets and liabilities

Financial assets: Book value Fair value Book value Fair value

Other short-term receivables 794 543 794 543 865 888 865 888

Receivables 52 048 189 52 048 189 31 220 686 31 220 686

Bank deposits 28 214 143 28 214 143 40 240 910 40 240 910

Total 81 056 875 81 056 875 72 327 484 72 327 484

Financial liabilities: Book value Fair value Book value Fair value

Accounts payable 368 436 368 436 0 0

Other short-term liabilities 3 237 250 3 237 250 3 631 072 3 631 072

Total 3 605 686 3 605 686 3 631 072 3 631 072

The fair value of financial assets and liabilities equals their carrying (book) value

as the assets and liabilities do not contain impairment.

2013

2013

2012

2012




Note 12 Guarantees and security

Secured debt 2013 2012

Secured long term debt 387 974 430 451 628 642

Book value of assets pledged as security for long term debt: 2013 2012

Bank accounts 28 214 143 40 240 910

Shares in subsidiaries 145 818 51 005

Receivables 19 694 543 16 901 188

Mobile drilling unit 761 589 769 795 797 895

Total book value of assets pledged as security 809 644 273 852 990 998

On 3 December 2010, Golden Close Maritime Corp Ltd entered into a USD 460 million bond agreement with Norsk Tillitsmann

ASA as bond trustee.

As security for any amounts outstanding under the bond loan, Golden Close Maritime Corp Ltd has provided the following

securities:

- pledge over all bank accounts

- pledge over shares in Golden Close II Ltd.

- pledge over membership interests in Dutch Coop

- security trust deed

- assignment of receivables

- mortgage in the drillship Deepsea Metro I

- floating charge

- assignment of management agreements

- assignment of earnings

- assignment of insurances

- assignment of the rights of the company under any drilling contract having a duration of minimum 12 months




Note 13 Operating income

Operating income - Bareboat hire Customer Days Day rate Gross income WHT 2013 Net income 2013

1 January - 7 Juni 2013 DSMH II BV 157,75 250 840 46 552 953 6 982 943 39 570 010

7 June - 31 December 2013 DSMH III BV 207,25 385 390 93 967 210 14 095 133 79 872 078

140 520 163 21 078 075 119 442 088

The drill ship has been on a bareboat charter contract with Deep Sea Metro Holland II BV from 1 January to 7 June 2013 and with Deepsea

Metro Holland III BV from 7. june 2013 . In 2013 The drillship has been performing offshore drilling in Tanzanian waters for British Gas and

Dominion Tanzania Ltd.

All income in 2013 was related to these bareboat charter contracts. According to contract, the daily bareboat rate was USD 250 840 under

the bareboat charter with Deep Sea Metro Holland II BV. The daily bareboat rate increaced to USD 385 390 (ex Withholding tax) under the

bareboat cahrter with Deep Sea Metro Holland III BV.




Note 14 Events after the balance sheet date

Deep Sea Metro Holland III BV - Tanzania branch (DSMH III BV - Tanzania branch) rents the drillship Deepsea Metro I

from Golden Close Maritime Corporation Ltd (GCMC) according to a bareboat agreement.

During the period July to December 2013, DSMH III BV - Tanzania branch has been withholding tax on rental payments

at 15%. A review of Tanzania's practice note 1 of Finance act 2013 shows that the Withholding tax rate on rental

payments to non resident companies, as GCMC, was reduced to 10%, with effect from 1 July 2013.

Based on this change, DSMH III BV - Tanzania branch has withheld tax on rental lease payment with a higher amount than

it is entitled to under the reviewed rules - the exceeding amount is USD 3,962,062.

A letter regarding the overpayment of Withholding tax was sent to the Tanzania Revenue Authority 7 February 2014, but

no answer is received yet. Overpaid amount will be offset against future withholding tax payable on rental of drillship towards

Tanzania Tax Authority, and accordingly between DSMH III BV - Tanzania Branch and GCMC.

Documents

Golden Close Maritime Corporation Ltd. · Golden Close Maritime Corp Ltd. Group ... Industries in South Korea on 22 June 2011 and commenced on its contract with BG in Tanzania on